The Prof G Pod with Scott Galloway - Office Hours: Recessionary Signals, Investing Advice, And Dealing With a Toxic Work Environment

Episode Date: February 1, 2023

Scott discusses what the increasing layoffs and reductions in force (RIFs) actually mean for our economy. He then gives insight on how to build economic stability through your investments, and ends with advice to a young professional dealing with a toxic work environment. 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 Prof G 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 email a voice recording to officehoursatprofgmedia.com. Again, that's officehoursatprofgmedia.com. First question. Hey, Professor. This is Gregory from Austin, Texas. I've been working in technology for several years, and I have to say I feel pretty lucky to have the career I have.

One of the things I've noticed, especially in the last year, we're going and seeing a lot of rifts around the market, especially in technology or in SaaS. I get that it is a turbulent time, but it seems like a lot of these companies have started playing more fast and more loose than at least I remember business in the last 15, 20 years. Can you help some of us younger 30, 40-year-old folks understand a little bit more as to, is this number of rifts in the marketplace this common? Thanks, Greg, from us. And so the media loves catastrophe or violence or hardship or bad news. So they publish when one of these companies lays off 10 or 12,000 people. I think the most recent was that Microsoft is laying off 10,000 people, wrung our hands over, and just had a ton of indigestion over this pending recession, it's not going to happen or it's going to be really,

really light. As it comes to reduction in forces or reduction layoffs, firings, whatever you want to call them, this just feels like nothing to me because the people it's impacting the most have the most options. They have the greatest ability to bounce back. If you're laid off in the tech community, and I don't mean to diminish your problems. I realize some of you have real financial obligations. But you are better off than 99% of the population globally, even at the moment you get laid off. Because you probably want to have great skills, a great resume, incredible certification, most likely from an elite university, live in a city that has economic growth. So you're going to be just fine. But I think we're just getting started.

I think we're going to see more and more as the prospects of AI and also kind of the cost reduction strategy of great taste, lower costs, fewer calories, hold on to that revenue that Elon Musk has sort of given everyone cloud cover for is going to only deepen the real numbers, which so far just haven't been that big. The economy has just changed dramatically. I would argue there's more jobs than there are people. When you're at three and a half percent unemployment, bottom line is that's full employment. So I would say this is more a function of your expectations, getting used to a new normal. And I think in the long run, it's really healthy. I think giving people flexibility to fire means they can hire faster. And again, I think this is more spectacle than significant.

I also think it's a great opportunity to start a business, really, really evaluate what makes you happy. Long-winded way of saying, thank you for the question, but I think we're just getting started is the bad news around tech layoffs, the good news. People are going to be just fine and they're going to find other jobs. Next question. Hey, Scott. I'm in my late 30s, emphasis on late, and have really good job security with an employer that has an annual operating budget of about $773 billion. And unless I commit a felony or an act of Congress gets passed, I can't get fired. In eight years, I'll be able to collect a pension immediately for about 50% of my base pay. What do I do with my investments given how secure my employment situation is? Now, I have no debt. I'm single. I don't own a home. I move around a little bit.

They like to send us different places. When I started with this employer, I have no debt. I'm single. I don't own a home. I move around a little bit. They like to send us different places. When I started with this employer, I had like $300 to my name. So I'm definitely coming at this from a bit of an out-of-my-league perspective, so to speak, especially for people that do the kind of work I do. So how should I position my investments, my decisions with my money? Should I start investing in myself in ways that maybe my current employer has hindered my development?

Can't wait to hear your thoughts. Thanks very much. And thanks for your service as obviously you work for one of the greatest fighting forces or the greatest fighting forces or the greatest fighting force in the history of mankind. It's something where our investments and commitments of our taxpayers and young men such as yourself, and you are young, commit to, and that is our

great men and women in uniform. So look, as young as you are and as much flexibility as you have, I think this is a great time to not what I'd call take outsized risks. Investing yourself is always a pretty good investment because that's one of the few things that it can't be inflated away from you. It doesn't go down in value. So if you have an opportunity, especially with some sort of GI program

to pursue a second degree while in the service, I would absolutely do that. I wouldn't pursue, I wouldn't immediately sign up for a second year MBA program that's going to cost you a couple hundred grand because unfortunately, I think education used to be a no-brainer. Now you really have to do the math because sometimes it isn't worth it. But with respect to your investments, given you're single, given that I bet a lot of your life is paid for by the service, boss, I would just try and save and invest as much as possible. So you can

be risk aggressive in terms of the type of investment, but you want to diversify. What does that mean? You can go into growth stocks, but go into a fund that mixes them together and has low costs, a low cost ETF, low fees, fees eat up your returns and diversification. So you're probably a very talented guy, but none of us have the ability to pick the one stock that's going to go up six or tenfold. So what we do is we hire professionals or we outsource it to people who will pick 10 or 15

and some will go to, you know, get cut in half, others will do okay and some will go up. And then you want to diversify even further, put some money in an ETF that looks at stocks or biotech or a different type of sector or category in a different geography. Because at your age, if you can save more money than you're making and you can put it away, by the time you're my age, 20 years from now, you're going to have real economic security. Keep in mind, if you manage to get eke out 8% annualized returns, that means in nine years, in nine years, those investments will double, right? So,

take advantage of time. You still have a weapon on your side, and that is you have a lot of time left, and it will go faster than you think. I think at your age, you don't want to put more than 20% max in any one asset. And also, ideally, over time, you diversify across asset classes. Maybe a home that when you're not there, where you're stationed, that you can rent out. Real estate is very tax advantaged and a great way to force yourself to save and grow your wealth. But you're in a great spot, but take advantage of your flexibility to try and save and invest as much as possible. And you can be more aggressive around the type of investment, but don't be aggressive around a lack of diversification. Still stay diversified. Just as we have an Army,

Navy, Air Force, and Marines, and we ensure that we have presence in every ocean, you want to make sure that your money has presence in every kind of asset class or region or geography because over time, and you have a lot of it, the natural trajectory of the markets is up. And because you're in a great spot and you can save money, go for economic security, live like a stoic, try and save and invest as much as possible,

diversification and low, low fees, right? We don't want to give that money away to a broker, you know, Vanguard, Fidelity, folks that focus on really, really low cost of transactions. Thanks so much for the question, and thanks for your service. We have one quick break before our final question. 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. I just don't get it.

Just wish someone could do the research on it. Can we figure this out? Hey, y'all. I'm John Blenhill, and I'm hosting a new podcast at Vox called Explain It To Me. Here's how it works. You call our hotline with questions you can't quite answer on your own. We'll investigate and call you back to tell you what we found. We'll bring you the answers you need every Wednesday starting September 18th. So follow Explain It To Me, presented by Klaviyo. Welcome back. Question number three. This question comes from a listener who would like to remain anonymous. Hi, Scott. I'm reaching out to you as you played a pivotal part at the beginning of my career,

as well as my future aspirations. I say this to you as I've recently joined a career in an institutional bank sales and trading program as an analyst for the equity derivatives program. Joining my desk in September, I noticed my group was not as outgoing and friendly as I was led on to feel. I have struggled to learn for much of the past three months. I've faced ridicule and little to no support. I'm struggling to find my footing and I felt bullied by the VPs and associates on my desk. Scott, my question is this.

Is there any way to get out of this situation? My anxiety about showing up to work has impaired my performance and I've yet to really enjoy much of my job. I know you're a firm believer in putting in your dues, but I'm not sure how much longer I can last. You're in a shitty situation. Your problem is a function of the opportunity and skills you have. You managed to get a great seat at a firm. And what you are right now is really disappointed because wouldn't it have been great if it worked out and been a good organization. And here's the thing. When you're much older and you have some perspective and you look back at this situation, you are going

to be upset. Now, why are you going to be upset in 30 years about what is happening now? You're not going to be upset that you were in a shitty situation that didn't live up to your expectations and your life right out of college wasn't as professionally as rewarding as you'd hoped it would be. You're going to be upset that you are this upset. This will happen several times in your career. And you know what? You're going to get through it. You're going to get through it. So keep in mind, these people, this toxic environment, they cannot eat you. They cannot hurt you. You are a young, strong, skilled man. There's nothing they should be able to do to you that will have a

profound impact on your life. True, if you have to get up in the morning and you hate it, that sucks, but we're going to do two things. The first is you need to start looking for another job. I fucking hated my job at Morgan Stanley. I hated the people I worked with. I hated the office. I hated the food. I hated the environment. I hated investment banking. I hated the markets. I hated everything about it. But I could muscle through the two-year program, wake up in the morning. I had everything you're talking about, maybe not to the same extent. I did have someone who was looking out for me, which was hugely rewarding. I got a lot of psychic income from saying I worked at Morgan Stanley. I was making good money, but it was awful.

On Sunday night, I don't know if you feel this way, but by like Thursday afternoon, the fact that the work week was coming to an end, it was like yabba fucking dabba doo. I was so happy. And then by Sunday afternoon or evening, this cloud would come over me. And I started thinking, oh shit, I got to get up and go to work and start this bullshit over for a week. But I knew there was a limit on it. I knew it was two years. And I was learning a lot. It sounds like it's worse there for you. Nothing is worth your mental health. So you've made the trade-off. If you can't, in fact, function and it's really coming after your mental health, then by all means, you need a strategy to get out of

there. And you need to do two things. One, you need to network and try and find another job. That's not going to be easy because you don't have a lot of experience right now. But if you found this one, you should be able to find another one. So one, put together a list every day. Emails, go back to the career center of the college you went to. Two, is there someone at the company you trust and you have a good relationship with that you can go to and just be very transparent with and say, I'm really struggling with this. I don't like it. I find that when you're open with people and ask them for their help, assuming not everyone's an asshole there, they feel invested in your future. They feel invested in you.

And they will try oftentimes to figure something out. And sometimes they will. Even if it's just passable or bearable so you can stay there two years, have a little bit of a resume builder, right? And then move on to something better. But my friend, you are going to be fine. This too shall pass. What I can tell you is that a lot of times when I have been really down in my life, it's been more a function of where my head was than what was actually happening to me. And what do I mean by that? In investments, they say the market is bigger than any individual company. And that is,

it doesn't matter how good the company is or how smart you were picking a stock. If the market goes down, your stock's going down. If the market screams up, a shitty company will go up in value. And what I found is that my perception of the world and how upset and stressed I am is maybe like 30 to 49% of the actual situation, but the other 51% is the headspace I'm in. And it's that complicated, nuanced, impossible to understand mix of emotions, chemicals, whatever the fuck is going on in there. What I didn't learn and what I should have done is that I hear real pain in your voice. It might make sense to reach out to a friend or to reach out to a therapist. There's so many great options now online. And just quickly try and do a quick test on how much of this is the situation or the headspace you're in. And granted,

the situation can create that bad place in your head, but I don't think it's a bad idea when you're feeling down or really stressed. And it sounds like you're feeling both of those things right now to check in with someone who's a professional. I wish when I was your age,

I had been more willing, more in touch with my own emotions and more brave to reach out to people and ask for help or just to check in. So that's the first thing and only you can make that assessment. That's all for this episode. Tune into the PropG pod tomorrow for our conversation with Derek Thompson, a staff writer at The Atlantic, to hear why he thinks America's progress has stalled. We'll be back with Office Hours next Wednesday. Again, if you'd like to submit a question, please email a voice recording to officehours at propgmedia.com.

Our producers are Caroline Shaverin, Claire Miller, and Drew Burrows. Jennifer Sanchez is our associate producer. 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 next week. 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.S. 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?

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