The Prof G Pod with Scott Galloway - Elitism: Money vs. Influence

Episode Date: August 13, 2020

Scott shares his thoughts on the possibility of Twitter acquiring TikTok and proposes a company that he thinks would be a better acquirer. Scott also addresses Amazon wanting to turn abandoned JCPenney and Sears stores into fulfillment centers. His main takeaway — warehouse space is the new black.  Then, Joel Stein, an American journalist and author, joins Scott to discuss his latest book, “In Defense of Elitism.” Joel gives us the definition of elitism and explains how it’s playing out in our political environment.  Office Hours: SPACs, how a company like Kohl’s can compete with the retail giants, and what skills make an employee stand out.           Joel's podcast recommendation: "The Good Fight" hosted by Yascha Mounk. Please take our quick survey to tell us how we can improve The Prof G Show: https://forms.gle/xVRfqCKrrNr9xzor5 Learn more about your ad choices. Visit podcastchoices.com/adchoices

Episode 22. It was incorrectly reported that the average age of a Vietnam foot soldier was 19. It was actually 22. I don't know about you, but we are feeling 22. That's a reference to a Taylor Swift song. I am so down with the young people. A catch-22 is a paradoxical situation from which an individual cannot escape because of contradictory rules or limitations. You must have experience to get a job, but without a job, how do you get experience? The atomic number of titanium is 22. When I was 22, I spent my fifth year at UCLA watching the Planet of the Apes trilogy over and over and smoking a lot of pot. And look at me now. We're now the 183rd most downloaded podcast in the United Arab Emirates. I's episode, we speak with Joel Stein, an American journalist and author. He's an all-around hilarious guy. I would never write that. Someone else wrote that for me. What would I write? Joel Stein is the kind of guy you'd like

to do MDMA with. He is interesting, insightful, funny, irrever? Joel Stein is the kind of guy you'd like to do MDMA with. He is interesting, insightful, funny, irreverent, fearless, the kind of guy that was always carrying the best bud in college and then ended up being much more successful than all of us. He's a, anyways, interesting guy, someone you'd want to roll with. We talked with Joel about his book, In Defense of Elitism, as well as what other power structures are at play in our current political environment. Okay, let's bust right into what were the biggest stories or the most underreported stories. TikTok. TikTok is, again, to recap, the president has decided he's a real estate broker and wants to get involved in basically a socialist construct where the

means of production are controlled by the government. He's decided that TikTok should sell to an American company and he wants to pick which company. And then Twitter decides to enter the fray and says they're having conversations. Or put another way, Jack Dorsey, who gave what was one of the most unsatisfying interviews I've ever heard with The Daily, where he would just talk really slowly and thoughtfully and say, we need to do better as a firm learning. If there's one thing I wish we could do, oh, shut the fuck up, you and your rage machine. What is any of this? It is Sheryl Sandberg with yoga pants. Boss, it's still a

rage machine. You haven't done a damn thing. And not doing a damn thing with a nose ring in an earnest and thoughtful voice still means, see above, you haven't done anything. But that's neither here nor there. Actually, it's more there than here. But Twitter announced they were in discussions, potentially with TikTok, to acquire them. This is the ultimate jujitsu move. And by the way, when I say jujitsu, don't feel triggered. I'm actually showing respect for the Japanese art form that uses the competitor's weight with non-weapons to do some sort of incredible, I'm going to take your weight, your momentum and use it against you. The Chinese, as is the case across almost everything geopolitically right now, have

pulled this ultimate gangster jujitsu move and said, okay, if you're going to force us to sell to a company, President Trump, we're going to sell to Twitter, which effectively means with a market capitalization of $25 or $28 billion, when TikTok likely goes for 30 to 50, that the combined companies, ByteDance would be the primary shareholder or put another way, oh, you're forcing us to sell to an American company? I got an idea. We'll effectively sell to a company smaller or worth less than us, thereby meaning that we're effectively acquiring that company. I think this is just such genius. Twitter needs a full-time CEO, potentially Vivian Pappas, the general manager of TikTok US could become the CEO of Twitter. They need a full-time CEO. Half of success is

showing up, meaning that Jack Dorsey, if he shows up, at best could be a quarter as successful as any other tech CEO, given that he's part-time, which is just absolutely ridiculous. But again, that's another talk show. They need product development. Effectively, what this is, is Jack Dorsey recognizing that shutting down Vine is a $40 to $50 billion mistake, or put another way, that reanimating this type of product is going to cost them $40 to $50 billion. This is difficult to get done because pretty soon Twitter shareholders are going to realize that they're going to get diluted and the new largest shareholder will again be a Chinese company. So I'm not sure this passes muster in the law of

unintended consequences. Donald Trump teeing this up for a acquisition of Microsoft pretty much means that it's not going to happen. I just doubt that's going to happen. Supposedly Apple can express some interest. I think the most likely acquirer from a pure fit standpoint? Disney. $230 billion market cap. They have the balance sheet, they have the cash, they have the currency to acquire it. I think the pandemic has exposed some of their weaknesses around their business model in terms of parks. Obviously, in a post-pandemic world, will likely be a little bit challenged for a while or very challenged for a little while. Their content machine feels a little bit dated right now, still dependent upon domestic box office theater releases, which is just dumb in terms of the cadence and the timing, and it's

a smaller business. But no one is better at managing content than Disney. So imagine what they could do with that supreme content algorithm. Arguably, the best content algorithm in the world right now is the TikTok algorithm. It's not about the creators. It's not about the platform. It's about that algorithm that takes you down a rabbit hole and just figures out what 30-second weird dance or piece of video you would like to see next. It really is intoxicating and addictive. Could we end up in the same place as Instagram or Reels? Absolutely. What is Reels? That is the new R&D department of Facebook, i.e. TikTok. It's basically a ripoff. But Disney, in my mind, is the most logical acquirer, has the strongest fit. A lot of people say it will not happen because Disney looked at TikTok and found that it was a toxic cesspool, which it is. But is there an opportunity to put in place the safeguards and the content moderation to take TikTok in a different direction? The general manager, Ms. Pappas, claims that's where they want to head, and that foots to Disney's kind of brand, if you will. What I do know or what I would predict is I think it's just unlikely that the president is going to

orchestrate some clean acquisition to Microsoft. I just don't see it happening. I think there's too many moving parts here. But again, an incredibly interesting move by the Chinese, if you will, to potentially sell, i.e. acquire Twitter. What else do we got going? Amazon is in talks with Simon Property, the largest mall owner in the US, to turn abandoned JCPenney's and Sears stores into fulfillment centers. This is really just an extension of what a lot of the best retailers have done. And that is Best Buy said, okay, let's look at our stores and let's not think of them as stores and liabilities. Let's think of them as fantastically located, well-positioned, well-lit, well-staffed warehouses. And if you order a flat screen TV from BestBuy.com, it gets to your house

faster in Delray because they fulfill it out of the Boca Raton store versus ordering from Amazon.com. Okay, we're Walmart. Let's think of our 5,500 stores as distribution centers for click and collect. This is largely the same thing where Amazon says, okay, we have to counterpunch against the people counterpunching against us and let's take stores and let's turn them into distribution centers. I think this is smart for both Amazon and Simon that needs to rethink their business and look at the underlying asset, the real estate, is really the core value here, even if it becomes a distribution center as opposed to a retail gathering point. What does all of this indicate? Again, again, COVID-19 and accelerant, we're moving a decade forward. We knew that the mix between offline and online would change.

We also probably didn't realize as quickly as it would happen is that a lot of existing retail space would immediately be converted to warehouse space. I bought a condo in Red Hook because I wanted to roll with the young people. And they were planning, the developer, this Italian developer was planning to turn all of Red Hook into this kind of innovation center with new campuses and learning facilities and cool restaurants and places where you'd brew your own whiskey. What ended up happening? They sold everything to Amazon as Amazon is now delivering everything to a bunch of wealthy people on an island called Manhattan. And warehouse space, as boring as it is, is the new black. And when I say the new black,

I mean something that's going to give above market ROIs. A company that I think is one of the most disruptive companies or best run companies over the last 20 years is Prologis, which is in the very boring business of warehouses run by what is arguably one of the brightest minds in business, Hamid Moghadam. And the lesson here, for those of you who are contemplating where to allocate your most precious capital, and when you're young, your most precious capital is your human capital, because you don't have any money. And then as you get older, you have less time, which I guess makes it more precious, but that's not your biggest decision. Hopefully you've aggregated some wealth in your biggest decisions around how to protect your capital. But the lesson here is the more boring the business, the higher the ROI. Prologist stock has outperformed its peers and the whole notion of fulfillment or warehouses isn't as fun and isn't as sexy as a whiskey distillery,

but guess what? It makes more money. We'll be right back with our conversation with Joel Stein. But if customers don't know about you, the rest of it doesn't really matter. Luckily, there's Constant Contact. Constant Contact's award-winning marketing platform can help your businesses stand out, stay top of mind, and see big results. Sell more, raise more, and build more genuine relationships with your audience through a suite of digital marketing tools made to fast-track your growth. Thank you. and reporting tools that get your marketing running seamlessly. All backed by Constant Contact's expert live customer support. Ready, set, grow. Go to ConstantContact.ca and start your free trial today. Go to ConstantContact.ca for your free trial.

ConstantContact.ca. We're back. Here's our conversation with Joel Stein, an American journalist and author of In Defense of Elitism, Why I'm Better Than You, and You Are Better Than Someone Who Didn't Buy This Book. He's actually a very thoughtful and funny guy. I was excited to get him on the program. Anyways, here's our conversation with Joel. Joel, where does this podcast find you? I am in Los Angeles. You ask everyone that. Do you really want to know? No. Let's skip right into it. We're actually in LA though. Where they're from. I am from LA.

Where in LA are you? I am in Griffith Park, Hollywood, Los Villas. Yeah, yeah. I used to live off of Harvard and Franklin. Yeah, so you know it. It's not a bad place to be. I used to live in Chelsea, Manhattan for a long time, and kind of psyched not to be in New York right now as much as I love New York.

Why did you move? I went to college in California and I really felt comfortable. Where'd you go to school? I'm sorry, I keep asking more questions. Where'd you go to school? No, that's what you do. That's the job. I went to Stanford and this is the longest I've ever gone in a podcast without mentioning

that. So you've done a great job. So let's actually, let's use that as a jumping off point. Give us your definition of elitism and who are the winners and losers in this age around this notion of elitism? Yeah. Well, it's in the middle of a flux, which is something I talk about in the book, that there's always a battle between elites and that's usually how revolutions take place. And right now there's a battle, the same battle that Nietzsche talked about and the same battle

that Pareto talked about in his 1900 essay, The Circulation of the Elites. I call them the intellectual elite and the boat elite. And the intellectual elite is the one that I talk about defending in my book. So that's the one that Sarah Palin and Trump talked about as far as you know do you see that Aubrey Huff video the baseball player about not wearing a mask where he talks about soy boys and professors and the kind of people who wear masks yeah that's the elite that I'm talking about and the boat elite which I got from this speech Trump made probably two years ago at this point, where after railing

against the elites in the election, as so many Republicans had done effectively, he suddenly out of nowhere in a rally said, in Minneapolis actually said, why are they the elite? Like, we're the elite. We have more money and nicer houses and bigger boats. Like, we're the elite. We have more money and nicer houses and bigger boats. Like we're the elite. That's the difference to me. There's, there's a group of elites who put all of their love into power and money. And then there's a group of elites that care more about influence and ideas in a different way. And I think what we're experiencing now in so many places around the globe is this battle between these two kinds of elites. So this term elite has become a kind of a negative moniker. And I think that,

all right, we all want to be, we all want power because power is a means of garnering more economic security, more safety, more, I don't know, self-affirmation influence. And there's different currencies of power. There's education or certification is a currency of power. Only a third of Americans have undergraduate degrees, less than 10% of graduate degrees, but they probably control 70% or 80% of senior level positions in our economy, in our politics, in our cultural institutions. And so they become, I mean, that's a form, I guess, they're the elite. And then people who don't have those degrees say, well, their outsized influence is unfair and there's currency, if you will, and going after those institutions. Isn't this just sort of a transfer

of power? And when one group doesn't have power, it goes after another group, accusing them of having unearned power? Yeah. A couple of things to unpack there. First of all, you listed, you are a business professor, but you listed economics first, which is a very American and modern way of looking at things. I don't think this revolution is all about economics. I think this is about influence in how and who is in the power structure. It's people feeling like these elite institutions and these elites are smug and don't respect them. And the amount of my friends who are liberal who say, why are these people voting against their own interests when they

themselves are rich and voting for higher taxes? And they see that as altruistic. And the people who I visited in my book in the county in Texas that had the highest percentage of Trump voters who love Trump aren't doing it for their own interest. They're doing it because they are worried about this country. And when they look at cities, they see homelessness, and they see people who don't know their neighbors and people staring at their phones. They see a dystopia, and they don't want the whole country to become that way. So it's not just about economics. And I know Hillary Clinton started to say that in her deplorable speech, that sometimes people don't vote just on economics and people didn't want to hear it because it's not a

very post-Marxist way of looking at the world. The second thing you're saying is that, is this just the fact that people feel like they're not getting their fair share? And totally, the balance in developed nations economically and power-wise right now is definitely out of skew. But that just kind of riles people up. And usually in those situations, you don't have a revolution from the bottom, where in the Luddite, Ned Ludd kind of sense, people destroy the factories and then the cobblers take over the world again. What you have instead is an opportunity to rile people up

and for one group of elites to take power from another group of elites. I think that's what you're seeing in places like India and Hungary and Turkey and the US and Britain. We can name almost every country. You had a great quote from your interview on NPR that I want to read and get your further thoughts on. We're in a world of extreme expertise and instead there's this movement that people should just operate from their gut as if education and expertise made you immoral and untrustworthy. And instead, you just want someone who claims he knows more than the generals and just has good instincts. That's a dangerous place to be in. So we're moving to projecting strength and the FCC is no longer the place where we make these decisions. Is that accurate?

Is this moving us to an instinct over expertise, a dangerous movement? Yeah. And I don't want to just blame Donald Trump, who's clearly a symptom of a cultural change around the world. I don't even want to blame, you know, the Republican Party that this is happening everywhere. Like I mentioned doctors, but it's also happening. You know, with our liberal friends on Facebook, who use headlines as grenades to throw at other people without reading the articles. There's, again, that's a political example. There's so many others where people just don't have any respect or trust of expertise.

And they feel like with all the information that's out there now, we're all equal at everything. And that can lead you to some scary, scary results. I mean, from the left and right. And what do you think? What kind of leadership is required to get us away from this? You know, the kind of thing where you ask people to do hard things, I think might be effective. What I also realized as I was trying to give people a solution at the end of my book was that that's not my expertise. Like what I wanted to do in my book was, was to realize that there's a big thing going on. There's a massive change going on. And I wanted to go figure out why that change is going on.

And I feel like people jump to how do we solve that thing? Because there's pain and you want to get rid of the pain. But I think people skip the step of figuring out what's causing the pain so that that's what i wanted to do in this book i wanted to go talk to people who hate the elites i wanted to talk to people who are trying to bring them down i wanted to talk to people who were defending kind of the neoliberal status quo that people don't like and figure out the root causes of this and then you know my expertise at best is reporting it's not i'm not a politician i don't know the exact answers the only answer i could come up with that seemed clear to me because people have been saying it to me since i was you know four years old and they called me precocious was that the elites need to be a lot less smug

you know that's not a solution. That's just a tip. And that's all I could really come up with. Pro tip. When you were out there writing this book, talking to people, what were the one or two instances or learnings where they kind of changed your view or you thought, wow, that's a, I don't want to call it a surprise, but something that illuminated you or really went against what your preconceived notions were. What shocked you out there?

I spent some time with Scott Adams, who created Dilbert, who's become a real Trump fan. The very Nietzschean perspectivist notion that there are no facts and there is no truth and experts are just con artists who don't know any more than anyone else. That notion is a lot stronger than I thought. And when you drill down and you think people are just going to kind of at some point admit that it's not true. They don't. So there's a real anarchist tear it all down. In essence, let's vote for a guy on TV. It doesn't make a difference kind of attitude. To me, it's just like we elected Snooki as our president.

We just didn't care in some level. We either think the institutions are irrelevant and things will be the same without them, or that the institutions are so strong, you can't tear them down. But it's a dangerous concept. Let's talk about, so you've written this book about elitism, and I'm going to put forward a thesis and you tell me where I got this wrong or what you found. We tend to think politically bucketing the world into two camps, and aren't there three camps right now? There's the far right, which kind of, for lack of a better word, I would call the white patriarchy and feel like the Republican Party now represents them. And if you look at

the demographic mix of the Republican Party, it's mostly old white dudes. There's the far left that immediately is constitutionally unable to acknowledge any points on the right and anything that Trump says or Trump followers say is they view as wrong and don't want to see if there's any merit or anything worth listening to. And then there's the third who are in the middle. And that's where the fight, that's where the fight for our future, the fight from a move away from a trajectory towards an autocracy moves. First off, do you buy that notion that we've been kind of trifurcated? And if so, what is their view on elitism? What is the role that it's played in the fight for the middle? Well, I think we're always trifurcated, but the far left, the left has gone lefter and the right has gone righter.

Yeah. Especially the right, the left has gone left or in the right has gotten righter. Yeah. Especially the right. The right has gone really past democracy. Right. But the middle is largely people who just don't give a crap. I mean, do you remember during the 2016 election? That's the best description of moderates I've heard. They just don't give a crap.

They don't. And in some ways that's great. They're living their life. They don't really care. It doesn't affect them much. they're not docker recipients and they're not you know but you remember cnn during the 2016 election decided to get um undecided voters and they had them like watch every debate and talk to them afterwards and they would change their mind every every debate they'd be like yeah did she i think she's good. Those people in Florida decide who the president is. Yeah. Well, I can tell you, we just don't

give a shit down here in Florida. Record levels of infections, and we just don't seem to give a shit. So Joel, I always like to end this with you, from an exterior viewpoint, it looks like you have led a very interesting and rewarding life. And what advice would you give to your kind of caught your 25 year old self? Well, that's interesting. I usually avoid advice giving, but I think giving advice to myself seems like a good exception. I guess I would tell myself to be less tied to my perceived identity. You know, I think a lot of things that I didn't do was because I didn't want to be thought of as that kind of person or I become doctrine, should not become dogma that you want to remain open-minded around, you know, avoid guardrails in your life, like try and be open to new opportunities. I'm trying to

make this more actionable for our young people. Yes. And also to other ideologies, right? So every time I get in a conversation with someone who disagrees with me, I don't have to try and win that argument. I can instead try to, you know, enter that discussion with the hope that my mind has changed. So a lot of guardrails that prevented me from being, and not just work-wise, probably all kinds of ways. Like I spent a lot of my life thinking I'm a person who isn't athletic and just wants to work in the world of the mind, so I don't care if I'm out of shape. And that was not a smart decision for a while. Okay. So rapid fire, Joel, first thing that comes to mind, Trump, Biden, and I know you don't, what's your instinct, although you're supposed to ignore your instinct, and I don't like to make predictions here. So

what's your non-instinctual, non-expert, non-elite viewpoint? Trump, Biden, who wins? Oh God, this is the kind of thing we just talked about not doing, right? And didn't we learn from 2016? Yeah, but I don't want your identity of who you are to turn into dogma. So I want you to be open to other things, including predictions. Trump, Biden, you were out there. What do you think? I don't see how given what's going to be an insanely bad economic situation and the coronavirus, how anyone who's president, no less an unpopular one, wins reelection. I mean, historical data, I shouldn't say I think think historical data tells you that it doesn't,

it doesn't mean it's right. A piece of media you would recommend for other people right now that you've consumed during COVID. Yasha Mount's podcast. Say more. I don't know that. He's a professor who studies, you know,

the he's, he grew up in Germany. He's Jewish. And he is very concerned, has been studying his whole life, kind of the dangers of autocracy to democracy, kind of democratic backsliding. And he interviews people every week about it. And I think it's just having a global perspective on democratic backsliding, I think, helps Americans from thinking this is all Trump. This is all racism. This is all whatever it is. And seeing the kind of whole picture of what's going on in all these countries. Joel Stein is a journalist, author and cultural pundit.

His latest book is called In Defense of Elitism, Why I'm Better Than You. And you are better than someone Who Didn't Buy This Book. He joins us from Los Angeles. Joel, thanks for your time today. Oh, it was fun. Thank you. We'll be right back. The Capital Ideas Podcast now features a series hosted by Capital Group CEO, Mike Gitlin. Through the words and experiences of investment professionals, you'll discover what differentiates their investment approach, what learnings have shifted their career

trajectories, and how do they find their next great idea? Invest 30 minutes in an episode today. Subscribe wherever you get your podcasts. Published by Capital Client Group, Inc. Hey, it's Scott Galloway, and on our podcast, Pivot, we are bringing you a special series Published by Capital Cleson, the senior AI reporter for The Verge, to give you a primer on how to integrate AI into your life. So tune into AI Basics, how and when to use AI, a special series from Pivot sponsored by AWS, wherever you get your podcasts.

Welcome back. It's time for Office Hours. As a reminder, we're here to answer your questions about business trends, big tech, career moves, and more. If you'd like to submit a question, please email a voice recording to officehours at section4.com. Question one. Hello, Scott. I'm Yeltsin from Belgium, and I would love to hear your thoughts on special purpose acquisition companies. Spocks have accounted for 38 percent of U.S. IPO filings and raised over seven billion dollars in H1 of 2020, more than the total capital raised by institutionally backed IPOs during that period. For private businesses, selling to a SPOC can be an attractive option as the owners are often private equity funds. SPOCs also pay a premium compared to a typical private equity deal

and being acquired by a SPOC can also offer business owners what is essentially a faster IPO process. So what I'm wondering is, do SPOCs also have benefits for us as investors? Are they a good way for retail investors to get in on part of the gains usually captured in the private markets? Or should we see this as buying a lottery ticket solely based on the team's reputation. Thank you, Scott. All right. Yeltsin from Belgium. Yeltsin, isn't that... Wait, hold on. I thought you were retired after leading the revolution or the fall of Russia. Wait, that's Boris Yeltsin. That's Boris Yeltsin. By the way, great hair from Boris, and that guy looked like he knew how to party. Anyway, anyway, a SPAC.

SPAC stands for Special Purpose Acquisition Company. SPACs are companies with no commercial operations that are formed strictly to raise capital through an IPO for the purpose of acquiring an existing company, also known as the blank check company. Several media outlets are saying SPACs are having kind of their moment. Well, that's not a surprise. They are having their moment. A recent report from Goldman Sachs said that of the 56 SPACs it examined since January 18, outperformed the S&P 500 in the first three months after an acquisition, but lagged the broader market in the year after the completed

deal. The report also found that 51 SPAC offerings so far this year have raised a record $22 billion. That's up 145% from the same period a year ago. Another report from Renaissance Capital in July looked at 223 SPAC IPOs since the start of 2015 and found that 89 of them that went public had an average loss of about 20% compared to the average aftermarket return of 37% for traditional IPO since 2015. Only 29% of the SPACs in this group had positive returns. So what is a SPAC? A SPAC is basically someone with credibility, like a Bill Ackman or a Jason Mudrick from Mudrick Capital, who are known for providing above market returns and have great brand. And they sort of do all the shitty work that has a certain amount of lag. And that

is they do all the filings. They get the company, if you will, effectively public. They raise money. They kind of go public. They get all the administration of an IPO out of the way, such that they can just add water to a company and boom, it's trading. So it bypasses to a certain, it's like Insta IPO. I'm an investor in several private companies and it's shocking how long it takes to get the company prepped for a public offering in terms of doing all the audits, lining up the right management, the right filings. It's at least a six month process from the moment you say, okay, let's go public, you can't really file for about six months. And essentially a spec arbitrages that time to market by saying, okay, the window is open. And right now we have such a dramatic

opening in the marketplace. You're seeing the few companies that managed to get out are doing really well because there is, I think, a reduction in supply across certain sectors that have been hamstrung by the pandemic. And you're seeing these kind of global disruptors just absolutely exploding, whether it's Lemonade or BigCommerce, which is sort of a Shopify light, a company that grew, I think, 30% or 40% last year that's trading at, I don't know, 20% or 30% times revenue. I mean, just crazy, up 3X in its first couple of weeks as a public company. So a lot of investors are seeing the opportunity to offer a great private

company the opportunity to do Insta IPO and kind of take advantage of that arbitrage. Now, what's the opportunity for retail investors? I say buyer beware here because as is the case with most innovation around the public markets, companies are staying private longer because the institutional for retail investors. I say buyer beware here because as is the case with most innovation around the public markets, companies are staying private longer because the institutional investors want to register that upside in just about the time they want to get out and not that they need capital because they can find all the capital they need in the private markets, not because they need liquidity because you can find liquidity in the private markets. They go public increasingly around the time where they think I'd just like to sell my stock to someone else. So in my opinion,

the retail investor is paying a substantial premium for this stock. And I would say buyer beware. And I think the evidence shows that even if you can get a short-term pop over the long-term, SPACs underperform. In the short-term this year, they're the best performing stocks because the market's appetite is greater than supply and SPACs are taking advantage of that arbitrage, if you will. If that was confusing, listen to it five times. It does five more downloads. Or if you didn't like it, forward this podcast to an enemy. Next question. Hi, Professor Galloway. My name is Matt, and I lead a team of product photographers under the brand creative umbrella for the Wisconsin-based retailer Kohl's.

In 2008, with the Great Recession, Kohl's was down 8% in comp store sales, and the sky was falling. Fast forward to Q1 of 2020, and Kohl's was down 43% comp due to COVID-19 shuttering 1,000 plus stores and furloughing 85,000 employees for a couple months. During this time, our online sales increased significantly, but our margin fell from 35% to 17% due to the increased operating costs of shipping more product. Kohl's stopped dividends and stock buybacks for the near term and introduced longer net 90 invoice payment terms. They also introduced curbside pickup, which was long overdue, downsized some of their stores, and leased the excess space to Aldi and Planet Fitness. And now we are test piloting some essential products such as hygiene and diapers.

Kohl's has a great loyalty and rewards program with their credit card and Kohl's cash, but I think it has an opportunity to be simplified as it can confuse new customers. With everything going on and the acceleration of digital, how does a place like Kohl's compete against Amazon, Walmart, and Target? Do you think any acquisitions make sense? And if so, who or what? Perhaps something that could layer on recurring revenue? Appreciate your podcast. It's helped enlarge my worldview and the work I do at Kohl's. Thanks. Wow, that's a really thoughtful question. I'm not sure I have as thoughtful an answer. I think Kohl's is one of the best run companies

in the world of retail, but unfortunately, individual performance is trumped by market dynamics. And that is you'd rather be a good company in a gray market than a great company in a shitty market. And being kind of near essential, I would describe Kohl's as near essential. Walmart, Target, kind of deemed as essential, allowed to stay open. And Kohl's is sort of near essential. Also, Kohl's is sort of a no man's land. And that is, if you're a fast growing company with less than a billion in revenue or less than a billion in market cap, there's still dramatic upside. If you have more than $10 billion market cap, you have the currency to go make big acquisitions or be bold and invest in technology. Kind of between one and 10 billion is sort of no man's land. And Kohl's has sort of

woken up and was sort of the interesting department store with great management, the little engine or the medium-sized engine that could, and it's sort of woken up and found itself in no man's land. I think they're going to have to take some big risks. And the Kohl's loyalty program is a great example of this. I think their foray into fitness is a very interesting idea. Maybe it's an opportunity to scoop up something inexpensively as obviously the workout or the athletic or the fitness industrial complex is really hurting. I would probably take a page out of Walmart's playbook and think about opening some sort of healthcare or clinics in store.

Trying to figure out if there are small brand acquisitions they can make and go vertical and offer some proprietary brands. Or I would think about hiring an investment banker and selling right now, because I think Kohl's is really in a difficult spot and they need to figure out a way to either merge with another great department store. I could see a Kohl's and a Nordstrom's getting together. And I haven't thought through the brand positioning there and the merchandising, but you have two incredible management teams, fantastic real estate, different complexion in terms of the national footprint. I wonder if there's any synergy there. Is there any synergy? I don't know if there's synergy, but essentially Kohl's has to prepare for a world where they have to do kind of one of two things. Management and their

stakeholders isn't going to let them milk the company and go into decline mode. They're going to try and make Nana young again. And I think they're either going to have to double down on a recurring revenue subscription program, whether it's across apparel or other categories and figure out a way to increase the stock price 50 or 100% from these lows based on having the fastest growing part of their business being some sort of recurring revenue bundle, or they're going to need to merge or be acquired. I don't know if they have the currency with $3.6 billion to make very interesting acquisitions at this point. So Kohl's, fantastic company, great management team. I would be thinking very creatively and very aggressively around what they can do to move to a subscription, whether or not they should be merging with another company where

they can cut their costs collectively by 20% and reinvest in technology or be thinking about selling. Cole is a fantastic company in a difficult place right now. Next question. Hi, Scott. Welcome to New York here. First of all, I love your work and wish I had a chance to take your class in business school. I would trade Adam Grant for you any day.

I was wondering what extracurricular activities you would recommend to young professionals to not only boost their resume, but enhance themselves as a person. I, too, was a college athlete and think the lessons in teamwork, discipline, and selflessness make me a better person and employee today. Living in this city, there are countless nonprofits to get involved with, serving many noble causes, not to mention the option of starting your own, but time is always a finite resource. What activities do you find most impressive in the additional information section of the resumes that come across your desk? Thanks, Scott. Noelle, thank you so much for the kind words. And

also, I am so jealous and envious of Adam Grant. I think he's fantastic. He's sort of Scott Galloway, plus a lot more substance, credibility. And he's won best teacher about five times at Wharton. Let me see. At NYU, I have won it. I have not won it. Zero times. Anyways, but thank you for saying that, because I will come for you, Adam Grant. I will conquer you.

I will squash you. Anyway, thanks for saying that. Okay. So in my opinion, the quote unquote additional interest thing is just stupid. I don't like it unless it's something, go to where you're good and could be great and don't do it from a resume standpoint. Do it from a standpoint of what you want to do with your spare time. I find, and I'm biased because I was an athlete in college, when I find that someone is an athlete, so let me back up. Who do we hire? We did an analysis. We ranked everybody at L2. I know you're not supposed to do that. I know it's not aspirational that anyone who ranks low, we just need to find a better environment for it. It's the company's fault. No, it's not. It's

their fault. Fire them. Anyway, ooh, good. I'm going to hear it on that one. But we found when we looked at, when we divided people into quintiles based on their performance, we generally found that the top quintile had the following attributes. First, they were female. And if they'd been male, I couldn't say that, but it's okay now to say they're female because as long as you are biased for underrepresented communities, you're okay. But we tried to ignore that and not hire based on gender. But we did find that they over-index female. I think young women just mature faster. But anyways, most of the men we had working for us under the age of 25 were still boys. Two, they graduated from a world-class university. And again, we talk a lot about how the better schools, it doesn't matter. No, it does matter. The better schools get more applicants and they're

able to get better human capital. It's not that they do anything different there or turn you into a better person, but they start off with the best raw material because these schools get 10 applications for every one they let in. Effectively, universities right now are giant HR organization screening for the best human capital. And you get best human capital in, best human capital out. So we found that recruiting at quote unquote, the top schools, and I'm not saying Harvard or Yale, but the Penns, the UVAs, the Berkeleys of the world, the schools, the Michigans of the world. And then the third thing we found was athletes were very successful, at least in our environment, in a services business that was very demanding, required a lot

of teamwork, a lot of discipline. And so I have a bias. If someone rode crew, if someone was in diving, if someone was a gymnast, anything that requires incredible discipline, ability to endure pain or push yourself really, really hard, ability to play with others, we will hire especially. So a female athlete from a world-class university was kind of an automatic hire. And I wasn't to say that we would have all three. We obviously hired a lot of men. We obviously hired a lot of non-athletes. We hired people from non-prestige universities, but those for us were very strong signals. So I think sports, athletics, physical fitness, or physical accomplishments through sports. So anyone who finishes an Ironman is probably not lazy and probably not afraid to work pretty hard. The other stuff, I wouldn't let the tail wag the

dog here. Do stuff you love, do stuff you're going to be great at. You feel comfortable talking about it, then talk about it. And also I think the nonprofit stuff, only put it down if you're really genuine about it. Only put it down if it's something that you're passionate about. I think it just begins to feel a little bit, I don't know, a little bit performative. Thanks for the question. We love your questions. If you'd like to submit one, please email a voice recording to officehoursatsection4.com. All right, algebra of happiness. Vox reported that American men still aren't wearing masks because they're afraid of looking weak.

All right, if you're that fragile, the mask isn't the problem. A Gallup report from July found that 3 in 10 Americans sometimes rarely or never wear a mask. Specifically, the survey found that a third of men compared to 54% of women responded they always wore a mask when outside their home, and that 20% of men said they never wear a mask outside their home. In other words, men are not masking. Can you imagine people in 1944 refusing to wear a gas mask or ignoring orders to turn out the lights during a bombing raid? I cannot. Why? Because people were willing to sacrifice. We've conflated freedom with a lack of discipline, a lack of comity of man, a lack of citizenship. Our optimism and technology are not going to replace sacrifice. In order to embrace life and each other,

we need a great distancing, and that includes wearing a mask. I want to talk a little bit about masculinity, and that is people have conflated toxicity with masculinity. And I speak to a lot of young men, and I think that they need to embrace their masculinity. The question is, what is masculinity? And what I suggest is getting to a point of that masculinity, but first identifying what it means to be masculine. And masculinity, I believe, is a wonderful thing. When I was a young man in my 20s, I thought that masculinity meant a few my 20s, I thought that masculinity meant a few things. One, I thought it meant being able to party harder than anyone else.

I loved having a reputation or aspired to have a reputation for being a crazy fun guy. I worked out to be ripped, not to be healthy. I would go to the gym to try and be huge and look good or look masculine such that I could attract a mate or believed I could attract a mate by being ripped rather than going to the gym to be healthy on the inside. And then finally, I thought that sleeping with as many strange people as possible made me masculine. What I found as I have gotten older is that masculinity has changed. And then masculinity means being a good neighbor, being a generous person, taking economic responsibility for my household. And let me be clear, sometimes taking responsibility economically for your household means recognizing

and acknowledging that your partner, your wife, your girlfriend is better at this whole money thing than you and being more supportive of her and her career. That is also masculine. I think it means taking an interest in a child that is not yours. I think that is the ultimate expression of masculinity. In many species, the individuals that are chosen to lead the herd, if you will, are the ones that show the greatest strength in terms of their ability to help out the other elephants. Are you that person? Are you that masculine? Citizenship, voting makes me feel strong like bull. Taking an interest or an irrational passion in the well-being of a child that isn't yours. The key is to define early what masculinity is or put another way, stop acting like a boy as I did

and start acting like a man. Our producers are Caroline Chagrin and Drew Burrows. If you like what you heard, please follow, download, and subscribe. Thank you for listening. We'll catch you next week with another episode of The Prof G Show from section four and the Westwood one podcast network. Do you have kids, Joel? I do. Say more. That's, that's the part where you go. Yes, I have X number of kids and they're this age.

Oh yeah. I have an, I have an 11 year old boy uh named laszlo and uh laszlo yeah that's an awesome name that is an awesome name it's also uh an incredibly elitist thing to do to try and find stanford son named laszlo yeah you should write a book anyway i'm sorry go ahead okay an 11 year old boy what else there's a little word cloud which is the least elitist thing you can do in my book that describes the most elitist things about me. And I actually didn't write A Son Named Laszlo, which I now realize was a huge mistake.