The Compound and Friends - The Algebra of Happiness (Barry with Scott Galloway)

Episode Date: June 6, 2019

Subscribe: https://www.youtube.com/thecompoundrwm?sub_confirmation=1 Josh here - I absolutely love this discussion between my partner Barry Ritholtz and the one and only Professor Scott Galloway about being happy and learning to live with yourself, in good times and bad. Scott's new book, The Algebra of Happiness, is both highly personal and instantly relatable to everyone.  Scott has become one of the most sought after speakers on technology, marketing, trends and innovation. This is a great introduction to the way he thinks, how he teaches his students at NYU and why he writes. You're going to love it!  Read Scott's book:  https://amzn.to/2WjCZOL Enable our Alexa skill here - "Alexa, play the Compound show!" https://www.amazon.com/Ritholtz-Wealth-Management-LLC-Compound/dp/B07P777QBZ Talk to us about your portfolio or financial plan here: https://ritholtzwealth.com/ Obviously nothing on this channel should be considered as personalized financial advice just for you or a solicitation to buy or sell any securities. Please see this 3,000 word terms & conditions disclaimer if you seriously need this spelled out for you. https://thereformedbroker.com/terms-and-conditions/ Hosted on Acast. See acast.com/privacy for more information. Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to The Compound. I have with me one of my favorite guests from Masters in Business, and I thought we would have a little more informal conversation discussing his work, his life, his school, his class. Scott Galloway, welcome to our office. First off, one of your favorite? One of my favorite. One of my favorite? What's with that? Well, you are our returning champion. You will be the first four-time guest we've ever had. And you gave me this jacket.

That right, which fits nicely. Yeah, thanks very much. You know, I put on a little weight, but it fits. And you gave me this jacket. That right, which fits nicely. Thanks very much. You know, I put on a little weight, but it fits nicely on you. It's a jackets-only sort of restaurant. Four times. And that's right. It should have, like, the number four in it. This is a new book, which I read over the holiday weekend.

Thanks for that. It was really a very fast, comfortable, amusing read. Yep. I was surprised at how much of this was autobiographical sure was that by design are you a frustrated biographer do you really want to reveal all this stuff about yourself mostly just a narcissist okay about my favorite topic me of course no but I put out a Friday blog and I talk a lot about family and relationships and the ones I can speak

to most authentically are my own. And it's also nice therapy, and it's cathartic for me to write about it. And also I write my secondary audiences. I want my kids. When I say my kids, I mean, one, the 27-year-olds I teach at business school, so the book's sort of for them. But mostly it's for my kids. I want my sons when I'm gone to be able to read this and know me hopefully a little bit better.

Because sometimes I worry that they look at this kind of intense guy on the couch or who occasionally hangs out with them or playing ball with them, and they don't have a sense for how strongly dads feel about their kids. So I want them to hopefully read this in 20 or 30 years and to go, I know them a little bit better. So let's talk about your other kids. So I want them to hopefully read this in 20 or 30 years and to go, I know I'm a little bit better. So let's talk about your other kids. The genesis of this is the last class you would teach each semester was, hey, fun with all this digital branding stuff, but let's talk about you and your lives as students. That's actually the genesis of this book. Yeah. So the most popular session, the way my process for writing a book is I take my most popular class

and the second most popular is a class called The Four where I talk at Amazon, Apple, Facebook, and Google. Your previous book, a giant bestseller in New York Times. Did well. Bestseller, like, hugely well. Not just like sold a couple of...

It's better to be lucky than good. Timing was great. Perfect. Timing was perfect. Yeah, sold really well. But basically I do a class and I do a video. If the video gets views, that video got a million views, I do a book. This is my most popular class, and that's the last class.

I say, okay, you think you're here for economic security. You're really here to develop the skills such you can develop a narrative of satisfaction through your life. Here's my observations coupled with a bunch of research on happiness, and I attempt to distill it down to a series of equations, and I take them through these equations, and it's called the Algebra of Happiness. It's my most popular course. I was chosen to give the last lecture at Stern this year, which is where the kids pick somebody to come to kind of one class for the graduating class. How many kids are in that lecture? So most of my classes have between 120 and 180 kids.

I've taught 4,500 students to date, or as I like to think of it, about $29 million in pre-cash flow for Stern. And then I did a video. The video got 2 million views. That's giant. Now, can we talk about what happened with your publisher when they said, hey, the four is hot. Let's do another book. That's giant. Now, can we talk about what happened with your publisher when they said, hey, the four is hot. Let's do another book. Yeah. So I didn't. The four is my first book. And

I think one of the many dirty secrets of publishing is that you should never buy the second book of a first time author. Because if the first one's successful, your publisher turns to you and says, write another book. Do the same thing again. Because the pump is primed and the channel, the distribution channel thinks, oh, we want another one. And I said, well, I don't really have a vision for another book. And they said, doesn't matter. Just get a book out there. Crank it out. Make hay when the sun is shining. That's right. So I called back and I said, I've actually written the better part of a second book. And they said, great. And I said, what is it? And it's called The Algebra of Happiness. And they said, say more.

And I said, well, it's called the algebra of happiness and they said say more and i said well it's about you know developing it's about have observations on success meaning and love and they're like no no no no no no no no no write the five write the one the five talk about how much you hate amazon whatever it is the sequel to yeah whatever so they're thinking the five the six hey, hey, we have a property. We'll go up to 40 if he keeps writing. Yeah, they're like, no, you have no credibility in this space, and that's not what we want. And I said, I get it, but this is what I want to write about or what I've written about. And they were very generous with me and said, okay, we'll publish it.

And so far it looks like we got lucky again. It smells to me like this is a graduation present, a holiday present. You could see this as a stocking stuffer for years and years. Dads and grads. Right. And that wasn't by design. This is something you've just been speaking about and writing about for a long time. Yeah, this is sort of a personal journey for me. We were talking about this off mic. I struggle with depression and anger, and I'm trying to figure that out. I'm so surprised about that, and I was surprised reading this because you don't strike me as either an angry or depressed person. I know that you're enthusiastic, your videos always are creative,

and you're railing against things that you think are wrong. Thanks for saying that. But that's not anger. That's, hey, the world is unjust and it pisses me off. Well, sure. I think some of those embers hopefully translate into some productive means of production, if you will. But my sister summarized it perfectly. I speak to my sister every Sunday night. And a couple of years ago, she said to me, why are you so pissed off? You have less justification to be pissed off all the time than anyone I know. And

the reality is, here are my blessings. Right. Here is my mood. And I want to bring my mood in line with my blessings. I have no reason to be anything but happy most of the time. And happiness is a sensation. It's a kind of a misnomer. You can get happiness from Chipotle, Netflix, and Cialis. But when we're really talking about happiness, we're talking about the investments. All at once, by the way. There you go. That's a Friday night.

That's the best. That's the trifecta. Right. Yeah, that's a weeknight at the Galloway household. So a good weeknight. So what we're trying to talk about here is what are the investments and decisions we make through our life

such that we can have, as we endure the ups and downs of life, which we all endure, the pendulum swings on a higher plane. And as you get toward the end of your life or hopefully sooner, you can feel as if you have the right to drop the mic. And there are best and worst practices, and there's a ton of great research out there. I didn't do any primary research. I have no academic credibility in this field.

So I purposely wanted it to say notes on the pursuit of success, love, and meaning, not the answer. I'm not a clinical psychologist, a social psychologist. There's a great amount of research out there, and I tried to distill it down, and also some of my observations around hanging out with successful people such as yourself, some of who are happy, others who are not. And this has been a personal journey of exploration and discovery, and the kids seem to really resonate I have to tell you I I know my personal demons and my dysfunctions and I would be really uncomfortable writing about them because they're dark and ugly and I know what I had to endure to achieve even a modicum of success you're

pretty upfront and blunt about drinking, about weed, about casual relationships, all that stuff. I'm a professional. All that stuff, you basically lay it right out there. I would bet the NYU students appreciate that. How hard is it to bare your soul like that? It's embarrassing. But what you find is when you lay it all out there, when you're authentic and you express stuff, people have a sense. People have a pretty good nose for when it's real. And I find that people are very forthcoming.

And what you hear from is you hear from people who are, yeah, I struggled. I abused alcohol as a younger person. Or I'm having trouble here. And what you find out, Perry, is that on different levels maybe, but we're all struggling and we're all trying to figure it out. Sure. And everybody has their demons. And the functional families are the ones you don't know.

And it's really what you find is you expose yourself and you hear from people you know really well and total strangers who relate to it and feel closer to you. So it's been, yeah, I feel vulnerable. I feel stupid. Sometimes people make remarks or mock you and you feel like, oh, shit, I really shouldn't have said that. The thing I worry most about is embarrassing people in my life. But not yourself because in your own videos and in your own presentation, you never hesitate to embarrass yourself.

Put on a wig, sing a song, you do some wacky stuff, and I would imagine the students love it. Yeah, but I think about, think about the people you really admire are the people I admire, Muhammad Ali, Richard Simmons, Ruth Bader Ginsburg. These people just live their lives out loud. They're not worried about, it's like when you go to a bar or restaurant San Tropez and you see some ridiculously hot dude or woman get on the table and dance and they are just they just don't give a shit right who's watching them or what they look like or you're at a wedding and you see some old guy out there doing the bad you know just a bad disco but he's just loving himself and his bad moves you were

inherently are drawn to that and all the the heroes I have, they have one thing in common, and that is they were fearless, and they were never watching themselves, and they were out there. They were out there with what they believed. They were out there with their faults, and they just lived out loud. And also, Barry, I'm going to be dead soon. So, you know, I have a very finite nature of life. I think I'm an atheist.

I think at some point I will look into your eyes, and it will be last time we see each other and our relationship will be coming to an end. So to not have the courage to be out there about, I'm really good at talking about what I'm good at. I do a lot of that. But to also talk about your shortcomings as a person, I find people are really open to it and really receptive and that it's productive and it's something we all need to do, I think, a little bit more of. Oblivion awaits. And plus, I've decided I'm never going to run for office, so I'm fine. You don't care what you have to say about these subjects.

They're never going to bite you. Well, I hope not. We'll see. What about, I've seen certain things you've written about colleagues and coworkers that have gotten you in a little bit of trouble. Any concerns about anything in the book that get a little pushback from NYU or they're pretty cool about it? You know, universities. Professor Galloway, you can't be talking about smoking weed.

We have students. We're forming the next generation of business leaders. We can't have a generation of potheads running the corporate universe. Look, in general, so I'll give you an example. One thing that Stern has been great at is that we produce these world-class people for deans. The dean right now, Raghu Sundaram, is a fantastic guy.

The dean before him, Peter Henry, just a world-class person. And Peter is this incredibly buttoned up, I doubt he's ever had a drink in his life. He is just, he's a very spiritual man. I think a lot of what I'm talking about, he probably finds personally offensive, and I'm projecting. But Peter has this love of academic freedom, and he gets, he takes a lot of arrows from me. I know this firsthand. Really. When I said Marissa Mayer would have been fired if she wasn't pregnant, which was a dumb thing to say, and he gets an email a minute from people saying, is misogyny the new curriculum at Stern? He's willing to say, maybe we don't

agree with what he said. Maybe it was ill-timed or ill-thought-out. But the whole point of a university and the reason they took them off campus or outside the city was to provoke people. And that as long as the person has some data and is pursuing the truth, we protect people. And he's always protected me. He's always said, look, I need you to have data. I need this to be honest. And I want to see what's behind your thinking. But as long as you're pursuing the truth and your heart's in the right place, universities are an outstanding place to be provocative, unless, of course, you're a conservative. Then the university becomes a hostile place that is not open to free thinking. Why is that? We seem to have entered into a bit of an echo chamber around in universities,

at least the universities I know people, where there's a ton of pressure to be, just conservative thought is not welcomed. I think there's some universities where it's probably not as prevalent, but I would argue that universities have incredible freedom of thought except for where you are on the political spectrum. It's a longer question. I don't know why. I don't know if people who are progressive tend to be drawn to graduate schools or PhD programs, tend to just attract progressives. Isn't the stereotype there's a correlation between academic, I'm sorry, educational achievement, not necessarily academic, and the left-right spectrum? The more school you have and the more urban you are, the more likely you're going to

end up being left of center. So NYU grad school, that has to be very left of center. Cities, education, even now youth. And what's happening now is the majority of the disposable income is now flowing and aggregating to progressives. So when Nike and Dick's find their progressive roots, it has nothing to do with principle. It has to do with economics. Speaking of Nike, you had a great take on Colin Kaepernick in the Nike ad. Let's talk about why people on the right got that wrong. Well, so in government, 70% of senators elected now are from conservative. Basically, conservatives are arguably overrepresented

in government right now. Certainly on the Senate side. Definitely on the Senate side. And some people would argue even on the House side. But regardless, if you were to vote with money and disposable income, the world is definitely becoming more progressive because the majority of the economics are moving to super cities, to college grads continue to aggregate more and more income than non-college grads, same-sex couples, whatever you want to call it, nontraditional family, college degree, city, that's a Democrat. So the majority of the economic spoils are

going to Democrats, and I think that's probably part of the reason we're in somewhat what I would call like a soft revolution right now. But Nike decided, okay, we have $35 billion in business, $20 billion outside the U.S., $15 billion domestically. Nobody outside the U.S. believes the U.S. has got it figured out on race relations. Of the $15 billion in the U.S., 12 of that 15 is people under the age of 35. Show me someone under the age of 35 that can afford a pair of $140 Vaporfly shoes. I'm going to show you a Democrat. So they put at risk of the $35 billion, $3 billion in business to strengthen their relationship with $32 billion and take a principled stand. That's a great trade. That's exactly the right term. It was a great

trade. So I don't know if they're progressive. I don't even really think it matters. This is a great business decision. All those YouTube videos of people burning their Nikes, my thesis is it was conservatives who went out and used a Discover card to buy their first pair of Nikes. And if you look at that, that was probably the boldest and best marketing move of 2018. It was a genius move. It took courage.

It was strength. And by the way, their sales are up. Stock is up. Just a genius move. They're killing it. Genius move. One of the guys in the office makes fun of me because, you know, my dad owned a sporting goods and sneakers store. So I've been a sneaker head for forever.

What are those? Element 55s. You're an artist. These are Nikes. I have five different colors in these. I have a half a dozen of the Vapor Max. But when I was a kid, I would have a different pair of sneakers every day. My father would say, here's a new company, Pony.

Try these out. Pony, yeah. Right? Like crazy stuff like that. Yeah, the Caseways, the Salcone. So I've kind of rediscovered my childhood roots. Ten issues in cars. You're like, you're such a dude.

Let's talk about cars before we wrap up. So you mentioned you were thinking about the other question I have to ask you about flying private. I have to read a line from – and Ben, let me know when you think we have enough and you want to wrap up. But there's my favorite line in this, in the whole book, my favorite line in the whole book. Yeah. In 1999, I and a gaggle of other San Francisco internet founders and CEOs went to an airfield where we browsed private jets. It made sense to me that at 34, I should have a one bedroom apartment to transport me across the surface of the atmosphere at Mach 0.8 because I was a fucking

genius who could afford on paper to spend the equivalent of a thousand years of my mother's salary on a Gulfstream. That sentence is a piece of art. I love that sentence. But talk to me about what that canary in the coal mine was in 1999 when you were kicking the tires of Gulfstreams at age 34. And so just to cut to the chase, within a year, the market returned to sanity, and I achieved mosaic status on JetBlue, but I never got the Gulfstream. Right. Look, even at that time, I realized that this was a trope, and this was abnormal, and that we were about to get slapped pretty hard by the palm of the market, and we were, and it was coming sooner than we thought. But look, it all comes down to this.

I think when you don't do well. So in the same story I talked, in 2008, when my oldest son had the poor judgment to come rotating out of my girlfriend, I called my accountant and he told me I was broke. Oh, really? So I was 40 and broke. And I thought I had a successful career just about the time that someone else was depending on me, my child and my girlfriend. And that was hugely emasculating for me, really did a number on my head. Really? Oh, my gosh, it was awful.

Where were you in 2008? I was advising hedge funds, teaching, but I was along the market. East coast or west coast? But my point is, one of my lessons in here is nothing is ever as good or as bad as it seems. I wasn't the idiot I thought I was in 2008, nor was I the genius I thought I was in 1999. And I think it's important that people realize that you're going to have moments where you think you're killing it, and you'll credit your character and your grit. Also credit luck.

And also when you really screw up, yeah, some of it's your fault, but a lot of it's the market's fault. It's not entirely your fault. So one of the equations I go through in this book is that the perception of anything in the moment is much greater than the reality. And if there's one piece of advice seniors would give to their younger selves and all the studies is they wish they'd been less hard on themselves. That when you have a down year here, you're going to stare at the ceiling, you're going to beat yourself up about it, and your limit is wanting you to do that. But towards the end of your life, when you have more perspective, you're going to look back and go, in the big picture, it just wasn't that big a deal. So that

gives me a lot of comfort. One, when I kill it and I have some luck, I try to maintain some humility and realize it's not entirely my fault. And when I screw up and I feel really angry at myself and I'm down on myself, I also try to have some perspective that this wasn't entirely my fault either. This too shall pass. There you go. 100%. Better way of saying it. I can't take credit for it. That's Solomon. Go get the book. It's called The Algebra of Happiness. As always, Scott Galloway, fascinating stuff. Really excited to have you. Yeah. Thanks for having me.