The Prof G Pod with Scott Galloway - Office Hours: NVIDIA’s Strengths, Meta’s Virtual Real Estate Opportunities, Proprietary Streaming Content, and Rebranding Government Jobs

Episode Date: March 21, 2022

Scott shares his thoughts on whether NVIDIA’s stock is a strong long-term investment. He then shares how streaming services might innovate around proprietary content, and answers a question about whether Meta might acquire Decentraland or the Sandbox. Scott also considers how government work could be rebranded to attract young talent. 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 prop g pods 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 visit officehours.profgmedia.com again that's officehours.profgmedia.com. Again, that's officehours.profgmedia.com. First question and a reminder, I have not seen or heard these questions. Hey, Scott. Kurt here from the last frontier up north in Alaska. My question is a broader one. Do you believe that we don't focus enough on companies like NVIDIA, who are building foundational tools, capabilities, hardware services around the omniverse, really as the tool building guide for creating metaverses and linking them potentially? I really think they're a next gen company that's still considered a graphics card manufacturer that needs a lot more focus. Uh, so my question is where do you feel Nvidia goes in the next five to 10 years? And if you don't like to project out that far, quite familiar with that

from attending classes, um, then how about the next year? All right. Thanks from Alaska. Kurt from Northern Alaska. I wish this was live because I want to ask you, how the hell did you end up in Northern Alaska? Are you a frontiers person or are you, I don't know, you work on an oil pipeline? It's got to be pretty freaking crazy up there. I think Northern Alaska basically means the North Pole. So I'm just kind of curious what's going on up there and what's it like. I'm fascinated by Alaska.

It's one of the few places I haven't been that I want to go. There's a lot of places I haven't been. I'm not going to piss off people by listing all the countries I have no desire to go to. But Alaska, probably more than any place, at least in the Union, I want to go to the most and I haven't been. Anyways, enough about my travel aspirations. So last quarter, NVIDIA posted around $7 or $8 billion in revenue. And that was up, I think, over 50% year on year. The firm does almost $30 billion in revenue and something like increased 60% year on year. And the thing that drove that was its gaming business and accounting for a record $12.5 billion, also up around 50% or 60%. And NVIDIA has just this stranglehold. I think they produce four and five chips

or four and five of the processing units for discrete graphics chips. And when you think about the growth and how important and how large the gaming industry is, so you have the monopoly that provides the brain for an incredibly big and growing. I mean, there's few things other than search that are as big and growing as fast as the gaming industry. And they're kind of the, I don't know, the Intel of that business. They have a market cap of around a half a trillion

dollars. I think it's off though. I think they're at about 200, 225 bucks a share down from around 350. And I think it's shed about a third of its value, which in this market, a lot of the stocks I hold, my biggest holding is Airbnb, which is off about, what is it off? It's off about a third from its high. And I feel fortunate because a lot of the stuff I track and that I like is off 60, 70, 80%. The reason I like this company, and I can't speak to the multiples of the valuation, I'm not comfortable making a projection for the next 12 months. I do like this as a long-term hold because it has come off its high. It appears to have dominant market share, and it's in a category that it just appears like heads they win, tails they win.

And that is these chips, whether it's video games or the metaverse, are going to continue to play a very important role. And this company seems to be shooting the lights out in terms of execution. And it's a complicated, difficult sector with huge IP, hugely expensive, I would imagine, manufacturing facilities that require a lag time. You just can't pop up, I would imagine, a facility making this. I bet these things are harder to manufacture than cars. Anyway, so big barriers of entry, their elbows are out. I like this thing a lot. I don't know the multiple on revenues. I'd have to look at it more in terms of valuation. But if you're looking for a stock to put away for five or 10 years, this feels like that kind of stock. Personally, my analogy for my personal investing would be crypto. And that is, I'm fascinated by the crypto space. I don't understand it. So I'm somewhat, if you will, cautiously skeptical on crypto. I think Bitcoin will be enduring because they've managed to create scarcity credibility versus

the US dollar, which is really the genius, the kind of finite nature or friction of mining coins. Ethereum seems to have real technology. It's the underlying platform for a lot of NFTs. But the rest to me just seems like a lot of hype that could literally go to zero. However, I want some exposure to the space. And so I'm investing in the picks and the shovels or the infrastructure, just as I would describe NVIDIA as the picks and the shovels or the infrastructure, just as I would describe NVIDIA as the picks and the shovels and the infrastructure. I invested in a company called Ledger that makes the Nano X, which is a hardware wallet. And that's my way of getting exposure to the space. If you wanted exposure to the metaverse, I'd like some exposure to the metaverse, but I don't buy it. I think the metaverse is kind of already here in different formats,

whether it's Twitter or the App Store or Fortnite, but I still would like exposure to the space. So I would invest in the plumbing or the picks and shovels or NVIDIA. So long-winded way of brother of saying over the short term, I don't know because the company does look expensive, but it warrants that type of valuation because it's an incredible company with a monopoly-like share in an industry that's growing and incredible execution. So this feels to me like almost a little bit like Cisco in the 90s, where everyone invested because it was the underlying technology. But also keep in mind, during the recession of 2001 or the unwinding of the dot-com bubble, Cisco also got taken to the shed. So there's no real safe haven here, but I do like NVIDIA. I

think it's an interesting long-term hold, and there's just no getting around it. This is a quality company that probably doesn't get the attention it deserves, as evidenced by the fact that it now has a larger market cap, I believe, than Facebook. A really interesting question, Kurt, from Northern Alaska. I hope you are well, and I hope you are living your best life, because Northern Alaska... By the way, I used to love the series Northern Exposure. I thought that was such a lovely TV program. I love the love story between the two major characters. I thought the characters in general were really interesting. I wonder what's

happened to all of them. Anyways, thanks for the call. Thanks for the question, Kurt from Northern Alaska. That's a question. Hey, Prof G. My name is Jim. I'm 25. I live in Chicago, and I work for one of your favorite social media platforms, Twitter. My question is, why wouldn't one of these subscription streaming platforms such as Netflix, Amazon, Apple, or Spotify,

or even a social media company such as Facebook, Twitter, or Snapchat, give a Rogan-esque deal to a top YouTube influencer? It seems like a no-brainer to give an exclusive rights contract and transfer however many billion viewers MrBeast attracts to YouTube to theirs. This would also be a pretty interesting approach to take down the streaming mammoth that is YouTube. Love the show. Dog in training.

Jim from Chicago, Twitter. Good to be you. Jim, 25, Chicago, Twitter. Check, check, check, check. It's good to be you. You're living a good life,. Check, check, check, check. It's good to be you. You're living a good life and I hope you are more self-aware than I was at 25 and realize how fortunate you are and take time every day to just say to yourself, I am incredibly blessed. I am incredibly blessed. Anyways, it's an interesting idea. We might see more and more of this as streaming services try to land new subscribers and attract more of our attention. And that is going vertical.

And that is capturing your own, having your own proprietary content. The seminal moment for Netflix was when they went from DVD by mail to streaming. But the second big moment was when they dropped the first season of House of Cards. You couldn't watch it anywhere else. I think that HBO going into original content was kind of the key gangster move for them. Roku just picked up for pennies on the dollar, all of the content from Quibi. They're trying to go vertical. So if the question is, do I think different platforms are going to figure out ways

to establish proprietary content? A hundred percent. I used to be a whore all over everywhere. I was on Fox. I was on MSNBC. It's funny. I was self-conscious saying I was on Fox. As a progressive, I used to go on Fox all the time. One, I go on with anchors, not networks. So I really like Stuart Barney and I'm a huge fan of Neil Cabuto. I think he's fantastic. And I also think it's important to engage with people who don't share your political beliefs. Maybe you convince some of them or at least modulate some of them. So I used to go on Fox a lot. I stopped going about nine months ago because I really got very upset

about some of the anti-vax rhetoric. And also I felt like they made some coordinated attacks against progressive women that felt just bottom line mean. But went on MSNBC a lot, used to go on CNBC a lot. And then CNN has locked me up. Now, granted, they paid me money. It sucks to be a grownup. But they have decided there's certain talent they want proprietary to their network.

Fareed Zakaria is not allowed to go on PBS. And I keep sending, I keep getting interesting invitations to go on fun stuff and I'll ping my boss and I'll say, can I go on this? And she'll be like, nope, nope, hell to the no. Anyways, the idea of going vertical across any platform and establishing proprietary content is something we're going to see a lot more of. And by the way, by the way, my brother at Twitter, you're going to work for someone else, meaning that I think Twitter is going to be acquired in the next 12 to 24 months because of a $24 billion market cap. I believe that what the Gulf War was to CNN, the invasion of Ukraine is going to be to Twitter.

I speak to so many people in journalism. What's the first thing they check in the morning? Twitter. You're sitting on top of a shitty business model. We have an incredible platform that has incredible influence. And somebody with inflated stock is going to come in and buy that influence and that attention and that incredible platform that you and your colleagues have developed. Anyways, thanks for the question. We have one quick break before our final two questions. 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. Hey, it's Scott Galloway. And on our podcast, Pivot, we are bringing you a special series Published by Capital Cleson, 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. Support for this show comes from Indeed. If you need to hire, you may need Indeed. Indeed is a matching and hiring platform with over 350 million global monthly visitors, according to Indeed data, and a matching engine that helps you find quality candidates fast. Listeners of this show can get a $75 sponsored job credit to get your jobs more visibility at Indeed.com slash podcast.

Just go to Indeed.com slash podcast right now and say you heard about Indeed on this podcast. Indeed.com slash podcast. Terms and conditions apply. Need to hire? You need Indeed. Welcome back. Question number three. Hey, Scott. Yeltsin from Belgium here. What are your thoughts on Facebook trying to save face and using their $5 billion Metaverse budget to potentially make a deal and buy the central end or sandbox? Love the show. Yeltsin from Belgium. That's an odd. I am Yeltsin from Belgium. That's not Yelp. I am Yeltsin from Belgium. You should definitely come to New York and roam around and just meet strange people. I'm Yeltsin from Belgium.

It just sounds cool and fun. It's not like you'd be a fun guy. I would grab a beer with you. Hey, it's Yeltsin from Belgium. I'm in town. Do you want to grab a beer? Yes, I do. Okay. So as of this past January, Decentraland had a monthly active user base of about 300,000 people and 18,000 daily users. The Sandbox has a monthly active user base of around 30,000. So I'm fascinated by virtual real estate. I'm not entirely sure. It might be because I don't understand the space enough to know what Facebook would get owning it as opposed to just partnering with them. And because Facebook has a huge platform and everyone's on it, they could begin selling their own real estate. I guess they would buy it just for the technology and expertise to actually create virtual real estate. But for me, virtual real estate is one of those investments that might be worth taking a flyer on. I'm talking a very small part of your portfolio, you know, one or two percent if you're younger. But young people don't have a problem paying for digital assets.

My son will buy a laser cannon on a video game for 10 bucks. He will buy skins that signal some sort of skill in the game. So I don't see why they wouldn't be willing to buy something that signals their power or their wealth and hope that there's some speculative attributes because they trust that the underlying platform is going to limit. If Bitcoin can create scarcity credibility, I don't see why one of these virtual real estate companies can. I think, again, Facebook would have kind of a leg up because as untrustworthy as Facebook is, if they said we're producing with the central land or sandbox, a thousand beachfront property, virtual lots in this community that offers the following features,

and they obviously have a lot of features they could offer with their incredible programming talent. To me, that seems interesting. I think they're more likely to build than to buy. But having said that, Facebook is shitty at building. They're really good at buying. Maybe you're right. I don't know. That's an interesting one. I find that virtual real estate is something that might surprise us all, that it might end up being one of the best performing asset classes of 2022. I'm fascinated by it. So anyways, interesting question, honest answers I don't know. But I like virtual real estate.

I think it's an interesting idea. I think people my age don't believe that you could create scarcity value and asset value around a virtual good, not recognizing that it's already happening, especially across the younger generation. And also the brand of real estate is really powerful. People are under the impression that real estate is just a very good investment. So you take the speculative nature of crypto, you take kind of the fun, cool, sexy Pepsi generation feel of the metaverse, and then you take what feel like fairly pedestrian but conventional truisms of real estate being a good investment.

And I think virtual real estate could be a very interesting asset class. Whether it's Facebook buying them, I just don't know. Yeltsin from Belgium. Thanks for the question. Apologize for the long-winded answer. A little meandering there. A little all over the place for the dog. Where am I? Where am I? Papa? Papa? Next question. Hi, Scott. My name is Chris from Portland, Oregon. I love your shows and all the incredible work you do, and I can't wait to see what you bring to CNN and Pluto. Currently, I work as a federal employee. I recently read a stat that said 40% of all federal employees are 55 years old or older, meaning in the next 10 years, we will see a massive wave in retirements in the federal sector. However, as you and many other people have mentioned, federal employment seems to have a toxic reputation in

society. Here's my question. How can federal service rebuild its reputation or brand for the millennial and Gen Z crowd? Currently, I'm 34 years old and the majority of my co-workers are decades older than me. While the federal service can't match the private sector on wages, it does provide incredible benefits and protections for employees, but it has become extremely difficult to fill a large portion of the positions in the federal service. How can the public sector improve its brand and society so it can draw the employees needed to fill positions? Thank you for everything that you do. Well, first off, thank you for everything you do, Chris. I think our fine brothers and sisters who work for the government work for what is the most noble organization, the most productive organization, the organization that has created more good in the history of Western democracy,

and that is the good people who work for the U.S. government, whether that's someone who's working at the DMV or figuring out a way to get a check to seniors or someone who works as a social worker or someone who's a mental health counselor for our veterans. I think that one of the most unfortunate things about the United States that started in the 80s was the screed, mostly on the right, that with Ronald Reagan, trying to convince us that government was bad, that somehow these people were not pulling their weight or that government was the enemy. And then some of the most famous people in the world, the young people look up to, whether it's Peter Thiel or Elon Musk, have this freakishly weird, perverted vision of libertarianism

that is, oh, I should never have to pay taxes and government just gets in the way of my awesomeness. No, it doesn't. Government puts people on the moon. Government solves pandemics. Government pushes back on tyrant. If we don't start investing more in government and holding ourselves to some sort of more basic notion that government, we get to decide what it looks like. So if we don't like it, it's our fault. But essentially, you've had huge layoffs at the state and local level. It's not seen as an aspirational job. You're correct. According to the U.S. Office of Personal Management, more than 43% of federal employees are 50 years plus, while just 8% are in their 20s. So there's a few things, and some of them aren't that aspirational. I think we should have

mandatory retirement. I don't think that someone should be 75 working in the federal government just kind of cashing a check. And because the federal government has become so fucking woke that you just can't fire anybody, I think we need to hold federal employees more accountable in terms of performance, just as we do in the private sector. And I think a lot of people in the federal government would like that, because the flip side of that is if you're really good, you can accelerate faster. And I think we need to people in the federal government would like that because the flip side of that is if you're really good, you can accelerate faster. And I think we need to create more opportunities for young people to go into government. I also think we need to stop this greed and kind of level up the aspirational quality of the federal government and of the novel coronavirus, something called the Corona Corps, where people who weren't ready for college or wanted a gap year or gap years would spend one to three years

in a corps of volunteers going around helping people get their vaccinations, helping people figure out a way to stay safe if they were immunocompromised, mental health counseling, handling logistics. But I think the idea of millions of young people, similar to a Peace Corps, but domestically, by the way, there are some organizations that do this. I think AmeriCorps does this, Teach for America. But I think we need more. And one of the reasons is one of the most dangerous things in our society is the polarization, that people see each other as red or blue before they see each other as red, white, and blue. And the great legislation of the 60s and the 70s, the civil rights legislation, voting rights acts, we got along, we got shit done, was because people saw each other as Americans first, or our leaders saw each other as Americans

first. And that's no longer the case. Get this, about a third of Republicans and about a third of Democrats see the people in the other party as the mortal enemy. That's just ridiculous. That's hopefully something that'll go away with the tyrant, the new tyrant trying to soldier into Ukraine. I do think for the first time we're coming together. But I think government is our opportunity. It is our connective tissue. And I think the United States citizens have to stop this bullshit disparagement and screed

of U.S. government. It is us. It's the most noble organization in the world. And we need to figure out a way to compensate our young employees in the federal government, give them opportunities. And not only that, give them something, a brand that they can be proud of, such that the U.S. government and federal employees can command the space they occupy. And that is they do tremendous good for us every day. I'm a huge fan of anything investing around federal employees. Thanks for your good work, Chris.

That's all for this episode. Again, if you'd like to submit a question, please submit a voice recording by visiting officehours.profgmedia.com. Our producers are Caroline Chagrin and Drew Burrows. Claire Miller is our associate producer. Thank you. Partners. Did you know that almost 90% of executives see potential for growth from digital disruption, with 37% seeing significant or extremely high positive impact on revenue growth? In Alex Partners' 2024 Digital Disruption Report, you can learn the best path to turning that disruption into growth for your business. With a focus on clarity, direction, and effective implementation, Alex Partners provides essential support when decisive leadership is crucial. You can discover insights like these by reading Alex Partners' latest technology industry insights, available at www.alexpartners.com.

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