The Prof G Pod with Scott Galloway - Is the Golden Age of Luxury E-commerce Over? The Nuances of Remote Work, and How Does Scott Manage His Time?

Episode Date: June 5, 2024

Scott speaks about the current state of luxury e-commerce, specifically how it speaks to a larger issue: every industry is turning into an oligopoly. He then discusses the nuances of remote work, and wraps up with how to approach time management. Music: https://www.davidcuttermusic.com / @dcuttermusic Subscribe to No Mercy / No Malice Buy "The Algebra of Wealth," out now. Follow the podcast across socials @profgpod: Instagram Threads X Reddit Learn more about your ad choices. Visit podcastchoices.com/adchoices

Support for this episode comes from The Current. The Current podcast is back with an exciting new season featuring marketing executives from the world's most influential brands. Tune in to hear what's driving conversation in the fast-moving world of digital advertising, the unique insights from brands as diverse as Hilton, Instacart, Moderna, Major League Soccer, and more. And in this presidential election season, The Current explores what a national political advertiser like the National Republican Senatorial Committee and a major CPG brand like Hershey

can learn from each other. Listen in and subscribe to The Current at thecurrent.com or wherever you get your podcasts. Support for PropG comes from NerdWallet. Starting your credit card search with NerdWallet? Smart. Using their tools to finally find the card that works for you? Even smarter. You can filter for the features you care about, access the latest deals, and add your top cards to a comparison table to make smarter decisions. And it's all powered by the Nerd's expert reviews of over 400 credit cards.

Head over to nerdwallet.com forward slash learn more to find smarter credit cards, savings accounts, mortgage rates, and more. NerdWallet, finance smarter. NerdWallet Compare Incorporated, NMLS 1617539. Welcome to the Profit Pod's Office Hours. This is the part of the show where we answer your questions about business, big tech, entrepreneurship, and whatever else is on your mind. In last week's Office Hours, I answered your questions surrounding TikTok, the toxic culture of investment banking, and being an older dad. That hurts. That hurts. I think my producer just called me old. You should see me naked.

I look 58 and 7 eighths. The propaganda tool is off the table. I think it's going away, but they'll say, well, if we're definitely going to lose the propaganda tool, we don't want to lose a quarter of a trillion dollars. And I believe they will come to some sort of accommodation that makes the White House comfortable and where ByteDance gets to keep that

quarter of a trillion dollars. I don't think your TikTok is going to go away. I think this will end up in an agreement. People should care about you. And whoever your bosses are that are letting you work to the point of exhaustion to where it's really impacting your mental and your physical health, then quite frankly, that's not B of A. It's those people's fault. Whoever is the VP that you're, the VPs that you're reporting into, whoever runs your group, are not decent people. You should look forward to having kids. It's never the right time. I find it's kind of never the right time to have kids. You just kind of, I don't kind of pull the goalie and see what happens. You don't need to anguish over this.

You're going to have to be in a relationship, to have kids with someone you like, to have a good job, 40 years old and having a kid. That is the sweet spot. Today, we'll answer your questions about luxury commerce, the rise of the remote husband, and time management. The rise of the remote husband? Jesus Christ, what the fuck is that? Okay, here we go. First question. Hi, Prof G.

This is Toby from the UK. Given your background in luxury and e-commerce, what do you think happens next in the luxury e-tailer space. The recent downfall of Match's fashion, sale of Farfetch for a song, and with private equity said to be circling some of the remaining players, is luxury e-commerce of third-party brands any longer a viable model, and was it ever in the first place? Thanks for the podcast, your candor, vulnerability, and humor. I'm a Londoner, and I'd love to take you for lunch when you're next in town. Thanks for the thoughtful question, Toby, from the UK UK. So is the golden age of luxury commerce over? So many experts think so. Some context with respect to some of the things you referenced.

Matches fashion was recently bought in December and then shut down by the Fraser Group. Although it was once worth over a billion dollars, it was sold for only 66 million because it routinely missed business targets. Then things worsened when new owners took over. Brand partners left due to delayed payments, and the firm endured harsh cost reduction strategies. In December 2023, so just a few months ago, Farfetch, which was a darling, another major player in luxury e-commerce, barely escaped bankruptcy after a Korean e-commerce group, I think it's called Kupang, acquired the firm and propped it up with a $500 million bridge loan. Experts believe Farfetch's financial struggles reflect broader issues within the industry, including poor management decisions, overstocking, and a crowded market. I think what happened with luxury commerce basically happened to traditional retail

back in the aughts. And that is, there were, so big companies are slow. So you had companies like Williams-Sonoma or Sephora kind of taking their time, not sure how they wanted to approach some of the brand challenges of selling online. They weren't set up for direct consumer fulfillment of sending things in onesies and twosies. And into that void slipped a bunch of e-commerce companies that started selling stuff. Do you remember Gilt? G-I-L-T. That was after 2008, there was a tremendous inventory overload and a lot of these companies needed cash quick. So they sent their stuff, I think even brands, you know, luxury brands sent their stuff to Gilt and they cleared it out for them and got them cash fast. And then when the economy came back, they no longer needed to sell stuff on discount

and recognize that that was bad for their brand. And then a lot of the brands themselves, from Williams-Snowman to Sephora, started going direct-to-consumer, even manufacturers' brands like Estee Lauder built their own websites and developed really strong direct-to-consumer e-commerce sites. The last holdouts were luxury. Chanel did not sell online. I remember advising Chanel and them saying, and Hermes said the same thing, we will never sell online. And it's easy to retrospect, pat yourself on the back, but I'm saying, of course you're going to sell online. You're going to sell through every channel. Why wouldn't you? Their view was that online was the septic tank, and it was bad for the brand, and they needed the full experience in the store. And of course, now they're all selling online. And so that void that was temporarily filled by players, including Net-A-Porter, remember them, has been that gap, if you will, that void has been filled by the manufacturers' brands themselves and the bigger players, but it does have aspirational brands on there. And so the combination of the proprietary product catching up in terms of technology, the capital, and then one player that commands 50% market share of online purchases, you essentially don't have a lot of room for undercapitalized players or for players that don't have access to proprietary brand or distribution. Hermes just isn't going to distribute through a third-party player unless it's a secondhand thing. So what you've seen is effectively everyone's been crowded out.

This goes to a broader issue in that I believe almost every industry is turning into an oligopoly and that if and when we finally decide we need to address our ills in terms of too much debt, spending way too much money on the next generation's credit card to prop up our own prosperity from the kind of the incumbents. I think one of the things we're going to need to do to oxygenate the economy and maintain growth is essentially we're going to need to fertilize the entire economy. Every industry, I don't care if it's pharma, chicken, search, social, big tech, cloud. For God's sakes, AI has created more shareholder value than the entire global auto industry in the last 90 days. And what do you know?

It's the same old players. They do this jazz hands. Oh, no, it's called Anthropic. Call it Amazon. Oh, no, it's called OpenAI. Call it Microsoft. It's the same fucking players. And despite their attempts to pretend that they're not in charge and it's not the same players, it is. The world is concentrating way too fast. Two companies, Alphabet and iOS Control,

all handheld operating systems. How on earth did that happen? 95% of messaging in India is the same one that's dominating messaging in Nigeria and dominates social media in the United States. What's it called? It's called Meta. Meta of meta-analysis, that was right there. Anyways, it's way too concentrated. We absolutely need to break this up. And you're seeing the same thing in the luxury market. As the bigger players have come in and taken back distribution, or you have the really big players at the near luxury, there just isn't room for these startups. And now that they don't have access to cheap capital, Farfetch probably never made sense. Did Net-A-Porter ever

make any money? I don't know. I don't know if Gilted, I don't know if these companies ever became profitable. And this goes to a bigger issue as an entrepreneur and how I've gotten rich. I've always sold too early. Now, what do I mean by that? I sold my first company profit for, I think, a valuation of $28 or $33 million in 2002, 10 years after I'd started it, to Dentsu, a Japanese ad agency. It was doing well. It was going to do better. It has done better. But the amount of risk, the amount of capital they've had to take on, the fact that it's sort of a management-run company, not a shareholder-run company, where they keep giving

themselves more shares and paying themselves more money, effectively, I'm pretty sure that what I sold my shares for 22 years ago is more than those shares are worth now. And I wish I'd sold earlier a red envelope. Instead, I got emotionally involved in a battle with a venture capitalist and I held on too long and it went to zero. What I always tell entrepreneurs is always sell some along the way. I sold L2 in 2017 for I think 158 million. Was it doing really well? Yeah. Would I have made more money if I'd held on for another couple of years given the boom? Probably. But when you're younger, you need to bank a certain amount of money, have a base, and it's worth losing some potential upside. Distinct of all the stories you hear about

Mark Zuckerberg not accepting $10 billion, get to bust a move to financial security or some semblance of financial security absolutely as fast as you can. I know one of the founders of Net-A-Porter, and they were smart. They sold early. They recognized, sure, could it have gone public? Could it have been a multi-billion dollar company? But I think they sold it for 350 million bucks, which is real cabbage. Is that company worth that now? I don't think so. So I'm that guy. I'm that board member telling people to sell a bit early. But back to your question, luxury e-commerce is going the way of all e-commerce. It's going to be manufacturers' brands, the brands itself. And the thing about luxury is these brands are built over generations or the bigger, the really, really huge players that usually are named after a river.

Anyways, thanks for the question. Question number two. Hey, Prof G. Got a quick question on your thoughts on the rise of the remote husband. I'm not sure if you've seen the articles lately. There seems to be an upward trend where women are going into the office or the hospital, maybe their partner in a law firm, and their husband is staying at home and working remotely. Do you think there'll be any long-term or short-term positive and negatives on this with men work from home

for example speaking personally i'm a fully remote senior software engineer my partner goes to the office every day i'm finding myself doing a lot of chores a lot of cleaning but if i'm honest we are both a lot happier do you think i should stay fully remote or should i go and get back into the office earn more money in the short term so you can have that long-term gain let me know what you think huge fan of your work love the algebra of happiness and have been listening since the amazon hq2 predictions from dublin and ireland uh thanks for the question anonymous from dublin by the way my son just went to ireland and had the best time he just loved it. And he's not of drinking age, so I know it's not the beer, but he absolutely loved it. And I remember going to Ireland with my father and thinking it was one of the most beautiful places I'd ever been. It was one of those father-son trips. He was getting into his 70s, and his passion his whole life was golf. And so I just thought I'll take him to Ireland, kind of the, you know, some of the better courses in the world. Anyways, little walk down memory lane.

So a new trend is emerging, the rise of the remote husband. Why is this happening? Men and women tend to specialize in different kinds of work. According to The Economist, men are often found in industries including computer science, engineering, while women dominate teaching and nursing jobs. And although professions including law and medicine have historically employed more men than women, that's changing. Now more women than men enrolled in law school and medical school. These industries where women are outpacing men typically require in-person work.

On the other hand, industries including coding, technology, architecture, engineering, and business jobs that attract more men report high levels of remote work flexibility. A McKinsey survey revealed that 38% of working men had the option to work remotely full-time, while only 30% of women have this option. Also, about half of women surveyed reported that they cannot work remotely at all compared to 39% of men. Okay, so this is somewhat situational. I don't think you said whether or not you have kids. So in sum, I think remote work is an unbelievable unlock for certain cohorts. There's some nuance here. I'll start with my favorite topic, me. Remote work and the comfort with remote work, or a cultural shift in the acceptance of remote work, has been an absolute game changer for me.

Best years of my life, COVID. And I feel self-conscious saying that, but it was more time with Netflix, more time with my kids, and my stocks skyrocketed in value. And I used to, I built a studio. My tech guy's a genius, Drew. He built an incredible remote studios in all my homes. And he comes in via the cloud. He sets them up basically such that if I'm doing a TV hit or a talk, and back then all of these companies were trying to keep people together. So they were doing remote talks. I made great money. It was amazing for me. Again, another transfer of prosperity and wellbeing from poor people who had to load up their diet cokes and their diabetes medication and then head out into very dangerous environments, driving an Uber or waiting on people who they had to remind to put

their mask back on. But if you were an incumbent, you already had some money and you could do remote work, COVID was much less damaging on you than the rest of the population, kind of the services population. So what do I think? I think that remote work is a tremendous unlock for caregivers. And I would like to see a new classification of worker called the caregiver who is taking care of kids, taking care of aging parents, and maybe even taking care of their own mental or physical health who does make the kind of money where they can be close to work. I think a special accommodation and investment should be made so to those people can work remotely. Now, here's the nuance here. It's a fucking disaster for young people. Why? Especially men. They need the socialization. What happens when you pull kids

out of school? They come off the tracks. They need the socialization. What happens when you sequester a dog? What do they tell you when you have a dog? You take it to the dog park to socialize. Well, guess what? You know, you're not a young man and young women aren't puppies, but they're adolescents and they need socialization. When I went into Morgan Stanley at the age of 22, I absolutely needed to do that. I needed to learn how to get up at a certain time every morning. I'd had some of that because I was an athlete, but put on a tie, look presentable. I used to get pulled out of meetings all the time and it was a wonderful thing. And my boss would say, don't say that, or don't be a fucking idiot, or occasionally might say, do more of this.

You need the socialization. You need to learn how to read a room. You're also going to make fantastic friends. You might even find a mentor. And you're 38% more likely to be promoted when you're in the office. Why is that? The decider always has three candidates for a promotion, and he or she will make that decision based on who they have the best relationship with, and relationships are a function of

proximity. So the person they've had coffee with, the person they see physically working really hard, the person they see that's a good culture carrier, the person they see who dresses well and works out, which reflects discipline, and if you think I'm fat shaming, well, okay, fuck me. So that's the bottom line. It reflects discipline to be in good shape. It reflects a certain level of attention to detail to look presentable every day. It reflects a certain amount of discipline to get in the goddamn office. So it's a conversation with your spouse, right? What are the trade-offs

here? Because there is a trade-off. You will lose some professional trajectory. You will lose some opportunity to develop relationships that will pay off later in life by being remote. Having said that, I get that it's a creative, especially with kids, especially if you're a caregiver, especially if you're managing issues around your own health. But be clear, my brother, you can have it all. You just can't have it all at once. Thanks for the question. We have one quick break before our final question. Stay with us. Support for this show comes from Constant Contact.

You know what's not easy? Marketing. And when you're starting your small business, while you're so focused on the day-to-day, the personnel, and the finances, marketing is the last thing on your mind. But if customers don't know about you, the 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 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. With Constant Contact, you can get email marketing that helps you create and send the perfect email to every customer, and create, promote, and manage your events with ease, all in one place. Get all the automation, integration, 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. at NerdWallet. Not only have they spent thousands of hours researching and reviewing over 1,300 financial products, but they have the tools you need to make smarter decisions. Looking for a

credit card? At NerdWallet, you can go beyond the basic comparisons, filter for the features that matter to you, and read in-depth reviews. Ready to choose a high-yield savings account? Get access to exclusive deals and compare rates, bonuses, and more. House hunting? View today's top mortgage rates for your home sweet home. Make the Nerds your go-to resource for smart financial decisions. Head to nerdwallet.com slash learn more. NerdWallet, finance smarter. NerdWallet Compare Incorporated NMLS 1617539. Welcome back. Question number three. Hi, Scott. Thank you for being generous with your time and insights. My name is Arun, and I'm calling from Singapore, a place I'd love to hear your thoughts on.

You juggle multiple demanding roles, a father, professor, author, public speaker, and many more. In each role, you masterfully blend effective storytelling with rigorous data analysis, making your points both relatable and memorable. It's clear you've invested much time in refining your approach. And while you're being very open about the algebra for wealth and how to go about it, I'm curious, how do you manage your energy and time to perform so well across these capacities? All the best for your new book. model. Anyways, so I do juggle a lot, but the reality is people are constantly come up to me and say, how do you produce all this content? And I love your sketches and I love your content and you must work around the clock. And then I know greatness is in the agency of others. What I am good at is finding and retaining really talented people. And the way you do that is that loyalty is a function of appreciation.

And you try and be thoughtful about what they want from their career. You try and coach them. Sometimes that's giving them, I don't want to call it tough love, but most of the time, especially the young people, it's watering them, putting them on a path for economic security, trying to show that you have a vested interest in their success and that your success is directly connected to their success and vice versa. But if you can do these things and build a team, you can just get incredible leverage. So I think we do five podcasts a week. We're doing a book about every 18 months. We'll do, I think, 3 million in speaking

fees this year with presentations that are very rigorous and deep. We have a really strong production team. We have tech people, video people, editors. So the key is finding leverage on your time. Now, that's not possible for all people. What you want is, obviously, you have to go, you have to be in the part of your career when you're a younger person is you're providing leverage to someone else or to another entity, or you're using a platform for greater leverage called JP Morgan or Google. But once you get to a point where if you're going to be an entrepreneur, where you have a little bit of capital, what you really want to be focused on, and I think this is true even if you're not an entrepreneur, is trying to zero in on what can I do really well, and then trying to outsource

almost everything else. And the very basic is at some point you probably decide, okay, it's not worth it for me to spend four hours cleaning my apartment on a Sunday. I'm going to get someone to clean my apartment and I'm going to focus on self-care or working out or maybe a little bit of additional work, whatever it might be. And then at your job, once you get to a point of, I don't know, emotional or financial security, I have eliminated the should bucket. What do I mean by that? Life is three buckets. It's things you have to do. If general catalysts who backed my company section, if they want to talk about, if they want me to come talk to their entrepreneurs, the CEOs of their companies, the portfolio companies, I have to do that. They're good to me. They've invested a lot of money in me. I have to do that. There's things I want to do. I want to walk around Soho. I want to go to Equinox later and work out. And then there's things you should do. And you spend most of your life doing should, right? I should go to my friend's daughter's wedding. I should go to this networking event. I should write an article

for this to try to make a small investment. I've gotten to a networking event. I should write an article for this to try to make a small investment. I've gotten to a point now where I've eliminated the should bucket. I just think to myself, okay, is this something I need to do or I have to do or something I want to do? And then I eliminate everything else. I have someone else dress me or at least pick out my clothes. I have someone else plan my diet. I have someone else managing my calendar, setting up everything. I haven't planned travel in years. That's a position of luxury. But to a certain extent, as soon as possible, you want to begin taking as much off your plate as possible once you identify something you are really good at and then double down on that one thing. And then when you get really good,

you'll start making more money. And then what are you going to do? You're going to reinvest in people who provide leverage to you. People think it's me producing this content. PropG Media is 14 people. It's 14 people and we get leverage on that. Books, speaking, podcasts, greatness is in the agency of others. That's all for this episode. If you'd like to submit a question, please email a voice recording to officehoursatproptimedia.com. Again, that's officehoursatproptimedia.com.

This episode was produced by Caroline Shagrin. Jennifer Sanchez is our associate producer Thank you.