The Prof G Pod with Scott Galloway - Office Hours: IPOs, Net Promoter Scores, and Investing in Yourself

Episode Date: April 12, 2021

Scott answers a question about Deliveroo’s disastrous IPO and whether it’s smart to allow retail investors in on an IPO. Scott also shares his thoughts on how marketers can improve their Net Promoter Scores (NPS), how to address your career needs with your partner, and the best personal investments young people can make.  Have a question for Scott? Email a voice recording to [e-mail].  Learn more about your ad choices. Visit podcastchoices.com/adchoices

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NMLS 1617539. Welcome to the Prop G Show's Office Hours episode. This is the part of the show and our favorite part of the pod where we answer your questions about the business world, 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. First question. Hi, Prop G. It's Oliver from London. Obviously, the Deliveroo IPO this week was a complete disaster. The stock dropped 30% pretty much immediately following its debut. A quirk of this IPO is that Deliveroo reserved 5050 million for retail investors, which it marketed heavily to its customers. Most people would argue that providing retail investors a way to participate in IPOs is a good

thing. But do you think it is a good idea for companies to actually do this? The upside seems pretty limited. Retail investors will likely only ever cover a small percentage of the order book. And as Deliveroo has discovered, there is potential to poison your relationship with some of your most loyal customers if the IPO goes wrong. Thanks for the great show. I'm looking forward to hearing your thoughts. Okay. It sucks to be a grownup, no risk, no reward. I think this is a good thing. They're sort of damned if you do, damned if you don't. And that is a lot of companies have gotten grief or shit because Goldman or the underwriters or the company itself, who largely dictates who gets access to these IPOs, have not offered very many shares to the retail market. Or essentially, the retail market gets to buy or gets access after the first trade. So typically, IPOs are priced below where they think

the number will settle. And everyone says, or people complain, well, no, that's leaving money on the table. No, it's not. If your stock goes up 20%, 30%, 40% on day one, the dilution is vastly worth it. That's money well spent because you're on the cover of every business section the next day. It kind of dictates your firm. It's the management team and the equity is a winner and creates hopefully an upward spiral with more cheap capital that you can reinvest in the company, which creates greater innovation, which creates a greater stock price, wash, rinse, repeat. So I don't buy that. I think it's a good thing that more retail investors or companies and underwriters are setting aside stock for retail investors. And the way, I think a decent way to decide what retail investors should get access to the IPO is your customers. I think that's a great idea. Brian Chesky did

something similar for the hosts. He let the hosts buy equity in the IPO, and I think they did really well. So look, the stock market is about risk and informed risk, or you try to be informed, and nobody should assume that every IPO is going to be successful. We've had some broken IPOs. Compass, a real estate company trying to position itself or pretend to be a tech company went public, and Goldman cut the number of shares offered by half and then reduced the valuation by a third, which is effectively cutting the supply by 60%. And even with that massive reduction in supply, ended up with an IPO pop of I think around 14%. And when Goldman can only manage a 14% pop with the strongest institutional book in the world, that says the four corners of the trade are starting to collapse. And then this week,

it became a broken IPO. I think it's below its IPO price, or I think it's right around its IPO price. Anyways, that's healthy. We should have some IPOs that trade down. This is a stock. They go up, they go down. So welcome to the world of investing. It sucks to be a grownup and you can't expect every IPO to go up, but I think it's a good thing that we carve off more shares for retail investors. And it seems like an interesting way or a decent way to discern who are the retail investors that have access to these shares would be your customer base. Thank you, Oliver from London. Next question. Hi, Professor Galloway. This is Michael calling from Claremont in Southern California. I hope you enjoy your visit to LA recently. I'm calling to ask about your comments

on NPS, Net Promoter Score, and how big tech can use it to arbitrage attention for revenue. How do marketers improve or even perhaps hack their Net Promoter Scores? And which companies have exceptional NPS, and what are the reasons behind such things? Thank you so much. So NPS, I just joined the board of Panera Bread, and there was one of the new board members is a

guy who used to run, I think he used to run Pepsi, total consumer guy. And he said that over the course of his 40-odd year career, he said that the most telling question is, would you recommend this product or service to a family member? And that's basically what NPS is. NPS is essentially a ratio of would you recommend it or not recommend it, and it's a pretty telling forward-looking indicator of the business. And the question is, what hacks can you sort of juice or get an irrational return on NPS? And there's a few things. And where I zero in on is that a colonoscopy. Okay, colonoscopy, Scott, tell me more. You got my attention. So they did an experiment. And with the control group, they just left the probe in for an additional five minutes and didn't move it around. So it

was the last five minutes were not as uncomfortable as the test group who they continued to do a traditional colonoscopy. And as soon as they were done, they took the probe out. And what do you know? When the last five minutes aren't as bad, even though it's five minutes longer, the NPS was higher. So in sum, there is a disproportionate impact on your impression of the service or the product based on your last moments with it. In other words, you want to invest in the end of the consumer relationship or that episodic consumer relationship. So as an example, I remember being at Disneyland with my five-year-old son at the time, and we went into some hall of mirrors thing, I don't know if it was Haunted House, and he freaked out and got very

upset. And it was late in the day, and a woman followed us out in some sort of princess outfit and said, we're sorry, he was scared, and she gave him a little toy. And I think also there's a lesson here around how you leave a company. And that is, you can work for a decade at company and be great at what you do, be a great worker. And 50% of your brand or your impression is in how you behave the last two weeks. You need to resist the temptation to stick up the middle finger or talk about why you hated it there, or leave, only give 15 days or two weeks notice. You need to be gracious and thoughtful and really turn it on. You need to be especially charming or make a

real effort the last 10 minutes you are in any social situation because the ninth inning is how people remember things. So I focus on when we're talking about a consumer company, how can you surprise and delight the consumer on the way out? I think one of the biggest innovations in hotels that's going to happen, they've done away with check-in, they need to do away with checkout. And I've noticed, I just stayed, speaking of LA, I stayed at the Waldorf in Beverly Hills because someone else was paying for it. Did I tell you I was out there doing the show with Bill Maher? Anyway, so smell me, I get a Cobb salad at the pool. I hang out. I go downstairs, put on some sunblock, go back upstairs, have a few cocktails,

have a Pim's cup. That's not true. I don't drink Pim's. What I drink is a cop and Coke. I was trying to think of an LA drink. All my friends, including my sophomore roommate in the fraternity, who is now at Dennis, comes over. God, I just fucking love LA. In-N-Out Burger. I mean, I just love it. Anyways, I'm at the Waldorf. One of the things they do is on the way out, there's no checkout. I think that's one of the biggest innovation. I don't see any reason why anyone should have to check out of a hotel. But the guy getting me into my Uber the day before had remembered that I got a latte. They had one of those converted VW buses into a little coffee store outside in the parking lot.

And he ran across and got me a latte and put a latte in the back of the Uber. And I just thought, oh my God, I love the Waldorf. Oh my God, I love LA. That's why airports, when you're thinking about the infrastructure bill, are so important to a brand because the first and the last thing people see when they come to a nation and their impression of that entire nation is the airport. It seems to me that immigration is probably, what is your experience with an immigration officer entering and leaving a country? And what's most important? What's most important? How you leave a relationship. Do you want to be the guy or the gal that develops a good reputation over your life as it relates to relationships? Then end relationships well. Be generous, be thoughtful. Do you want to be known as a good

employer? Then when you end a relationship with an employee, i.e. you fire them, you're generous with them. You try and make it a win for them. You try and help them find another job where they might be successful. You're generous around, they can be upset, they can be angry, but what you don't want is you want them to be scared about being able to feed their family. Anyways, in any company, what are the last few moments of engagement? I think that's where you get the irrational pop in terms of MPS. Also, also, the little things, the little things. If you have a virtual company, mail them something, send a handwritten note, send them some swag.

But any sort of physical touch, I think is becoming more differentiated and more valuable. So at Section 4, my online ed startup, we send them stuff. We send them a paper-based kind of cheat sheet or cliff notes on all the key concepts we went through in that class. We send them a certification that says, congratulations, you finished your group project, you did well. And we send them something they can stick on their LinkedIn profile, which isn't in fact tangible, but in this LinkedIn world, it's important. It's the little things. How do you surprise and delight? And how do you end the relationship well? NPS, NPS says the dog. We have one quick break before our final two questions. Stay with us. 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. What software do you use at work? The answer to that question is probably more complicated than you want it to be. The average U. average US company deploys more than 100 apps, and ideas about the work we do can be radically changed by the tools we use to do it. So what is enterprise software anyway? What is productivity software?

How will AI affect both? And how are these tools changing the way we use our computers to make stuff, communicate, and plan for the future? In this three-part special series, Decoder is surveying the IT landscape presented by AWS. Check it out wherever you get your podcasts. Welcome back. Question number three. Hello, Professor Ji. My name is Yuting, and I am currently based out of Shanghai in China. I was previously based out

of New York. I work for a global management consulting firm. Due to the U.S. immigration policies, I was temporarily relocated back to China office. My fiancé is American and we have been separated due to the temporary relocation and COVID-19 pandemic. In the next month or so, I will finally be able to return to the U.S. on a family-based visa. While I am thrilled about the opportunity of reuniting with my fiancé, I feel a sense of loss since I'll be giving up my career in the immediate future. In one of the older podcasts, I remember you mentioned that you had to temporarily step away to take care of your mom. Can you talk a little bit about how to navigate the feeling of loss to give up great opportunities in the near future in order to prioritize family and your happiness in the long term? You think that is such a thoughtful question.

And thank you for that. So I think that what you don't want, you're making this decision. You and your husband have made this decision, your fiance, that you are going to give up your career and move back to the US. By the way, I think that's a good move. And this is going to come across as xenophobic, but two thirds of millionaires in China have either left or planning to leave because people in China, the lifestyle isn't as good there traditionally as it is in the US. And I also think there's a genuine fear among wealthy Chinese that at any moment the government could just show up and take their land and their money away, whether that's fair or not. So I think moving to the US,

I think it's just a better lifestyle here. I think you're going to love living in America. Having said that, I sense some resentment. I sense some loss. I don't even need to sense it. You said it's loss. I think you need to have an open and honest conversation with your fiance and say, look, this is upsetting for me. I feel like I am really sacrificing here. And I don't want this resentment to fester and get in the way of our budding relationship. So I think that he needs to acknowledge the sacrifice you're making and the two of you together need some additional calorie burn around putting your shoulders down around your career for a while. And that is, okay, we are focusing on your career right now in the sense I am moving here, but once we get back to

the US, if we need to change cities or if we need to put off, I don't know, put off having kids or if we need to invest in your returning to graduate school to become more, to get additional American certification. It sounds like you're both young. I think it sounds like you have an impressive career. I think if he is a real man, he will acknowledge that the key to economic livelihood or security for your family is acknowledging and investing in both of you and seeing and being able to acknowledge that you have a great career. And two incomes are so much more powerful than one. American prosperity for the last 30 years or from kind of the 70s to the early aughts was a function

of our society putting women to work. The reason we won World War II is we didn't have this bullshit notion that women should be in the home. We asked women to become part of the greatest industrial machine in history, and that was the US war machine. But my point is, two incomes are really powerful. You are making a real sacrifice. I think it's important to have an open, honest conversation with your spouse, that you have some feelings of loss and resentment, and collectively decide as a team, as a team, what are you going to do to try and accelerate your career once you're back in the United States? Welcome to America, Yu Ting. Welcome to America. Question number four. Hey, Prof G. I'm Edward, born and raised in Tanzania,

20 years old country, and the last year of my economics and finance degree. I'm a great student of yours. Thank you for all of the valuable lessons that you provide through all online platforms. My question is, what Thank you for all of the valuable lessons that you provide through all online platforms. My question is, what do you consider to be the most important investment that young people, presumably in their 20s, can make to attain long-term success in their professional and personal lives? Wow. Okay.

So if you're in a position, what are the investments? What are the best investments you can make in your 20s? So if you're in a position, if you're fortunate and you come from a top income earning household, and I hate to say this, but those people tend to have more access to an elite university. If you have access to an elite university, because A, you come from one of two cohorts, and that is your parents are rich, or two, you're freakishly remarkable and have built wells in Africa and have patents for virtual reality, and you can get into an elite university, or you have access to an elite platform, Google is an elite platform. McKinsey is an elite platform. Goldman Sachs is an elite platform. Salesforce. If you have access to an elite platform, be it academic or professional,

then by all means, get there. People say, oh, Scott, you're an entrepreneur. I want to be an entrepreneur. On a risk-adjusted basis, if you have access to that type of aspirational platform, get to that. Now, let's assume you don't. Let's assume you don't. What are the best investments you can make? I think the best investments you can make are acknowledging that there is no work-life balance. And if you want to be professionally successful, massively invest in working your ass off and getting great at something. I want you to find something you're good at and then work really, really hard at it and try and make a ton of progress fast. Why? The reason I have balance in my life now is because I had almost none

when I was younger. And I think the time to invest in your professional life, the time to invest in getting traction is in your 20s and 30s. There is no balance. There's just trade-offs. The other thing you want to do or the other two things I think you want to do is, one, I think you want to be as risk-aggressive as possible with relationships. mates, asking people out for coffee, taking people out, asking people out, forcing yourself when you want to stay home Friday night and take an edible and binge watch Search Party season four. Overrated seasons one and two. Genius season three, barely gifted season four. I don't know what the fuck was talking.

I mean, talk about jumping the shark. That was just strange. Anyways, really talented cast though. Whoever's the casting director for Search Party, you and I should roll. You and I should roll. That is probably the best casting of any media of the last year. Anyway, don't do that. Force yourself to go out and meet people because the best investment anyone can make is to find the right partner. If you find the right partner, someone where it's a real partnership, where this person inspires you not to keep score, the bad moments in your life are going to seem less bad and the brighter moments are going to burn a little bit brighter. The key to happiness are deep, meaningful relationships. And in your 20s and 30s, the relationship that will largely dictate not only your emotional health, but your financial health is picking the right partner. Now, obviously, there's a whole art to picking the right partner. But at the end of the day, you want to go to the candy store or the Walmart with the greatest selection, and you get to decide the size of that store by putting yourself in a position to meet people. And the way you meet people and the way to decide the size of that store by putting yourself in a position to meet people.

And the way you meet people and the way you create the greatest selection set is being really aggressive. Do you like somebody? Let them know you like them. Get out there, meet people, have the greatest selection set possible such that you can find the greatest ROI asset

in the history of mankind. And that is partnering with someone wonderful. And finally, finally, try and find time, try and find time three or four times a week, and you get that time back because it gives you more energy to be a fucking monster physically, to work out really, really hard. Our species is happiest when we are surrounded by others and sweating and in motion. Be violent in the weight room. Be violent on that Peloton. Be a fucking animal in Pilates. That aggression, that violence with weights, with a yoga mat, whatever you want to call it,

seems weird to talk about violence in yoga. That makes you stronger. It makes you more confident. It makes you more attractive to potential mates. And if you want to talk about a great ROI, for every minute in the gym right now, it'll take you five minutes in the gym to get to the same level when you are my age. So let's summarize. Get to a platform if you can. Get to a platform if you can, an aspirational platform. Two, be incredibly aggressive, risk aggressive around meeting as many people as possible to create the Walmart of relationships so you can access and select amongst the broadest variety of mates and have a wonderful partnership, which is the most important decision you will ever make. And finally, finally, be a fucking monster in the weight room or on that Peloton, get in great shape. Thanks for the question, Eddie.

Thanks for your questions. That's all for this episode. Again, if you'd like to submit a question, please email a voice recording to officehours at propgmedia.com. Our producers are Caroline Shagrin and Drew Burrows. If you like what you heard, please follow, download, and subscribe. Thank you for listening to The Prop G Show from the Vox Media Podcast Network. We'll catch you on Thursday. 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.

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