The Prof G Pod with Scott Galloway - Office Hours: How Much Should I Spend on Marketing? When Your Colleagues are Getting Poached, and Talking to Teens About Their Futures

Episode Date: December 20, 2023

Scott gives entrepreneurial marketing advice, speaking as to why startups should focus on creating an exceptional product over spending on marketing. He then discusses how to deal with management teams within your company when employees keep getting poached. He wraps up by advising a listener who is speaking to their nephew’s high school class about their career path in entrepreneurship.  Music: https://www.davidcuttermusic.com / @dcuttermusic Learn more about your ad choices. Visit podcastchoices.com/adchoices

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NMLS 1617539. Welcome to the PropG Pod's Office Hours. This is the part of the show where we answer your questions about business, big tech, entrepreneurship, and whatever else is on your mind. If you'd like to submit a question, please email a voice recording to officehoursatproptumedia.com. Again, that's officehoursatproftoonmedia.com. First question. marketing. As you think back as a successful entrepreneur or perhaps an entrepreneur that has experienced a failure, you know, as they think back to the very beginning, when they're getting ready to launch their business and seek to gain traction, what was their perspective around the value of marketing and communications. Was it viewed as a priority? Maybe there were some learnings that are worth sharing

for awareness and credibility, right? For lead generation. Any mistakes you made or you know others made, I'd be really grateful to get your perspective. Thanks so much. Jackie Omaker, thanks for the thoughtful question. I don't think startups think much about marketing, nor do I think they should. I think what you should think about in a startup is building an amazing product that 10x, your

goal should be a 10x better product that will get its own discovery. Traditionally, if you had a better product and you didn't have marketing, it was like a tree falling in the forest. No one cared. No one heard it. Now, if you put out a better widget that's generally better, people's social graph will take over and they'll start talking about it. So initially, I don't think you want to spend a lot of money on marketing. Here's the problem a lot of entrepreneurs fall into, is that they think expenses make a business. No, expenses don't make a business. Revenues do. It's fun to lease a nice office space, fix it up, hire a bunch of people, start marketing, have glossy brochures, a cool

website. Those are just expenses. Expenses put a business out of business. So here's the thing. You want to start a services business? You got a client. You want to start a product business? You build a product and you try and ensure that someone might actually buy the thing, you want to start a services business, you got a client. You want to start a product business, you build a product, and you try and ensure that someone might actually buy the product before you even think about marketing. Every company I've had, I've poured all of my effort into making a better product. And then once I knew I had a better product, I then think about, how can I get earned media? Specifically, once you have a great service, it's truly differentiated, or a product that's truly differentiated, which is just table stakes. Now your product has to be better. Don't spend a dollar on marketing until you know you have a product that's so strong

that people naturally want to buy it or use it. Otherwise you're just, I don't know, you're putting lipstick on a pig. Once you have a product that you think resonates, then I would go very small ball into some Google key terms, search terms, some mild advertising across social media, and I would be very, very disciplined in terms of the spend and the ROI. And don't let some cool people wearing black show up and talk, do a big game like I used to do about brand. Also, a small business that accelerates faster than other small businesses are all going to have one thing in common. One, see above,

10x better product, or at least 2x better. And two, they're going to embrace new mediums. Now, what do I mean by that? L2 probably had a much bigger footprint than the size of his business. When we sold, we were $20 million. We sold for $160 million, but we had, I don't call it global awareness, but in our industry, in luxury and consumer, we had near ubiquitous awareness. Why? Because I leaned into this emerging medium 13 years ago called YouTube, and I would do these funny videos. And we had these really talented people, some of whom are at PropG Media now, who would do an incredible job editing and filming and the quality, the production quality of the videos, and we put them out on YouTube every year.

And we would talk about our research and our findings and couch it in humor. And, you know, we were good at it. And these things would go viral or they would get go viral. They would get between 30 and 2 and 300,000 views. And then we would put out a freemium product. And that is when we put out research reports, we'd put out the first 10 pages for free. And if you wanted to see page 11, you had to click on a link that said that had an email form that said email us for information about membership.

So over the next five years, if you have a small company that punches above its weight class in the service of the product, the consumer industry, I would bet that you have done one thing. And that is you have learned in addition to having a great product, you have learned how to leverage TikTok. That's what I would be leaning into right now. I just think that's where everyone's going. I think that's, you know, basically Tory Burch was a brand built on Instagram. You know, Burberry was a brand built on digital media. And also in the services industry, what we did was we absolutely over-served those first six clients because what is your marketing? It's client references across your initial clients. Thanks so much for the question. Colorado College, good to be Jackie.

Question number two. Hi, Scott. This is Jack from New Jersey. I'm a solution engineer at a SaaS company that recently underwent a 10% reorg after securing significant capital from a large PE fund two years ago. We're facing a unique challenge. Our top sales engineers are being poached by larger players in the industry, despite consistently outperforming them in the field. It feels like our leadership team isn't stepping up with innovative strategies or recognizing that the market's telling them they need to reset their expectations to retain the winning talent. As a 30-something navigating their first job in tech,

any advice on dealing with an anemic leadership team in this landscape? It's been a wild ride. Jack from New Jersey, thanks for the question. So look, it sounds like you're in sales. It doesn't sound like you're in a senior level position. So it's like they said, or Heath Ledger said in Brokeback Mountain, if you can't fix it, you got to stand it. And that is you can talk to your boss and set out what your expectations are in terms of compensation.

But if, in fact, you feel your management team doesn't get it around compensation or strategy, you can go somewhere else. And, you know, management teams aren't dumb, or they're usually not dumb. I shouldn't say that. Sometimes they're dumb, but if they're losing people, they'll get the memo. And especially with a software company, the assets go home in the elevator every night. So if they're a decent, you know, a decently managed company, they have churn rates. They should know what the average is for the industry. I know when I'm on boards of software companies, I ask them to produce data on what is the average churn by position, by level.

How does that compare relative to the industry? What they've done in terms of a layoff is not surprising. This is kind of the year of efficiency, starting at Twitter and then moving through the system where companies have said, we've stuffed so many calories down the esophagus of the growth industry that there's fatty deposits everywhere. It's not that they're losing people that's worrisome. It's whether or not they're losing key people and they're seeing a decline in revenues. One of my companies had, I remember, 100% attrition one year. We had, I think, 60 employees and not one left. And I remember saying

that must mean we're overpaying them. And you don't like to say that. We have zero attrition at Prop G Media because I've consciously decided to overpay people. And no one ever feels overpaid. No one ever says, no one ever says, yeah, I'm definitely overpaid. Everyone feels like they're underpaid 90% of the time and occasionally 10% of the time they feel like they're fairly compensated. But I would say, look, if you yourself don't feel like your management team is making the right decisions, the bottom line is they get to make these decisions. In this economy, a decent, you know, a decent opportunity is just, quite frankly, is to find another job. Appreciate the question. We have one quick break before our final question. Stay with us. Welcome back. Question number three. Hi, Scott. I'm Kurt Paul from Montreal.

Thanks for the show. My nephew gave me the honor of being a guest speaker for his career week at Welcome back. Question number three. My path to entrepreneurship was a little different. My grandfather started a bicycle retail business in 1948. When I was growing up, my father owned it. I started working for him at age 13. In college, I wasn't really successful. I took some time off of school, and I went to work for him full time. I quickly became the service manager, and by 22, I was running the store. At age 25, I was buying the business from him, and five years later, I grew it into a second location.

I unfortunately never made the time to go back to school. I love entrepreneurship. It's the environment I grew up into, and I wouldn't trade that experience for anything else. I guess I'm a little bit nervous speaking in front of a bunch of kids about entrepreneurship when I learned it from my father instead of in school. Thanks for your insight.

Pierre-Paul from Montreal. By the way, I love Montreal, mostly because my experience in Montreal or my exposure is during the first week of June. I used to go up there for Formula One. And in June, Montreal is wonderful. I did go back there once in February. Not as nice, not as nice, but most European city in North America. Okay, so I have some experience here. I had the opportunity to go back to my high school university charter school in West Los Angeles last year to film an episode of CNN+. I don't know if you've heard of them. I had a TV show on the streaming network of CNN. And I spoke in front of the senior or the graduating high school class. And there's a few things. One, in terms of being self-conscious about not pursuing college, I would just cite the data. And the data is the following, that if somebody, if an 18-year-old or 17-year-old has the opportunity to go to a good school and has the resources, it's a pretty good backup plan. Even if they plan to start their own business at some point, college grads on average earn

almost twice what non-college grads earn over the course of their lifetime. It opens up a ton of doors. It opens up, you know, there's just a whole cadre vein of corporations and institutions, whether it's the Secret Service or Google, that it's almost impossible to get a job out unless you have the certification that an undergraduate degree offers. So I would just acknowledge that point, but also say, if you don't decide to get a college degree, there are other paths and tell your story. Now, you also have to recognize your privilege. And that is essentially, it sounds like you inherited, and not that you didn't deserve it, but you were put in a place of opportunity to have some wind in your sails as an entrepreneur because of a family connection or family ownership of a business. So I would just acknowledge those points. In terms of what you tell kids, you know what I, and I would root in your own experiences. My own experiences was that if you feel like you're lonely and not doing that well here and don't have a ton of friends, aren't that popular, just keep in mind the correlation between how popular you are in high school and how successful and happy you are as an adult

is not only not correlated, it may be inversely correlated to the importance of taking risks and chance and being resilient. I ran for sophomore, junior, and senior class president and student body president. I lost all four elections and I think that was hugely valuable for me.

And then I think it's really nice to try and develop a sense of being in touch with your emotions and being generous with your emotions at a young age, telling friends that you care about them, you know, being trying to be a good person at home, realize your parents are your allies. But I would just root it in personal experience. I think that kids want someone authentic to talk to them about what they were thinking about in high school and what went well and what didn't go well. But congratulations. That's a nice, that's got to be a nice moment for you going back to your high school. I mean, it took me, you know, the better part of 35 years to get back to my high school. It's taken you about 36 months. So congratulations on your success and try and avoid what you think you're supposed to say and just say what you feel.

Thanks for the question. And again, congratulations. That's all for this episode. If you'd like to submit a question, please email a voice recording to officehoursatpropertymedia.com. Again, that's officehoursatpropertymedia.com. This episode was produced by Caroline Shagrin. Jennifer Sanchez is our associate producer and Drew Burrows is our technical director. Thank you for listening to The Prof G Pod from the 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.