The Prof G Pod with Scott Galloway - Office Hours: Rebranding Climate Change, MBA Applications, and Lowering Your Economic Burn
Episode Date: July 11, 2022Scott takes a question from a listener who wonders what it will take for climate change to become the biggest story in business. He then offers advice to a father considering moving to a more affordab...le city where his family can live mortgage-free. Scott also shares his thoughts on applying to business school without big name schools or companies on your résumé. 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 visit officehours.propgmedia.com.
Again, that's officehours.ppertymedia.com. Again, that's officehours.propertymedia.com.
Again, I have not heard these questions.
Giving you that real and authentic dog talk.
Okay, first question.
Hey, Prof.
My name is Bill, and I'm calling from San Diego.
And like you, I went to both UCLA and Berkeley.
That led me to a marketing career with Unilever, so I have a marketing question for you.
I'm very concerned about climate change and specifically how we get people to take action.
Now, the strategy I see people using most often is fear, you know, the idea of scaring people into action.
And that makes good sense to me.
And for many people, that works.
But the problem is that for many other people, I know it just doesn't work.
And that got me thinking about your show and about business media in general. It really surprises me that I
don't hear more stories about the innovators in this space, because it seems like such a good
subject. I mean, climate change is an enormous discontinuity. You know, it's going to create
drama, they're going to be winners and losers. And yet for every story I hear about a company like Beyond Meat or Breakthrough Energy, I probably hear about 100 stories about social media instead. So my question for you is, what is it going to take for climate change innovation to become a big and maybe even the biggest topic I hear about on the news. What a thoughtful and nice question, Bill from San Diego.
First off, go Bruins and go Bears.
You sound about my age,
although it's probably,
I don't know, it's probably a hate crime
to stereotype someone's voice
or link it to age.
Is that ageist?
Is it voiceist?
Is it voiceist?
Okay, so a complicated question.
I don't know.
I think just trying to scare people into, okay, the super fires are coming. I mean, there's already a lot of evidence that it's just at a minimum, this climate change stuff is a big pain in the ass. And that is more super fires. I think four of the five biggest fires in California history have happened in the last 10 years. You're going to see forced migration, huge economic strain. Fear-based marketing works
in the short term. And that is, if you don't figure this out, if you don't get chemo,
you're going to die in the next 12 months. I think that is very effective. But I think
everyone assumes with the earth that it's a long-term investment. We do know that it's going
to perhaps cook our children or our grandchildren. But I generally think that people are pretty selfish.
And also, I think the left lacks credibility around this issue because they're seen as alarmist.
And when they try and propose things like the new green deal that's $10 trillion and wants to
prohibit lawnmowers and commercial air travel, they just sort of turn off.
I am not an environmentalist. I believe that after the last human takes her last breath, the Earth is going to belch for 50 years, and then it's going to be as if we were never here, which is not a popular viewpoint.
However, I'm also a person of science and data, and there's just no getting around it.
This has gotten super serious, super fast.
The oceans are increasing in temperature, and it's going to have really negative externalities. I don't think it'll wipe out the race, but as with all things, it'll make it increasingly uncomfortable for the people who are the least fortunate.
Now, having said that, let's move on to solutions.
The thing I don't like about the way we have framed this challenge is we tend in America to frame it as an opportunity. And that is, okay, there's two people at MIT in a dorm,
and they're going to come up with some great climate tech company and make billions,
and we can invest in the company, and we're going to solve climate change while making a
shit ton of money. Well, wouldn't that be nice? I think this problem is so severe,
and I don't think there's any cheap and easy way out. I think we're going to have to make
massive investments and have regulation that just gets rid of coal, right?
We're just going to have to figure out a way to make Europe more secure so we're not dependent upon their gas.
We're going to have to make, in my view, and this is getting into kind of my, I don't know, everyone has an opinion around climate change.
I can't figure out why we're not making a massive investment in nuclear.
You want to talk about branding and marketing something?
I don't think we need to rebrand or position the importance of climate change.
I think we need to rebrand nuclear power.
Call it elemental power, as my friend Josh Wolf says.
Because if you look at all of the emissions from all of nuclear throughout history,
that is the spent fuel.
It would be a container about five feet high that would span the entire length
or be basically a football field.
That is manageable.
I mean, granted, that shit is dangerous
and you have to be thoughtful about it,
but we're not talking about pumping trillions
of kilograms of carbon into the air.
The emissions here, to me,
relative to the productivity,
are just so extraordinary.
And for some reason,
it's developed an incredibly poor brand.
Anyways, I'm very pro-nuclear,
but we need to come up
with a different branding.
I think there are real inspirations
around branding,
around kind of privatizing
or capturing gain or economic gain
from climate change.
Most specifically, I just think you have to nod your head to Tesla.
They've said, all right, we are electrifying the world.
We're moving away from fossil fuels.
70% of EVs in America are now Tesla.
The multiple on that stock is not an automobile multiple.
It's a climate change multiple.
So the Greek lands have been started
around climate change.
What's happened?
The majority of investigations by the SEC
launched a look into SPACs
who basically said things they weren't supposed to say
are wildly exaggerated,
which is Latin for lied,
have been filed against, wait for it, EV companies.
So I think the branding here
has not only been attempting to inspire entrepreneurs, I think it, EV companies. So I think the branding here has not only been attempting to
inspire entrepreneurs, I think it's become near fraudulent when you have companies like Aspiration
claiming they're ESG. I think ESG has totally been weaponized. So when you're talking about
actual awareness, a study from Media Matters found that the kind of major broadcast networks
spent about 22 hours discussing climate change on their news shows in 2021.
That's more than a threefold increase in 2020.
So it is getting an increase in awareness.
But overall, that represented just 1% of news programming that year.
As a matter of fact, I think the Blue Origin launch got a lot more attention on the broadcast networks as all these people went down and were just breathless at the innovation of
sending a man up one-fourth thousandth of the distance that we sent three brave souls 50 years ago.
Jesus Christ, what a fucking handjob in the shape of a penis called a rocket.
Anyways, in sum, I think the answer here is not as much about branding, although I do
think there's an example of branding around nuclear power rebranding.
I think it's about a sober adult conversation that we elect people to do what government
officials are supposed to do, and that is prevent a tragedy that comments and think long term and say, okay, this is going to be expensive and hard, and we have to do it.
Oh, my God.
Living your best life in San Diego.
Go Bruins.
Go Bears. has benefited from what is arguably the most impressive manifestation of government,
I believe, in history,
maybe with the exception of our men and women in uniform,
or maybe Social Security, I don't know,
or maybe mental health counseling or Veterans Affairs.
There's a lot of wonderful things about our government,
but one of the wonderful things
is the good people at the University of California.
Thank you for the question, Bill from San Diego.
Next question. Hi, Prop G. I'm Salah here, Bill from San Diego. Next question.
Hi, Prop G. Gonzalo here, living in the Bay Area. Quick question, a life-changing event question.
We have a house here in the Bay Area, and I have an idea of moving to Austin, Texas,
with the purpose of being mortgage-free. With the equity on these houses, we can pay a house
in Austin, and I will be mortgage-free. I'm the on these cells, we can pay a house in Austin and I will be mortgage-free.
I'm the only one who provides
at this moment at home
two kids,
another kid's mom and I are married,
so child support.
My wife doesn't work.
I'm the only one who provides for everything,
so you can imagine the stress that puts on me
as the economy might be going into recession.
The idea that I might end up with a job tomorrow will mean that we might lose everything.
So I'm trying to get a little bit of perspective from other people, persons, and see if this
is something that is worth to do or not.
Any thoughts?
I'll appreciate the help.
Thank you.
Gonzalo, thank you for the thoughtful question
also I appreciate
your transparency
I think a lot of men
have trouble
expressing their emotions
and their fears
and their stressors
and
I think your stress
or often times
your stress is a function
of the love in your life
and that is
you are taking care of a family
kids from this marriage
kids from a past marriage
are contributing
the most wonderful things in life,
relationships, economic stress,
are a function of your blessings.
And that is you're taking care of people
because you love them
and I'm sure they love you a great deal.
But there's just no getting around it.
It's fucking stressful.
The most stress I think I've had,
and I've led a fairly charmed life,
was I had my first kid
and the great financial crisis hit in
2008. And I'm like, shit, all of a sudden I don't have any money. And a kid had the poor judgment
to come marching along. It was really scary. And it triggers a lot of emotions. And not that women
don't have this kind of stress. And unfortunately, women bear a disproportionate amount of stress day to day. And I'm making huge gender stereotypes here. But I think oftentimes men who are head of households feel not a unique stress, but I'll call it just head of household stress, that I had this kind of demon whispering in my ear, you have failed as a man, that it's your job to take care of your family.
And even though I was able to do that, that fear was just hugely stressful.
Anyways, I empathize with that, and I hope you realize that stress is a function of the people, a function of your blessings and some of the love in your life.
Now, specifically to your question.
So, a lot of it is what's the job and the source of income in Austin?
It sounds like you probably work in tech, and I didn't get this, but it sounds like you have a job potentially in Austin.
And so, you're looking to do sort of a geographic arbitrage where you lower your cost of living by moving from San Francisco to Austin. Now, that arbitrage isn't the arb it used to be because in some, Austin home prices have kept pace with
or actually increased in terms of year-on-year change. And that is downsizing is wonderful.
And the idea of lowering your burn is really responsible and takes a lot of stress. What
does it mean to be rich? Simple. Your passive income
is greater than your burn. My dad is rich. He makes $52,000 a year between Social Security
and his pension from the Royal Navy. He spends 42. My dad is literally the cheapest man in the
world. So at the age of 91, he's saving money. And it makes him very happy. He's rich. I have
another friend who runs a large division at an iconic investment bank, he makes between $3 and $7 million a year
in between alimony, his NetJets card,
his master of the universe lifestyle.
He spends all of it.
And I know that he is very stressed.
Could he choose to live his life differently?
Yes.
For whatever reason, he lacks the discipline to do that.
And he is wildly stressed.
He is not rich.
So I understand you wanting to manage that stress.
What I would suggest is the following.
If you can sell your home in the Bay Area and if you can maintain your income and lower your burn,
that feels right. And by the way, the lifestyle in Austin is awesome. It's a great city, great food,
great people, great economic opportunity. I just text max, music scene. I go to South by Southwest every year just because I don't even go to the conference. What I'm doing is I'm going to
Austin. So according to Investopedia, interest rates on a 30-year mortgage have averaged from
about 3% to 4.5% through the last decade. Another thing you got to figure out is do you have a great
mortgage on your house right now that you'd be giving up. And now it's jumped to the current
rate on 30 years, gone up almost to 6%. Here's what I think you want to be mindful of, or here's
what my advice would be. The idea of paying off a house feels economically smart. I would suggest
that even at these interest rates, especially even get a variable rate, that it's still financially wise to take out a mortgage and
then the money you otherwise would have put into paying off the entire house or being
mortgage-free, you invest in diversified, low-cost ETFs.
Because most of the time, you're going to get a greater return.
When you look at the tax deductions, what has been
historically low interest rates on mortgages, you can usually over the long-term outperform that.
And that is a certain amount of manageable debt is actually financially responsible.
It feels emotionally really good to not have any debt. I get that. And if it's a huge emotional,
if it's hugely emotionally accretive for you to not have any debt, fine.
But what I would suggest is if you can take a San Francisco salary to Austin, good move.
If you can sell a home in the Bay Area, which no one knows if it's the best time to sell,
but we know it's a good time to sell, right? That's the good news. The bad news is you got
to buy into Austin, which has probably doubled in the last three to five years, but it's still a
lot less. You'll still probably be able to buy a similar size home for a lot less. And I think over
the medium and long-term, my brother, you're going to outperform and have more economic security.
But let me finish where I started. These types of stresses are a function of one your character that you take being a head
of household seriously which both are i think great great signals my mother did this she took
economic responsibility for my household it was just me and her and i'm forever grateful for and
she was thoughtful and an adult and and managed our finances uh well she never made more than i
think 48 000 a year And we lived an okay life
because she was responsible and worked hard. So I think that's what it means to be an adult. And
that's what it means to be a man or a woman who's head of household. So your stressors here are a
function of a couple of wonderful things. One, you have people in your life that love you. And two,
and just as importantly, you have people in your life that you get to love.
Thanks for the question.
We have one quick break before our final question.
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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,
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So tune into AI Basics, How and When to Use AI,
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Welcome back.
Question number three.
Hello, Prof G Pod. This is Connor from Idaho. I'm a big fan of both Prof G and Pivot. Welcome back. Question number three. El Salvador, but I left college with an associate's and recently returned and graduated from SNHU with
4.0. My concern is most MBA graduates I follow went to a top undergrad program, Brown, Duke, UOP,
and have since worked for Google, Deloitte, McKenzie, or a top firm. I didn't, but rather
have 15 more years work experience and have needed to door dash over the past year to finish my degree.
My question, when I apply to top MBA programs, do I need to be coming from a full-time position
or does that matter? Thank you so much for your time and look forward to hearing more.
Take care of both y'all. So thanks for that, Connor from Idaho. I appreciate your transparency here. Okay. So, a couple things. A top MBA program. I
do think that unless you get a full ride, you probably only want to consider a top 20 program.
We're not in the business of educating in higher education. We're in the business of certifying.
And that is the primary benefit and the justification for the massive investment in time and money you make in a graduate program is that it says to every HR department, we've done your job.
And that is the HR, the head of HR at Google would rather pay $200,000 a year for an MBA when that person is maybe worth only $140,000 or $160,000.
Or they could fine that person for $140,000 or $ or $160 with equivalent skills who doesn't have an MBA.
But they'd have to do much more work to get to that realization.
And they would rather just pay the additional fee to know that that person has been already evaluated by an admissions department at an MBA program.
So the primary value add of MBA programs is the sort of screening from the MBA admissions.
Anyone who gets into a top 20 program is smart, tests fairly well, has shown they play well with others, has shown that they have the mental health to work well and meet deadlines and handle stress, has contacts, can network, you know, all that good stuff, and also has some good skills, knows a spreadsheet, understands the basics of strategy, marketing, finance, et cetera. Now, so first thing,
I would apply to a top 20 program. I wouldn't naturally assume that because you're not coming
from a top elite school yourself, you can't get in. I had a 2.27 GPA at UCLA. And granted,
it was a different time. I applied to nine schools, and I got into two and wait GPA at UCLA. And granted, it was a different time.
I applied to nine schools, and I got into two and waitlisted at one.
I got into UCLA.
I got into Haas, a C above, grateful to California taxpayers.
And I got waitlisted at the University of Texas, Austin, where they said I was going to show up and pass some summer classes to get in.
True story.
I wanted to go to UT.
I thought that would be awesome. I thought, oh, my gosh, Tex-Mex, hook them horns. I thought that would just be an amazing experience. And I fell in love with someone and she said, I'm going to Berkeley or Haas. And I
said, well, I'm going to UT. And she said, I'm going to Berkeley Haas. And I said, well, I'm
going to Berkeley Haas. And so I basically went to business school following somebody. Anyways,
was very much in love with her and I don't regret it at all.
Anyway, and had a wonderful experience.
That's not what you asked.
What I found out applying is that everyone, no one's a perfect candidate.
What I found, I got there.
I'm like, oh, my God, I fooled them.
I'm an imposter.
And then what I found out is I was surrounded by other imposters.
So this is what you do, Connor.
You write an application.
You do an application. First off, you study really hard for the GMAT, and you try and say, do, Connor. You write an application. You do an application.
First off, you study really hard for the GMAT, and you try and say, look, I've got it going on.
Maybe I didn't go to a top school, but I got good grades. And then you apply, and you see where you
get in. And then hopefully you get into more than one place. You can play them off of each other
for tuition or financial aid. And let the market decide. If you don't get into a good school,
if you don't get into a decent school with financial aid,
then you don't go.
But don't assume that everyone is a graduate of MIT
and work for Google.
I think they want people with a different background,
but they want to make sure,
they want your background to say to them,
you have a great potential future.
And I think there's a variety of ways
you can demonstrate that.
The fact that you did well, I think it's Southern New Hampshire University,
the big online university, but a 4.0 says something about you. Anyways, bottom line is,
if you get in, you won't deserve to get in. But guess what, my brother? Most of the people there
didn't deserve to get in. So don't spend too much time wringing your hands over this decision. Let
the market decide. Apply.
I don't think you're going to get into Harvard or Wharton or Stanford.
I'll say that.
But you might get into a great school.
And the key is applying to a bunch of schools.
And they might say, we want to take a chance on that guy.
They took a huge chance on me.
And we're all imposters, Connor.
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.propgmedia.com.
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Caroline Chagrin and Drew Burrows. Claire Miller
is our associate producer. If you like what you
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We will catch you on Thursday.
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