The Prof G Pod with Scott Galloway - Office Hours: Philanthropy, What to Do About Standardized Testing, and the Algebra of Making Predictions

Episode Date: March 14, 2022

Scott shares his thoughts on the roles that tests like the ACT and SAT play in college admissions. He then answers a question on how to be more charitable with your wealth, and explains his prediction-making process. Music: https://www.davidcuttermusic.com / @dcuttermusic Learn more about your ad choices. Visit podcastchoices.com/adchoices

Join Capital Group CEO Mike Gitlin on the Capital Ideas Podcast. In unscripted conversations with investment professionals, you'll hear real stories about successes and lessons learned, informed by decades of experience. It's your look inside one of the world's most experienced active investment managers. Invest 30 minutes in an episode today. Subscribe wherever you get your podcasts. Published by Capital Client Group, Inc. Support for PropG comes from NerdWallet.

Starting your credit card search with NerdWallet? Smart. Using their tools to finally find the card that works for you? Even smarter. You can filter for the features you care about. Access the latest deals and add your top cards to a comparison table to make smarter decisions. And it's all powered by the Nerd's expert reviews of over 400 credit cards. Head over to nerdwallet.com forward slash learn more to find smarter credit

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 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. First question. Hi, Prof G.

It's Sophia in London, United Kingdom. I love your show. I recommend it to everybody here. I love how you mix topics about business with topics about education. I'm an ed tech entrepreneur. My question for you is, what does your crystal ball mind say about the future of high stakes testing and also just regular assessments in the classroom? I don't think testing is bad necessarily, but I'd love

to hear how you think it's going to change over the next five and 10 years. Thank you. Thanks for the question, Sophia. It's a thoughtful question, and it's an issue that's getting a lot of debate. The University of California removed ACT and SAT scores from admissions consideration for good across its system of 10 schools. Similar to other universities, the UC system has already made the test optional during the pandemic and planned to completely phase them out by 2025. And this just expedited the process. I remember getting these big, long memos saying, as if it was some sort of victory, that the fear is that these things have cultural biases, which is probably true of almost everything we do in our society.

And that these tests have been weaponized and co-opted by wealthy people who could enter their kids into the industrial test prep complex and had unfair advantage. And there's some truth to that. As a matter of fact, what's interesting, in China, the CCP said, all right, there's a university over there, I forget the name, that has less than a 1% admissions rate. So it's five times as hard to get into this university as Harvard. And they did some analysis and said, okay, what do you know? It's only rich kids getting in because wealthy people can start their kids on a path with all sorts of test prep to get them into these universities. And the CCP said, that is not the intent of our universities.

It's to find the best and brightest, not the wealthiest. And so it essentially put all of these test prep companies, and we're talking about multi-billion dollar market capitalization companies, out of business, just with a stroke of a pen or whatever it is they do there, said, you're done. We think this is bad for the middle class. And to a certain extent,

this is sort of a Diet Coke version of that. Harvard also extended its test optional admissions policy for the next four years, attributing the decision to the pandemic and signaling its confidence that it doesn't need test scores to be one of the most selective institutions in the country. So how do we feel about this? Keep in mind that initially the SAT was meant to level up people from disadvantaged backgrounds such that they could have a moment on an equal playing field, taking a test in a room with a number two pencil to show that they were especially strong at math or English or math or verbal. It was meant to be the great leveler, that regardless

of your skin color, regardless of your gender, regardless of the high school you went to, regardless of who your parents were, that you had a chance on a totally even playing field to test your mettle. And I am empathetic to the notion that this, like a lot of things, has been weaponized. Or if you will, wealthy people want their kids to do well. One of the accoutrements of a capitalist society is you're able to provide your children with more opportunities. And I'm not sure that's a bad thing. And I also wonder if, okay, if the tests go away, we're just going to find other means of assessing them because the reality is there's more demand than supply. These organizations, whether it's UC Berkeley or Google or the Navy SEALs, want a

series of tests to evaluate you. And what does it mean when you don't have the SAT or ACT? My guess is, okay, it's your interview or it's your, at a private school, it's your parents or legacy, or if it's, were you captain of the lacrosse team? I don't know that these are gonna be any less advantage to people who already have money. I actually like standardized testing.

I think your ability to go into a room with a proctor and answer questions shows your ability to prepare. Maybe there's ways of doing tests that are more around creativity that you can't prepare for. I don't know, but I like the idea of static tests

that give everyone the same opportunities on some level and ask everyone to perform in the same environment on the same test. I actually think that's a good thing. But be clear, in capitalism, there's going to be winners and losers. And if it's not the ACT or the SAT, we're going to come up with new means of figuring out which 95% of our applicants we reject. The question is, are the new criteria or the remaining criteria any less culturally biased than the SAT or the ACT? And

that's my fear. So in sum, I probably err on the side of saying the tests are difficult, they're stressful, wealthy people are advantaged, but it sucks to be a grownup. And I think that's just a component of capitalists and a competitiveup. And I think that's just a component of capitalists and a competitive society. So I would have voted to somehow reform them, not eliminate them. What an interesting question. I'd love to hear what you think about this. Send us a voicemail or a voice recording, and maybe we'll play some of them. I just come up with that because I want to reach out to the people. I want to touch you. Touch the dog. Question number two.

Professor Galloway, thank you for taking this question. My name is Hashim from the Mojave Desert. My question is about philanthropy. You've talked a lot about investment, passive income, and building wealth. I worked at Apple, and when my stock started investing, we had more money than we needed to live our daily life. It made me ask, how much is enough? Apple, and when my stock started investing, we had more money than we needed to live our daily life. It made me ask how much is enough. My wife encouraged us to start moving our money to philanthropic causes right away and not wait till we are old and retired. We're in a fortunate

position. It gives us joy to do this and hopefully does some good. So my question is, what is your advice to get people in tech who have more money than they need to give in a sizable and sustained way? I'm not talking about giving to your alma mater or your kid's private school or 50 bucks to the public radio pledge drive. All good things, but true philanthropy. I've learned it's a lot more accessible than people think. It can be done earlier in life and with smaller but still meaningful amounts than the perception of the space that people have. How do we motivate people to see giving as something important as they make their money, not just after?

Thank you for listening to my little ramble. So Hashim from the Mojave Desert, good for you. It's good to be you. What a great problem. And it's nice that you're being so thoughtful about it. So I think this is a deeply personal question. Some people don't give money away at all. My mom was philanthropic with her time. I don't think my dad has ever given a dollar away. He was a depressionary kid. I think he's still worried about ending up homeless and not having enough food and just doesn't, in general, Europeans, I think, look to the government more. They pay higher taxes and they expect the government to take care of our neediest. And it's just not the same culture of philanthropy. And I know other people from a very

young age gave away a large portion of their income when they weren't making a lot of money. That's just kind of the way they're wired. So I think it's personal. Someone I admire who does exactly what you've just described is Mackenzie Scott, who's donated more than $8.5 billion since her divorce from Jeff Bezos in 2019. And what I love about her form of giving is that I would describe the traditional big dollar giving that we've become used to as sort of very testosterone filled. It's like, because I'm giving money, I have a viewpoint and you need to listen to me, Cory Booker, about the future of higher education in Newark, or I have some sort of insight into how I'm giving a lot of money or what's a lot of money for me to public institutions.

So they kind of pretend to care what I think about public education. And I'm not sure they really do. Maybe they do, they don't. But what I like about Mackenzie Scott is she said, all right, I'm going to do a much lower profile, no ribbon cutting, no naming, you know, things like Cal State Fullerton or legal defense funds for LGBTQ youth. When you think about how she was helping people without the need for influence or recognition, we kind of get to the true sense of the word giving. And I was really inspired by the co-founder of Amazon, Mackenzie Scott. Sam Harris, who we've had on the pod a couple of times,

introduced us to the importance of monthly versus one-time donations. You know, what I have found really rewarding is you run across people every day that money could help. And I like writing checks for $1,000, $5,000, or $10,000. I've given a decent amount of money away on Twitter. a group of single moms who are really struggling through the pandemic, I call the reporter and I ask for their names and I send them a little bit of money. And the reporter calls me back and says, they think this is a scam. And so I have to figure out a way to let them know it's not a scam. But that, I personally have found that incredibly rewarding. I think money is a wonderful thing. I think it's absolutely wonderful. And I don't think there's anything tacky or gross about giving it to people or giving it away,

as long as you don't expect anything in return other than maybe a little bit of gratitude. And I really think the gangster move, the gangster move is anonymous giving. And I'm trying to move to that. Talking about your anonymous giving is not anonymous, but I don't want to fall into the trap of always thinking about what does this do for me? You do want to think about, okay, are you really giving? I find a lot of these philanthropic events, I think they're going away. I think people realize this isn't giving, this is just posing. I used to go to this ridiculous event called Save Venice in New York, and it was a bunch of young people.

And we'd go and give some money and get dressed up and had sort of a more refined, eyes wide shut kind of party. And because we were saving Venice, what a bunch of fucking douchebags. Anyways, that's not giving. That's consumption and posturing, which I guess is fine. But I'm inspired by Mackenzie Scott in terms of just getting money out to people who need it. I find it very rewarding to give smaller amounts of money to people you run across in your life. Anonymous giving is super exciting. So this is a wonderful

thing. You're in a fantastic position. Good for you. Congratulations on your hard work and your good fortune. 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. And when you're starting your small business, while you're so focused on the day-to-day, the personnel, and the finances, marketing is the last thing on your mind. But if customers don't know about you, the rest of it doesn't really matter. Luckily, there's Constant Contact. Constant Contact's award-winning marketing platform can help your businesses stand out, stay top of mind, and see big results. Sell more, raise more, and build more genuine relationships with your audience through a suite of digital

marketing tools made to fast track your growth. With Constant Contact, you can get email marketing that helps you create and send the perfect email to every customer and create, promote, and manage your events with ease, all in one place. Get all the automation, integration, and reporting tools that get your marketing running seamlessly. All backed by Constant Contact's expert live customer support. Ready, set, grow. Go to ConstantContact.ca and start your free trial today.

Go to ConstantContact.ca for your free trial. ConstantContact.ca 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, Scott. This is Lorenz from Buffalo, New York, originally from Perth. We met briefly last year at a conference and that was a highlight for me. Thanks for all that you do. My question is about how you form a point of view on a business matter and make your predictions. Is it a similar method that you advise boards to make their forward-looking business decisions and investments? When a business forms a strategy, it looks at historical data as a guide. What's working, lean into that. What's

not working, do less of that. The truly great business strategists can see around corners, but what's guiding them there? Surely you can't just be reading Twitter feeds, a few Wall Street Journal articles, and connecting some dots. Is there something more magical at play here, or can anyone learn how to make an accurate prediction? Despite the fact you admit to getting it wrong a lot of the time, when you're making these predictions, it sure does come across bulletproof. Can you share any tips to making sound, forward-looking predictions? Many thanks again, Scott. Lorenz from Buffalo, originally from Perth. Perth to Buffalo. I don't think I've ever heard of that migration before. By the way, Perth, the most remote city in the world,

as defined by a city over a million people in population, that's furthest away from another city of over a million people in population. So Perth is literally the most remote city in the world. I have not been to Perth, but I have this vision. It has such a great brand. I have this vision that it would be like New York in the 50s and 60s. It's this raw, natural beauty. And you could get a beach house for a reasonable amount of money, which I don't think it's true because I think it's mineral rich and has become extraordinarily expensive like the rest of Australia.

But anyways, Perth to Buffalo. I'm not sure that's natural. There must be family or you fell in love or something. Anyway, a very generous question. So I do, as you point out, I get it wrong all the time. And as Eisenhower said, plans are useless, but planning is invaluable. I think predictions are useless, but predicting is invaluable. And as a profession, if you will, I do this a lot. I think a lot about it. It's a key component of my brand. It's a shitty business

because if you get a prediction right, all the events in between your prediction and the actual prediction coming to fruition make the prediction seem less bold and insightful because everything's added up and it's like, oh, that was obvious. And when you get it wrong, Twitter weighs in and reminds you that you got it wrong every day. Where the real value is, is thinking through how you got there and then looking back and thinking what change has led to either getting it right or wrong. So what's the process? A lot of it starts with my gut. You know, I had a gut feeling

that Whole Foods was amazing warehouses and that Amazon needed to get into multi-channel and that Amazon trying to move into luxury and this myth that Amazon was for lower income people was a myth that it was actually upper income people that liked Amazon. And I knew they wanted to get into grocery. And I thought, oh my gosh, they have these incredibly well-lit, well-staffed warehouses that immediately make them a presence in grocery that saves them 15 years to try and build these 550 out, and they can acquire it for less than 2% dilution. It just made so much sense to me as I started

thinking it through. So I'll have an idea, a hunch, and then I look at all the data to try and support, validate, or nullify the thesis. But most importantly, the way you make great predictions is that greatness is in the agency of others. I have a team of analysts and super smart people, and we do an editorial meeting on Mondays. And when I put together these decks, I go through the decks a dozen times with the analysts who have started to pull them together, and we just start thinking through these predictions, right? Why do we think the meme stock movement is going to unwind? Why do we think fundamentals in 2022 are going to rear their ugly head? Why do we think in 2021, I said that Bitcoin would hit $50,000? Why? Because I saw all these incredibly smart, compelling people

advocating for it. And I thought, okay, at a $800 billion market cap, which I think it was all of Bitcoin at the beginning of 2021, that's actually not a lot relative to the brand and the awareness of an entire asset class, whether it was junk bonds or Japanese equities, it seemed relatively underpriced as an asset class to me. And also, it wasn't tethered to any underlying fundamentals. So I thought, when you have these incredibly smart people out there, ranging from Michael Saylor to Raoul Pal kind of saying, there's a lot here, I thought, okay, that $800 billion asset class is probably going to be worth more than that. And it went from, I think, $16,000 to $50,000. Now I think it's back into the 30s. Anyways, and then other ones, I get wildly wrong. I could not get over Tesla being valued at $100 a share. It seemed overpriced to me. I just did the fundamentals.

I looked at it as an automobile company. And what did it do? It went to $1,000. So, one, you start with a gut instinct around what you think is going on. You have good instincts usually around business. Two, you nullify or validate them with data and you can't be afraid to say, I got this wrong. This doesn't make any sense. I thought this might happen, but as I look at the data, it doesn't support it. And then three, and most importantly, most importantly, you bounce it off a lot of other smart people and you get their reactions.

There is a wisdom of crowds. So an exercise I take companies through is if they're $100 billion in market cap, I say, imagine you're at $500 billion in five years. Let's reverse engineer the most likely things that would have happened that you would guess would have happened to get you to $500 billion. That's a form of scenario planning. It's a form of predictions. Thank you for the question. That's a form of scenario planning. It's a form of predictions. Thank you 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.propgmedia.com. Our producers are Caroline Chagrin and Drew Burrows. Claire Miller is our associate producer. Associate producer. Talk about a meaningless title chain. Congratulations, Claire. You're welcome. If you like what you heard, please follow, download, and subscribe. Thank you for listening to the Prof G 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 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. 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.

That's www.alexpartners.com. In the face of disruption, businesses trust Alex Partners to get straight to the point and deliver results when it really matters.