The Prof G Pod with Scott Galloway - Exploitation Economy

Episode Date: June 25, 2020

Scott discusses how the Tech Giants will see a snapback in their US advertising revenue, as well as how the disruption to higher education has already begun and why universities need to rethink their plans. Scott also brings on Jim McKelvey, the co-founder of Square, to hear his ideas around innovation, the payments sphere, and advice to entrepreneurs. McKelvey is also the author of “The Innovation Stack: Building an Unbeatable Business One Crazy Idea at a Time.” This week’s Office Hours: Palantir’s potential IPO, what to expect when impact investing, and how to build your personal brand.  Algebra of Happiness has Scott wondering when the US moved from an innovation economy to an exploitation economy. Learn more about your ad choices. Visit podcastchoices.com/adchoices

Welcome to the 15th episode of the Prof G Show. 15, our quinceañera, cultural appropriation of the worst kind, a celebration of the passing from girlhood to womanhood in Latin cultures. What else can we tell you about 15? Football is done in 15-minute increments. 15 is also the emergency number designated in Pakistan. Good to know. It also plays a big role in rugby. And finally, the Hanbali Sunni Madhab states that the age of 15 of a solar or lunar calendar is when one's taklif, which is an obligation or responsibility,

begins and is the stage whereby one has his deeds recorded. In other words, when one starts living up to one's position in this world as a responsible human being, when you start being a man, I will be turning 15 soon. It's the Prof G Show. In today's episode, we speak with Jim McKelvey, the co-founder of Square. To hear how Square fits into the payment sphere, his ideas regarding innovation or the innovation stack and why he thinks disruption needs to be disrupted. Well, that's clever. What a turn of a phrase there.

Disruption needs to be disrupted. Buy the book now. During office hours, we'll also cover Palantir's potential IPO, where we think impact investing might be headed and advice to those looking to build their personal brand. The brand is you. The brand is you. Last session of my class is on branding yourself. Anyways, let's rock this boat. Let's light this candle. Let's be all beer, no foam. All right, today's news.

Companies including Upwork, REI, The North Face, and Patagonia are seizing ad spend on Facebook to protest the platform's handling of misinformation and hate speech. I heard they did that. I heard that that friendly blue icon does that and that it's damaging the world at a greater scale than any organization in history, but I could be wrong.

I'm not wrong here. This is part of a campaign led by top civil rights groups known as hashtag stop hate for profit, which began calling for advertisers to spend their marketing on Facebook in the month of July. On a similar note, the tech giants are expected to lose billions in ad revenue due to COVID-19, according to eMarketer. Google will lose about 5% in the US of their ad revs, but you're going to see just as vicious or more vicious a snap back. The revenue line at Facebook and Google will look like what the president and CNBC are hoping happens with the economy, which it won't once we stop helicoptering all this money that we're borrowing from future generations. I hate crime against future generations is what we should

be calling these bailouts, but I digress. Back to Google and Facebook, they will rip back and they'll go from 60 cents on the dollar to 70. And their stocks reflect that. I believe their stocks have hit all time high. I sold all my Facebook stock because it's just easier to me to go fully sanctimonious all the time now that I don't own shares in the company, but I expect it will continue to go up. So it costs the dog money to howl at the moon. It costs him money. Anyways, what's going to happen here? An unbelievably aggressive snapback. Yelp announced in a blog post that it's introducing a new feature that tracks whether businesses are following social distancing guidelines.

So Yelp, let me just give you some insight here, some recon on the ground in Florida. Floridians just don't give a shit. They just don't give a shit. It's striking how lax people have been here. And I think that we need new messaging around masks. And unfortunately, it's become Democrat versus Republican. I think the messaging around masks, it rings true and positions it in a different light, is I think we have to position masks around citizenship and patriotism, that if you care about Americans who have served, if you care about Americans who have built this country, specifically the older generation, you're going to wear a mask.

I've been talking a lot about this with so many companies and so many people, and I'm not an epidemiologist, but that's not going to stop me from playing one on TV and making predictions that I know nothing about. But it strikes me, or my bet, is that we're going to, in fact, get at this from the other angle. And that is similar to the AIDS virus, where there was always head fakes about a vaccine, but ultimately the therapies are what really made the progress around this. I think the same thing's going to happen here, whether it's remdesivir or learning or acquired learning around putting people on oxygen sooner rather than later. I think that we're going to come up with better therapies faster than we'd

expected. And I think the vaccine is going to take longer. Even if we find a vaccine, how do you distribute it to 355 million people efficiently? And how many people decide they don't want to be the first ones in line for a new vaccine? It's going to be very interesting. In other news, Harvard announced it was laying off some people. Carnegie Mellon is, in fact, doing the same thing. And Purdue announced they were closing their MBA program. And this is what I would call a little raindrop before the tsunami of disruption that's about to happen in September. Come fall, people have a chance to step back and go, do I really want to pay $58,000 for my kid who's supposed to be in New Orleans

experiencing alcohol discovery, finding his or her greatness? I think at the end of the day, that's what college is supposed to be. It's supposed to be an opportunity for you to find your greatness. And sometimes that means discovering what a shithead you are, such that you can begin to zero in on your greatness by beginning to shed some of the irresponsible, low character behavior, i.e. youth, and then hold on to some of it, some of that craziness, some of that creativity, some of that personality, such that you can develop the DNA, the base, the cement, the foundation such that as you age, you can become more like yourself. I love that saying, as we age, we become more like ourselves. Wouldn't we like to become more like our better selves? So I think college in that period is exceptionally important. And the

idea that people are going to be trying to do this from their parents' basement is an entirely different proposition. And it's understandable, but here's the rub. The industries experiencing the greatest disruption have one thing in common, and that is the consumption of the product involves standing or sitting shoulder to shoulder with other people, sports, restaurants, movie theaters, and education. And what have all those other industries done? They have cut costs. They have reshaped. They have made really hard decisions. How many universities have cut costs? Simple. The ones that have literally run out of money and have decided we are not only in the ninth inning, we're in the 11th inning, such as the MBA program at Purdue. And Purdue's a decent brand. I mean, that's decent certification,

a good school, the Boilermakers, a good engineering, or a good technical chops. And if their MBA program is shuttering, you're going to see just blood, blood in the water come September 1. And we are going through a series of just ridiculous, ridiculous, some of the most thoughtful, responsible, empathetic people in the world end up in leadership at universities, but they're also in denial and they are constitutionally kind of incapable of making decisions, if it strikes me, around adapting their business strategy to an environment that involves cost cutting. And they're going through a series of iterations around protocols that are just ridiculous. I think it's Georgetown has put out,

I don't know if it's Georgetown. I think it's Georgetown has put out, I don't know if it's Georgetown. I think it's Georgetown. I don't know. I don't know. Has put out advice or a memo to returning students saying you get to pick four other people and that's your quarantine. And they're going to ask that you not have any contact with people outside of those five people. So let me ask you this. What is the point of college? One, find your greatness, and two, to become much better at not distancing. What's the point of college? You're there to not distance, for God's sakes. I was president at UCLA, and this is something that I'm sure will come back to haunt me. I was president of something called the Interfraternity Council. And basically, my job was learning about these horrific incidences where a guy would get

shitty drunk and fall asleep on the roof of his fraternity and then roll off into the parking lot and the guys picking up the trash would find him and we'd have to call his parents and tell them that their son was in the hospital with a fractured skull. My treasurer on the interfraternity Council supposedly went to ask his girlfriend to marry him. And then we don't know what the story is, but he came home and decided to hang himself. And we're not sure what was involved there. But this is what I'll call a time of exceptional alcohol abuse, exceptional, I don't want to

call it emotional instability, but you're going through a lot at this point. And the notion that these kids are going to maintain any sort of protocols off campus is just absolutely delusional. So this is what will happen on campuses across America. They're going to realize about the middle of August that the vaccine is just not going to make its way to the 11 million kids who are supposed to show up sometime in September. They're going to realize that in order to have any sort of reasonable protocols, they cover the myriad of unfortunate, unfortunate, but possible scenarios here. Your professor, I bet a third of our professors are over the age of 60. Professor, week three, sends out an email saying, I've contracted third of our professors are over the age of 60. Professor week three sends

out an email saying I've contracted it. And then week five, a message goes out saying he's passed away. What does that do to the environment of the school? What happens when on week 10, someone reports they have symptoms and that following Monday, 30 of the 150 kids in that class are supposed to scatter to 25 different countries around the world, which is what you have, an international, strong international population at these universities. And let's assume that the current bigoted xenophobic administration doesn't allow foreign students into the country, which they may not. What happens to these universities' financial health when they have 25% of their students are international, but 50% of their cashflow is from students. What happens when your cashflow, 50% of your cashflow doesn't show up? The enormous disruption in education is coming September 1 with institutions, a sector that

is in consensual hallucination with their CFOs and their boards of advisors who have told them to come up with a narrative, a protocol, and absolutely ridiculous strategies and plans, which are nothing but Latin for a signal and a message to parents to send in your deposits. Because about a third of universities could be out of business in 12 months or less. And while they still might have their campuses, they still might be taking applications, they're the walking dead. And people are going to stop applying there for fear that like Purdue MBAs, after their first year, they're going to find out the MBA no longer exists. It is going to be muy interesante, more cultural appropriation. Stay with us. We'll be right back. is the last thing on your mind. 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

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Go to ConstantContact.ca for your free trial. ConstantContact.ca. Hey, it's Scott Galloway, and on our podcast, Pivot, we are bringing you a special series about the basics of artificial intelligence. We're answering all your questions. What should you use it for? What tools are right for you? And what privacy issues should you ultimately watch out for? And to help us out, we are joined by Kylie Robeson,

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 here's our conversation with jim mckelvey the co-founder of square and author of the innovation stack jim where does this podcast find you st louis missouri locked in my office i've never been to st louis we'll circle back to to St. Louis. But so first off, just tell us, I kind of know what Square is, but not really. Can you give us the headline news on what Square is and why it's different? Square has two main product lines. The first is a payment system that allows you to take credit cards and run your business. So you can do loyalty programs and put an online store up and get paid is the first half of the business.

And then we've got this thing called the Cash App. And it's basically a bank in your pocket. It allows you to invest. It allows you to save. It allows you to transfer money. It's super clean and it's open to everybody. I think PayPal and all the different guys, how were you able to carve out a niche and thrive the way, I mean, prosper and thrive the way of, what was the secret sauce there? Well, we didn't carve out a niche the way normal companies do that. So, the way most companies start, it's like elbowing your way into a crowded elevator. There's just a bunch of people in there and you got to kind of jump in and make some room. We didn't do that. We created our own market. And the new market, describe that new market is?

Merchants who process less than $100,000 a year in volume. So the small guy, and when I think of Square, at least I think there's the plugin on the iPad such that you can start taking credit cards right away. So you were there for how long? When did you decide to leave? Talk to us a little bit about being an entrepreneur. So I was there full-time until my son was born, late 2010. And he was a great little kid, had a happy family, and I was working 14 hours a day. And that just is not compatible. And it was also unreasonable for me as a founder to come into the office eight hours a day, while the rest of the team is working almost double that. So it was like, okay, I'm stepping out. So I kept my seat on the board and I left.

But you got to understand, Scott, by that time, all the stuff that I was good at was already done. We had built what was basically Square by the time I had left. And it was just a question of executing. And I'm terrible at executing. So we were hiring people to do the jobs that I was doing. And as soon as we'd hire them, they'd do it better than I would. And I think this sort of cements the point that entrepreneurship and greatness is in the agency of others, right? That a great entrepreneur, there's a difference between having a practice and having a business. And you clearly know how to scale these things and know when to step back and hand the reins to someone else. And I would argue oftentimes great ideas that don't scale, it's a function of, in the beginning, you got to be all over everybody all the time. At least that's how I am when I'm

an entrepreneur. And then at some point you have to find and recognize that this person is really good and is going to do better. You just got to kind of get out of their way. You talk a lot about the innovation stack and that Square's success was in part due to this notion of an innovation stack. Can you say more about what you mean by that and how we should think about it? So the first is that invention and innovation is different than the thing that we always do, which is copying.

Okay. So in most cases, copying is the best way to solve a problem. You find a problem that you need to solve. The first thing you should do is find somebody else that solved it and just do what they did. Like right now I'm sitting in a chair. Guess what? The chair is a solved problem. Now there are different versions of the chair, but basically, you got a surface 17 to 18 inches off the ground, reclines at a three-degree angle if it's rigid or tilts back. I mean, there are different ways to solve the chair problem, but most of them have been done. Just adapt. Copying almost always works, except if humanity has never solved the problem before. And in that case, you're thrown into this weird, weird world, which nobody ever discusses because we don't even have a word for it. But now you're inventing,

now you're creating new and you don't get to copy. And all the tools that you learn, especially the stuff you learn in school, tends to not work that well. You don't get to have a checklist of, you know, step A, step B, step C that gives you the solution. And in that situation, you're then forced to do something that is hugely awkward for humans to do, and that is you have to create something new. You have to invent. And invention, at least the way I was sort of taught it, was not the way I lived through it at Square. Invention is this messy, chaotic process where you do one thing and it doesn't work, and you something else and that works, but it causes two other problems. So now you've got to solve those two problems. And the second problem is illegal. So now you've got to get a law changed. And the third problem causes your customers to revolt. So you've got to switch

that. I mean, you end up with, in Square's case, we did about 14 things that had never been done. So isn't, when I think about trying to take the intangible and distill it down to the tangible such that we can learn from it, I think that a lot of what you're talking about and a lot of my observations around companies that are adding tremendous stakeholder value kind of flies in the face of this basic premise of business school teaching or learnings or one of the core principles. And that is Professor Prahala, University of Michigan talked about this notion of core competence. And other than curiosity and a willingness to experiment and try stuff and not like that,

but also the willingness to kill stuff when it's not working. And you end up with a series of things. You end up with the app store, great design, better marketing. I mean, just all sorts of shit. A better way to present new products and what feels like a fashion show. You end up with all these different innovations. And you're saying that the whole is greater than the sum of its parts. That it's just not one thing. That you can no longer defend something with just one great competence idea asset.

It has to be an amalgam. It's a salad, for lack of a better term. Am I getting to something there? Yeah, yeah. It's a mass noun. And I so wish that people would understand that invention and creating something new is almost antithetical to most of what we have been taught to do, right? We're taught to copy and copying almost always works. And with a copy, you can have an expert, you can consult an expert, or you can go to a seminar or a trade show where they'll teach you how to do it. Or you can have a credential that allows you to officially do this thing.

That's totally cool, but that shouldn't be the limitation of human progress. In other words, if everybody in the world said, I will only do stuff that has already been done, then we don't get any stuff new. And the problem is too many people that I know, and I'm including myself in this, disqualify themselves when they feel that burning ignorance, when they're like, I'm not an expert, so I shouldn't be doing this thing. Well, if the answer is you're flying a plane, you're right. You shouldn't. Don't get in the cockpit and fly a plane unless you've been trained. But unfortunately, the Wright brothers who invented the airplane, one of them had to get in and fly for the first time. And he, by definition,

was unqualified. No human could be qualified to fly the first airplane. So I want a bunch of people to get off the sidelines and get in there and build stuff that hasn't been built before. And it's going to feel really awkward. Talk a little bit about, you say disruption needs to be disrupted. What does that mean? So we get called a disruptive company. Square's called a disruptive company. And so I said, okay, well, what does that mean? And I looked for the disruption. So I went like an academic would, and I said, okay, let us look for evidence of disruption. And there was none. Now there was a little bit because before we entered

the market, there was a bunch of price gouging. And that pretty much ended when Square publicized a 2.75% rate. But short of that, which may have driven a couple of little minor players out of business, like none of the majors fell. Like we didn't kill any companies. We didn't come in and conquer some market. What we did was we found effectively unoccupied territory and occupied it. And it was really not disruptive to anybody. As a matter of fact, all the companies

that we were supposedly competing with when we started, I mean, you could argue that PayPal, PayPal's a direct competitor. They kind of did the same thing we did. Well, PayPal's 10 times the size they were when we started. They're doing fine. We're doing okay. And I was like, well, why are we talking

about disruption so much? And the answer is we're lazy. And we took Clay Christensen's work and he wrote this thing called uh you know innovators dilemma and he coined the term disruptive innovation that's what christiansen called he called it disruptive innovation but that's a mouthful so people started saying disruption instead of they they left the innovation part off and and then since a lot of people heard the word and didn't understand the background concepts, they thought, oh, well, the purpose of my hot new startup is to destroy what exists, which I think is a stupid way of viewing entrepreneurial activity. Like, no, what you should be doing with your energy is creating something new, build something that we don't have.

You don't have to disrupt anybody. Who's the most innovative company in payments outside of Square? Shopify. Shopify. That's interesting. Yeah. Payments. That's funny because most people don't think of them as payments. They think of them as fulfillment, but they have- Well, they're point of sale.

Right. Fair enough. It's that whole innovation stack you were talking about, right? Yeah. I mean, again, to me, the payment is just a way into one value chain. I mean, there are a bunch of companies that are doing interesting stuff in payments. Like the best payment experience is not the Square payment experience. It's the Uber payment experience, right?

Yeah, because there is no payment. There's no payment experience. Get out. Yeah. That's a really interesting thought. I agree with you around Shopify. So I want to talk to you a little bit. There's this notion that

the migration into kind of super cities has been just unprecedented over the last 30 years, the New Yorks, the Londons, the Hong Kongs of the world, the Singapore's, et cetera. And that all of this, the flow of this river might be reversed and that we might see, I don't call them second tier cities, but smaller cities boom. And it seems like St. Louis is set up really well because it has an outstanding university of all the, we track universities, you know, like you track your competitors. And I would say the two universities I hear more about than any other two universities are Carnegie Mellon because of some of the work they're doing. And also I keep hearing about

Wash U. The Wash U has kind of gone from this almost like a Pitzer or a Claremont where anyone who knows what they, where anyone who knows anything about academia goes, that's a great university too. It's becoming sort of a real iconic university and sort of starting to rival other great schools in the South or the Midwest, the Dukes of the world, et cetera. And it feels like a great university with a strong engineering department, a city that's less expensive. It feels like St. Louis is set to boom. And I imagine you're going to agree with this. Any thoughts? Give us your best pitch on St. Louis. You could obviously live anywhere and you did live in super cities and now you're back in St. Louis. What's the pitch for St. Louis? Well, that's the first pitch is that

as someone who could afford to live anywhere now, I've chosen to live here. And I wasn't even the one that made the call. It was my wife who's Swedish and she has no allegiance to any place in the United States. And she made the decision to move out here. The thing that's awesome about St. Louis, it is a world-class city in many ways in the lifestyle. And then culturally, there are two things that we do really, really well. One is education and the other one is healthcare. And you don't really care about either unless you have kids, in which case you really care about education. And what we notice- You see public schools, very public schools. Public schools. My kid walks to a public school. Well, used to when it was closed. But like,

the point is, when I lived in California, there were great schools available. They were very expensive, private institutions that only elite kids could get into. And I didn't want my child only experiencing rich kids as his peer group. Oh, I so agree. So agree. And so if you want to have a normal, well-rounded, but well-educated person, you can do here for free. I'm talking about public education. So that's thing one, move to St. Louis. The lifestyle is awesome. Second thing is healthcare. We've got one of the better healthcare systems in the nation right here, anchored by Washington University's medical school. We didn't choke when COVID hit. We have world-class healthcare. Those two things matter. Culturally, the city's got a lot, but let's talk

about the trend that you started this off with because you talked about super cities. And to me, super cities, which are great places to visit, they're also like, they're very clubby. Okay. So what I mean by a club is that it's an elite institution. A city like San Francisco where rent for a single person is $3,000 a month. You've got to be pretty elite to be able to afford to live there. And if you're not of a certain stature, you don't get to play in that club. And one of the things that the COVID-19 shutdown has taught us is that the clubs don't actually have to work. I mean, you and I are not sitting in a room together. We're electronically connected. I think what you're going to see is that now that we've broken some of these club bonds,

and I don't just mean super cities, I mean elite institutions, perhaps even elite educational institutions, you don't have to be in this geographically restricted area to contribute. And hopefully that will then let cities where lifestyle dominates to prosper. Jim McKelvey, amongst other things, is a serial entrepreneur, inventor, philanthropist, and glassblower. In addition to being deputy chair of the St. Louis Federal Reserve, he joins us from St. Louis. We'll be right back. Support for the show comes from Alex Partners. In business, disruption brings not only challenges, but opportunities.

As artificial intelligence powers pivotal moments of change, Alex Partners is the consulting firm chief executives can rely on. Alex Partners is dedicated to 350 tech executives from across North America and Europe to dig deeper into how tech companies are responding to these changing headwinds. And in their 2024 Digital Disruption Report, Alex Partners found that 88% of executives report seeing potential for growth from digital disruption, with 37% seeing significant or even extremely high positive impact on revenue growth. You can read both reports and learn how to convert digital disruption into revenue growth at www.alexpartners.com. That's www.alexpartners.com.

In the face of disruption, businesses trust Alex Partners to get straight to the point and deliver results when it really matters. Think about those businesses that grew their sales beyond their forecasts. Companies like Momofuku or Feastables by Mr. Beast or even a legacy business like Mattel. When you think about them, sure, you think about a product with demand, a focused brand, and influence-driven marketing. But part of their secret is actually the business behind the scenes, as in the business that makes selling and buying simple. And for millions of companies, that business is Shopify. Nobody does selling better than Shopify, home of the number one checkout on the planet. With their Shop Pay feature, they can boost conversions up to 50%.

Meaning way less carts going abandoned and way more sales going... So if you're into growing your business, you want a commerce platform that's ready to sell wherever your customers are scrolling or strolling. Whether that's on the web, in your store, and everywhere in between. Because businesses that sell more, sell on Shopify. Sign up for your $1 per month trial period at shopify.com slash voxbusiness, all lowercase. Go to shopify.com slash voxbusiness to upgrade your selling today. Shopify.com slash voxbusiness. Okay, it's time for Office Hours. As a reminder, we're here to answer your questions about the business world and how you can get ahead at work and in life.

If you'd like to submit a question, please email a voice recording to officehours at section4.com. Number one, question one. Hello, Scott. Palantir is rumored to be filing its IPO in the coming weeks, with floats set to be available as soon as September. From a business perspective, how do you think the IPO will be received? And as a global citizen, do you believe this company is a net positive or a net negative for society? Thank you. Thanks, Ryan. So there's two things here. There's the IPO market and there's Palantir itself. And in the short term, you'd rather have a hot IPO market and a good company than a great company and a tepid, anemic IPO market. And I believe the IPO market is going to be white hot and have predicted that the last half of 2020 will be exceptionally strong for this vintage of IPOs. And I'm putting my money

where my mouth is. I'm trying to get in on some IPOs and find shares in the secondary market in companies that are supposedly going to go public sometime soon. Why? Why? Because the people investing in these IPOs are the ones with the best relationships with the underwriters taking them public, which are typically institutional investors. And these individuals have more money or these institutions have more money than they did at the beginning of the year. We don't like to say this out loud, but the markets are up and people who have a net worth over $10 million are worth more than they were post-pandemic than pre-pandemic. Okay, that makes sense. Income inequality on steroids, that's what we have.

Everything's thrusting forward 10 years, even in a pandemic or because of the pandemic. So we have more demand or more cash on the sidelines, but I would imagine there are a lot of firms planning to go public that can. Anything in certain sectors, whether it's anything to do with hospitality or anything to do with the consumer world right now, like an actual consumer product, anything to do with retail, can't get out. So you have entire swaths of the economy are prohibited from accessing the public markets, which means you have more demand, more cash on the sidelines, and fewer companies getting out. So the ones that will get out will experience a bunch of money trying to get through a crowded

door and I think are going to experience incredible one in 30-day pops, if you will. And we're already seeing that so far. I think this company called Shift was up big on the first day. We're going to see what happens to Lemonade, the disruptor in the insurance space. I'm trying to find shares in that because I think Lemonade has established a reputation as the disruptor in a sector that has billions of margin value. Again, just as the IPO market is probably more important than the name itself, the industry you're trying to disrupt and how fat and happy and lazy and how many

unearned gross margin dollars are in there is as or more important than the quality of the company itself. And I think Lemonade is both a good company with good management going after one of the few remaining blue whale carcasses ripe for disruption. But let's talk about Palantir in terms of whether or not I believe as a global citizen that they're good or bad for the world. The honest answer is I don't know. This company is very kind of stealthy and I think that's on purpose. I think they enjoy positioning themselves as sort of the spy versus spy. It makes them seem smarter than they are. And they're constantly talking about how they work with the CIA and how their company played a role in capturing or not capturing, hunting down, finding, and putting a bullet in

the eye of Osama bin Laden. By the way, I just fucking love the notion that Osama bin Laden's last moments, he registered the notion that we had found him. I remember on September the 12th or 13th, I saw the second tower come down and I was walking around Union Square and this elderly couple came up and handed me this flyer and it was patterned like a missing dog flyer. And it said, have you seen me? And it was this picture of this handsome young man in his waiter's uniform. And he worked as a waiter at Windows of the World in the World Trade Center. And his parents, I don't know if they were Polish or Czech, were wandering the streets of Manhattan, passing out flyers, looking for their son. And I remember the woman looking up at me, the mother looking up at me. And when she made eye contact with me, I remember registering

a moment after understanding what they were doing, she actually looked at me and she was hopeful that I might know where her son was. So I love the idea that we put a bullet in this motherfucker's eye and then showed him a lot more respect than his organization showed for any of us and gave him a burial with full rights. A bit of a digression there, a bit of a digression. So I think Palantir, whether or not it's good for the world, there's a lot of strange shit here. Supposedly critics will say, okay, they help put kids in cages or they're working with the CIA or they shouldn't do that, or they work with ICE. My viewpoint is that I want to see America and the government working with the best firms in the world. I've never understood the Amazon indigestion or the indigestion from Amazon

employees about ASW or AWS having the government as a client. I think the most noble client in the world is the US government. And there are a lot of bad people out there. There are a lot of bad actors. And the notion that we're going to let the Chinese and the Russians and Taliban and Al-Qaeda and ISIS have access to the best software in the world, advanced software companies in the world. Whether or not Palantir is that company, I don't know. I know that they're expecting to do about $1.5 billion in 21. This year, they're at a billion up from about 700 million in 19. So it's growing fast. I don't know what the profitability is there, but this is going to be a really interesting one. I think Peter Thiel has a reputation as being this genius, but uncomfortably, I don't know if the term is strange, but his proximity to Donald Trump, his political views, his unabashed endorsement of Facebook, distinct of the bad behavior on the platform. There's this very uncomfortable weirdness around Palantir right now and a little bit around Peter Thiel. I don't know if that's actually going

to add to the allure of the IPO or hurt it. But in general, if I had to guess, this is going to do okay to good. I think if you had access to this IPO, I don't know who's taking it in public, I would say it's probably asymmetrically tilted to the upside because the market, I think, for IPOs is going to be really hot. Palantir is considered a disruptive company with very, very smart backers. Next question. Hey, Scott. This is Carolyn from San Francisco. I loved your last episode on altruism and had a question around impact investing. I know some way. Do you think this is a space that's going to grow, recover, or maintain some stability during all this? Do you think it is a good way of supporting companies that are trying to make a positive impact? Would love your

thoughts. Thanks. Thanks very much, Carolyn. So when you decide to invest in funds where sustainability or impact investing is a criteria or the kind of their lead mission, I think that's wonderful. I'm glad there are funds that do that. I think you should expect to have lower returns. I think if you task a fund manager with investing your capital and you begin limiting the potential universe of alpha and returns to companies that are behaving based on a predetermined set of criteria such that they clear those hurdles for the manager and the limiteds, that if you're reducing the population or the opportunity set, you should logically expect to have lower returns. And there's this Hallmark cartoon that, oh, if we just focus on companies that are doing good,

we'll get higher returns. That's bullshit and the data doesn't bear that out. Tobacco companies have been incredible companies to invest in. Facebook and Google, who arguably have been some of the two of the most damaging companies over the last 20 years, have been extraordinary, extraordinary companies or stocks to own. As a matter of fact, show me a company, I used to say, show me a company that's added more than 10 or $20 billion in a 24-month period, and I'll show you a company that's vertical, has data, Benjamin Button effect, that's the sort of telegram thing I'm going through. I would add to that, show me a company right now that is adding tens of billions of dollars, and I'll reverse engineer it to one thing, and that is exploitation. We have moved from an innovation economy to an exploitation economy. It is really disturbing. I think it's

wonderful that people have decided to focus on impact investing and sustainable investing. You should expect lower returns. Next question. Hey, Scott. This is Andrew Blum calling from New York City. I actually heard you speak at Stanford, you and Kara. I was wondering, you talk a lot about how you should go on these social platforms to build your brand. And I was wondering what advice you would give to a student who maybe knows what sector they want to go into, but aren't exactly sure what their brand is yet. Thanks.

Thanks very much, Andrew. So the last session of my class is called The Brand Is You. And the first half is on how to brand yourself. And the second half is on kind of a summary of the algebra of happiness and these equations I've tried to assemble that I think are best practices around the competence of being happy. So in terms of The Brand Is You, a key component of managing your own brand, think about how many millions of people are in the business of marketing and really understand everything about Rubbermaid, the brand, really understand everything about Pepsi and the difference

between Pepsi and Pepsi Lite, and think about the brand from every dimension. But how much time do these people spend thinking about managing their own brand strategically? And that is the impression other stakeholders have of you based on all the different ways you touch them. And it's a really, I think, productive analysis to go through. And one key component of that is similar to a consumer product that figures out what its medium is. If you're beer, you need a lot of awareness and people make very quick decisions around

beer. So that's sort of a function of imagery that's best probably communicated to a target market. Everybody loves beer, specifically all dudes love beer. So sports and TV and humor and top line imagery, and then supported with shopper marketing, that is end caps showing a cardboard cutout of Tom Brady saying, pick up Bud Light for July 4th. Those are the mediums that work best for that. If you're in the business of movies, although this is changing dramatically and you need to get dramatic awareness fast, boom, boom, TV, run a bunch of stuff across Modern Family and The Masked Singer because we got to raise awareness for

Minions 3 fast because it gets out of the gate strong, or it just doesn't get, period. So the question is, what is your medium? And that is, where do you thrive? And there are so many mediums to choose from in terms of your media mix. There's one-on-one, there's presenting to groups, there's going out with groups of people. There's texting. There's LinkedIn. There's TikTok, Instagram, Twitter. There are just so many mediums. There's the written word. Here's one. Isn't that crazy? The written word. What is your medium? I am good in front of large crowds. I'm a decent speaker and I kind of rise to the equation and I become likable and charming in front of large clouds. One-on-one, I managed to come across as insecure and aloof at the same time,

which is no easy feat for the dog, right? No easy feat. It's like the dog that growls at you and then won't look you in the eye because it seems scared. It's just not a good look. So start, I would say pick three or four, start on it to spend some time, try and come up with some core associations around what are the features you want to, or the associations you want to cement in the mind of your stakeholders in that sector and start experimenting on those various mediums, whether it's the written word and posting in medium. I mean, come on, there are so many mediums, including Medium. And then see where you start to get a little traction, see what feels right when you try it on, and then pick one of

those mediums and go all in. I decided in 2007, I think it was, that I was going to get to 100,000 Twitter followers and that I was going to start producing one video a week on YouTube. And then at some point I would have a video that got viewed a million by a million people. I set those goals and said, I think I'm good on video and I have resources around me. Greatness is in the agency of others. And I really enjoyed Twitter. So I picked those two mediums and I set out goals, made investments, hired some people to help me with the video production, tried to get better on Twitter, followed a lot of people, used a follower strategy. But the bottom line is you are a brand. Part of being a brand is picking your media mix. Pick four or five mediums, experiment with them after deciding what are two or three core

associations you want to reinforce over and over with the content you post on those mediums. See which one or two just feel right after you try them on and then set aggressive, aggressive but doable goals and approach it like a project and own that medium. Own it. Own it, Andy. Own it. Keep sending in your questions. Again, if you'd like to submit one, please email a voice recording to officehours at section4.com. Algebra of happiness, citizenship, being a part of what is this incredible experiment known as America, it ends up that the most patriotic Americans are those who have invested the most. Soldiers, the ones who have sacrificed, who leave their families to go put themselves in harm's way, tend to be the most patriotic. And the same is with your children. Why do you love them?

Why are you so, I don't know, what's the term, parental or all in with your kids? Because you invest so much in them. A, also instinct has something to do with it and hopefully they're not awful, but them look, smelling and feeling like you and also the fact that you spend so much time dealing with these things that are awful, especially when they're really young, you become incredibly invested the way I think a soldier becomes invested in their country because of the incredible investment and sacrifice they make. And I think about our citizenship. And I wonder if that because Americans haven't had to invest, at least my generation on down,

most of us were not called to war. Most of us, our armies all volunteer. Most of us have not had to pay high taxes. Most of us have not really felt a foreign threat. Most of us take, I think, a lot of our citizenship for granted or a lot of the rule of law. We've never lived in a nation where corruption, although it feels like we're getting closer every day, but where corruption is a constant fear that people could show up and just take your private property away, that you had no recourse when people did things to you, harmed you

or your family or stole from you. And I worry that we haven't been forced to make the same investments in our country that our ancestors have made and as a result don't demonstrate the same level of citizenship. And I think the way that's manifesting itself right now is in our country's pretty much refusal, not across the board, but refusal in much of America to wear a mask. And it's just such a shame that it's become politicized because it really is just about citizenship. Again, not contracting COVID is the fear here, although you do not want this, but passing it to someone vulnerable. And it seems like the easiest form of citizenship is that when you are not on your own, in your

own house, on your own property, to put on a mask. My father, 90 years old, a frog man for the Royal Navy, married and divorced four times, wears a mask when he goes out for health reasons. But he is out every day because he wants to swim and he wants to walk on the beach. And for all of our fathers, let's wear a mask. Also, this week, I've been spending a lot of time thinking about the young man, Alex Kearns, who took his own life, threw himself in front of a train after mistakenly thinking he was down $750,000 after an alert he received or an update he received on his Robinhood app. And it strikes me that many of our companies now, at least the

ones that have managed to aggregate tens of billions of dollars in a short period, all have one thing in common. And that is on the other end of that app is someone being exploited. Whether it's a worker who's making less than minimum wage as a quote-unquote partner, which means driver with no health insurance, not subject to minimum wage protections. Whether it's a young woman who is prone to self-harm because she not only doesn't get invited to a party, but has to see it play out in real time in her room. Whether it's a young man who doesn't understand instruments and through gamification and colors and random rewards is encouraged to play with financial nuclear bombs, instruments that he doesn't understand and gets

in too deep, too fast using the same addictive qualities that Facebook and Twitter have deployed. When did we become a country where, A, we don't have the citizenship or don't feel the need to wear a mask, and B, where our best and brightest decide that the way they're going to aggregate wealth is to exploit other people. We 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 Prop G Show from Section 4 in the Westwood One Podcast Network.