The Prof G Pod with Scott Galloway - Office Hours: LinkedIn’s Learning Opportunity, P&G and Unilever’s Gangster Move, and Making Cities Affordable

Episode Date: February 28, 2022

Scott answers a question about how LinkedIn can become a stronger platform for educational content. He then shares how consumer packaged goods giants can innovate to stay relevant, and offers his thoughts on what would make tech hubs more livable.  Music: https://www.davidcuttermusic.com / @dcuttermusic Learn more about your ad choices. Visit podcastchoices.com/adchoices

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cards, savings accounts, mortgage rates, and more. NerdWallet, finance smarter. NerdWallet Compare Incorporated. NMLS 1617539. Welcome to the PropG Pod's Office Hours. This is the part of the show where we answer questions about business, big tech, entrepreneurship, and whatever else is on your mind. If you'd like to submit a question, please visit officehours.profgmedia.com. Again, that's officehours.profgmedia.com. First question. Hey, Prof G, Michael here, Brand Strategy Sprint alumni and a resident of the great city of Richmond, Virginia. My question is about LinkedIn. You've talked a lot about it being a great platform, but could they do more with content creators?

Over the last two years, there's been an explosion of influencers and writers on LinkedIn, all making great content. Could LinkedIn use this to overhaul its stale and outdated LinkedIn learning platform? My thought is TikTok meets Masterclass with all the best content creators in one place. And of course, they would be paid.

Thoughts? Michael from Richmond. It's a thoughtful question. I love LinkedIn, mostly because I find it's a more civil place. Why is it more civil? Because you, I think two basic reasons. One, you have to have your identity. I think identity is so powerful. We're talking about Airbnb. The reason Airbnb and Uber work is because of identity. Specifically, the driver has to be pre-screened and the person in the back of the car, the organization has your identity.

So if you steal from the driver, they know who you are. You're not going to let just anyone show up and crash in your apartment, but they have their identity. You also can hold responsible the owner of the apartment if they don't live up to the contract because why we have their identity. I think the same is true with LinkedIn. And that is, you're just less likely to slander somebody. You're less likely to make hateful comments. You're less likely to be a total racist or weirdo or misogynist when your actual identity is on the platform. I think that's something that all the different platforms need to do a better job enforcing. Also, there's a general notion that anyone on LinkedIn, you might at some point in your life ask for a job. So I think people just tend to be, they just keep the temperature a little bit lower. I like it a

lot. I find that I try and keep my temperature a little bit lower. I try and play my role. I don't get back in people's faces. I have noticed though, it is getting a little more coarse in the last 12 months. I don't know if that's because more people are spending more time on LinkedIn, but I do find that you do get a little bit more of that dunking, bro-y feel on LinkedIn. It's still much better than a place like Twitter or Facebook or some of the others that can just be just a fucking sewer. But anyway, so the idea of them overhauling sort of their stale learning platform, I've always thought, so I started a company called Section 4, which is an online education company. And entrepreneurs will say they never think about the exit, right? They just want to build a great company. That's sort of bullshit. In the back of our mind, we're always thinking about an exit. And I've always thought

that the most likely acquirer, if someone said, okay, Section 4 was acquired, I always thought, okay, the most likely acquirer, if I had to guess, would be LinkedIn. I think LinkedIn has an incredible opportunity to get into education. They have made some purchases in the education space. I think they bought Lynda. Was that? I think that was LinkedIn for over a billion dollars. I would argue their video and their education are somewhat, are pretty anemic right now, pretty flaccid in their opportunity to do kind of higher end asymmetric and symmetric learning are really powerful.

And also to partner with, say, an ASU who's very innovative and very open-minded or a Purdue and start offering some sort of certification, maybe partner with some land-based universities and offer some offline component. I think education is going to be a hybrid. I don't think it's going to be all online or all offline moving forward. I think it's going to be a mix of the two. But LinkedIn has the capital. They have the credibility. They could absolutely get into certification.

Microsoft could say, we're going to hire two or 3,000 people out of these online certifications programs brought to you by LinkedIn. So I think it's a huge opportunity, education. It's a $750 billion business in the U.S. It's about $2 trillion, I think, globally. The costs have skyrocketed without really any increase in outcomes in terms of the salary you get. And also we have this crazy rejectionist culture with our offline institutions where they artificially restrict supply so we can all feel good about ourselves that we got into a school that no one can get into now. So I think it's a huge opportunity. I'm sort of in violent agreement with you. And to date, they really haven't executed across it.

So LinkedIn, LinkedIn University, LinkedIn micro-certification, things like health tech, things like cybersecurity, that just seems like a win. Or maybe even lifelong learning, you sign up for a premium product that is membership-based, that gives them more recurring revenue. Again, one of the reasons Microsoft was the most valuable company in the world for a short time last year, and I think it's number two or three now, is that LinkedIn has been an outstanding asset. But it does feel like an asset that's been lying fallow, that if they were to get into some sort of recurring revenue education offering, they'd sort of commanded the space they occupy. So I think that's a great idea. So thank you, Michael, from Richmond. I'm kind of down with that and agree. Question number two. Quick question. If you were an activist investor taking a board seat on one of the large CPG conglomerates, think P&G or Unilever, what's the gangster move? What can these companies do?

They seem to have been caught with their shoelaces firmly tied together with regard to anything digital. How do they leapfrog the competition? What's the move for them? Is it simply break them up? What would you recommend? Fletch from London. What's with all the cool names from whatever? I'm Scott from Delray Beach. That blows. Fletch from London. CBG and what's the unlock there? I've worked with both P&G and Unilever and the majority of CBG firms are the bigger ones, and they would ask the same question, what's the unlock? So I thought they were in real trouble because if I look at the advertising industrial complex, it's collapsing on itself. And that is the basic notion that you pummel people with advertising to cement these very aspirational associations such that you can produce a mediocre product,

stuff it through these non-aspirational channels of Kroger or JCPenney's, and then hope that people will buy your shitty salty snack, sugary drink, or a tennis shoe or shitty car out of Detroit and pay ridiculous margins because it makes them feel more American or younger or more European, whatever it might be, or more maternal. I think the sun has passed midday on that. At the same time, so I reverse engineer and say, okay, the companies that are dependent upon the advertising industrial complex are in trouble. And I think that's playing out. I would say it's kind of playing out with Facebook. Facebook is the yellow pages just 40 years ago. The yellow pages are an incredible business, but they weren't far enough down the funnel. And I think that's what's happening a little bit to

Facebook right now. So what can they do? And I spent that's what's happening a little bit to Facebook right now. So what can they do? And I spent a lot of time with a lot of people at P&G and Unilever talking about it. One, their stocks never really went down that much. Nelson Peltz went in, got a board seat. I thought it was ridiculous for P&G to circle the wagons the way they did. The easiest way to shut an activist up, and I speak from experience here, is just to put them on your board and say, fine, come on in. The water's just fine

and you can deal with the same problems we're dealing with. And if you have any brilliant ideas, we're up to it. But instead, P&G pulled the same bullshit kind of reflex, gag reflex, that we're in charge and anyone who would question our authority,

we're going to fight tooth and nail. It's a huge distraction. Usually, this is what happens when you go into a new situation, including when you're an activist that goes into a board. You find out in quick order that you're not as smart as you thought

and they're not as dumb as you'd hoped and that they're dealing with these issues. Now, P&G and Unilever, here's the thing. They're both remarkably innovative. It is not easy to manufacture a diaper or a razor. Unilever has been fantastic at benchmarking. When I say benchmarking, I mean going into the Indian market and finding out what type of moisturizer is selling like crazy that

feels crafty and authentic and new and different and basically copying it and then leveraging their capital and their distribution. So Unilever is very innovative, considered one of the best media buyers in the world. P&G has fantastic innovation, Tide Pods, the way they're packaging, they're world-class companies. Now, my go-to around what they should do and what I recommend it is really falls into the same song that is the serenade of the dog. And that is one, a recurring revenue bundle or subscription that they should probably get together and say, all right, let's look at food. Let's look at home products. Let's look at laundry and let's offer people an amazing deal and just go into recurring revenue and say, we're going to learn from you. And we're going to just automatically fulfill all these wonderful

products across the home, in your refrigerator, in your drawers, and we're just going to automatically fulfill it with great products. And we're going to go put you on a subscription model. That was kind of what I recommended. They tried a couple of times at P&G. I think they had to go much broader and much bolder. And that is reach across different categories and really try and take decision-making down and saying, we're going to adjust and calibrate using technology. And if you're the recent college grad, or you're the family with two people, that's quote unquote unquote the heartland of America. Maybe you don't have a price point that's very high, so you want generics. You want good value. Maybe you're what's called the urban sophisticate. You're the banana republic person and you want

sort of accessible, cool, and they merchandise across. And if I were them, I would all bind together to offer products and information across kind of corporate boundaries here. That was my first idea. My second idea was that I think they need to go vertical. And that is, and I've mentioned this a few times to drinks companies, think about what Sephora did for the beauty industry. I can't figure out why someone hasn't done that to the drinks industry. When I go into Sephora, I'm not into makeup, I'm not into beauty, but I love going into Sephora. I just find the products there, the presentation, the packaging, and the cast, that is the people that work there,

inspiring. And I think they've done an amazing job with the experience and the process of discovery and the in-store environment. And I can't figure out why the places I buy alcohol feel like I might get shot. They're just not, you know, Liquor Barn. I mean, they're just, oh God, I'm going to hear it from Liquor Barn. Or going into a 7-Eleven or a bodega. I mean, it's just, they're just awful. And you think about such an incredibly high margin, high price point, wonderful product with all the ceremony. There's got to be something between, you know, 7-Eleven and going wine tasting in Sonoma. There's got to be distribution that is somewhere in between. So the CPG companies, one, a recurring revenue bundle, a subscription model, and two, going vertical, and that is offering branded P&G, Unilever, maybe they do it together,

stores that offer, that give them an opportunity to really bring their brands to life. Those are sort of my two go-tos, but I think these are actually pretty good companies. So I'm not, when I looked at them, I thought they were going to have a much tougher time. Their stocks, to me, feel like they're not crazily undervalued. And what you're talking about here is operational activism, and that is not get rid of the CEO or sell the company. It's reconfigure the divisions and the org structure, which is real hard work. Thanks for the question. We have one quick break before our final question. Stay with us. Support for this show comes from Constant Contact. You know what's not easy? Marketing.

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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. Hey, Prof G. My name is Cameron, and I work as a firefighter for a medium-sized city in Silicon Valley. Although home to some of the country's largest and most innovative companies and record high valuations, firefighters and their families are struggling to be able to live near the communities they serve. Anyone hired in the last decade in trying to afford a home is usually moving two to five hours away.

Some are even starting to move their families out of state. This also makes it hard when trying to hire as people are becoming interested in working somewhere they can afford to live. Add on top of that all the budget challenges we've faced with COVID-19, and my city's in a very dire staffing shortage. This isn't unique to firefighters. It includes teachers, hospital workers, and many others. My question to you is, what can cities do to help capture more of the revenue companies are making without totally stifling growth and incentivizing them to move or outsource? Are there any good examples you've seen anywhere in the world? I know a collaborative solution exists. I just don't know if it exists yet. Curious to hear your thoughts. Thank you. Wow. Cameron from Silicon Valley. That's a really interesting question. And it's sort of the age old problem that a lot of cities face around trying to attract people to support

infrastructure. The median price for a Bay Area single family home reached $1.13 million in September of 21. That's up 16% year over year. Our guest, Margaret O'Meara, wrote that tech hubs, including Silicon Valley, Austin, and Seattle, first emerged alongside massive public investments in education, research, technology, and infrastructure. Those investments meant that people from modest backgrounds were not only able to afford to live in those hubs, but also benefit greatly from the opportunities created there. That's changed since the 70s when political leaders embraced tax cuts rather than social spending as the chosen vehicle for economic growth. And since then, the federal budget for

research and advanced technologies has steadily declined, as have state budgets for higher education. To quote Professor O'Meara, for every job gained, regions sacrifice tax revenue and funnel limited resources away from wider public needs. We've just slowly but surely decided to privatize a lot of the gains that were brought by public investments, specifically public investments in R&D, whether it was space, defense, the internet, and we've privatized the gains from those investments as opposed to reinvesting those proceeds in public infrastructure. So as some additional thoughts here, I think it's government investment. I think when government goes in and regulates and tries to create rent control,

for example, I think that's a terrible idea. Rent control ends up ultimately being housing discrimination. Santa Monica had rent control and what it meant was every landlord was giving their $300 a month apartment to this rich white yuppie couple. You know, co-ops are housing discrimination in New York where we get to interview people and ask if they're planning to have kids. Literally someone on my co-op board asked someone who was trying to buy an apartment there. I found these things just so ridiculously weird and offensive. Anyways, I don't like rent control. I think it makes sense for city councils to only approve projects or use their leverage to approve residential projects if they include a certain amount of low-income housing.

But that should be pushed down to the local level. I do think that we're probably going to need to have some sort of, I don't know, intrastate tax. I think that when Elon Musk benefits from the huge investments that California has made in its education system, and then when he's sitting on top of a $200 billion long-term capital gain, that if he pieces out to Austin and just in time to start liquidating some of that and pay 0% state taxes back to California, that feels wrong. There's something wrong there. He states, well, I'm going to pay taxes or California taxes on my options. And that's wrong. There's something wrong there. And he states, well, I'm going to pay taxes or California taxes on my options. And that's true. Options are taxed at where you vested them. And so even though he hasn't monetized his options, if he's vested half of them over a four-year vest, if he was in California for those two of those years, he has to pay the 13% or the

14%. I think we're going to end up with something similar on capital gains. And that is they're going to look at where you actually registered the gains and make an estimate and come after you if you move from New York to Florida or from California to Texas, what have you. So the first is what I would just call basic tax equity. And then we're also, I think capitalism in the market is going to sort of be left to take care of some of the rest. And that is if the fire station can't find fire workers or firemen or firewomen, they're going to have to raise their prices and the city is going to have to decide whether they're going to pay them more to attract them. There's two sides to every trade and people have to decide where they want to live. And if people keep moving or keep leaving

California to go to Texas or Nevada, then at some point those companies and those governments are going to have to figure out what to do about it. For the better part of a century, everyone was moving to California. So I think this is a natural part of the cycle where the taxes and some of the urban blight means people are leaving. I think that's probably a good thing. Cities like products, they ebb and flow in terms of how attractive they are. The migration here in the U.S. is pretty obvious. It's kind of based on two things. It's sunshine and low taxes. But I don't think there's a silver bullet. I think 80% to 90% of this has to be left up to supply and demand and, quote unquote, the invisible hand of the market. But institutions can do something about it. And also, I just think baseline that

individuals who benefit from these massive investments in infrastructure should have to pay based on where they accreted that wealth. They shouldn't be able to just peace out and recognize a huge economic gain. Who's moving to Miami? A VC sitting on top of $100 million in a capital gain.

When I meet someone who's moving to Miami, I even sometimes say to them, let me guess, you're about to sell a shit ton of stock in something or register a huge capital gain. Anyways, thanks for the question. That's all for this episode. Again, if you'd like to submit a question, please submit a voice recording by visiting officehours.propertymedia.com.

Our producers are Caroline Chagrin and Drew Burrows. Claire Miller is our assistant producer. If you like what you heard, please follow, download, and subscribe. Thank you for listening to The Prophecy Pod from the Vox Media Podcast Network. We will 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. Thank you. Learn more at klaviyo.com slash BFCM.