The Prof G Pod with Scott Galloway - Jumping the SPAC Shark, Greenwashing, and Building Productive Habits with Charles Duhigg

Episode Date: September 30, 2021

Charles Duhigg, a writer at the New Yorker, and the author of, “The Power of Habit” and “Smarter Faster Better,” joins Scott to discuss his research around productivity and habits, as well as how to stop making unproductive decisions. Follow Charles on Twitter, @cduhigg. Scott opens with why he believes the SPAC bubble appears to be bursting, and how companies that simply aren’t worth their valuations use SPACs to maneuver their way into the public markets.  Related Reading: Jumping the SPAC  Learn more about your ad choices. Visit podcastchoices.com/adchoices

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cards, savings accounts, mortgage rates, and more. NerdWallet, finance smarter. NerdWallet Compare Incorporated. NMLS 1617539. Episode 104, the atomic number for Rutherfordium. I'm in Los Angeles. Coming to LA for me is like going to church. A lot of arrogant assholes who are sex offenders. Go, go, go! Strongest brand in the world, by the way. What other brand could scale and institutionalize pedophilia and still survive? Very impressive. Very impressive.

But I love LA. Specifically, I roll into LAX. First thing, first and last thing in LA, hello In-N-Out Burger. We have Isis sells supposedly in 15 states, but we only have In-N-Out Burger in four states. Something is wrong with America. Love In-N-Out. Stay at the Beverly Hills Hotel, put on a pink robe, order a Cobb salad, put on a big, big pair of sunglasses, smoke a cigarette.

I don't really smoke, but I light it because I think I look cool with it. And then wave at people. Hello. Hello. Just wave at them like you know them and see if they know you back. So I absolutely love Los Angeles. If I moved back to the West Coast, I'd absolutely move to LA, buy a Porsche, get a cocaine habit, start dating actresses, and then they'd find me dead in a hotel room. It'd be worth it. It'd be worth it. But beyond that, beyond being here in LA and my ultimate demise, I have news. And this is something I'm really excited about.

I am going to, or we announced today that I'm going to be launching a show on CNN Plus, the new streaming network brought to you by CNN. I'm super excited about this for a few reasons. I mean, to be blunt, it's sort of a dream of mine. I've said for a long time that the network I would want to work with or have as a partner would be CNN. And why global? I think they have the best talent. My sense is in terms of trust, they actually, you know, platforms usually have a lot of trust, like a New York Times or a BBC, or they have a lot of reach, a Facebook, a TikTok, or what have you. And I find there's only really just a very finite number of platforms that have both trust and global reach. And I think CNN is one of those platforms. I love the idea of doing non-ad supported media. One of the things I've hated about doing some of the other media

on TV, and you're probably saying, but Scott, podcasting is ad-supported. Yeah, but somehow, I don't know about you. I don't think the ads are as offensive here. Or at least I don't mind the ads as much when I listen to podcasts. But I think ad-supported television and media that's tied to the clock really reduces the power of it. And I love the idea of having a show that if we have 27 minutes of content, we go 27 minutes. And if we have 40 minutes, we go 40 minutes. And it's just the content, nothing but the facts. And then quite frankly, just love, I've worked with Michael Smirconish, who for me is like brothers from another mother, a raging moderate, and a really, actually a really good guy. Anderson Cooper is like my man crush, the guy I'm coming back as in my next life, I think. And by the way, Anderson is the most trusted journalist,

living journalist in the world. We had him on last week. Listen to the episode. It's doing really well. Fareed Zakaria is sort of a professional role model. I just love that he leads with data and truth as opposed to some sort of political bend. Christiane Amapour, I think is a super impressive journalist. I'm just very excited to be a part of this. And I know that sounds a little passe, but I'm genuine about it. So I'm super excited. A big part of the reason I got this opportunity is because of the impact and the goodwill that this podcast has produced. So I hope that you share in some small way this victory. So thank you. And please tune in in January for my show. We're thinking about calling it No Mercy No Malice, or I don't

know what we're going to call it, or The Prof G Show. Anyways, if you have any ideas, please send them to us. But stay tuned. Da-dog in January. CNN Plus, what's the over-under? What's the over-under that I do or don't fuck up and get canceled before the show airs? Taking bets now. Take wager on the dog. Wager on the dog's ability to snatch defeat from the jaws of victory. Okay, some details about the show,

and then I'll shut up about this. Q1 2022, it'll focus on the intersection of tech, business, and society. CNN is going all in here. And I think that's what you have to do. I think some of these kind of adjunct streaming or OTT platforms from existing legacy players feel like a bit of an afterthought. But CNN is going all in. They're hiring 450 people, roughly 200 of those jobs are production and editorial jobs for journalists. And they're going to have about 250 engineers, product planners, marketing folks, et cetera. That doesn't guarantee success, but they are, quote unquote, coming to play. And they're taking risks.

See above the dog. See above. Okay. In today's episode, we speak with Charles Duhigg. Charles is a Pulitzer Prize-winning reporter and the author of two books, The Power of Habit and Smarter, Faster, Better. None of those things. He is currently a writer at The New Yorker and was previously with The New York Times, the NYT. Ooh, smell him, smell him.

Productivity, New York Times. Here we go. We discuss his research around productivity and habits as well as how to stop making unproductive decisions. Jesus, I'm going to tune into that. Okay, what's happening? There's a stench in the air and it's coming from the SPAC market.

It's beginning to smell like teen spirit. If teen spirit smells like bullshit in an overvalued market, we saw a boom in the number of SPAC IPOs at the beginning of the year, but the bubble appears to be bursting or at least probably unwinding. I don't think you could call it a bubble bursting. According to research by Goldman Sachs strategists, an average of 21 SPACs raising $6 billion in capital

entered the market each week during the first quarter. Fast forward to today, an average of just six SPAC IPOs have raised around $1 billion in total capital each week. Think about this. The market is basically shut. Not only are fewer SPACs entering the market, they consistently underperform the S&P 500. And data from Renaissance Capital reveals that 58% of the SPACs that have completed mergers this year trade below their original offer price. When we say merger, what we mean is they have de-SPAC. So a SPAC essentially is an operating group, a group of people who get together and say, the operating committee at Goldman that takes companies public is no better than us. We're going to get together a group of operators, finance people. We're going to go public and say, hey, public markets, give us $300 million,

and we'll go use that $300 million to buy a company. And overnight, because we'll have done a lot of the advanced work, a lot of the bureaucracy, a lot of the filings, that company will be public. We'll make it easier for them to go public. And we know just as well what companies should be public as Morgan Stanley or Goldman Sachs. And typically, typically they only have a two-year time horizon to put that money to work, or they have to return it to investors, minus the money that they put in as sponsors, which they're forced to do. So, that's a bit of a gun to their head. Anyways, so the question is, have we jumped the SPAC shark? I think we may have. And despite what CNBC, Bill Ackman, and the space industry or the budding

space industry keep trying to tell us otherwise, companies that simply aren't worth their valuations use SPACs to maneuver their way into the public markets to try and, you got to, you know, when the ducks are quacking, you feed them. And I don't resent these companies for doing that. There's been a lot of people who've promoted SPACs and then sold the majority or all their stakes. Good for them. They made basically enormous fees. They've become part-time investment bankers, but much better compensated investment bankers. There will be some companies that endure and do really well. but typically SPACs have underperformed the marketplace. In 2021, they overperformed, but I think we're going to see

a regression of the mean. I think it's already regressing, if you will. Because if you think about it, Goldman, and I'm on the board of some of these companies, most companies choose to go the traditional route because Goldman and Morgan Stanley are basically sort of halo brands. It's like saying I graduated from Tucker MIT. There's just a certain credibility there. And the best companies typically choose to go, still go the traditional route. Having said that, there are some outstanding SPACs where the real litmus test is you think, okay, if you raise $300 million, and that's what most SPACs raise initially, give me $300, I'm going to go find a company. The company they acquire, they usually strike a deal for much more than that, say a billion,

billion and a half, $2 billion. The key is they have to go raise debt to support that valuation and get the transaction done, and then the stock starts trading. So sort of the adult in the room, if you will, has been the pipe market, which stands for public investment and private equity. But effectively, this is a piece of debt that's bolted onto the $300 million. So a SPAC operating committee or SPAC operating group can go buy a company for a billion or a billion and a half dollars. And that's where things get tricky, is the pipe market looks at the company and says,

are we going to get this money back? Okay, great that you think this electric vehicle motor company out of Alberta, Canada, it's great that you think it's worth $2 billion. And it's great that you're showing up with $300 million, but you're asking us to loan you $1.7 billion. We need to do some work and see if there's any chance this might not get paid back. And a lot of SPACs are fumbling, or SPAC operating groups are fumbling, trying to get the pipe done. So a company I am involved with, Better.com or Better Mortgage, which by the way, by the way,

has hired 7,000 people since, since the beginning of the pandemic, which tries to take or tries to implement technology to take the mortgage process and disrupt it and make it much more elegant, much faster such that one, we can give people a lower rate

and two, we can pay our mortgage counselors more, which creates more retention. It's an industry that has enormous turnover. This company will now do over a billion in revenue this year. Key for us, we are de-SPACing or SPACing with SoftBank, kind of the big or the 10-ton gorilla in the space. But key to the whole thing is that they showed up with a commitment to the pipe or that the pipe's going to get done. And that's sort of the new litmus test here for when a SPAC shows up. It's like, great, you're willing to give us your equity, but how are we going to get this pipe done? And so the new kind of, the new bar is if a SPAC can get or SPAC operating group can get

the pipe financing done to ensure this thing actually gets out. But this is beginning to look like kind of the beginning, if you will, of an unwind. Now, is it just an asset class that has reached too far into the barrel, or is this the beginning of something worse? Only time will tell. One example, one example of reaching too far into the barrel, Aspiration, a finance firm that claims its products can, open quote, change climate change, end quote. In August, the company announced it was going public via SPAC at a $2.3 billion valuation.

Change climate change. That would be awesome, except there's a catch. This is a fucking debit card. So hold on, buckle up, rest in, pull your covers up. Let's tell a story here. Aspiration was launched in 2015 by a former Clinton White House aide and Elizabeth Warren protege. Its initial and still primary consumer product was a debit card with a few green features. That's nice. The company claims money deposited in its debit accounts won't fund fossil fuel exploration or production. Okay. It plants a tree every time a customer chooses to round up a purchase, and it offers 3% to 5% cash back on

purchases from mission-focused merchants. That all sounds fine. That's all nice. The company also offers an ESG-focused investment fund, Redwood, and has plans to launch a credit card. So you make deposits, and if you want, you can ask them to invest your funds in an ESG-focused alternative investments fund. The company's marketing focuses on a pay-what-is-fair model, which permits investors to choose an annual fee between 0% and 2%, depending on what they believe is, again, fair. And that sounds fine and good, but then you read the fine print, as you should do. You find a base fee of 0.5%. So you're not getting to decide.

This is your tip, if you will, is on top of the base fee of 0.5%, which compares unfavorably with fees of higher performing passive ESG funds. So in sum, the innovation here is that they hide the fee, or it's not entirely evident, at least it wasn't to me, that you're already paying a fee, but you get to pay more if you want. Thanks for that. Aspiration claims the Redwood Fund is 100% fossil fuel free. However, however, almost 3% of its holdings are in Southwest Airlines,

a company that burns 2 billion gallons of fuel per annum. I think Southwest is a great company. I think that fuel burn with airlines, given the amount of passengers they transport, and at that speed, I would argue that that is a decent use of fossil fuels, that that might be worth the juice, there might be worth the squeeze. I'm not criticizing air travel. I'm criticizing Redwood or the Redwood Fund that claims it is 100% fossil fuel free, but is investing or has invested their client's capital in an airline that burns 2 billion gallons. That just feels, I don't know, a little inconsistent. Another portfolio company is Lindy, an industrial gas company that touts its experienced team of oil and gas specialists and boasts that it's been supporting the industry for decades. Now, what does that have?

What does Lindy do? What is that particular expertise? Fracking. I'm sorry. Wait, this is an ESG fund? Sustainable Energy is Redwood's smallest investment sector, accounting for only 2.3% of total assets. The fund's investment in Southwest alone surpasses that. So an ESG fund that is investing more in Southwest Airlines than in actual ESG investments, the bulk of the

portfolio consists of stocks that are prevalent in every portfolio. In other words, this is not a difficult portfolio to assemble. The stocks include Microsoft and Starbucks. Do you really need to pay 0.5% plus a tip to buy Microsoft and Starbucks? So let's now talk about the actual business, specifically its top line revenue. In 2020, five years after debuting its debit card, Aspiration managed to expand revenue to just $15 million. So five years in business, revenue of 15 million bucks. By the way, most of my companies that I've started are doing more than that, are they? Yeah, most are doing more than that within five years.

Maybe I should SPAC for 2.1 billion and just call myself ESG, ES dog. Yet the company, the company being Aspiration, claims that in 2021, its consumer business will triple, okay, to 43 million. Let's give them that. And its recently launched corporate consulting business

will generate 55 million. Corporate consulting, 55 million. The consumer business is 15, growing to 43. So we're looking at what appears to be, if we assume they're going to be able to execute against this and we believe them,

we got a $100 million business here. From what we can discern, the sustainability as a service, that's my favorite. Remember WeWork, space as a service? Sustainability as a service business is quasi-consulting that helps firms assess their carbon footprint, then brokers the carbon offsets necessary to make up for this or to account for it and then put in place the offsets. By the way, I think that's a valuable service, similar to the classic advertising agency model where they do the work for free and make money on the media buyer,

in this case, buying the offsets. So let's pause on Aspiration's consulting business for a moment. The only member, or what's supposed to be a consulting business, the only member of Aspiration's management team listed with any experience working at a consulting firm is the CTO, who worked at Accenture for 16 months and left in 2008. Nor does the company have any job postings on LinkedIn for consultants. So it feels like they have some sort of index

around assessing your carbon footprint. They go out and buy a certain amount of offsets. They sell it to you at a markup, and it's creating. But are they charging? Are they including in that top line number the actual purchase price of the offsets and only taking two, three, ten points of margin? I don't know what it is, but this doesn't feel like what I would call traditional consulting is someone who has rented his brain to other people most of my life and called it consulting. All right, moving on to how the company is smearing more Vaseline

on the lens of the actual business fundamentals here. And there's a lot of Vaseline here. I'm ready for my close-up. Aspiration leans heavily on a profitability measure, get this, called EBITDA. EBITDA is the familiar earnings before interest rate taxes, depreciation, and amortization, and it's a largely accepted industry standard that's supposed to say, all right, how profitable is a company's core operations before the vagaries of capital structure, tax strategy, and accounting charges? It's meant to

say, okay, how healthy is the core business? How profitable? EBITDA, so EBITDA plus an M, excludes all those things and then also excludes marketing spend. And when you think about a company whose primary means of customer acquisition is going to be getting debit cards, that means their real business expense, their cost, is going to be marketing. That'd be like saying, I don't know, EBITDA before equal pay for women or EBITDA before everything, EBITDA before all our, I mean, it's just so fucking ridiculous that we tolerate that or that people even have the gumption to put forward these metrics. So you could argue, wait, wait, hold on. In small doses,

maybe this isn't crazy. Debit card customers tend to be loyal. Aspiration claims it has more than 90% customer retention. So the idea is that marketing is mainly for acquiring new customers. And if you want to see how the business performs on its existing customer base, you should exclude those costs. Okay, fair enough. But Aspiration attempts to elevate EBITDAM far beyond its station. Over here in reality town, the company's operations burnt $34 million in 2020, and they're projected to burn $133 million in 2021. So they are scaling losses like no tomorrow. And to be clear, sometimes you need to make forward-leaning investments. In the rest of its investors deck, Aspiration refers to its EBITDA profitability this quarter

and then uses EBITDA throughout its financial analysis, which is really rich for a company whose entire projected profit model is dependent on explosive customer acquisition, which to date has been really, really expensive. So we're just going to pretend that this expense doesn't exist, even though it's our primary expense and even though it's getting more and really expensive. So we're just going to pretend that this expense doesn't exist, even though it's our primary expense and even though it's getting more and more expensive.

The company spent $22 million on marketing in 2020. That's roughly 50% more than the revenue generated that year. This year, get this, it plans on spending $149 million on marketing, 52% more than expected revenue. And that's supposed to be worth 2.3 billion? Oh, come on, guys. So what's going on here? When the markets get this hot, you're going to have tremendous amounts of capital chasing worse and worse prospects. And we'll all enter into this consensual hallucination because there will be some SPACs that emerge from the ashes and are enduring.

We have sort of a cycle, right? We have an economic boom. We have innovation. We have incredible valuation increases. We have mania. We have mania. And I think that's where we are now. Then we typically have a correction that, by the way, corrects usually too far the other way. And then we have what I'd call enduring. Some enduring companies emerged. People don't remember. People thought Amazon was going out of business after the dot-bomb implosion. And a lot of those companies emerged and have done really well. And there's no doubt some SPACs will survive and go on to be fantastic companies. But we are definitely in the mania stage and we are reaching really far into the barrel. What does that mean from an investment standpoint? Does it mean you avoid SPACs? No, there's probably some opportunities and will be more because the markets are bipolar. They either love things too much,

they're either manic or they're depressive. And when we go too depressive, and I think we will, I think a lot of good companies that went public via SPAC will be unfairly punished and there'll be some big opportunities. However, you're going to want a basket. You're going to want to find two or three companies with genuine financial metrics that actually make sense. Find a company that doesn't use yoga babble. Find a company that actually has a decent business whose gross margins are positive, that looks like it has a path to profitability, and doesn't fill or doesn't try and create an illusionist trick and say, hey, look over here at ESG. Hey, let's just call whatever business we're in and tack on as a service. You got to do

the homework. You got to diversify. There will be opportunities. There will be enduring companies here, but be careful. Be careful. We got our leather jacket on. We took a trip to California with the Cunninghams. And guess what? Guess what? We have jumped this back shark. We'll be right back. 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. Support for this show comes from Constant Contact. Published by Capital Client Group, Inc. 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. Welcome back. Here's our conversation with Charles Duhigg, a Pulitzer Prize winning reporter and the author of two books, The Power of Habit and Smarter, Faster, Better.

Charles, where does this podcast find you? I'm in Santa Cruz, California. Nice. So let's bust right into it. Your second book, or your most recent book, you talk a lot about productivity. What were sort of the surprises about, or that you found about habits and productivity? Yeah, so the first book I wrote was called The Power of Habit, and it was about the science of habit formation, how habits exist within our brain. And the second book, Smarter, Faster, Better, was about basically the science of productivity.

Why are some people and some companies and some nations more productive than others? And I think the biggest surprise for me was I had a preconception that productivity was about essentially learning how to work harder, right? How to optimize things. And what I came back to is the same thing that Peter Drucker discovered 30 years ago, which is there is nothing more wasteful on this planet than optimizing

something which should have never been done in the first place. Throughout history, the killer productivity app has been figuring out habits to force yourself to think more deeply about the choices you are making. And so, for instance, you look at Jeff Bezos and you look at Amazon. What is the innovation that Amazon came up with? The innovation really was a way of thinking about business, of thinking about creating self-sustaining flywheels, of creating Amazon as a company that creates many Amazons. So he didn't invent anything new. He didn't see some market that no one else saw.

He saw a way of managing, of thinking about choices that made Amazon, Amazon. By the way, the same thing happened 70 or 80 years ago with the invention of General Motors, right? Ford is the leading motor car company. GM comes along and Alfred Sloan says, look, instead of thinking about cars, I'm going to think about managing people, about creating these decentralized management systems that allow people to become the CEOs of their own particular little divisions. And that propels GM beyond Ford into the most powerful car company for 30 years. In fact, not just the most powerful car company, they made everything. They made refrigerators, they made air conditioning units. Throughout history, when we've looked at productivity, what we found is that it's not someone who finds a new way necessarily of making a widget. It's

somebody who trains themselves to think more deeply about which widgets ought to be made. And it turns out there's a whole series of habits that allow us to think more deeply, particularly when thinking is hardest, right? Particularly when we're in a panicked moment, when we're under pressure, when it seems like the obvious answer is right in front of us. How do we stop and train ourselves to think more deeply so that we find not just the answer, but the right answer, perhaps to the question that hasn't even been asked yet. So you would argue, if we think of this as an asset class and we have our capital as our mental bandwidth, you would argue there's greater return from thinking, continuing to think about how to innovate, how to do things differently as opposed to taking the same processes and just trying to optimize for that process.

Oh, there's certainly like, look, I'm not saying that you, that wringing inefficiencies out of a system isn't going to yield you some profits, right? We know that. We know that like what, one of the things that the Toyota production system did is it made production manufacturing more efficient by, for instance, doing just-in-time delivery of inventory? And so as a result, you took inefficiencies out of the system. What I'm saying is the greatest gains in productivity don't stop there. The reason why the Toyota production system actually transformed manufacturing is not just because they wrung out inefficiencies. It's because they turned the model of manufacturing on its head and said the

person closest to the problem has to be the tip of the spirit solving that problem. That the person on the floor shop has to be the one who has the most clout to be able to stop the production line and make a change at that exact moment. That was the real breakthrough in manufacturing and the plant that changed the world. And so I'm saying, oftentimes we look at a system and we have this engineering approach where we say, look, if we engineer out all of the problems, we're going to make more money, we're going to make it better. And then oftentimes the engineers get trumped by, I don't know, what do you call them? The dreamers who come along and say, you know what, instead of like just re-engineering this place, let's figure out what a brand new plant would look like.

So what advice would you have to people to try and avoid, to not be their own worst enemy, to avoid making unproductive decisions? So one of the things that we know is that there's this cognitive need for closure, right? Psychologists have documented this, that we want to feel productive. We want to feel like we've gotten something done. So let's take to-do lists as a great example, as a way to answer your question. If you look at research on to-do lists, most people write to-do lists the same way. They fill up a sheet of paper with a list of things that they want to get done, anywhere from 10 to 20 things.

And that makes sense, right? Because we have trouble remembering that many items. And so they basically come up with a memory list and they use their memory list as a to-do list. And very often in about 15% of people, what you'll find is they write down something they have already finished because it feels so good to cross it off of their list. So they'll actually write down the tasks they just completed because they want to give themselves a cognitive need for closure, that reward of crossing it off. That's exactly the wrong way to do a to-do list. It's a great way to come up with a memory list. Everyone should do it. But the right way to write a to-do list is to look at that memory list, those 10 to 15 things or 20 things, and ask yourself,

what is the most important thing I could do today? Write that on your to-do list and then stop writing. Force yourself into a habit, what psychologists refer to as cognitive routines that allow you, that force you to think about what you ought to do today rather than what feels easiest to do or feels most rewarding to do or feels like you're going to be able to celebrate crossing it off your to-do list. Because you can spend your entire day answering emails. You can spend your entire day being busy and get nothing important done. And so the question is, how do you build habits that force you to do the important thing

rather than the thing that just feels good? I remember this is such a flashback. I remember my mom coming home in the 70s when I was really young and saying she'd taken this productivity class at the temple we went to, and that you create a list, and we did this exercise, like what are the things we need to do tomorrow or today? And then rank them, one, two, and three. One being gotta do this, two, sort of important, three, not as important, but need to do it. And then go back and force yourself to get rid of all the twos, either bucket them as ones or threes,

and then drop the threes and just focus on the ones. I mean, aren't you really saying that to-do lists are basically the beginning of ranking and prioritizing and that you should then create a very fine filter and just take the top, you know, one, two or three a day? That's exactly what I'm saying. And I love that she did it at Temple, right? Because what is at the core of Judaism, right? Like Judaism being like one of the greatest production productivity systems on earth. It's a ranking of commandments. It's not that all commandments are equal. There's a first commandment and there's a second commandment. God is actually telling you that some good acts are better than other good acts and some bad acts are worse than other bad acts. You don't just get a

list of how to behave. You get a list that forces you to figure out in conflict, when two things come into conflict, which one is more important. That's the hard work that God did for you, is he ranked things. And there's a lesson there. But let me ask you, I mean, you did this with your mom. I imagine you have positive memories of it. How often do you or I, for that matter, wake up in the morning, look at our to-do list, the things we got to do today, look at our calendar and rank them. And how often do we just go on onto autopilot and just start doing whatever's at the top or whatever comes first? Yeah, I don't, I don't have to-do lists. What I would, what I take from you with the application or how it translates to some of the things I try to practice

is that, and I tell this to management teams and myself, is that success is just as much a function not only of what you do, but what you don't do. And that is you have the cruel truth of capitalism in life is we have a finite amount of financial and human capital. It just doesn't matter who you are. Nobody has infinite amounts of money and nobody, the mortality rate is a hundred percent. Your time here is finite. So thinking about what you're not going to do, right? Like what relationships you're not going to invest in, where you're not, I'll give you an example. And this is sort of, I don't know, it's kind of total white guy example. I get invited to play golf a lot. And I decided when I moved back from the West Coast that I was going to give up golf. I loved golf.

I found it addictive, a great way to spend time with friends. I was getting pretty good at it and just really loved it. And then I just looked at it and said, okay, it's six hours a week. To play once a week is six hours. And I'm like, I would rather reallocate that six hours into working out. And I told my, you know, by the way, the public excuse was now that I have kids, I want to spend more time with my kids. But what I really did with that capital was I said, okay, I'm going to devote that six hours a week to working out. Six hours a week working out,

you can be in good to great shape. Do you really get it? And being in good to great shape is a fucking amazing thing. It's an amazing thing. And do I get something amazing by playing golf once a week? I like it. I get a lot of enjoyment out of it, but being in great shape is life-changing. Anyway, I think the tough part and what I like about what I read from your work is, okay, make your list and then start performing infanticide on the list. Yeah. Start going after it. That's exactly right. Anything coming out of COVID that you think has changed our productivity or our bad habits or how to eliminate bad habits?

Oh, absolutely. I mean, the thing that, so a little primer on habits. The way that habits work is that every habit has three components. There's a cue, a routine, and a reward. And it's that cue and that reward that's really important in deciding if that habit is going to take root in our brain. One of the things that's happened with the pandemic is that all of our cues have been displaced because our daily routines have been thrown out of whack. And we've been introduced to new rewards that maybe we sort of theoretically saw as rewards previously, but didn't actually believe were rewards, like having dinner with our kids or not having to get on airplanes and being able to spend the weekend relaxing. That introduction to those new cues and

those new rewards has been tremendous in helping people understand what new habits can infiltrate their lives. When we talk about the fact that business travel hasn't returned and then we chalk it up to all these structural reasons, people are afraid of X and Y and Z, the pricing isn't clear yet. I think a huge part of it is that people have had a mass psychological change. They've now learned that the lives that they had previously were not inevitable. They did not have to live that way. They have proven to themselves that alternative lives are actually more rewarding. And so even once everything gets back to normal, if Delta recedes, if everyone gets vaccinated,

we are not going to see the same society that we saw previously. And you wrote a book about this, right? You know this. And it's not just because of structural changes in our world it is because of changes in our minds we have learned about new ways to live and that will stay with us for the rest of our lives coming up after the break the hard conversations with yourself and with others that feel like work and feel unsatisfying, that is the thing, the habit that leads us to happiness or joy or satisfaction. Stay with us. Hello, I'm Esther Perel, psychotherapist and host of the podcast Where Should We Begin,

which delves into the multiple layers of relationships, mostly romantic. But in this special series, I focus on our relationships with our colleagues, business partners and managers. Listen in as I talk to co-workers facing their own challenges with one another and get the real work done. Tune into Housework, a special series from Where Should We Begin, sponsored by Klaviyo. 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. Yeah, it's a simple but a profound observation. I hadn't really, I mean, it's obvious hearing you articulate it, but I spent 120 to 180 days a year on the road.

And now in the last year and a half, it's been 10 to 20. I mean, it's just, it's been 10 to 20. I mean, it's just my life. Oh, gosh, Charles. It's a weird feeling to have too much time with your family. Yeah. I have never experienced that. I have never experienced being at home on a Wednesday and my kids roll in and they barely look up and I have to track them down and play basketball with them or go boogie boarding with them or something.

Yeah, it really is. Let me ask you the other question. Let's say, okay, let's go back two years before the pandemic. Let's say I said to you, Scott, I promise you that if you just travel 20 days over the next year, you will be happier. I wouldn't have done it. Would you ever believe believe me would you ever believe it's even possible yeah well but see there's there's two sides to the trade here and that is the business ecosystem was forced to make it possible for me before that to do to i could have done that but it would have meant cutting my income by 70 if not more and giving up a lot of opportunity what changed is the world

came to guys like you and me. Our lives can largely be digitized. You can write articles. You can probably do almost everything you were doing before from Santa Cruz. I can now do teaching, consulting, go on MSNBC from my guest house. That just wasn't possible for me before. My company at Section 4, my ed tech company, is now dispersed. There's 1,500 people willing to take my class online. That just didn't happen before. When the CEO of Samsung wanted me to do an executive session meeting for him, it was like, come to Seoul or San Francisco. It wasn't like you can do it remotely. So the world has kind of come to us, if you will. Is there any like one thing in terms of being happier?

Is there, what is kind of the starting place? If you think, all right, I'm interested in eliminating bad habits. I'm interested in making better decisions. I'm interested in being more productive. What is the one thing you'd start with? The one thing I would start with is just finding some way to force yourself to think about it regularly. And it should feel like you're forcing yourself. It should feel like work. So if you go and you look, there's lots of studies out there that tell you if you have more friends, you're going to be happier than if you go and you look, there's lots of studies out there that tell you if you have more

friends, you're going to be happier than if you have more money. If you spend more time with your family, X, Y, and Z. And the thing to remember about these psychological studies is that in aggregate, they are true. That doesn't necessarily mean that they're true for specific individuals, that what the science tells you is going to be true for you. And so the thing is, because for instance, for some people, happiness is overrated. I like being satisfied more than I like being happy. But if you read all the research, it's just going to tell me how to be happy.

And it's not going to create a distinction there between satisfaction and happiness, about feeling a sense of meaningfulness versus feeling a sense of joy. And so what's really important is to have a cognitive routine, have a deliberate practice where I sit down and say, here's what I did last week. Does that actually give me as much joy as alternatives? And it's hard to do that because what people will tell you is, oh, I go and I take

walks. I like have like these nice strolls. That's not the hard work of thinking about what you actually want. That's relaxing. The hard work of thinking about what you want is about sitting down with a therapist or a diary or with your spouse and having bored and frustrating conversations or writing things until your hands cramp and you don't really know what you're trying to say. And the only way you can figure it out is to write it over and over and over again or to ask yourself hard questions or to come up with a list of questions six months ago and force yourself to answer them today even though you don't want to or to think about how much you're doing because you hate your dad or because your mom sacrificed so much

for you. The hard conversations with yourself and with others that feel like work and feel unsatisfying, that is the thing, the habit that leads us to happiness or joy or satisfaction. Charles Duhigg is a Pulitzer Prize winning reporter and the author of two books, The Power of Habit and Smarter, Faster, Better. He's currently a writer at The New Yorker and was previously with The New York Times. He joins us from his home in Santa Cruz. Charles, thanks for your insights and stay safe.

Thanks for having me, Scott. How's the river of happiness? So nothing is ever as good or as bad as it seems. I had originally signed with Bloomberg to do a show, did some promos. It offended some folks in the newsroom. Bloomberg was incredibly gracious and tried to work it out. We could not work it out and come to some sort of agreement around a way to move forward. And we all collectively, and this always sounds like a press release, but it was true in this instance, decided to part company.

And I was bummed, mostly because I fucked up, right or wrong when you're working with good people and the deal ends before it even starts, the show never got aired. You have to take responsibility for it. But then kind of no sooner than I'm feeling sorry for myself and thinking, okay, I'm never going to get a shot at TV. I got a call from CNN. And so you just never know. This reminds me back when I was kicked off the board of Red Envelope. Imagine being kicked out of the band you started. I started this company, worked really hard at it, essentially got into sort of a fight with a board member where I felt he was using the company as a dumping ground for the failed products of his portfolio companies and pointed that out in a board meeting. And on the way to the airport, they told me they were kicking

me off the board. And I was just so bummed. And it ended up not right away, but a year or two years later, some activist funds called me and said, you know, you're crazy, but you are kind of crazy. Would you be interested in getting involved in some of our deals, activist deals, where we try and unlock value? And you just never know what's going to come of things. And so again, I go back to the study showing by Adam Alter about end of life. The number one regret people have, well, there are a few regrets, right? They wish they'd invest more in relationships. They wish they lived the life they wanted, but they wish they hadn't been so hard on themselves. And so when something bad happens to you and you're beating yourself up and you're sitting

there in bed and you're all bummed out, keep in mind there's a couple of things that work. One, there's a principle, an unfortunate reaction that is human nature. And that is you tend to magnify or have a greater emotional reaction to your screw-ups than your successes. And you also got to realize just as a lot of your success isn't your fault and you should be humble and feel gracious when good things happen to you and try and pay it forward. You should also recognize that when you screw up or something bad happens, it's not entirely your fault either. And you don't know what's going to

come from that. If I ended up doing a show with Bloomberg, I wouldn't have ended up doing a show with CNN. So take things in stride. At the end of life, you're not going to look back on the things that happened to you. You're going to look back on how you reacted to the things that happened to you. Nothing's ever as good or as bad as it seems. Our producers are Caroline Chagrin and Drew Burrows. Claire Miller is our assistant producer. If you like what you heard, please follow, download, and subscribe. Thank you for listening to the Prof G Pod from the Vox Media Podcast Network. We will catch you next week on, and subscribe. Thank you for listening to the Prof G Pod from the Vox Media Podcast Network. We will catch you next week on Monday and Thursday.

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