The Prof G Pod with Scott Galloway - Latin America’s IPO Market, How to Mentor Young Men, and Scott’s Stake in La Equidad Football Club

Episode Date: January 29, 2025

Scott discusses the lack of IPOs in Latin America, specifically the difference between cyclical and structural decline. He then gives advice on mentoring young men and wraps up by discussing his stake in a Colombian soccer team, La Equidad Football Club. 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 Prop G comes from Crescent Family Office. As an entrepreneur, you spend a lot of time and energy building your business. And chances are you've been so busy there hasn't been a ton of time to think about preparing for an exit, tax strategies, and wealth management. Crescent is here to help wealth creators and families like yours streamline complexity and invest for the future. Crescent was built by entrepreneurs for entrepreneurs with financial advisory teams who embraced their fiduciary duty to place the client's interests first. You can learn how to optimize your life by scheduling a call with a Crescent founder at crescentcapital.com. We are not clients of Crescent. There are no material conflicts other than this paid endorsement.

All investing involves risk, including loss of principle. Hey, Spotify. This is Javi. My biggest passion is music, and it's not just sounds and instruments. It's more than that to me. It's a world full of harmonies with chillers. From streaming to shopping, it's on Prime. Clear your schedule for U-time with a handcrafted espresso beverage from Starbucks. Savor the new small and mighty Cortado, cozy up with the familiar flavors of pistachio,

or shake up your mood with an iced brown sugar oat shaken espresso. Whatever you choose, your espresso will be handcrafted with care at Starbucks. Welcome to Office Hours with PropG. This is the part of the show where we answer your questions about business, big tech, entrepreneurship, and whatever else is on your mind.

If you'd like to submit a question, please email a voice recording to officehours at propgmedia.com. Again, that's officehours at propgmedia.com. I have not seen or read these questions. Question number one. Hi, PropG. I'm Anna from Mexico, currently living in Chicago, Illinois.

First of all, thank you for all your hard work. I listened to your podcast during my commute to school and it always makes the ride more enjoyable. My question is about APOs in Latin America. One of the predictions you did for 2025 was that emerging markets will become more attractive to investors. I had the chance to work for a unicorn in the region, and ever since, I have wondered why we don't see many IPOs in Latin America. I truly believe that there are amazing companies

led by talented entrepreneurs, but not many of them go public. What do you think this is the case, and what do you think could be improved to help more companies in the region to take that step? Thank you so much. And thank you for choosing that question. Anna from Mexico, I love your accent and the IPO market. Since the pandemic, the IPO market in Latin America has has really fluctuated in 2021. The region raised about $19 billion, mostly due to Brazil, which accounted for about 85% of that capital.

Mexico in comparison had only one IPO in 2021. So basically the IPO market in Mexico could best be described as kind of like dead. Other than that, it's fine. By 2022 and 2023, IPO listings came to a complete halt in Brazil. In the first half of 2024, the entire Latin American and Caribbean region registered only four IPOs.

Why? Essentially boring, it's the boring stuff. Interest rates, rates in Brazil rose over seven points to nine and a quarter points. Similarly, interest rates in Mexico increased from five and a half percent to 10 and a half percent in the same period. At the end of 2022, the average policy rate

in Latin America stood at 18.9% rising interest rates usually decrease investor confidence, which typically means an outflow of capital from equity markets into safer fixed income investments. In short, when you're getting paid a lot of money just to put your money in bonds or would feel like less volatile or safer investments, the bar to go public gets much higher and money flows out of equities and into fixed income instruments,

thereby creating a less hospitable market for IPOs. Additionally, the rise of populist left-leaning governments in Latin America has deterred private investment in the region resulting in a nearly flatline GDP per capita. I'm actually quite bullish on Mexico, I think for a few reasons. One, more political stability, I would argue, than the US.

Two, proximity. As we try and divest away from China, one, because of geopolitical tensions, but also just because of supply chain diversification. I was on the board of chemical and urban outfitters. We woke up one day in the middle of COVID, realized that the disproportionate, 60 to 70% of our tops were being manufactured in a five mile radius of Shenzhen and

basically all 550 of our stores couldn't get tops in time. And said, okay, even if it costs us a little bit more, we need some supply chain diversification. Basically, up until COVID supply chain was run for lowest cost, full stop, how do we eke out more and more costs and it ended up we had absolutely no slack, meaning any interruption at all and everything from your refrigerator to your garage door, they couldn't find parts and the whole thing just kind of collapsed on itself.

So essentially the biggest threat to these companies is no longer consumer demand, which has been really strong for the last 16 odd years, but supply chain interruptions where basically consumers can't get what they want. So there's this amazing or this incredible inspired effort towards supply chain heterogeneity and then there's supply chain diversification moving stuff out of China into Vietnam, other Southeast Asian countries

and also the big beneficiary has been Mexico, which is now our largest trading partner. So I'm actually quite bullish on Mexico. IPOs in general seem to be in, are they in cyclical decline or structural decline? And that is, it used to be, if you wanted a company to be worth more than a few hundred million dollars,

you had to access this deep pool of capital called the public markets. There just wasn't enough capital available in the private markets. The biggest VC funds only had two or $300 million funds. So you went public to access these big pools of public capital. That's no longer the case.

People have gone further downstream. And when they see opportunities, when they see the company accelerating in value, they wanna squeeze more and more juice in the private markets as institutional investors. So they're like, we don't need to go public. As a matter of fact, if the existing shareholders or employees

want some liquidity, we can give it to them. We can do secondary offerings. We don't want the scrutiny, the regulation of the public markets. So we'll just stay private. And oftentimes the private markets are actually trading at a premium to the public markets. So what do you have?

The number of public companies has been reduced, I think by two thirds over the last 30 or 40 years. One, it's harder to go public. Two, there's more regulation. Three, it's expensive. And four, mergers and acquisitions have taken a lot of public companies off of the rolls. And finally, finally, being private is kind of equivalent

or maybe even more ideal than going public. And typically, I think also what's hurt the public markets is by the time a company decides to go public, it's sort of the last stop on the full train. And that is Google, when they went public, enormous upside. Same with Meta, these companies still had enormous upside left. Now most of the, again, the juice is being squeezed

in the private market. So by the time it gets to the public markets, it's sort of like, well, we've run out of people in the private markets who will bid us up. Let's see if we can find stupid retail investors. And some of the public market IPOs have underperformed and has made a less hospitable environment. But yes, the IPO market in Mexico is dead.

I hope it comes back for all of us. Thanks for the question. Question number two. Hey Scott, this is Kevin from Colorado. Longtime listener of the pod and wanna tell you how much I appreciate your insights on helping young men. Although I'd still like to consider myself young, in 2025 I'm turning 40 and I'm increasingly feeling the responsibility to make a positive impact with the abundance of

young men I interact with in my life. I have three young boys, a younger brother, four younger brothers-in-law, and eight young nephews. Outside of my family, I own two businesses, each having many young male employees. And I'm also active in my church, where I help mentor dozens of young men under 18. I'm finding it hard to get involved and help these boys that aren't my sons, because I don't wanna overstep my bounds.

My question, Scott, is this, with no shortage of opportunities, how do you recommend I be more proactive in helping mentor these young men, especially those I can see are struggling without being overbearing or coming off as weird? Boss, you're doing it. Raising good men,

raising confident, loving, patriotic boys, that's kind of 90% of what you're supposed to be doing. In terms of helping other boys, when I can't stand the gestalt in our society where we suspect men who want to get involved in other boys' lives. I think that is one of the terrible things about our society that is largely the fault

of the Catholic Church and Michael Jackson, which I will not go into, but your inclinations are the right ones. One, getting involved in groups, being a scout leader, teaching Sunday school, whatever it might be, but sharing some of that confidence, being a male role model in groups. Also recognizing, or what I think is a great trick, or not a trick, but I do this sometimes with my boys.

One, my boys are 14 and 17, so no matter how wonderful or fat the think is a great trick or not a trick, but I do this sometimes with my boys. One, my boys are 14 and 17, so no matter how wonderful or fat the vacation is, unless they're with other boys or other people their age, they're just not gonna have a good time and they're gonna get bored and angry and make our lives miserable. So I bring friends.

And what I find is I try and find or encourage them to invite boys that may not have the opportunity for whatever to hang out or do the kind of things we do. So I like to bring my boys friends with them. And I find you don't need to do that much. I think just seeing a healthy father-son relationship, seeing you trying to occasionally ask a few questions, them asking you a few questions, it's really powerful because the reality is

this is sort of, I don't know, disappointing, hurtful as the dad, what you're gonna find is with your sons, they withdraw a little bit or they're just less inclined. I have young men asking me for advice every goddamn day. My boys don't ask me for advice because they have this very healthy instinct that says I need to break away from the pride. And in order to make that a little less painful,

I start thinking my parents are idiots. And what's interesting is there's research that shows with teen boys, they're more apt to listen to their friends' fathers than their own fathers. So what I would say is in addition to just doing the good work you're doing, to get involved in groups where you might have an audience

of more young men or young people that you can influence, whether it's a church group or as I said, the Boy Scouts or volunteer groups or coaching or sports leagues if you really feel like you have that ability to connect with young men. But also on a very basic level, when you do stuff with your boys, encourage them, ask them or just invite other boys their age from your friends. Especially, I think it's doing God's work to kind of do a little bit of poking around and find out whether there's single mothers in your universe and say, hey, I'm taking my kids to the football game or I'm taking my kids to whatever it might be to the beach. Would John like to join us?

And I think you're going to find a lot of single mothers are very open to their son spending more time In the company of men trying to lead a good life and around other boys, but thanks for the question We have one quick break before our final question stay with us Support for property comes from quints your wardrobe is the first thing you upgrade when you want to look and feel your best. But what if you're someone who doesn't like spending a ton of mental energy on your clothes? The solution is to find classic timeless pieces that actually last. And that's when you turn to Quince. They offer high quality clothing at an affordable price. They're really well known for their Mongolian cashmere sweaters, which start at just $60. They also have great activewear, including performance tees and tech shorts.

Our producers tried some sheets from Quince and said they love them. Made with organic cotton, comfort and sustainability, all in one package. Whatever you're looking for, Quince says that all of their items are priced 50 to 80% less than similar brands. They say they're able to do that by partnering directly with top factories and they use premium fabrics and finishes so every item feels like a nice luxury item. Upgrade your closet this year without getting the upgraded price tag. Go to quince.com slash provg for 365 day returns plus free shipping on your order.

That's quince.com slash provg to get free shipping and 365 day returns. quince.com slash provg. This episode is brought to you by Crescent Family Office. Entrepreneurs understand the challenges of building a successful business. You've probably spent years pouring your heart into different ventures and maybe even had some serious wins. Still, I bet a lot of these successes came with headaches, complex financial planning, optimizing tax strategies, and timely exit planning.

It can be overwhelming to figure those things out, and charting a path forward can take a lot of time away from what you love most. If that sounds familiar, you might want to check out Cresit. Their prestigious family office for CEO, founders, and entrepreneurs. Cresit's advisory teams can simplify your financial life. They handle the tedious stuff behind the scenes, freeing you up to focus on growing your business and enjoying your life. It's the sort of help that can be transformative. Optimize your life and optimize your wealth with Cresit. If you want the freedom to follow what really matters, you should schedule a

call with a Cresit founder at CresitCapital.com. We are not clients of Crescent. There are no material conflicts other than this paid endorsement. All investing involves risk, including loss of principle. Support for the show comes from NerdWallet. Listener, a new year is finally here. And if you're anything like me, you've got a lot on your plate. New habits to build, travel plans to make, podcasts to host. Good thing our sponsor NerdWallet is here to take one of those things off your plate, finding the best financial products. Introducing NerdWallet's best of awards list, your shortcut to the best credit cards, savings accounts, and more. The nerds at NerdWallet have done the work for you, researching and reviewing over 1,100 financial products to bring you only the best of the

best. Looking for a balanced transfer credit card with 0% APR? They've got a winner for that. How about a bank account with a top rate to hit your savings goals? They've got a winner for that too. That way you can know you're getting the best products for you without doing all the research yourself. So let NerdWallet do the heavy lifting for your financial future this year and head over to their 2025 Best Of Awards at nerdwallet.com slash awards to find the best financial products today. Welcome back. Question number three. Welcome back, question number three. Hi, Scott. This is Marcela Teran from Miami.

I am a Colombian immigrant. And just when I thought I couldn't love any of your content anymore, I find out you have bought a football team, not soccer, football, from my beloved country, Colombia. I was just curious what motivated you to join this group that is making the purchase, and if you have any plans to visit my country. I'm just so excited.

Thank you so much for all your wonderful content, and keep up the good work. In another non-football note, just wanted to thank you for showing up vulnerable, and emotional, and loving and caring and also being a baller because I think that's your very own brand of healing the world and helping young men know that those two things can coexist. Bye, Scott.

Thank you. I'm going to print this out and read it to myself every night. This is one, I oftentimes think my producers hate me and are just so sick of me because I know me and I know how difficult I can be. Actually, I'm not difficult. I don't think I'm difficult. Am I difficult? But I'm shocked that they let this get through.

So thank you for the really kind words. So La Equidad, the second best team in Bogota, Colombia, uh, this is, I don't want to say it's a dream of mine, but I had always toyed with the idea of I really wanted to buy or to make an investment in Rangers, uh, the, the, the best team in Scotland, uh, because my dad used to go to Rangers games. I absolutely love football. I love the idea of investing in a community and I think it would just be a lot of fun.

Also, quite frankly, it's sort of a, I don't know, a symbol of your success, midlife crisis, I'm worried I'm gonna die soon, arrested adolescence. I mean, all of that less admirable shit too. And I met, so how did this come about? I met some, I met this guy at an investor conference who's sort of the Yoda or the Svengali of investing in teams.

And he scans the world for teams and he tries to find teams that are economically viable because they have a great player academy and cultivate and just aid players and then sell them. Or they have kind of unrealized or unlocked TV rights, whatever it might be, or they're just not a well-run team. This kid literally needs a kid who's in his 30s, scours the globe for opportunities.

And he came to me and said, I'm putting together an investor group, which includes people much more famous than me, including Ryan Reynolds and Rob McElhaney. And I got to know Rob because of my work on Young Men and I was in Welcome to Reximar. I was in an episode and I just was so impressed with this guy. He's just such a lovely talented guy. When I saw they were part of the

investor group and it was also an opportunity to spend more time in Colombia, which I just think is such an incredible country and also quite frankly this is a bite-size. I'm not buying Chelsea. Chelsea cost four or $5 billion. I'm not in that weight class. This is a company that went for dramatically, dramatically smaller purchase amount. And I'm also a small owner, or I think I'm gonna own something like 5% of the team.

But anyways, this is one part investment. I do believe, I think I'm gonna make money here. Why? The fastest growing demographic group isn't seniors or Latinos, it's billionaires and the super wealthy. What does that mean? It means the assets of super wealthy buy,

whether it's hotel rooms in San Tropez or Gulf Streams or Loro Piano or Brunello Cuccinelli or sports teams are gonna go up in value. Sports teams typically have sort of a natural monopoly. And so kind of Columbia League One does not have only, they sequester, we can't just start a football team. You know, MLS rights in the United States are going for several hundred million dollars now.

These are essentially regulated monopolies. Is that a good thing? Probably not, but I'm taking advantage of it. So what do you have? You have an explosion in the customer base, specifically wealthy people who buy teams. And two, you have limited supply. I like my math here, I like my prospects.

Also, you have this dynamic in terms of media where people can now avoid ads. Advertising has become a tax that the technologically illiterate or the poor have to pay except for sports. And that is the only time I ever see adverts as they call them here in Britain is when I'm watching Arsenal play.

And that is the only time I'll endure ads is when I'm watching live TV, which is almost never. I never watch live news anymore. I don't watch, I watch original scripted drama. So I'm able to avoid almost every news anymore. I don't watch, I watch original scripted drama. So I'm able to avoid almost every ad, except when I watch live sports, meaning the TV contracts will go up in value

because advertisers still need to reach people and there's fewer and fewer places they can reach them. See above live sports, which means the TV rights deals will go up, which means the value of the teams will go up in concert with the number of buyers, specifically very wealthy people going up. But I don't wanna pretend this is also not consumption.

I just think this is gonna be just so much fun. I can't wait to take my boys. I can't wait to go with my friends. I can't wait to have an excuse to spend more time in Medellin and Cartagena. I just think it's, I'm just so excited about this. I love Latin American culture. I love the idea of spending more time in Columbia.

I love the midlife crisis, midlife meet crisis. I like the investor group. So this was an easy one and it's not, this is a lot of money, but it's not hundreds of millions, not even tens of millions. It's for someone like me who is incredibly blessed and economically secure, but not a billionaire. So what is this?

This is capitalism meets consumption. I just think it's gonna be so much fun So famous last words, but I'm really excited about this and maybe I will see you at a lot equidad game Oh my gosh, that's right. He's coming in El Pato's coming in. Muy hace calor muy hot He's coming in, El Pato's coming in, muy hace calor, muy hot. That's all for this episode. If you'd like to submit a question, please email a voice recording to officehours at propgmedia.com. Again, that's officehours at propgmedia.com.