The Prof G Pod with Scott Galloway - Office Hours: An Honest Look at Climate Change, Advice for Aspiring Entrepreneurs, and Parenting as a Wealthy Person

Episode Date: April 12, 2023

Scott takes an honest look at what the 2023 IPCC Report had to say about the state of climate change and the environment. He then gives advice to a listener seeking to start up their own ad agency and wraps up with his thoughts on parenting as a person with wealth. Music: https://www.davidcuttermusic.com / @dcuttermusic Learn more about your ad choices. Visit podcastchoices.com/adchoices

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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 to the PropG Pod's Office Hours. This is the part of the show where we answer your question 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 profgmedia.com. Again, that's officehours at profgmedia.com. I have not heard or seen these questions. Question number one.

Hi, Prof G. Luke here, all the way from Rotterdam, the Netherlands. First of all, thank you for the great content that you are making. Your podcast makes me reflect on the world and on what I do, and it is a great thing. So thank you. My question around the IPCC report that was published recently in March 23. I've read quite a bit on it now and I find the scenarios that are presented very disturbing given that me and my wife have two little boys that I want to see growing up in a safe and livable world. Following the report, cutting back on emissions and pollution to get to a safer scenario will have massive impact on businesses and our lives, especially in a developed world, the US, Europe and China. It sort of offers a prisoner's dilemma, whereas highly unpopular measures need to be taken that politicians are

not always willing to take. Say, cutting back on flights, meat consumption, production and so on. Somehow, I don't get the feeling that the report has been big news. I see media largely ignoring it and haven't heard anything on your podcast. How do you look at this? Do we look away because the truth is too confronting? How do we get out of this prisoner's dilemma? And how can we look at the future more positively, as it seems that we are driving towards a cliff at 200 kilometers an hour? Thank you for your thoughts and keep up the good work. Lou from Rotterdam, Netherlands. So just some data first. The report released in March by the UN Intergovernmental Panel on Climate Change, the IPCC that you referred to, found that the world is likely to surpass 1.5 degrees Celsius or 2.7 degrees Fahrenheit above pre-industrial temperatures by the early 2030s.

While that may not sound like a lot, once we get to that point, climate disasters will become so extreme that people will not be able to adapt. This irreversible damage will cause famines, infectious disease. Climate disasters will become so extreme that people will not be able to adapt. This irreversible damage will cause famines, infectious disease, heat waves. There was some good news. I don't know if they were just trying to not come across as total Debbie Downers or Eeyores, but IPCC Chair Hu Song Lee, I think I'm getting that right, said this report offers hope and provides a warning. According to him, the changes we make now will have a great impact. I get a lot of criticism. One of the questions I get when I speak at conferences, I cover kind of an omnibus of issues, whether it's income inequality or struggling young men. And I get a lot of criticism of why aren't you using your platform to talk more about climate change, which a lot

of people justifiably see as kind of the existential crisis of our time. And the honest answer is the reason why you don't hear a lot about it on this podcast is I don't have a lot of domain expertise around it. I want to be clear. I believe that when the last human takes her last breath, the earth is going to belch for about 50 years, and it's going to be as if we were never here. So I'm not worried about the earth. I'm worried about us. And that is, I think that climate change, it's just, if you consider yourself a person of science or just a rational person, you just can't ignore the data. And I think seven of the 10 worst fires in American history have all happened in the last decade. We're getting hurricanes at a greater propensity and intensity.

I mean, there's just sort of no denying this unless you've decided, okay, I'm just going to stick my head up my ass because I've decided that for some reason the environment and climate change are democratic values. And I can't ascribe or prescribe to anything that smells of blue. So I think this is something we absolutely need to address. I also think there's a myth that we're going to figure out a way to address this by making a lot of money, that all we need to do is buy Tesla stock or that there's some engineer at MIT in his senior year or her senior year who's going to – that we're going to get rich while solving this. I think this requires massive global cooperation, and I think it's going to be expensive. I do think there's some myths, though,

and that is a lot of people think that one way to solve it is this nihilist vision of going into population decline, that it's the population bomb problem. In about the 70s, there was this myth started that the Earth was going to collapse under the population explosion or under the weight and consumption desires of an increasing population globally. That just hasn't happened. As a matter of fact, it's a population implosion. Three countries in the West have gone into population decline, Italy, Japan, and I forget the third. And I think another dozen are about to go into population decline over the next decade. And I would argue the population decline makes those countries less economically relevant, makes their society less productive. People's productivity peaks in their 40s, which means they have to allocate more and more of their budget

to taking care of seniors as opposed to investing in R&D, including how to address the climate crisis. As Bill McKibben, a guest on the pod, said, the two big puffs of carbon into the atmosphere were one, the suburbanization of America, and two, the industrialization of China. So, it's been lifestyle and energy choices that have really driven climate change. That's not to say the population doesn't have an impact. True, it is correlated, but it's not high among the causes. As a matter of fact, the countries that have had the largest population growth over the last 50 years actually have a lower per capita carbon emissions than wealthy nations. So it's really a function of policy, energy, and lifestyle choices. I was on Bill Maher last week, and he said, well, we're running out of water.

The reason we're running out of water is because we subsidize water to the point where it makes sense to submerge the Central Valley under two feet of water. And all this bullshit around don't water your lawn is like recycling, and then it's meant to give consumers the illusion that they're actually doing something or that these government regulations matter. Consumer usage of water is actually a fraction of what agribusiness consumes. And if we priced water to its actual cost, when it takes several thousand gallons of water to raise a cow, if we price beef to what it was supposed to be priced at,

we would have better outcomes and water would be, if water was priced to what it actually costs, you wouldn't have a water shortage. I don't talk about this a lot because one, I don't have that much domain expertise around it. I do feel like there's a decent amount of catastrophizing. I think we just need to have a sober conversation around

international cooperation, moving away from coal. I'm hopeful that President Biden's climate bill, which claims we can cut carbon emissions by 40% in 2030, is actually tangible evidence that we're moving in the right direction. Personally, I'm much more cognizant of my own carbon footprint. I think each of us individually needs to try and figure out what our carbon footprint is and then go on the offense, take it to zero, and then start thinking about things we can do in terms of voting for the right people. But I appreciate the comment. This is arguably the biggest threat to our children and our grandchildren. Thanks for the question. Question number two. What's up, Prof G? Jake from Denver here, looking for some sound business advice from the dog himself. Some quick background. I'm 29 years

old and have seven years of experience in marketing, split between two Fortune 500 companies. I've been successful climbing the corporate ladder, but I found the process of doing so to be pretty soul-crushing. As such, I'm considering going out on my own and starting an advertising agency with the idea of finding small businesses as clients to start

and potentially scaling to larger clients down the road. I have good connections in the advertising and marketing world to pull business partners from and also have good small business connections to pull clients from. I'm attracted to the ad agency idea. Because it's familiar, I have the connections and skills. And because of the very low startup costs, which I plan to fund using savings. My question, as a marketer yourself and brand strategy expert,

is an ad agency still a profitable business model? I've heard you talk on your podcast and pivot about ad-supported business structures and your skepticism of them long-term. Would I be better off starting a small business in a different industry, even if I had to learn the seal from the ground up? Thanks as always for your wisdom and humor.

It's an interesting question, and I got a lot of different forms of this question, Jay, from Denver. So a lot to unpack here. The first is entrepreneurs will typically say, and sort of this hustle culture, TikTok culture will say, yes, start your own business, leave the man, leave the corporation. recognize that that is a viable option is to stay there. And maybe even to share with them that you're thinking about starting your own business and tell them why, what attracts you to a small business? Is it autonomy? Is it more economic upside? Maybe they would offer you equity in the company. But I don't think you ever want to leave without being transparent around why you're

leaving. Because sometimes they would say, look, we didn't recognize that this was important to you. Maybe there's a way we can give you some of those things here because a platform, an existing platform is really powerful. And a lot of people sometimes underestimate the power of the platform and don't realize the power of the platform until they leave it. Having said that, having said that, I started Profit, a brand strategy firm when I was your age, when I was 26. And I started it not because I'm so awesome or so talented, but my limited experience in the corporate world was that I was not good at it. And that's not a humble brag. I wasn't secure enough. I wasn't confident enough. Every time people went into a conference room, I assumed

they were talking about me. I couldn't handle the injustices, which are a guaranteed attribute of the corporate world. So, if you are going to start your own business, one, clients make a business. Revenues make a business, not cost. Don't fall into the trap of thinking because you lease expensive office space or spend a bunch of money on a website that that makes a business. No. Expenses don't make a business. Revenues do. Find a client, first and foremost.

Even before that, kind of employee zero will be a partner. I find that greatness is in the agency of others. With almost every business I've started, I've founded a partner who is not anything like me, who brings a different set of skills. It's also, I think, just more fun to build a business with a partner. One, you divest some of the stress. And two, it's fun to have shared victories, and they bring hopefully a skill set that you don't have. So in terms of the industry itself, advertising, yeah, it's challenged because you have these big players consolidating the market. But having said that, if you're skilled and you're doing well and you have client relationships and a feel for the market and understand how to sell the business and how to execute it, you can make money in it still. Advertising is sort of a static business in the economy. It attracts about 1.3 or 1.6% of GDP every year. It's not a growth business,

but it's not a business in decline either. It's kind of a remarkably steady business. Having said that, you have some big players sucking oxygen out of the ecosystem. But as a small, nimble company and you're young, there might be ways that you can figure out how to be the agency that helps people figure out TikTok or figure out their analytics. The best services company are in the services client business, and that is they aren't necessarily buying TV time on cable, which is obviously declining business. They become a trusted advisor to the company. I was in a brand strategy firm. Brand was very important. But then I evolved to an e-commerce consulting firm. And then ultimately, I started another company, L2, which was a business

intelligence firm focused on kind of the luxury sector. Once we ran out of luxury brands to sell into, we expanded it. It was called initially Luxury Lab. Then we changed the name to L2, and we worked for P&G and Unilever and the majority of the CBG companies. So look, being an entrepreneur is a few things. One, you have to be comfortable signing the front of checks, not the back of checks. I call a lot of people in my company co-founder, but that's because I want them to have a vested interest in the company and titles are cheap. The reality is they're not the founder. The founder is the person who's willing to put their own money into the company. You have to be willing to do cheap. The reality is they're not the founder. The founder is the person who's willing to put their own money into the company.

You have to be willing to do that. And it is really, really painful. Good entrepreneurs throw around nickels like they're manhole covers, be ridiculously cheap in the beginning. But if you think, my brother, you have the contacts, insight, a good partner and clients

that you can start with on day one or call it day 30, then my brother, go for it. Jake from Denver, appreciate the question and good luck to you. 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. Published by Capital Client Group, Inc. Welcome back. Question number three. Hi, Prof G. My name is Robin and I'm a big fan, though at 61 years old and female, I'm not your typical listener. I want to congratulate you on the big investment windfall that you disclosed on a recent episode, and it's part of the reason I'm calling. My parents are quite wealthy, and I was given an excellent education all the way through undergraduate school and was able to graduate debt-free. When I graduated, my parents gave me a car, told me they loved me very much, and informed me that I would never see another penny from them. And almost 40 years on, I can tell you, they were not lying. My husband and I have decided to be much more generous with our own children, now both adults

and in graduate school. We're paying for their educations, including graduate school. We help them with rent. We plan to help them buy their first homes. We top up their IRAs annually when necessary and pay for family trips and other nice things. And when and if they have kids, we'll help pay for their educations. So what are your thoughts around parenting as a wealthy person? I can see the value of not raising spoiled rich kids and teaching them hard life lessons like my own parents did. But I also feel like life is hard, much harder for kids in their 20s now than when we were that age. And we should help if we can.

I'm interested to hear your thoughts. Robin, this is probably the most important and thoughtful question I've received in a long time. And let me finish where I'll start. I don't know. I think every parent that's been blessed with some economic security really struggles with this question. So, I want to say I empathize with your parents, and that is, I often say I would not have what I have if I had what my kids have. I didn't, I'm not economically secure because I'm so talented or because I wanted to save the world.

I had some moral obligation or that I had some vision and that the money just flowed from these initiatives or these discipline. I have economic security because I didn't have it. And it scarred me. And it was incredibly motivating. I couldn't take care of my mom when she needed me the most. I mean, I just saw all around me that people with money were living a much better life. And I decided very early that I was going to make a huge sacrifice or at least try to get economic security. If I had what my

kids have, the only thing I know I'd have in my life right now would be a Range Rover and a cocaine habit. So I empathize with your parents' sort of tough love. Now, having said that, what I see everywhere is everyone talks a big game. I had kids later in life, so I have a lot of friends my age that have grown children. And what I generally find is they talk a big game, something along the lines of, well, pay for college, help them a little bit, and then boom, that's it. And then 10, 20 years after college, they're still helping them because this is how it plays out. Your kids are good kids. They've gone to college. They've gotten good jobs. They've likely played by the rules. And by the way, you've raised them in a certain lifestyle that not only they would like to maintain, but you want them to maintain because

specifically you want them to live near you. You want to see your grandkids. You want to see them pursue their dream and try and pursue their dream of acting or public relations or starting their own design firm in New York or San Francisco. And you're absolutely right. It's much harder and more expensive now. Our economic policies have made buying a house near... I bought my first house when I was

28. What 28-year-old can buy their own house? So now, I mean, there's just, you're absolutely right. It's harder for our kids, at least economically, you know, on certain levels than it was for us. So I can totally empathize with the decision to want to help them out. But the problem is, you wake up 20 years in, and you've been helping them, and the kids have become so used to it that they haven't developed their own immunity. Specifically, they haven't developed a lifestyle and an earnings trajectory that foots, and you're basically having to fill in that gap. You want to try and cut kids off once they have kids, once they have a house near you, but they can't afford to maintain the quality of life that they had envisioned for themselves

or that you had envisioned. These are really difficult conversations. In the town, I used to live in Gulfstream, Florida. It was happening all over Gulfstream. And it's the following. You have ballers. You have people who were big executives, saved $7, $8, $10 million, ton of money, right? Or what seemed like a ton of money. Interest rates plummeted, so they were only making $200,000 or $300,000 on their savings. And

their kids kept needing money. Not bad kids, not for meth, but to live near pop-up and Nana, right? And their kids couldn't go to public schools or they didn't want them to go to public schools. I shouldn't say couldn't, so you helped out, all the things you're talking about. And then the parents lived 20 years longer than they were anticipating. And what you have in many of these communities is the grandparents are going broke because they didn't expect to live that long. And they didn't think that they would be shuffling 50, and that is, I will give my kids enough money such that they can do anything, but not enough such that they can do nothing. Having said that, I'm a softie when it comes to my kids. I can't imagine if I have the money ever imposing tough love. I just don't have that skill, and it is a skill. So where I probably end up is where you are, and that is I will help my kids financially should they need it, and most kids do need it

in today's economy. What I'm also going to try and do is instill certain values. I'm forcing or asking my 15-year-old to work this summer instead of summer camp, such that he starts to connect the value of money to work. I think a lot of this is just in the batter. I know some kids born into wealth who still work extremely hard, make their own money. But then again, I know a lot of rich kids who can never just never find the fire. And why would they? Why would they find the fire? It's a long-winded way of saying, I don't know. I think these are very personal situations. I think the way you're going about it is probably what I will do, but I will try hard, summer jobs, an understanding of money,

maybe some sort of matching as opposed to just giving them money that encourages them to be self-reliant. But yeah, this is just a tough one. And again, if you look at the data, the reason the Carnegies and the Gettys don't run the world is because the children of rich people usually decrease the level of wealth of the family. It's the children of immigrants that see how much hard work pays off that do really well. Thanks so much for the thoughtful question, Robin.

That's all for this episode. Again, if you'd like to submit a question, please email a voice recording to officehoursatproptomedia.com. Again, that's officehoursatproptomedia.com. Oh my God, the producer's finally doing their jobs and harvesting some good questions. Good questions. Thank you. Podcast Network. We will catch you on Saturday for No Mercy, No Malice, as read by George Hahn, and on Monday 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.