The Prof G Pod with Scott Galloway - Office Hours: Allocating Your Small Business’s Revenue, Would Scott Ever Run for Public Office? and Finding Your Purpose

Episode Date: August 9, 2023

Scott gives a listener advice on how to allocate the revenue of their small business. He then discusses whether he would ever consider running for public office. He wraps up by offering guidance to a listener who is navigating the challenges of the post-undergrad phase in their life. Moreover, he shares his insights on discovering one’s purpose.  Music: https://www.davidcuttermusic.com / @dcuttermusic Learn more about your ad choices. Visit podcastchoices.com/adchoices

I just don't get it. Just wish someone could do the research on it. Can we figure this out? Hey y'all, I'm John Blenhill, and I'm hosting a new podcast at Vox called Explain It To Me. Here's how it works. You call our hotline with questions you can't quite answer on your own. We'll investigate and call you back to tell you what we found.

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I have not seen or read these questions. First question. Hi, PropG. I love the knowledgeable, honest, and humorous advice you give to your listeners. I eager. Hi, Prof. Chi. I love the knowledgeable, honest, and humorous advice you give to your listeners. I eagerly wait for office hour day. I quit my cushy corporate therapy job and started my own private practice. The first year I was working for myself, I pulled in more than what I was making there. And now my second year in, we are incorporated. We have a small office in Pasadena and I have another therapist working for me so that I could focus more on how to scale my business.

She doesn't know this and this doesn't sound great either, but she's slightly making more than me. Not a lot though. My dream is to figure out how to scale up so we can help more families and also put systems in place so that the practice can eventually run without me. There's so much conflicting advice about how much to allocate for expenses like rent, materials, owner's pay, and putting some money away for business savings. My question for you is how should I be allocating my revenue as a small business? Do you think it would be a good investment to get a business coach or financial planner

to help me forecast? Thanks so much. Justine from Los Angeles. Justine, thanks for the question and the kind words. I think you're dealing with what every small business person deals with and just a couple best practices as someone who has started businesses his whole life and until really the last. I raised money, but I've always started businesses with my own capital. In the beginning, that was none. The first thing is, and it sounds obvious, but a lot of entrepreneurs don't really register it. And that is revenues make a business, not expenses. Your focus is on delivering amazing service to that first 10, 50, 100 customers, patients. Because a small business,

you're essentially in the services business. So services business is all about word of mouth initially. You gotta have that first 50 or 100 evangelists for your business. I would throw around nickels like they're manhole covers with one exception. Well, actually two exceptions, and it sounds like we already made one.

One, you found someone good. Now, I don't know if there's an equity play in this business. It sounds like to me private equity is probably going to roll up therapist's office at some point. But hiring someone good who can deliver, create those evangelists for you, that sounds smart. generates cash flow where you don't spend full time at the office. I'll come back to that. Or two, the company gets bought and you have equity. I would argue that in the beginning, you probably need to be doing a lot of time as a therapist and driving a lot of revenue. But the only place I ever overspent or always signed checks and said, okay, I'll spend the money was around technology. And whether it's scheduling software or great voicemail or a fantastic website or experimenting with some customer acquisition or whatever it might be, voice memos, I don't know how a therapist's office leverages technology. I would constantly be thinking about that. In terms of a financial planner, I think you want to have decent visibility into the finances and understand cash flow and have a good relationship with a bank that might be able to loan you some money. But I don't know if that's worth it. And executive coaches can be great. It's a big emerging industry. I never

had one. What I would suggest is that, and this is something that every entrepreneur needs, boards of directors are fantastic for public companies. Groupthink works. There's a wisdom of crowds. We save the CEO from him or herself every once in a while. I just had a conversation with the CEO of a company I'm on the board of. They're laying off some of the people. This is a company actually headquartered on the West Coast. And I'm like, board of. They're laying off some of the people. This is a company actually headquartered on the West Coast. And I'm like, you're not going deep enough. You don't want to do two layoffs. You only want to do one. And my advice to CEOs is if you're going to do a layoff, go deeper than you want, because it's easy to talk yourself out of thinking,

well, let's just lay off 3% of the people. I'm like, no, you should be laying off 8% or 10% of the people because it's like surgery. You don't want to do it more than once. And the sooner you lay people off, the more generous you can be with them. Anyways, there's a wisdom of crowds. And it's very hard to read the label from inside of the bottle. So this is what I want you to do. I want you to put together a kitchen cabinet. Maybe one of those people has a background in finance. And you can just say, this is my financials, this is my cash flow. And they can ask you some questions and just make sure that you're not going to run up against a cash crisis. So kitchen cabinet, but you need to generate revenue. You're the owner, you need to be in the business of therapy, and I don't see why you would need

that much time for infrastructure. You're probably not going to be able to create cash flow without you not there with just one person, because at some point that person is going to realize he or she's running the practice. So these kinds of companies are like restaurants. And that is the most profitable ones. The ones that are enduring are the ones with the owners there a lot of the time. So I don't know if you're going to be able to escape this place or I mean, everyone has a dream of making money in your sleep. I think what you can get to a point with a small business like this is a place where

you're making really good money and you're only working 30 or 40 hours a week, not 70 or 80. And that's what it means to be an entrepreneur. It means working all the goddamn time. And when you're not working, thinking about the business. So take a little bit of money, take a little bit of money and do experiment with some online customer acquisition on LinkedIn or Meta or Alphabet and track, you know, be really cautious about your cost of customer acquisition. It's basic. If I spend $1,000, how much traffic do I see to my site? How many customers can I reverse engineer to this advertising? And you come up with what is a cost of customer acquisition,

right? Another suggestion here, go and type in SaaS metrics, S-A-A-S metrics. I find that the approach to SaaS software and the metrics that software executives use to measure the performance of a company can be applied to almost any business and are really thoughtful and really helpful. Doll renewal, logo renewal, the number of patients that renew every year and then how much money you're making for them, although it's a little bit different for you because it's not like you can keep increasing prices or say, hey, you're really fucked up coming three times a week, not once a week. Anyways, probably an inappropriate joke. Anyways, congratulations on your small business. Pasadena, I have fond memories of, specifically the Rose Bowl. That's where I used to go for

football games when I was at UCLA. And it sounds like you're doing absolutely fantastic. Justine from Los Angeles, thanks so much. Congratulations on your success to date. Next question. Hey Scott, Marina here from New York City. I'm a former student and current fan. I especially love your political rants and political points of view. You've such a progressive stance that really gets me excited as a liberal, but your ideas are always grounded in good business sense, so perhaps more fiscally palatable to my not-as-liberal friends. And you certainly don't sound like a politician. You package your ideas in an anti-bullshit and unconventional way. When you talked about the tax code and falling back in love with work, it made me think. If you could

unite people, Democrats and Republicans, who make money from sweat, and I think you could, that would be an electable and unbeatable combination. All of that is to say, would you ever consider running for public office? I'm really passionate about politics, especially income inequality, living wage, and the tax code, but I don't want to go into politics. Any ideas for how I can affect some sort of positive change in this domain? I'm a researcher, and I'd love to contribute to your campaign if and when you decide to run. Marina, that's so nice. That's such a warm and generous compliment. So thank you. I find that when I was younger, and everyone, it's interesting to look at what shaped your political views. What shaped my political views is I was raised by a single immigrant mother who lived and died a secretary.

And quite frankly, it was hard, or some of it was hard. I mean, on a global level, we had a nice life because we always had food on the table. My mom was irrationally passionate about my well-being. I got to go to decent schools, public all the way through, and then amazing schools at UCLA and Berkeley. But the thing that shaped me was that I realized big government is who I am. It's so easy to credit your grit and your character for your success and blame the market for your failures. I have no such delusions. The reason I'm here talking to you, the reason I get to go to Mykonos, the reason my kids get to have wonderful lives is that the generosity and vision of California

taxpayers and the Regents of the University of California and government decided we're going to help kids from single immigrant parent homes, and we're going to give them things like Pell Grants. When their mom gets laid off as a secretary, we're going to give them things like Pell Grants. When their mom gets laid off as a secretary, we're going to give her welfare or unemployment. Big government is who I am and America has provided me with just a life I just wouldn't have had anywhere else. And so to not be passionate about these things and that's what's made me sort of a progressive, if you will. Having said that, as you get older, I think that it's important to say, every time an issue comes up, really search your feelings and say, how do I feel about this issue?

As opposed to the lazy thinking of just going to the narrative of the party you've assigned yourself to. And I find that because I have a real fondness for progressive ideals, especially on social issues, that I always kind of signed up for the narrative. And as I've gotten older, I've decided if you have people who love you and you have some economic security, you have an obligation to speak your mind. And on certain issues, I'm not on board with the woke narrative. The moment I came out and said, yeah, I don't think affirmative action should be race-based, you get attacked by your friends who are like, we thought we could trust you. We thought you were one of us.

So I very much enjoy kind of being an outsider. In terms of running for office, I'm a narcissist. And I got to be honest with you, I thought about it. I had a group of people approach me about running for mayor. I think it was six years ago. And they said, you put in 5 million, we can raise 5 million. You won't win this time, you'll win the next time. When I had a big exit a few years ago, I was contacted by some political operatives in Florida and said, would you be interested in running for Senate? You have name recognition. And they said, you'll need $10 million to lose and then you'd win the next time. And I toy with the idea because I like the idea of trying to make a big difference. And when I meet with Senators Klobuchar or Representative Ro Khanna or Senator Warner, you know, they just tell you, they say, Scott, will you do a small ball? When we decide to do something, we can assign billions of dollars and thousands of people to helping low-income kids get good nutrition at school. And so I'm drawn to it because one, quite frankly, I have an enormous fucking ego. And two, I do think that elected representatives can have a big difference. But

here's the thing. I think I can have a big impact from outside of the tent. I wouldn't want to subject my family to that. I talk very openly about my past involvement in drugs. And I actually haven't done as many drugs as people probably think I have, but I just wouldn't want to be under that scrutiny. And also you have to like people to run for office. I generally don't like people. They suck energy from me. I'm an introvert. I'm a bit of a recluse. I just don't think I would enjoy retail politics. And you can have a big, big impact from outside of the tent as opposed to inside of the tent. And I think that if you have a voice, and this is where I'm pivoting finally away from me into advice for you,

I think you can have a lot of impact from the outside. Getting people, registering people to vote has an enormous impact. Finding issues and advocating for those issues. Yourself being a good citizen. You know what I'm trying to do to improve America? I'm trying to take the temperature down. I'm trying to be more reticent to engage in personal attacks or bullshit fights on Twitter or wherever. I'm trying to show more grace. I'm trying to be less judgmental. I'm trying to be just a better neighbor. good parent, taking an interest in another child's well-being, canvassing, voting and giving money to candidates that you believe in, being cognizant of the issues. There's just so many ways to contribute to what is the greatest experiment in the history of mankind, and that is democracy and specifically the United States. A very generous and thoughtful question. How do you change America or how do we eat an elephant one bite at a time? And let's all take the

temperature down and realize one key truth that we have lost the plot on. One thing we continue to forget, and that is Americans will never have greater allies than other Americans. Thanks for the question. We have one quick break before our final question. Stay with us. The Capital Ideas Podcast now features a series hosted by Capital Group CEO, Mike Gitlin. Through the words and experiences of investment professionals, you'll discover what differentiates their investment approach, what learnings have shifted their career trajectories, and how do they find their next great idea? Invest 30 minutes in an episode today. Subscribe wherever you get your podcasts.

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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. Question number three. Hi, Scott. My name's Kyle. I'm a 23-year-old first-generation college graduate here in Atlanta, Georgia. I was lucky enough to get a job in the IT field right after graduating, and I really enjoyed it. I enjoy what I do, and this is something that I've always wanted to do.

Although, ever since graduating, I feel like I've lost my identity. I don't have an interest in the things that I used to enjoy. I feel like I can't find any hobbies, and it's really impacted my sense of self and my purpose in life. Because of all that, my anxiety has really skyrocketed. It's impacted my relationships with my family and my girlfriend. And I'm trying to improve by getting to the gym, lifting weights, running, getting into therapy, and taking an antidepressant. My main question to you is, how did you discover those things that made you who you are? Your hobbies and interests and things that brought purpose to your life. I'm having a really hard time finding those things again and making those things me and my identity. I'm a huge fan of who you are, Scott. You're such an inspiration.

I've been reading all your books and listened to your podcast for the last year, year and a half now. Kyle, I can't tell you how impressed I am with your transparency. I did not have the courage, the masculinity, the self-awareness at 23 to even identify what you are going through and articulate it and have that kind of courage. So first off, let's review. You're in the IT field, right? You went to college. You were the first person to graduate from college from your family. You got a good job. You are self-aware enough to know that on certain parts of your life, you are struggling. You, my friend, you, my friend, are in the top 10% of young men in America and in the top 1% of men in terms of your achievements,

your character, and your self-awareness. And when you are feeling really down, you need to say to yourself, all right, something is going on in my head. This is something chemical because any sober analysis of how you are doing, Kyle, you are doing really well. You are doing really well. Now, that doesn't help when you feel like shit.

And one of the key indicators of depression is you don't get joy from much at all. That is a key signal for depression. And I want to be clear, I am not a therapist, but I so much respect and admire and would urge you to continue to engage in therapy and work on this stuff because a licensed professional can get you to the right solution and help you figure it out. And what you're going through is, first off, just not that uncommon. There's an arc of happiness. Zero to kind of 22, 23 is Star Wars, prom, beer, football games. You know, it's pretty good. And then kind of 22 or college graduation to sort of 45 is what I

call the shit gets real part of your life. Work is hard. Relationships are hard. Young men have a tough time finding a mate these days. If you're thinking, wow, this is harder than I thought, you know, I would argue that's kind of where a lot of people, especially a lot of young men, are at your age. Now, in terms of your family, in terms of anxiety, it sounds to me like you're addressing it. It sounds to me like you're going to figure this shit out because you're doing what you're supposed to be doing. In terms of your question, how did you discover these things that made you who you are, your hobbies and interests and things that brought you purpose in life? Dude, I'm still fucking figuring it out. I'm still figuring it

out. And to think that you're going to have 10% of that figured out at 23. I mean, this is what your 20s is about. Your 20s is kind of about workshopping. I was an investment banker at your age. I was terrible at it and I hated it. And I remember thinking, Jesus Christ, this is my life. It's doing something I hate with weird people that I don't like and don't like me. And, you know, I got a job for the wrong reasons. I got a job at Morgan Stanley because I thought it would impress my mom and strange women. And I realized I didn't like it. But guess what? That was hugely valuable. I went back to business school. I realized I didn't want to be an investment banker. And that helped me figure out, get closer to things I do want. And, you

know, if I could do it all over again, I'd be an evolutionary anthropologist probably. But I, you know, next life or a Broadway dancer, a Navy SEAL, still time, still time. But look, my brother, you are killing it. You recognize the most important thing in life is relationships. And if your relationships are struggling, what did you do? What did you do? You did the masculine thing. You did the masculine thing. You took fucking charge of the situation and you found people who understand this shit. You found domain expertise and you're trying to wrap your arms around it. But in terms of finding your purpose and your meaning, my brother, that's just a random walk.

And the only thing that works is time, is investing in relationships and figuring it out slowly. And this is the good news. With your self-awareness, with your courage, with your masculinity, you are going to figure this shit out. The bad news is it's going to be a long process. It takes a long time. And whenever you're feeling down, you need to, to the rational part of your brain needs to constantly repeat something is going on in my head that I can't control. It's one thing to be down and depressed. I get that. But what I hope is that you don't get upset or angry at yourself. And I realize it's easy to tell someone that and hard to do. I find talking when I'm down, talking to people about it is

really, really helpful for me. It Articulating it makes me feel better. I blew up at my family the other day. I had a close friend pass away, and I'm trying to figure out, is it that I'm upset for him, or I have these terrible images of his last days and what he probably went through. He was very sick. I don't know if it's selfish. I'm so freaked out about my own mortality. This isn't supposed to happen. This guy's younger than me, was in great shape and boom, leukemia that fucking pivoted to Richter's and just died a pretty unpleasant death. But just even just talking about it with people helps me. But I blew up at my family. I just blew up at them. And what I still wish I'd had more command over is to realize when you have that inclination to say something mean or unkind to someone in your family, to try and press the pause button and say, is this really about them or is this about what I'm going through? But anyways, a very long-winded answer. But Kyle, you're doing great, and I hope you check in and let me know how things are going. But the notion, brother, that your purpose and your meaning, there's no algorithm for it.

You're doing exactly what you should be doing. You're doing things one step at a time. You're finding what you like and what you don't like. And it's just, this is a random walk, my brother.

And we're all trying to figure this shit out. Thank you so much for the question, your transparency, and your courage, Kyle. That's all for this episode. If you'd like to submit a question,

please email a voice recording to officehoursofpropertymedia.com. Again, that's officehoursofpropertymedia.com. This episode was produced by Caroline Shagrin. Jennifer Sanchez is our associate producer and Drew Beros is our technical director. Thank you for listening to the Property Pod and Vox Media Podcast Network. We will catch you on Saturday for No Mercy, No Malice, as read by George Hahn, and on Monday with our weekly market show. 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,

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