Motley Fool Hidden Gems Investing - Scott Galloway on CEOs, Big Tech, and Energy

Episode Date: September 30, 2022

(0:21) Ron Gross, Maria Gallagher, and Jason Moser discuss: - Nike’s tough quarter. - Macro headwinds for Carmax. - Questions about Peloton’s retail strategy. - Lululemon’s new subscription service. - Signs that Cintas is focused on the long-term. - Amazon’s data strategy and product announcements.   (19:11) Scott Galloway, author of “Adrift: America in 100 Charts,” discusses his new book, why nuclear energy needs a rebrand, and the CEO that’s created the most shareholder value in history. (37:21) Jason Moser and Maria Gallagher share two stocks on their radar: Cadence Design Systems and Target. Hosts: Ron Gross, Chris Hill Guests: Scott Galloway, Maria Gallagher, Jason Moser Producer: Ricky Mulvey Engineers: Dan Boyd, Rick Engdahl Companies mentioned: NKE, KMX, PTON, DKS, LULU, BBBY, AMZN, MTN, CTAS, CCL, CDNS, TGT, AAPL, TSLA Learn more about your ad choices. Visit megaphone.fm/adchoices

Hey Ontario! Come on down to BetMGM Casino and check out our newest exclusive, The Price is Right Fortune Pick. Don't miss out! Play exciting casino games based on the iconic game show, only at BetMGM. Access to The Price is Right Fortune Pick is only available at BetMGM Casino. BetMGM and GameSense remind you to play responsibly. 19 plus to wager. Ontario only. Please play responsibly. If you have questions or concerns about your gambling or someone close to you, please contact ConnexOntario at 1-866-531-2600 to speak to an advisor free of charge. BetMGM operates pursuant to an operating agreement with iGamingOntario. We've got earnings from Nike, thoughts on Amazon's new hardware,

and a look at the future of America through the lens of 100 charts from its past. Motley Fool Money starts now. Everybody needs money. That's why they call it money. From Fool Global Headquarters, this is Motley Fool Money. It's the Motley Fool Money radio show. I'm Ron Gross, sitting in for Chris Hill. Joining me today are senior analysts Maria Gallagher and Jason Moser.

Fools, how you doing? Hey. Good, thank you. Let me just say right at the top that our hearts go out to those impacted by Hurricane Ian, and certainly our thoughts are with you all. Fools, it was another very volatile week for the markets as the quarter drew to a close with some mixed economic data. The coming earnings season is going to be, let's just say, interesting. Today, we're going to talk new gadgets, mountains, and used cars, but we begin by just doing it. On Friday, Nike reported

sharply lower profits highlighted by soaring inventory, markdowns, and higher operating costs. Maria, the stock sold off rather sharply on the news. Are the inventory and cost issues temporary or do we have a bigger problem here? I think it's not just Nike. I think this is a trend we're going to keep seeing, which is just really uncertainty on consumer spending and really an increase in inventory from a lot of these retailers as there's also uncertainty with supply chain issues. So the overall quarter wasn't terrible for Nike. Their revenue was up 4% to 12.7 billion. Their direct sales were up 8%. Their brand digital sales were up 16% with 46% growth in EMEA. There was a big growth driver in footwear in America, which was up 17%. There was a decline

in China, that market as a whole was down about 16%, which isn't too surprising. Gross margin was down about 220 basis points. And they said that as a part of elevated freight and logistics costs, lower margins in some of their direct businesses due to higher markdowns, like you were saying, Ron. They're working on liquidating their excess inventory with their inventories up 44% and their elevated transit inventories from some supply chain volatility. So I don't think that's unique to Nike. I think that they have a brand name and consistent revenue growth even during hard times in recessionary periods. So I think they'll be okay. But I do think that is a trend we're going to keep seeing with a lot of these retailers is really high inventory and a need

for some markdowns in the upcoming months, especially going into the holiday season. Yeah, they made some negative comments about Christmas. So I was going to ask you, do you think that this is the first of many that we're going to see follow along with that sentiment. Yeah. And as I'll talk about a little bit later, too, with some other retailers that are doing that, I think they're trying to entice these consumers as much as they possibly can as they spent two years really growing faster and saying this is going to continue into perpetuity. And they're now realizing, I think, a couple of months ago, a lot of these retailers were saying, oh, maybe it's not going to continue with that growth the way we saw it in 2020 and 2021.

On Friday, CarMax lost a whopping quarter of its value as inflation and economics concerned weighed on Americans' demand for buying used cars and profits declined sharply. Jason, is this just a storm that CarMax is going to have to weather or is there something more troubling going on here? Yeah, you're right. The stock got hammered on this report and I think it's a storm they're going to have to weather. This is a combination of missing expectations and a view that things are likely going to get worse before they get better from a macroeconomic perspective. There is vehicle affordability that is really a challenge there, which stems clearly from persistent and broad inflation, as they noted,

climbing interest rates, low consumer confidence. This is just a lot of things coming at this business at once. It's not a business that is in peril. The numbers weren't that bad. Revenue is $8.1 billion up, 2% from the same quarter a year ago. Earnings per share really got hit hard though, $0.79 versus $1.72 a year ago. When you look at the metrics that matter for the company, total retail used units sold fell 6.4%, but gross profit per retail used unit was actually up a little bit there, close to $100 per unit, so that was nice. Average selling prices for used vehicles up 9.6% for the quarter, and for the first six months up 18.8%. I'll tell you one thing that stood out to me even more so

though, is CarMax has this wholesale side of the business where they auction vehicles. Those prices were up 17% for the quarter and 32.8% for the first six months. So, yeah, costs are really coming into play for this business. It's challenging for sure. It's not really been the best investment when you look at it over the last five years, but they seem to do something very well. So, maybe this is a point where shareholders or prospective shareholders could get interested in the stock. On Thursday, Peloton announced it will begin selling its bikes, treadmills, and other products in Dick's Sporting Goods stores. Maria, Peloton's got to do something to turn this ship around. Is moving into retail the right move? So it's going to be good in some

instances. It's going to raise awareness, but I still think the price point for Pelotons are still so high. The bikes are almost $1,500. The treadmills are almost $2,000. And at least for my family and we're going to Dick's or Models or a sporting goods store, you're not really going to purchase those big ticket items. But I do think at least it's good for brand awareness. It's going to be available in over 100 stores during this holiday season. Dick's has 700 stores, so there's potential for expansion down the line if it goes well. I mean, like you're saying, they need to do something. This is after six quarters in a row of losses for Peloton. So I think that similar to Nike, we're just going to continue to see discounting to get consumer interest, which does

her profitability and brands like Nike in contrast, I think can withstand that. Or I don't know that Peloton will be able to in the same way. So it'll be interesting to see. I want to stick with fitness for a second, Maria. On Thursday, Lululemon announced it was expanding the reach of Mira, which is its at-home fitness device. And it would make it a central component of its new paid membership program called Lululemon Studio. Members will pay $39 a month to have access to thousands of streaming and in-person workout options and receive other perks and discounts. I've been critical in the past of the 500 million Lulu paid for Mira. The company still hasn't told us if Mira is even profitable. Do you like this move? So I think that it's smart, right? I think

expanding their fitness options is a good move, but I think that they should consider the route kind of that Peloton went, which was you had the app that was associated with the bike or the treadmill, but you could also do it independent of that as well to just get more and more people to get into the ecosystem right now what lululemon is doing with the studio is it you have to own a mirror to join it you can now buy the mirror for just 795 which is a 47 discount okay so i think that it's kind of safe to say that the acquisition isn't growing maybe the way they hoped it would uh their mirror plus lululemon shoes kind of the most detail we have is that it's going to be about five percent of their business in the next five years they had slashed the expectations for that

business in 2021. So I do think that it's kind of a smart move. I think that part of this membership launch is it's partnering with popular fitness studios like Jog Pound, Pure Bar, and Rumble. So they're going to have deals on both in-person classes and this through the studio. So I think it's trying to bridge that gap between saying you're just going to work out at home, you just want to go back to the studio. Here you have multiple options. So if you have customers who have a lot of disposable income, this could be attractive to them. On Thursday, Bed Bath & Beyond reported rather dismal results as the company tries to turn itself around. Jason, Bed Bath continues to struggle to turn the business as it tries to clear out excess inventory,

shift its merchandise strategy again, and shore up its relationship with vendors. Are they doomed or do they have a shot at pulling this off? Doomed is a strong word. I don't want to go there yet. But this is a company in turnaround mode, obviously. It's always a very difficult thing, but it can be done. But for now, it does continue to hemorrhage money as management works to right the ship. Obviously, a very tough time with CFO Gustavo Arnal's recent passing. This is now fully an interim leadership team, and I think that's one of the challenges that they have to really address. The numbers are dismal, not anything to smile at. Sales of $1.4 billion down 28%, comps down 26%, digital sales down 22%,

percent, and that still remains about 40 percent of the overall business. Gross margin clocking in at 27.7 percent. This is a company that at least used to generate gross margins above 40 percent. You can see where they've come in such a short period of time. But there are some pockets of improvement. They're seeing some positive sales trends in seasonal categories that are bringing more national brands back into the business. They see opportunity on the buy-by-baby side of the business, trying to get back to reinvigorating the registry and ultimately creating a relationship with the consumer that starts much earlier. You can't start much earlier than when you're born. Maybe there's some potential there. I think you certainly know

when you have kids, that register is a pretty handy thing to have. They're making some progress on the loyalty program as well. 6.4 million members now, that's up 30%. I wouldn't say doomed, but they've certainly got a lot of work to do and the clock is ticking. Coming up, we'll talk Amazon hardware, and we'll do a little skiing and cruising. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. Ron Gross sitting in for Chris Hill. As always, people on the program may have interests in the stocks they talk about, and The Motley Fool may have formal recommendations for or against,

so don't buy or sell stocks based solely on what you hear. Earlier this week, Amazon held its fall hardware event where it unveiled some interesting new gadgets. Jason, a lot to unpack, but what stood out to you? Yeah, a lot of interesting new gadgets is right. I mean, some of the stuff you just kind of forget that it even is out there at times, right? But some pretty neat hardware, a couple of big new TVs with Alexa built in, of course, a new FireCube, updated remote control, ring camera. People probably forget that they own Ring, right? They made an update to the Astro robot that includes pet detection. I don't know how many people are actually going to buy that

Astro robot though, Ron. The one thing that kind of stood out to me was the Halo Rise bedside sleep tracker. And not for really a good reason. I don't really care about how I sleep. I just kind of wake up in the morning and it was either a good night or a bad night. But this thing sits by your bedside and it just stares at you and monitors your sleep. I'm not sure I can get on board with that, Ron. My sleep number bed claims to track my sleep. I'm not sure. There's a point where I need to be disconnected. Speaking of being connected, I think it speaks towards Amazon's bigger strategy here. They shipped 11.5% of all U.S. smart home devices in 2021, up 15.5% from the year before. The runner-up, Google, 6.5%. Samsung in third at

5.8%. So, Amazon has a very clear lead in this space. And the other thing, they own that Eero Mesh internet system. I have one in my house here. They bought that, I think, back in 2019. They're getting a lot of data from those internet connections there. And it speaks to this bigger philosophy that these devices help them sell more stuff. For them, it's not about making money on the devices. It's about using the devices and making more money from people buying things. And so, it does seem like it's playing very well into that strategy. On Thursday, Vale Resorts reported better than expected results as the company continues to benefit from the weakening of the COVID pandemic. And it was perhaps the only stock on my monitor

that was up for the day. Maria, results for the quarter and the guidance look pretty good. What do you think? Yeah, Vale is a company that has a pretty clear vision. It executes on it really well. Last quarter, it had a net income of $348 million. They announced a quarterly cash dividend of $1.91. For last year, their total lift revenue was up 21.7%. Their ski school revenue was up about 55%. Lodging up 51%. Like you said, they're really benefiting from more people getting back to vacation. They are planning to make its largest ever investment in both properties and resorts for this upcoming season. They're investing $175 million in employees. So a higher minimum wage, career and leadership differentials and potential. Their 18 newer replacement lifts. So I think that

that's going to be important to see how this season shakes out and if those are good investments for them. I will also say that something interesting, it just finalized its first strategic investment in a ski resort in Europe with Andermatt Cedron, which is a, I'm sure I butchered that name, but it's in central Switzerland. They have about 55% ownership. So I think that has also a good growth potential for them. So I was impressed. On Thursday, Cintas reported better than expected results and management raised its full year guidance. Jason, strong report for the uniform and corporate apparel supplier. Is this mostly about the strong labor market? If so, what happens if that starts to show some cracks?

I think it plays a big role in our workforce. It holds a strong position in a relatively resilient market. That doesn't hurt. They offer a strong value proposition to their customers in the face of scarce labor and rising costs. There probably is something to that present-day environment for them. But this has been a pretty decent place to park your money for a while. You look at the five-year chart on this stock, shares are up 188%. You stretch that out to 10 years, 985% total return on this thing. I bet you it flies under a lot of radars too. But revenue, $2.17 billion at organic growth of 13.9%. Maintained gross margins, which was nice to see. The uniform rental and facility services side of the business, that's the biggest part of the

business. That revenue was $1.7 billion versus $1.51 billion a year ago, and organic revenue growth of 12.3% there. Noteworthy contributions from first aid, safety, firesides of the business as well. But all back to that raising of the annual revenue expectations, that certainly plays into it. And it was just a neat quote I saw on the call. Todd Schneider, the CEO of the business, only been CEO for a short time, but he's been with the company since 1989. He said, we don't think about our customers in quarters or fiscal years, we think about them over decades. I think that really is a testament to the long-term thinking that this business, that this leadership team takes and clearly is paying off.

Sintas, one of those under the radar, not so sexy stories, but they get it done and investors may want to take a look. I haven't looked at how cheap or not cheap the stock may be, but it's a company that puts up nice results year in and year out. The numbers don't lie. On Friday, Carnival reported quarterly results that seemed to indicate a continuing rebound in the business, with a measure of adjusted cash flow coming in at a positive $300 million. Maria, I know on the face of it, some of these numbers still look pretty good, pretty bad, I should say, and the stock did fall sharply, but there are some bright spots in the report. Is Carnival on the right track here? So I was pretty impressed with some

of its capacity numbers, which I didn't think would be so close to 2019 levels. I feel like cruise ships are a pretty specific environment that I thought would take longer to return to normal, but their occupancy was up 15% to a 90% occupancy rate on August sailings. They're hoping to reach full capacity this upcoming quarter. Their booking volumes for future sailings continue to see some accelerated interest, especially since the company has relaxed a lot of COVID protocols in August. Some of them are credit, so they're still actually below that historical average in price, but they're definitely trending in the right direction. Their revenue was up 80%, and they're continuing to work on closing the gap to 2019. They're saying that they're going to

expect occupancy to reach historic levels during 2023, so still a little ways to go, but they're expecting higher advertising expense to drive revenue. So they're trying to really get people back, get people interested. And it's one of the only companies I've seen recently that's saying we're going to really go in more on advertising. So I thought that was kind of interesting. So I'll be fascinated to see what kind of advertising Carnival Cruises has in the next couple of months. You know, cruises have historically had to deal with the norovirus, that pesky stomach ailment that sometimes goes through the ships. And then, of course, had to deal with COVID. So my question to each of you is, have you been cruising before and would

you cruise now? Jason, you're up. I was just going to ask everybody around the table, who's been on a cruise? Listen, I grew up on the water down in Charleston, South Carolina. I grew up on boats. I love boats. Honestly, I have zero desire to go on a cruise like that, though. And I'm not certain if I can say precisely why, other than just I don't want to be around that many people on a ship, I feel like you're going to get sick. I'm not even like a germaphobe. I just feel like there's no way you're not going to get sick on one of those ships. It's just not anything that has ever really attracted me. I know Matt Greer would take the other side of that argument. He loves those Disney cruises. He's had some of the greatest stories to tell. I don't know,

maybe I need to take a cruise one day. Maria, have you been on one? No, I can't swim. I know it's a boat, but the water scares me. And I haven't been on one since I was 22 years old, so quite some time ago. All right, fools, we'll see you a little bit later in the show. Up next, a conversation with NYU Stern School of Business professor, my alma mater, Scott Galloway, on his new book, Adrift, America in 100 Charts. You're listening to Motley Fool Money. drinking all night got into a fight well it feels so broke up i wanna go oh first mate he got drunk

broken the captain's bunk the constable had to come and take him away welcome back to motley fool money i'm ron gross scott galloway is a professor at nyu stern school of business and the author of several bestsellers including the algebra of happiness and the four the hidden DNA of Amazon, Apple, Facebook, and Google. Earlier this week, Chris Hill caught up with Professor Galloway to talk about his new book, Adrift, America in 100 Charts. I think the last time you and I talked, it was your book about happiness. This is a very different book. How'd you get the idea for this one? Well, I'm fascinated by charts and trying to communicate information with images and visuals. We've had an alphabet for 1,500 years,

but we've been interpreting actions and taking instruction through images for tens of thousands, whether it's paintings on cave walls or trying to figure out when to plant the crops based on the height of the sun in the sky. We can process information communicated through visuals six to 60 times faster. And I've always over-invested in everything I've done in finding someone exceptionally creative to help display information visually. I always say, with everything we put out, a podcast. Well, that's actually not true, not a podcast, but a book, a video. I would say, can we say this with an image as opposed to words? And we've produced several thousand images across our body of work over the last decade. And I thought if you were to try and pick the hundred

most illuminating or shocking or insightful and then group them or cluster them into themes that told a story, how would you do it? And so there's narrative. It's basically the book is laid out a chart, then a page of narrative, then another chart, and tries to tell a story around, A, some of our biggest problems, and then I save the last chapter for what I think are some potential solutions. The process you just described reminds me a little bit of a documentary filmmaker who has, in some cases, 70, 80 hours of footage and tries to distill it down to maybe 90 minutes or two hours. How challenging was the process of getting it down to 100 charts? Because certainly if I was your publisher or your publicist, I would very much

be focused on a nice round number like 100. Yeah, it's definitely a phenomenon. If I'd had more time, I would have written you a shorter note. The hard part wasn't what to include, it was what not to include. And we literally have several thousand charts. And I sort of backward integrated. And I said, what are, I think are the biggest issues facing America and that people aren't, or that are sort of underreported or if you will, many of them and, and then what charts best illuminate the issue. But the hardest part is finding that narrative and that arc, that, that story arc that tells a story with them and then bringing it, trying to bring it all together. That's the hard part. The hard part is the clustering and the

sorting. You can find the ingredients, but somebody really intelligent figured out, oh, chocolate and peanut butter actually go really well together. And so, yeah, that was the hardest part. But it's something, you know, this was fun. This stuff is fun. Writing a book is the hardest thing I do professionally. There's supposedly a hormone that comes over women right after childbirth that gives them amnesia. Otherwise, they would never have more kids because it's so painful and unpleasant. I think there's a similar process with writing a book. This is my fourth book. About halfway through every book, you think, why the heck did I agree to do this again? Right now is the euphoria stage. You get to the end of the book like never again. I get to

speak to smart people like you. I get to have fun. People are nice to me on Twitter and LinkedIn. All of a sudden, I can feel that amnesia washing over me. Already, we're like, well, what's the next one. So, yeah, we'll see. When I think about your first book, which is about Amazon, Apple, Facebook, and Google, was that book, as you were writing this one, was that book, I don't want to say a North Star, but was part of the process of putting this book together, looking back at that first book about big tech and essentially saying, I want to update what I wrote before? There were some similarities. For example, in the four, my publisher didn't want charts. The conventional wisdom, when you put charts in a book, it feels like a textbook

and it won't sell. We said no. I think we have 30 to 50 charts in the four. I just think sometimes it's just much more illuminating to show the dominance of these companies graphically. The difference, the major contrast though versus the four is I started the four as a love letter to these companies. They are the largest recruiter out of my class at Stern. I have a decent amount of economic security because I've owned their stocks for a long time. I love their products. And then as I really dug into the research and kind of marinated in the data around these companies, the book turned, morphed into a cautionary tale. By the end of writing the book, I was just like, you know, it was kind of like for a moment when you write a

book, the day you finish the book, you feel like for a few minutes, you know more on that topic than anyone in the world. And then a few minutes later, you don't, because things change. But I felt like I was the kid who could see dead people. And that is, I thought, these guys are scary. People don't realize, people don't remember when I wrote the four in 2017, the only debate about the four was who was going to be president, Jeff Bezos or Sheryl Sandberg. The general assumption was Sheryl Sandberg was the lock on for governor of California, and then going to be Bloomberg's running mate and then be president. And we were just all so enamored with these companies, including Mark Zuckerberg. And I generally, for a moment,

I'd like to think I saw the externalities a little bit sooner than some other people, just by looking at the data. This book, Adrift American 100 Charts, I started out very pessimistic, polarization, failing young men, income inequality. There's just some rise of the shareholder class, decline of the middle class. But by the end of the book, I felt much more optimistic, because I think one of the major messages I'm trying to get across in the book is the biggest problems we're facing are of our own making, and we can absolutely unmake them. And I have a chapter in the book called The World We Made,

and if you look at the things we have faced down, if you look at the things we have pushed back on, if you look at the things and really bad ideas that we have defeated, there's nothing we're facing now that we can't defeat. There's this great photojournalist, I think her name is Mariana Amelo. She's colorizing World War II photographs. There's this wonderful photograph of an allied landing craft. Front skate has just dropped and there are a couple dozen young men, their average age was 26, their average wage was $800 a month after inflation, wading towards Omaha Beach. Two

of three of those men would not leave that beach alive. I imagine them turning around and somehow through some space and time, Loki-like metaverse wormhole can see what's going on in our lives. We say, oh my gosh, we're facing income inequality, we're facing polarization in our media. I can't imagine they wouldn't say, you can't fix that. Look what's waiting for me on the beach. Look what I'm about to sacrifice and overcome. Whether it's coming up with vaccines that saved one to two million American lives by most estimates, no one's waiting in line for Russian or Chinese vaccines. Whether it's 50% of global philanthropy is sponsored by American organizations and we've taken world poverty down. The World Health Organization

in 1970 said, let's commit to cutting it in half in 40 years. They cut it in half in 20 years and then they cut it in half again. So, and most of this has been American led. So I actually came out of this book, started down and came out, started at half empty, started at half full, come out of the book, actually quite optimistic about America and our ability to face down these challenges. I was going to say, you end this book on a very hopeful note, you know, for anyone who might be thrown off by the word adrift in the title. You end the book with, I think, a great deal of optimism. As you touched on recommendations for specific remedies, things like simplifying the tax code, the one that really caught my attention was rebranding

nuclear. I'd love to have you share a little bit more about this because I think this, among other things, relies on your expertise as a professor of marketing. But when I was reading that, I thought, oh, yeah, nuclear power really could use a rebrand. Well, think about Hollywood and how it portrays electric vehicles or wind and solar. These are generally like the ultimate boyfriend in a Hallmark Channel movie is a guy who owns solar farm or install solar panels or our heroes, our innovators coming up with electric vehicles. Think about Hollywood and nuclear power. Start with Monty Burns on The Simpsons. The evil guy owns the nuclear power plant. Or there's that incredible docudrama Chernobyl. Or there's

the China syndrome with Jack Lemmon, where we're going to burn a hole through the... I mean, it's just, there is, you know, Hollywood has done a great job of basically, like, Nazis, then South Africans during apartheid, they always find a bad guy, then the Taliban, and nuclear. Nuclear is the corporate bad guy, maybe only second to tobacco executives. And if you look at, and I'm not an expert on energy, but it strikes me that if you look at the fact that one power plant or one reactor can power a city the size of Philadelphia, When you look at the actual number of fatalities stemming from 50 or 60 years of nuclear, when you look at the fact that we are arguably funding a war in Ukraine with fossil fuel dependence, it just strikes me that any serious, and then you also quite frankly just look at the relative efficiency or inefficiency of some of the cleaner, sexier technologies, wind and solar, just how much of it we'd have to build to replace fossil at the rate we want. I would argue that most data leads you to any serious conversation around the type of pace

and cadence we need to establish to turn back climate change has to involve a sober conversation around nuclear. And that's not to say there aren't risks. That's not to say there aren't externalities. But the emissions, I think the total nuclear fuel spent from U.S. nuclear power plants could be put in cement casings six feet high and cover a soccer field. Now, it's dangerous stuff and you got to be really careful with it, but that's nothing, I believe, compared to the emissions of most other, especially fossil fuels. And some very bright people, including Bill Gates and some people I really respect are saying, yeah, let's start calling it elemental energy because, and there's some interesting conversation now around whether we put off plans to mothball

some plants in California. Germany is thinking maybe they don't unplug their plants. But I think nuclear and the advances in nuclear are really interesting. Even some of this new technology where you can have a mini plant the size of a Winnebago that can power a fairly sizable town, or even something the size of a backpack that can power a neighborhood. could. I'm actually really excited about nuclear. I think it offers a solution. Sometimes the most obvious solutions are right in front of you. Bill Gates is someone you referenced in an article you wrote recently for The Atlantic entitled America's False Idols, really about tech entrepreneurs. One of the things that

caught my attention in the article was the number of times a company founder lists his name in the S-1 filing, which seems like it might be a new exercise for investors to just go through the S-1 and see how many times someone like Adam Neumann lists himself in the WeWork IPO paperwork. I am curious though, Scott, if you look at the follow-on leaders of companies differently, if you look at someone like Tim Cook differently than Steve Jobs or Andy Jassy different from Jeff Bezos because, I don't know, they don't have everything that comes with being a founder attached to them, and instead, they are an operator.

Yeah, so there's a lot there. The idolatry of innovators, and by the way, if I wrote that article again, I probably wouldn't include Bill Gates in that imagery because I actually think Bill Gates is doing really good work. And I have a lot of admiration for him. And I think we could do worse than have the wealthiest people in the world with the same foci as Bill Gates. But anyways, having said that, the kind of charismatic storyteller leader has been a key component of any of these companies that have accelerated from zero to kind of half a trillion dollars or more. And that is their ability to articulate an incredible vision, whether it's Steve Jobs in his showmanship or

Jeff Bezos' 1997 investment letter, where you read the thing and you just want to buy shares, or Adam Neumann, who I've been on stage interviewing before, who's just incredibly charismatic. You just want to be around him and a part of what he's building. That ability, that competence of a CEO to articulate a really compelling vision such that they attract cheap capital, and basically, to use another World War II reference, overwhelm the enemy with just brute strength. That's what capital is. Typically, the company in any sector that has access to the most capital, the cheapest capital, that's the odds-on favorite to win. A really compelling CEO who can raise a lot of capital, well ahead of the curve, and pull the future forward with

that capital, they can buy amazing things, plans, property, IP, people, wins. What's unusual about, you brought up Tim Cook. He's an exception. Tim Cook has added more shareholder value than any individual in history. People might say what Steve Jobs did, taking a company from zero to $300 billion was more difficult, but nobody has taken a company from $300 billion to $2.5 trillion. Tim Cook has added $2.2 trillion in shareholder value. No one has ever done that, accomplished that. He's a supply chain guy. I don't know if it says as much about the difference in CEOs, because I still think at the end of the day, they are spokespeople. And when you listen to Tim Cook in his own way, he just kind of reeks of

credibility and integrity. And the performance is just so outstanding. I think the jury's still out on Andy Jassy. I don't know if he brings the same level of compelling vision and storytelling as a Jeff Bezos. And I think that's still TBD. But I think this Elon Musk weaponizing or leveraging whatever the term is, Twitter, with 90 million followers, and as a result, spends almost zero on traditional marketing, and General Motors has to spend $2 billion. I mean, the storytelling, visionary, charismatic CEO has kind of become the criteria for a CEO. They've become our new heroes. We have an idolatry of dollar, and specifically tech CEOs. Every third year, Times Person of the Year just picks the richest tech person. And I think it's a phenomena,

talking about in the book, the idolatry of innovators is nations become wealthier and more educated. Church attendance and reliance on a superman goes down. But we need new idols. We need to look to people who can answer the unanswerable. And technology is the closest thing we have to sort of mysticism or magic or spirituality. Because my iPhone can do amazing things. I have no idea how it works. So Steve Jobs kind of is the information age Jesus Christ. And I would argue Elon Musk is kind of taking that mantle. And it leads to some very unhealthy places. These firms aren't regulated the same way other firms are regulated, and these individuals are given a wider berth than any leaders in history. Unfortunately, I think it wallpapers

over things such as teen depression or organizing insurrection. My last point, and I'll stop this word salad, there's an illusion of complexity that's fomented by these companies that these are big problems we can't figure out, and yet you remove one account from Twitter and 30% to 60% of election misinformation goes away in one night. Amazon gets critic-bombed on their Load of the Rings series, where people are showing up and making incendiary comments and fake comments. They close the comments section down, they use AI, they enforce identity, they post it 48 hours later, and the comments are legitimate and have more veracity. So, they figured it out in 48 hours, but Meta and Google throw up their arms and say, these problems are too big. No, they're not.

We're not talking about the realm of the possible, we're talking about the realm of the profitable. They create this illusion of complexity to try and stave off what are fairly obvious solutions and actions they should take. The book is Adrift, America in 100 Charts. It is out now and available wherever you find books. Pick up a copy. Scott Galloway, always great talking to you. Thanks so much for being here. Chris, thanks for your good work. Coming up after the break, Jason Moser and Maria Gallagher return with a couple of stocks on their radar. This is Motley Fool Money. Welcome back to Motley Fool Money. Ron Gross here with Maria Gallagher and Jason Moser.

Okay, Fools, we've got just a little time for a couple of stocks on our radar, and I'll bring in our man Dan Boyd to pick his favorite. Jason Moser, you're up first. What do you got? Yeah, going with Cadence Design Systems, ticker CDNS. They play an extremely important role in the semiconductor value chain with their suite of solutions, which enables their customers to design and deliver fully functional electronic products, Ron. With a strong recurring revenue model, Cadence is going to bring in about $3.5 billion in revenue this year. Management plans spent around $900 million in free cash flow and share repurchases this year as well. I've recommended the stock already, Ron. It's one to keep an eye on.

Maria, you're up. What are you looking at? I'm going classic. I'm going Target, ticker symbol TGT. As we talk through inventory management this upcoming holiday season, I want to spend more time looking at it, see how they've historically performed during tighter spending markets, and I probably have to go to see some of their Halloween offerings. Dan, you got a favorite for your watch list? Surprisingly enough, Ron, I think that semiconductors might be the future. So I'm going to go with Cadence this time. All right. Maria Gallagher, Jason Moser, thanks for being here. That's going to do it for this week's Motley Fool Money. Our engineer is Dan Boyd. I'm Ron Gross. Thanks for listening,

and we'll see you next week.