Pod Insights The Prof G Pod with Scott Galloway Prof G Markets: Scott’s Investment Portfolio — a Breakdown About this episode Scott shares how he allocates his investment portfolio between asset classes. He explains how he gains access to certain investment opportunities, and why he can take greater risks than most people. He also shares his biggest losses from the past year, and his biggest wins.
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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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0:59 Scott Galloway? This week's number, $32 million. That's how much revenue the Caribbean island of Anguilla earned last year from .AI web domain registrations. True story yet. Last night I was at a urinal in a bathroom at a famous restaurant. The guy next to me said, oh, you're circumcised. And I said, nope, that's just the wear and tear.
1:25 Scott Galloway? I like that. I like that. Get it, Ed? Get it?
1:29 Ed Elson? I get it.
1:30 Scott Galloway? Okay. Welcome to Prop G Markets. Ed, what are we discussing today?
1:36 Ed Elson? We're doing something a little different today, Scott. We're going to take a look at your own personal investments over the past year. We'll talk about what went well, what went poorly, and perhaps what surprised you. And at the end, we'll discuss your investment strategy for the year ahead. Sound good?
1:52 Scott Galloway? Sounds good.
1:52 Ed Elson? So let's start with a pretty general question. Between stocks, bonds, real estate, private investments, what does your overall asset allocation look like right now?
2:04 Scott Galloway? My asset allocation is about 40% real estate.
2:10 Scott Galloway? Which is a lot. And then about 40% private investments and only about 15 or 20% publicly traded stocks.
2:21 Ed Elson? Has that balance changed significantly from previous years or is that pretty standard for you?
2:26 Scott Galloway? When I was younger, obviously I had a lot of money in real estate because I kind of levered up to buy a home. And then as I got more money, it was more public stocks and I have reduced my public markets exposure, increased my private market exposure and increased my real estate. So the reason why I own so much real estate is, one, I really think it's a tax advantaged asset class. And it's the kind of asset you can, if you don't lever it up too much, you can hold forever and then might make a good asset to give to your kids. But essentially, I have two types. I have kind of consumption real estate and then rental units. And the rental units are great because you can depreciate them 2 or 3% of your real estate. It's the most advantaged asset class in the world.
3:07 Scott Galloway? So even though these rental units that I have have gone up in value every year, every year I can depreciate them. I think it's 3% a year. There's no other asset that as it's going up in value, you can take a write-off against it despite the fact it's increasing in value. Then I look at demographics and we are building one and a half million fewer homes than we need every year, which just says to me that there was going to be a demand-supply imbalance for a long, long time. So I just love rental units and I think it makes sense. Where I have the bulk of my real estate holdings is in what I call a 0.1% strategy that I've adopted over the last five years. And that is, I used to own one home, now I own four.
3:48 Scott Galloway? My belief, again, based on economic trends, is that what's happened in the US is happening around the world. And that is massive income inequality. And that is the 1% continues to garner more and more. They weaponize government, they keep their taxes low, they have invested, they invest in monopolies. They get, they massively weaponize the tax code and there seems to be, in my opinion, just unbelievable explosion in the ultra-rich. So in the US, for example, the last 10 years, the number of billionaires has gone from 500 people to 2,500. And so what I've done is I've bought four homes in what I call 0.1% neighborhoods.
4:27 Scott Galloway? So I have homes in London, New York, Palm Beach and in Aspen. And there's some consumption in there in the sense that as I get older, my priorities are the following. I want homes where my kids, when they leave for college, will come visit me. And so I want to have homes where they think, oh, you know, we'll go see, we'll go see dad. And two, as I get older, I primarily just want to, you know, like I always say, I want to be in beautiful places and just wait for the ask answer. And so there's some consumption here. And generally speaking, I think that, I think that as income inequality continues to get out of control, that these areas are going to increase in value faster than inflation.
5:12 Scott Galloway? And then privates is disproportionately high because I have access. I know a lot of, after working in tech and business for 30 odd years in consulting, where you speak to a lot of CEOs and in academia, where what I do, I meet with a lot of CEOs and a lot of venture capital firms based on starting companies. I have a lot of access that other people don't have. And if it's a story of privilege, trust your instincts. But I get invited to invest in companies alongside of kind of tier one private equity VC firms at sort of negative fees. They will let me invest if I put in, say, a million bucks, they'll give me, you know, 1.2 or sometimes up to 2 million in equity to go on the board or be an advisor.
5:53 Scott Galloway? So I get to invest, most people will have to invest with fees. I get to invest with negative fees. And so I disproportionately allocate money to privates. I have less money in the stock market because I've come to the conclusion that nobody can pick stocks. The only time I invest. Typically in a stock is when I have access to the IPO because I either have advised the CEO or the investment bank running the book. For whatever reason, I can get allocation. It's a rigged market. Most of the pop for the first couple of years is usually on the first trade. So unless I can get allocation in the IPO, I don't do it. Again, if that sounds like privilege and access, it is. I've worked hard to get it, but it's still a rigged market. But I don't invest that much in public market stocks anymore because I find it a bit emotionally trying.
6:38 Scott Galloway? You know, today I check my stocks probably six times and I hate having a scorecard every day. One of the reasons I've never purchased crypto is I know my personality. The fact that it trades 24 by seven would just be bad for me. So one of the things I like about owning real estate and owning privates, which is 80% of my assets, is that you don't have to mark your book every day. And I find that is emotionally comforting or it's less kind of emotional stress, if you will.
7:03 Ed Elson? Yeah, I think the thing that jumps out to me is this unusually low public markets exposure. And you're sort of over indexing on private investments and real estate. Your advice to listeners is generally speaking, diversification, low cost ETFs, let time take over. But when I look at this portfolio, just from the bird's eye perspective you just laid out, it doesn't totally reflect that. Is there a reason why you're not following your, say, standard advice right now?
7:36 Scott Galloway? So some things I'm following, some things I'm not. So a couple of things. One, this is not, it's like, don't do this at home, kids. And here's the reality. If I lost 90% of my wealth, I'd still be fine. I'd be bummed out. I probably couldn't maintain this lifestyle, but I'd still have enough money to live really well. And my kids would be fine. I just, I can take more risks than most people. In addition, I have access that other people don't have. I mean, that's the reality and I'm trying to lean in, you know, and I do that. I lean into my access. I'm very self-conscious saying it, but that's the reality. I am following diversification. I have everything from a investment in a company
8:17 Scott Galloway? that buys old aircraft engines, fixes them up, and then leases them out to cargo planes, to real estate, to investments in software companies, to investments in supply chain benchmarking companies. I have to claims against a bankrupt FTX. I do have decent.
8:37 Scott Galloway? Diversification. I'm not diversified geographically. Most of my companies are in the US. I have a little bit of exposure to Europe, but I do have pretty good diversification. And I do let time take over in the sense that I usually don't invest in anything. I'm not a trader. I usually don't invest in anything that I don't plan to hold for several years. And a lot of the stuff I buy, I mean, for example, the real estate, I don't plan to ever sell it. None of it. I mean, until my kids need it or want it, or, you know, or what have you. So the other thing I don't do, I don't try to time the market. I'm, I realize that it's very difficult to do. I find a good company or a good opportunity. I lean into it and I plan on holding it for a long time.
9:21 Ed Elson? So let's go through your wins and losses and we'll, we'll start with the losses. What have been your biggest failures in investing in the past 12 months?
9:30 Scott Galloway? Well, I don't think of it as failures. My, my biggest loss is because if you do what I do and you invest, I mean, I think I have 30 or 40 different investments. If you, if you looked at every investment over, I don't know, a million dollars in value, I have at least 30 or 40 of them. And, and that goes to diversification. I don't like to have any more than,
9:50 Scott Galloway? you know, I have one asset that's probably almost 15 or 20% of my net worth, one of my homes, but that's it. Nothing else is more than kind of 5% and most is two or three. The biggest loss, I lost $15 million shorting the market last year. I do it as a means of hedging. I had a lot of exposure to tech stocks. I had a lot of exposure to individual stocks. I got in the IPO. So I would short some high flyers by selling calls against them and some of them just skyrocketed and I got just hammered. Now, the year before I'd made money, the year before that I'd made a lot of money. So I started believing that I was good at it. And that's a lesson to not trust your emotions. I was lucky. I wasn't good. And I started believing I was good at it. So I got more aggressive with it, which really hurt me.
10:35 Scott Galloway? And also I write covered calls in all my stock positions. So if I own Airbnb at a hundred bucks, I'll write a week long, I'll write calls on the number of shares I have. So if I have 10,000 shares at a hundred bucks, I write calls on 10,000, say expiring at 105, and I'd get a buck premium that week and I'd make 10,000 bucks. And it's all great as long as the stock doesn't go above 105. Now technically you're hedged because you just give up the gains above 105 because the stock's gone up. But what happened to me a lot last year is these stocks would skyrocket. And if I wanted to hold on to the stock, I had to go buy the calls back and it cost me a lot of money. And then I wrote calls nakedly against some companies I thought were really high flyers and were just made no sense.
11:19 Scott Galloway? And I learned the hard way, the market can stay irrational longer than you can stay liquid. And some of these companies, a couple of them went up 30% in three days. And I'd have to write a, you know, write a check for two or three million bucks. Anyways, I've still made money on this strategy over the last three years, but I lost $15 million on that. I've a lot of, a couple of my private companies, I've marked down substantially in value. I was an investor in Post News or am an investor, fantastic CEO, fantastic idea, competitor to Twitter. Competitors to Twitter haven't gotten any traction other than threads. So I made a substantial investment there. I've marked that down. I'm still hopeful. I made an investment in a text messaging app focusing on the healthcare industry.
12:00 Scott Galloway? Everything made sense. Smart people, healthcare handhelds. I love it. Pushing out healthcare to lower income people through corporations. You know, Sam's or Walmart signs up and for eight bucks a month per employee, you can contact a dermatologist or a doctor and give them your symptoms over the phone text message and they use AI to connect with the right person. Great business. Hasn't grown as fast as we'd all hoped. I invested at a really high valuation. A vocational training company here in Europe I have marked down. Really good company, but I think the valuation I invested at, it was extraordinarily rich and the company's doing well, but. The market's rationalized the private market, so I've marked that down by two or
12:43 Scott Galloway? three million bucks. So of my losses last year, I mean, they all add up to probably about 25 million bucks.
12:52 Ed Elson? When you say you're marking these investments down, are you coming up with your own valuations when you mark them down? Are you getting reports from the team and learning based on other investors' valuations? How are you, how does marking them down work for you at a personal level?
13:09 Scott Galloway? So I find, generally speaking, if you don't keep track of how much money you're spending and how much you're making and the value of investments, you're due for an unwelcome surprise. And so as a regular practice, at least once a year, if not more, I sit down with the guys at Goldman and I go through every investment, actually, I probably do it twice a year, and try and mark the investment. And an easy way to market is if a company raises money in the market, follow on around at a, you know, 100 million, you know, and 1% of it, then you know your stock's worth a million, at least if it's a legitimate mark, not just insiders. I try to be conservative on the marks such that I don't get too crazy with my spending and overestimate my net worth. And I always try
13:49 Scott Galloway? and value it probably maybe 10 or 20% realistically than what I could get in the open market. And some of these things are difficult to mark because they're so illiquid. But I try and go through everything and have an honest, sober assessment of what I think it is worth at that moment.
14:05 Ed Elson? We'll be right back.
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17:40 Ed Elson? We're back with Prof G Markets. Just a question on liquidity. I think what's also surprising about your portfolio is just how insanely illiquid the portfolio is. I mean, you only have 15, 20% in public stocks. How do you manage liquidity? Like, how did you manage liquidity when you needed the cash to, say, buy a house in Aspen this year? What do you do about liquidity?
18:04 Scott Galloway? Well, one, you can borrow against, if you have, say, 30 million in stock, you can borrow 20 million against it. So I do what a lot of wealthy people do, and that is I borrow money against my stocks. I don't do it to double down on the stock market, but I'll do it to invest in another asset that's diversified, and you can borrow at very low rates. And also, I'll sell stuff, and I have liquidity events on a regular basis. You know, I was an investor in a subscription-based search engine called Neva. I wanted to invest in companies where I thought provided a solution to some of the systemic problems of big tech. I hate the ad model of Google. I think it's led to really terrible places. And I met this guy, Sridhar Ramaswamy, who I just thought was so incredibly bright.
18:47 Scott Galloway? He was lead engineer at Google, and he was starting a subscription-based search engine. I put 3 million bucks in. The company never got traction, but Snowflake came in and I think basically did an aqua hire because they're like, this team is so incredible. We'll pay all your investors back. And now, of course, Sridhar is the CEO of Snowflake. And I'm actually thinking about investing in Snowflake because I just think so much of this guy. So I got my 3 million bucks back, which is like the best venture investment in the world because I got a lottery ticket, and when it didn't hit, I got my dollar back. So I actually see that as a kind of a win. I have so many investments that typically two or three a year will have a liquidity investment. And then I deploy that capital. Also, no matter what wealth I have, I always want
19:29 Scott Galloway? to make money. And between books, podcasting, speaking, you know, the reality is I make a lot of money. So I try to still live within my means. I try to still live, I try to make as much as I spend. And occasionally, if I don't have cash, I have an investment opportunity now. And I've had, I've ramped up, I've got, I've got a line against one of my homes. So I try to always make sure, I try to always line up, kind of drive powder in case an opportunity comes along. But I do try to keep track of how much leverage I have, because leverage is kind of the smart person's way to get poor fast. And that is if the market has a real hiccup and you get caught with a lot of leverage. If I have X worth of net worth,
20:11 Scott Galloway? I try not to lever up more than point one or point two X, recognizing that you might have enough money to pay it back, but it's not liquid. And the problem is when you need liquidity, it's when no one wants to provide it. There's been some times I've been a little bit stretched, but for the most part, like on all my homes, I have almost no mortgages. So if I really need money, I can borrow against them or, you know, borrow against the stocks.
20:33 Ed Elson? Speaking of liquidity events, let's focus on your wins. What were your liquidity events this year? What went right? Where did you cash in?
20:42 Scott Galloway? Earlier in the year, we purchased a bunch of claims against a bankrupt FTX. I bought a bunch of those at 23 cents on the dollar and just sold some at 95 cents. So that was like, and it's better to be lucky than good. I had no idea that Bitcoin was going to skyrocket. So, but in a matter of less than a year, that investment more than quadrupled. My public stocks have done really well this year. Airbnb is up, I don't know, 40 or 60% this year. I'm a holder in Amazon and Apple. They've had really good years. But my big win was about seven years ago, I invested.
21:23 Scott Galloway? Two and a half million dollars in a bankrupt consumer company. And the distressed credit investors, a friend of mine, he called and he's like, I'm investing in this smoking cessation company called Enjoy. And this was seven, eight years ago. And the idea was smoking is going away. And two of my friends used Enjoy's to help to quit smoking. And I'm like, oh, I've heard of this company. I know it. So he said, do this, go on the board. So I invested two and a half million bucks and this company, I went into it because I thought it was going to make a lot of money, but I thought it was going to get a two for because my mom died of a smoking related illness and I thought smoking cessation is great. And the UK, the health ministry or the equivalent of the FDA here sends you a vape if you're
22:05 Scott Galloway? smoking because they're like, this is just, it's not good for you, but it's not nearly as bad as combustibles. Anyways, that company, we kind of went through the valley of death, if you will, and a really strong CEO, really smart investor, a guy named Jason Mudrick, who I've been friends with for about 20 years. Anyways, long story short, Ultra bought it and that investment paid about 75 million off a two and a half million dollar investment. I gave a third of it away, but as you can imagine, that's still a huge liquidity event. So that was my biggest, that was by far my biggest hit, my biggest hit ever, other than maybe when I sold L2. And just if you have any questions about how the rich have weaponized the tax code, I was also able to take advantage of 1202.
22:46 Scott Galloway? And because I'd held the stock for longer than five years and the company had net asset value of less than a certain amount, the first 25 million were tax free. So if, if, if you don't believe that the tax code has been weaponized by rich people, it absolutely has, but I try to make myself feel better. I give a much of it away.
23:08 Ed Elson? What did you do with that, with all that cash? Did you immediately invest it?
23:12 Scott Galloway? Yeah, I deployed it in different, it's amazing how fast you can spend money. I deployed it across a bunch of different investments in private companies. I paid off all the debt on all my homes because mortgages, mortgages exploded and I was dumb. I bought, I have five year mortgages and now looking back, you know, we all wish we'd got 10 or 30 year mortgages, but I thought, oh, interest rates are never going up. So I had kind of five year mortgages. They all sort of seemed to come due last year and I just paid them off because the cost to refinance them. What's going to, the cost to take out a new mortgage is going to be about 7%. And I thought, I'll just pay them off because a 7% guaranteed return feels pretty good.
23:54 Scott Galloway? So I paid off almost all the mortgages on my homes and properties, made some new private investments. But it went, it went pretty fast.
24:02 Ed Elson? When we spoke earlier, you also mentioned this company Flight Lease Capital that you invested in, which is like an aircraft leasing company.
24:09 Scott Galloway? Yeah, that's a, it's a great company. A friend of mine, Ashad Azimi, a super bright private equity guy, found this great group of guys in Florida, and they're total gearheads. And they go out and they have just a look and a lock on this strange market where they buy used aircraft engines from, usually from companies or airlines all over the world going out of business. They buy the engine, essentially a plane. If a plane is worth 10 million, 9 million is in the engines. They buy the engine, they refurbish it, they're fantastic engineers, and then they lease it to usually a cargo company. And I'm an investor in there and it's just been a great, every year it's been, it's done really well.
24:49 Scott Galloway? So that, that one's returned like IRRs of like, I think, almost close to 30%. But the reason I did that one, I didn't get negative fees, I actually paid fees on that one, is I love the idea of diversifying. I thought air cargo is probably, you know, I want to, I'm much more inclined to make investments in things that aren't tech right now because I'm so levered to tech. Because that's where I get opportunity, that the thing I loved about this company was it wasn't really tech. It was like, a lot of these engines are leased out to companies, you know, transporting, you know, materials between Mexico and, you know, Texas or wherever their cargo planes are flying. But I love that investment.
25:27 Ed Elson? Do you have any income generating investments? I mean-
25:30 Scott Galloway? Other than Ed Ellison?
25:33 Ed Elson? Well, that counts, yeah.
25:34 Scott Galloway? We make good money here, you know? We make, you know, millions of dollars doing books, podcasts, speaking gigs, so-
25:44 Scott Galloway? You know, I try not to spend more than I'm actually making in terms of current income and then let the asset base grow. So I don't have kind of cash. My real estate, my rental units generate income, but I usually reinvest that back in other stuff. But I don't, I'm not at the age yet where I need cash flow for my investments. I still manage to live within my means for my current income, for my, my day jobs, if you will.
26:09 Ed Elson? And you have no interest in debt, it sounds like. I know you were considering private credit at one point, but we haven't discussed bonds.
26:17 Scott Galloway? Yeah, I actually bought my first bond. I bought a $10 million bond in Gannett because I know the guys at Apollo and I like them and they, they were investors and they carved out a piece for me. But I sold that, I think about two years ago, and I haven't been back in the credit markets. I would like whatever liquidity events I get in the remainder of the year or 2025, I would like to put into the credit markets because interest rates have come up and I think it would be good diversification for me to have some exposure to the credit markets, but probably some sort of tax deferred or tax advantage vehicle that's a low fee in the credit markets. But you're right to point that out, that I have a dearth. It's a hole in my portfolio. I should have, you know,
27:02 Scott Galloway? they say 60, 40, I'm, I'm not, I'm whatever, 40, 40, 20, and none of it is, is in the credit markets. I don't think so.
27:09 Ed Elson? The other thing that I find interesting, which I didn't totally appreciate, is that you basically manage everything yourself and actively. I know you have a guy at Goldman, but you're making all of the investment decisions, it sounds like. It doesn't seem like Goldman's actually doing that much. My question to you is, what does Goldman actually do for you?
27:30 Scott Galloway? Well, they do execution. When I do, when I write covered calls on stuff, they help me figure out asset allocation. They're real thought partners. They're really good fiduciaries. They have all these funds. I've invested in several opportunity zones, which is also real estate through them. But I'll call them and say, this VC approached me and said I should invest in this, and they're going to give me additional options or RSCOs. And meanwhile, they have all their own products which they get fees from. And they'll say, oh, no, you should do that. They really are good fiduciaries. They put themselves in my shoes. They also handle my taxes, which is getting increasingly complicated. They will sit down with me and say, what investments are you planning to make over the three, six, 12 months? What is your burn? And they'll say, this is where we need liquidity.
28:15 Scott Galloway? And they'll manage all that for me. I'm going to try and outsource more of it. Like this credit vehicle, I'm just going to put money in there and let it go away. Or just not think about it because I'm spending too much time on it. I'm a bit of a, I've talked myself into thinking it's worth it. And I, it's like, do as I say, not as I do, or whatever it is. But I do have these opportunities. My investments are usually pretty hands on. So if I get an opportunity to invest in something, especially if they're going to give me additional options, I'm expected to work on that company. I'm expected to get involved. So I like to stay very involved in this stuff and really understand where everything is. And having said that, my advice to people is to take all of the time you're spending on your investments
28:57 Scott Galloway? and give it to other people, low fees, and then focus on your work to make more money. But I've talked myself into believing that a lot of my investments, it makes sense for me to be active in. I probably should move to more passive as I get older. I probably spend easy a third of my week on money. Managing investments, you know, figuring out where I can invest, what opportunities I have to invest, advising the companies of my investments, stuff like that. I spend a lot of time, I'm on several boards of companies I invest in. So I do spend a lot of time on it. And I think as I get older, I'm going to start moving more into passive.
29:37 Ed Elson? I guess I'm surprised that you're still doing it yourself. Is there a reason why you haven't made that switch yet?
29:44 Scott Galloway? Because of my business, which is, I'm in the business of advising CEOs and advising investors. I get, I get crazy access. And if I really like a company, I'm not above this. If I really like a company, I'll call the CEO and say, hi, I'm Scott Galloway. I love your company. This is the, I want to invest. And these are, in my view, let's set up lunch. And then I'll sit down at lunch and say, I think these are the three things I would be thinking about if I were you. And most of the time I don't get a call back. When I get a call back, most of the time I don't get a lunch, but occasionally I get a call back and a lunch. And occasionally I get a call back and lunch and I think, okay, this guy would be a good person to have on the cap table.
30:28 Scott Galloway? Most, even wealthy people, don't have that kind of access. And that's the reason that I'm so heavy in privates is I, you know, I'm not above calling someone that I think is doing a great job or a company I really like in saying, you know, I want in on this. I think it's, I think there's a real opportunity here. This is what I would do to improve the company. This is why I like you guys. And, you know, this is why I want to invest. I mean, it comes right down to this. Returns are a function of how kind of hard you're willing to work in your access. And I, right now, at some point, my contacts will start to dry up. I won't have the profile I have now and I won't just have this type of access.
31:14 Speaker 05 We'll be right back.
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33:39 Ed Elson? We're back with Prof G Markets. Has anything happened this year that was particularly unusual? Is there anything that's surprised you? Anything that caught you off guard perhaps? A liquidity event or an unexpected loss? What's been strange this year?
33:54 Scott Galloway? Everything's been kind of strange. Like, everything is such a random walk. At one point, I marked enjoy down to almost zero. You know, every year I mark my investments. At one point, I made a $2.5 million investment. I think at one point, I marked it down to half a million dollars.
34:09 Ed Elson? Because you got the financials and they just went up to scratch?
34:13 Scott Galloway? No, it was just, it was just such an ugly space. And we were trying to get FDA approval. The key to this company was basically regulatory play. We got it. The FDA, it cost us, I think, $100 to $150 million to do all of the studies and tests to show that this is a company and a product that's not only, it's not only safe or reduces the harm on a net basis of getting people off of combustibles and nicotine, but also the youth studies to show that we were unlike other players in the space, that youth weren't buying our product. To get FDA approval for a company like that cost, I think it cost $120 or $150 million.
34:53 Scott Galloway? So that was a massive investment. And then when all hell broke loose a few years ago, it felt like none of these things were ever going to get FDA approval. They were just all going to be removed from all shelves. And it was very hard to raise money, but you know, we got through that. The FDA decided that this is that smoking cessation or electronic nicotine delivery systems are a net good and provided FDA approval to like a handful of companies and we were one of them. And then, once we had that FDA approval, we were able to sell the company for, I think, 2.8 billion? Or anyway, some crazy number. It paid off huge. And then other companies, you know, I'm an investor in public.com,
35:38 Scott Galloway? great guys, online trading. They don't do payment forward or flow. And I'm like, I like these guys. They're not preying on young men's gambling addiction. They don't, they're trying to be, they're trying to promote responsible investing. So I invested there. Overnight, I marked that from 1 million to 10 million, and then Robinhood has crashed. And so now that, that company I would mark down substantially. So, and then investing in a Twitter competitor from the guy who ran, who founded Waze. This guy's probably the best product guy in the world, literally in the world. He, he took on Google Maps and beat them. He's amazing. He's just such a talented guy. You just meet him and within three seconds, you're like, I'd back this guy to do anything. All of those companies
36:22 Scott Galloway? are down. And what it all comes down to is the following. Nobody knows. Nobody knows. I wrote Enjoy almost down to a zero. I thought it was under the next best thing with text messaging and healthcare, a subscription-based search engine run by the head of Google Engineering, one of the brightest people I've ever, and here's the thing, nobody knows. I mean, you always want to look for concepts that you think work. And most importantly, you want to find good people. Because good people have a tendency to, at worst, get you your money back. But no one has any idea. And that's why I never invest now, other than a couple of homes. I've never, I don't invest more than 3% of my net worth in anything. If you looked at my portfolio now and said, something's going to go to zero in the next three months
37:07 Scott Galloway? and something's going to go up 20X, I'd have almost no idea. I would literally be throwing darts in my portfolio. I don't know. So I spread it around in a bunch of different stuff. I try to find good people and good opportunities and more importantly, things where I get better economics. If I can invest in better economics than a, than a tier one VC firm, over time, if I do enough of those, I should, I should be fine. But my, my random walk through the world of investments is that nobody knows. So you want to diversify, you want to lean into your strengths and you don't want, especially when you get money. The key to being rich is to stay rich. And so I'm not looking to get rich, I'm looking to not get poor. And you, the way you manage that is through diversification. Now, I can take a lot of risk, but I take risks in different things that are somewhat sequestered from each other.
37:52 Scott Galloway? But yeah, every year it's like, I can't believe this company isn't doing well. I'm just shocked. And then who would have thunk that claims against a bankrupt FTX go up, go from 23 cents to 95 cents in about six months? Who would have thought that? So the key is, the key is to make a bunch of bets. You don't know what number is going to come up, so you want a lot of chips on the table. And the way you do that, if you don't have access like I have access, is through index funds.
38:21 Ed Elson? Let's switch to the year ahead. Are there any investments that you're looking at right now? And how is your overall strategy for 2024 shaping up?
38:31 Scott Galloway? So I'm, I want some exposure, as you referenced before, to the credit markets. Also, I think the D I P O market is going to boom in the next six months. So I'm trying to find a way into great companies that are about to go public. And that is try and find companies that I think are great companies. See where I could add value and quite frankly, call the CEO and say, I want to invest in your company. And I think that the IPO market in the back half of this year is going to be really, really strong. And I think we've seen that and we've talked about it on this show with Astera on Reddit. And in one of those companies, the CEO reached out to me, said, can I do an hour long call with you? And I said, sure. And he asked me for advice. I gave him advice, said, anything I can do for you? And I'm like, yeah, I want allocation
39:14 Scott Galloway? in the IPO. And by the way, I asked for X and he only gave me 0.3X. But it was still more than most people got. So I'm going to try and do that a bunch. Whether it happens or not, you know, I don't know, but I'm aggressive. But your, your success in life, financially and personally, is your willingness to get out a spoon and eat shit. And what I mean by that is endure rejection. I don't, I don't just wait for people to call me and say, you're awesome. You're going on board. I'll call people and say, I love your company. I'd like to invest. You know, that's how I kind of try to have outsized returns, but be clear. I get it wrong all the time. What I try to do is be so diverse, or diverse enough
39:58 Scott Galloway? that it doesn't keep me awake at night. I assume I'm going to lose everything and ask myself, if I lost everything, would I not be able to sleep? If that's true, I don't make that size of investment, I reduce the size. And also, I try to go in for the long term. And just to manage my own mental health, I've been in privates a lot because I don't like to have a scorecard every day. And like I said, I'm just trying to be really diversified. And yeah, and now I'm, I'm trying to take a certain percentage of every investment and give it away because it's like forced philanthropy, which is fun and also has tax advantages.
40:35 Ed Elson? My takeaway here is you have throughout your entire life actively managed your portfolio. I don't know what your net worth is, but you said on this podcast that it's nine figures.
40:48 Ed Elson? I think it's safe to say that you are a very good investor. I just want to end this by reflecting on what you think you're actually good at and what you think your strengths are and whether you believe personally that you are a good investor too.
41:06 Scott Galloway? I'm not a good investor, Ed. I'm a really good communicator. I have the ability to take ideas and communicate them through storytelling, which has given me access to the highest levels of corporate America. The CEOs of the biggest companies in the world and the most esteemed investors are willing to sit down and let me tell them a story about what I think they or their company should be doing. And as a result, they've given me access that any fucking idiot could make money on if they diversified and just weren't stupid. And I was smart enough to diversify such that no one mistake, of which I made a lot of, it might have hurt, but I had Kevlar, so I didn't get, the injury wasn't fatal. And also, being a great communicator isn't enough.
41:51 Scott Galloway? What my superpower has been, my core competence has been communicating, but my superpower has been attracting and retaining really talented people because that scales what you're good at. And every company I talk about, every piece of access I've had, it's because of a firm or a consulting firm or something where I was working with great people and we had credibility. So I got, you know, we established a good relationship with these companies or these investment firms. You know, at Profit, we were doing brand strategy engagements for Kleiner Perkins. So I got to co-invest with Kleiner Perkins. By the way, I lost everything investing with Kleiner Perkins. But the point is, I got access.
42:30 Scott Galloway? And so, am I a great investor? I don't think so. I think if you said manage a hedge fund, I'm not sure I'd be any good. And also, Ed, let's be honest, I've just been really fucking lucky. You know, to come into my prime income earning years when the market was about to have an unprecedented bull run, I mean, to think about it, I hit, I kind of hit 40 just as the market was starting to scream. So I'm finally making really good money. I have enough capital to deploy into the market and the market just goes batshit crazy up. That's got nothing to do with me. So a smartest decision I've ever made was being
43:13 Scott Galloway? born in California, a white heterosexual male in the 60s, I had unfair advantage and coming into my prime income earning years during the greatest bull market in the greatest country in the world. So yeah, my talented, hands down, I, you know, I might be the best merchant in Tehran if I'd been working there, making 30,000 bucks a year, but I might be the best hotel operator in Cape Town, making 80,000 bucks a year. My exceptional wealth is a function of things that aren't my fault.
43:50 Ed Elson? This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our executive producers are Catherine Dillon and Jason Stavers. Jennifer Sanchez is our associate producer. 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.
45:02 Speaker 06 To a stay.
45:05 Speaker 06 Surrounded by nature.
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