The Prof G Pod with Scott Galloway - Office Hours: The Fast-Casual Business Model, Early Career Tips, Pivoting to Academia, and Prof G’s Nutritional Habits

Episode Date: September 27, 2021

Scott explains why he’s a fan of Chipotle’s business model in an evolving fast food industry, and why it’s time employers to start paying their employees liveable wages. He then offers advice to a recent graduate about showing face at the office and encourages someone to accept a new role at a university, even if it means taking a pay cut. Scott also discusses his relationship between food, exercise, and his body image.  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. We're partnering with our friends at ScholarSite so that you can easily submit audio and video questions. Get notified when your question is answered and engage with other questions. If you'd like to submit a question, please visit officehours.propgmedia.com. That's officehours.propgmedia.com.

Disclosure, I'm an investor in ScholarSite. We did not, my producer, choose them, so I didn't influence this. And there are these incredibly impressive folks from my alma mater, the Haas School, that are trying to help professors build platforms. Anyways, I like the company, and I was excited to see that we're working with them. Anyways, first question, and again, I do not see these questions before they are asked. experience. Curious to hear how you see them now, both as a company and as an experience. Have never heard you talk in depth a little more about what it is that won you over with them and what you think of their move to paying all workers $15 an hour, which caused a dip in the stock recently. Thanks a lot. So I am a Chipotle fanatic,

although I've noticed during COVID, I haven't eaten it as much. I could eat Chipotle. At one point I was eating Chipotle, it feels like every day. So I'd say three days a week. I think it's fairly healthy. I'm not a nutritionist

and nutrition is where I fall down, but I can eat pretty much whatever I want. And I love Chipotle because A, first and foremost, I think it tastes fantastic, and B, I like the assembly line of it. I like that you can get in, get out, and the way they can basically create what feels like a Model T Ford assembly line in terms of food. And I just look at it, and I'm like, oh, my God, smell the margins. Anyways, they're raising their wages is what you you asked about, to $15 an hour.

I believe they raised it in June. And they also passed these costs onto consumers through increases in their prices. I think it was about three and a half or 4%. And these price increases haven't seemed to deter or decrease demand. The company's comparable sales rose more than 30% in the second quarter,

and the stock's up about 50% in the last 12 months. And there are some learnings here specifically. So I'm on the board of Panera, a competitor to Chipotle. And what's interesting about this space, whether it's Domino's, Starbucks, Chipotle, Panera, it's become about innovation. And that is more than 50% of our sales now, I don't know what it is at Chipotle,

but more than 50% of our sales at Panera are now originally digitally. People ordering for pickup, people buy online curbside pickup, delivery. And that is incredibly powerful. It not only gives you a better sense of scale and demand, but it also increases margins, decreases your reliance on more square feet in the cafe. It begins to get the company thinking about technology. And also, quite frankly, it creates real pressure or creates consolidation in the space because the majority of small restaurants

can't make those sorts of forward-leaning technology investments. And as we see in every category, when technology shows up, it consolidates the industry. And we're seeing a consolidation in that industry. And Domino's, which is arguably the best, or I think is the best performing stock from 2010 to 2020, it wasn't because the pizza got a lot better. It was because of technology. By far, the most

innovative thing I've ever seen in technology was the Domino's app. When you opened it, it began a countdown. And if you didn't press stop within 15 seconds, your favorite pizza that you'd ordered before was on its way. I think that incorporates taking consumer choice out of the equation. I love that. I think choice is overrated. I love the sense of urgency. I love the playfulness.

I love the gamification. I mean, they just nailed it. And Domino's took what I think is a fairly mediocre product, quite frankly, and layered on innovation and became the best performing stock of the 2010s. What did they call that? It was the aughts and then the tens. I don't know. So anyways, you asked about Chipotle. It's an incredible company spun out of McDonald's, I believe, and it's now one of the most valuable fast food companies in the world. I like their culture. I like their product. The fact they've raised wages, I wouldn't say that that's anything socially conscious about them. That is happening across every organization. It is a state of chaos right now in the front line.

Why? Because, and this is a good thing, for the first time in 40 years, labor has some leverage. Capital has been kicking the shit out of labor for the last 40 years, meaning that wages have been flat. The stock market has exploded. Corpor corporate profits at an all-time high, the NASDAQ up fivefold since 2008. CEO pay has gone from 60 times the average worker's earnings to 300 times the average worker's earnings, I think, in the last 30 years. And minimum wage since 2008 has exploded from $7.25 to, wait for it, $7.25. So shareholders killed it. And management is usually part of

the shareholder class. They're usually given an ownership stake or shadow ownership in the form of options. The consumer has killed it. I can't get over how good food is and what a great value is. Chipotle is an amazing deal. Who hasn't done as well? Who hasn't done as well is the people behind the counter. And then with the stimulus, and I think this was a good thing, it was the first action that did what unions are supposed to do. Unions are supposed to represent the middle class and help them get leverage to garner some of those shareholder gains. And you know what? They've done a really shitty job. The thing that's worked is putting enough stimulus in people's hands such that people thought, you know what? I don't need to go to work for 40 hours at nine bucks an hour so I can live in my

car. I have enough money through unemployment or other tax credits or what have you such that if this is a terrible job, if this is a dangerous job, a dirty job, and I'm making eight, nine bucks an hour, you know what? To be blunt, take this job and shove it. And that is forcing organizations around America that have frontline workers and services positions to raise their wages. We're not doing this. Nobody's doing this out of the goodness of their heart. I think there are good owners. I think the franchisees of many of these restaurants are good people who want to help their employees. But the bottom line is we live in a shareholder-driven economic capitalist society. And people always come up with good reasons to pay their employees just enough to attract the right type of employee.

We call it supply-demand. A lot of CEOs will say that we base our wages based on the supply-demand dynamic. But here's the problem with that. The supply-demand dynamic around employee compensation at what I'll call the frontline or essential worker level. By the way, when you call someone an essential worker, it means you're going to pay them like shit and treat them like shit. That's why we call our military heroes so we can treat them like shit when they come back from war. Be very careful when you start calling people essential and heroes. That's Latin for we're going to pay you like shit.

Anyway, CEO wages during the pandemic up 23% and everyone rolls their eyes, oh, you know, CEOs. Then news comes out that, oh, no, we have to raise wages from 11 to 13 to maybe 15 bucks an hour. And everybody fucking freaks out like it's the end of the world. Like, oh, my God, it's going to start raining frogs. Well, you know what? It's about goddamn time. So shareholders are probably going to make less money. We all like to think in capitalism that we can spend our way to climate change, that we can solve the world's most challenging

problems and make some young innovator a billionaire and shareholders in the NASDAQ will continue to go up. Not always. Not always. We're probably, some of these companies are going to probably be less profitable because they have to pay their frontline workers a living wage. And guess what? Guess what? That's okay. Shareholders have killed it for the last 15, 30, 50 years. Management has killed it. You know who has not killed it? The guy putting your brown rice in that wonderful burrito bowl. It's about time. It's about time. Question number two. Hi, Prof G. My name is Yvonne and I've been a huge fan of your podcast, Writings and Philosophy since the beginning of the pandemic. I just moved from New York City

to Toronto for personal and family reasons. I went to business school for undergrad and currently work in private equity. So my questions are related to navigating the situations when we return back to the office. I am class of 2020, the pandemic graduating class, if you may call it. So my only real in-person professional experiences were my summer internships during college. So I'm asking on behalf of my class, as we're returning to the office, what should be our priorities in catching up and filling up that one-year professional gap from working from home? What should we do to fill up free time in the office when we're not working on something super urgent during the day? And any thoughts, wisdom, and tips would be greatly appreciated. Thank you, Prof G. What a lovely message, Yvonne. First off, recent grad, private equity in Toronto.

It is really good to be Yvonne. And that means a couple of things. One, you are blessed. You are clearly, I don't know your situation, but it's hard to imagine that you weren't, you haven't had a lot of good fortune in your life to end up in private equity in a wonderful city such as Toronto. Toronto is one of my favorite cities in the world. I love Canada. I find that they're kind of, I don't know, a gentler, nicer form of capitalism. They still work hard. They still kill it. But it seems to me they just have more, I don't know, comedy of man up there. I just love Canada. And I think Toronto is one of the nicest cities in the world. True story. True story. My father, every year, gets something off his bucket list. I call him and I say, okay, it's your birthday. What do you want off your bucket list?

And every year he picks the same thing. I think he's going to say, well, I just want to spend time with you or I'd like to take the boys to Scotland. Nope. Every year he's like, I want to go to opening game of the Leafs at the Air Canada Center. And so I haul my dad and I and our asses up to Canada and we haven't done it the last two years because of COVID, and we watch the Leafs play the Montreal Canadiens, the Habs, and when these bagpipers come out on the ice, I don't know why they're bagpipers in Toronto, my dad starts to sob. It's like, okay, never really saw my dad cry. Didn't see him cry when, you know, he left me and mom. But he, you know, the bagpipers on the ice of the leafs, that's just too much for him. Anyway, anyway, not therapy for me. And then, I'm sorry, more about me.

He takes me, God damn, he does this every time. He takes me to this lame apartment building in Toronto and points to it and says, that's where you were conceived. And I'm like, okay, that's a little creepy, dad. Anyway, I love Toronto. And I hope you take time to pause and think about how fortunate you are. I'm just like thinking about how strange all of this has been so far. Anyways, I'll move to your question. Okay, when you show up to work, you come to play, Yvonne. What do I mean by that? You go into HQ every goddamn day. This ridiculous notion that remote work is going to liberate everybody from the office industrial complex. I think notion that remote work is going to liberate everybody from the office industrial complex.

I think the office industrial complex is going to be a shadow of itself because I think a lot of people aren't going to be there nearly as much. If people just go in three days a week, as Apple is suggesting, that translates to a net demand destruction

of 40% for office space, what is like a $10 trillion asset class in North America. So you're going to lose the GDP of Japan out of one asset class called offices. So it's a shitty time to own offices, but you need to own the office, Yvonne, and that is you need to put on a suit or a pantsuit

and blow dry your hair and look professional and get in there early and stay late. And you need to work your ass off and show Yvonne that you came to play. You also need to be aggressive, not obnoxious, but aggressive in forming relationships, getting to know people, asking for advice, investing in relationships.

When I started at Morgan Stanley right out of UCLA, I knew a couple of things. One, I wasn't as well-educated as my peers. I was the only person from UCLA. And it's not that UCLA isn't an outstanding school, but UCLA is a place where you can hide and do nothing. And I decided to smoke a shit ton of pot and watch Planet of the Apes over and over. But this is what I had. I had physical strength and I had grit. And this is no exaggeration. Every other week I would go into the office Tuesday morning, and I wouldn't leave till Wednesday night.

I would work 36 hours straight. And by the way, when you're 22 or 23, you can physically do that. And you have no one, or I didn't. I didn't have anyone at home waiting for me. If that sounds like an American, macho, weird, Amazon approach, then fine, so be it. And guess what? That worked for me. It showed that I had grit and it gave me confidence and it showed that I was serious about my career. The second component is relationships.

You want to establish as many friendships, mentorships as possible. HQ now is a point of differentiation. And before you start collecting dogs and spouses, come to play, Yvonne. Come to play. FaceTime. FaceTime is important. It's important. You should be there before others and you should be there after they leave. You want to show that you are serious, you're committed. Lift heavy weights and run long distances in your mind as it relates to work. I'm not suggesting you give up physical fitness. I'm not suggesting you give up nutrition. I'm not suggesting you don't call your parents and check in on your friends. Young people always find a way to have fun. They are really good at figuring that out. I used to go downtown in New York, get shitty drunk, wake up the next morning and find a way

to get into work with a Diet Coke and a Big Mac and a couple of Advil. Today, if I did that, I would be like, I don't know, Christ, throwing up for two days. Anyways, you can do what people my age can't do. Take advantage of it. You're physically strong, you're young, you don't have the distractions of a spouse and kids. Not that those aren't great things,

but this is the time. This is the time. The world is not yours for the taking. The world is yours for the trying. It's unfair, but your career trajectory that is set over the next five years largely indicates the career trajectory for the rest of your life. So that things and just the muscle you bring to work. Get into HQ. Establish relationships and show that you have come to play Yvonne. Yvonne from Toronto, go Leafs. Go Leafs. Break our heart every year. Thanks for the call, Yvonne. We have one quick break before our final two questions. 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 Thank you. 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. Hey, Crofty. It's Adam from Wisconsin. Love the show. I'm in my mid-30s, working corporate marketing, and I've been successfully working my way up the corporate ladder. I'm at a point in my career, though, where I continually find myself struggling with motivation, passion, and purpose in my working career. With that, I've been approached the opportunity to join a large state higher education institution in a role that would combine teaching and career development for

young marketing students. It would not only be a career pivot, but also a sizable pay cut. The upside is better work-life balance and the platform to have better meaning behind my work and see mature impact with young people's lives. What should I know about entering higher ed? Should I be worried about the industry's potentially heading for a cliff? Is the work in the classroom and with students as meaningful as it seems, or is the rigidness of academia dampening everything? Thanks, Prof. G. This is a really interesting question, and there's a few questions I'm actually qualified to answer, and this is one of them. So Adam from Wisconsin, I mean, there's some situational dynamics that I don't know. Is it a great school? Is it a mediocre school? Because there's a difference. A great school, the University of Wisconsin at Madison is a great platform and adds a lot of credibility to a lot of the things you do. Universities for a mid-career professional are outstanding platforms for your research, consulting, if you want to do media. I'm not sure you'd be listening to this program right now if it didn't say NYU professor.

It's given me a lot of credibility and people, I think it's a nice solvent for a lot of the, I don't know, irreverence that I bring. I'm not sure. I think people might just find me obnoxious if I hadn't, you know, established some of that credibility. And also being in a university, you do learn how to do research. You do take fact checking seriously because you want to support the institution. So a mid-career move to academia because you want to support the institution. So a mid-career move to academia, you want to look at the strength of the institution because brands mean a lot in academia to how big a pay cut. And also, what's your financial situation? Are you barely making ends meet right now and maybe have a partner or spouse that doesn't

work and two kids and one with a learning disability? Then you probably aren't in a position to take a pay cut. If you are in a position to take a pay cut, I have found, so I moved to academia when I was about 36 and I had made some money and then I lost a lot of it. Of course, my first year or was it my first year? I forget. Anyways, about three, maybe it was a few years into my academic career, the dot bomb implosion and then the recession of 2008, I forget. Anyways, about three, maybe it was a few years into my academic career, the dot bomb implosion, and then the recession of 2008. I ended up with a lot less money than I thought I had. But when I started at NYU Stern, they paid me $12,000 a year to teach one class. Over the course of probably 10 or 15 years as I gained credibility, worked hard, my classes got bigger, that moved more to like 200 grand,

plus good benefits, good healthcare. And by the way, people tell you not to share salaries. That's the man or the institution who wants to create asymmetry of information so they can underpay certain people. And you're not supposed to talk about your salary because transparency would create more wage pressure upward. I think that's bullshit. I think it's fine to talk about your salary. It's just the person who has perfect information would rather the people who don't have perfect information, specifically the employer and the employee respectively, they'd rather you not have perfect information so you don't have the leverage to say, well, the average salary at my level is

this and you're paying me 0.7 this. Anyway, more than that, the way it's been a great living for me is that it's been a fantastic platform for writing books. NYU has given me tremendous flexibility. I'm what's called a clinical professor, or some people call it a professor of practice. So I'm expected to do things outside of work. They see that as a feature, not a bug. And it's just been, in addition to the economic opportunities, it's provided a launchpad's just been, in addition to the economic opportunities, it's provided a launchpad for other businesses, a launch for media, a launch for books, et cetera. It's also been really rewarding. I joke a lot about NYU and higher ed and give higher ed a hard time, but my colleagues are wonderful, inspiring people. They are people who are

generally pursuing the truth. Some, if not most of them, are the best in the world or the most knowledgeable people in the world on a very narrow part of the world, but still, they own that narrow part. I have a lot of good friends. I met a lot of good friends at NYU. So, I found it. And in addition, you get to hang out with young, inspiring, super intelligent people who are all trying to better themselves. So I can't imagine a better environment. There's some bullshit. It's incredibly political because they have so little to fight over. I would hate to have to have entered academia not having some money because if it was my sole source of income, I think I would find it a little bit frustrating.

I don't have – I'm not politically savvy, as you might imagine. I don't know. I'm not sure that the rewards and the compensation are as directly correlated with your productivity as you might find in a private company. But having said that, I tell people all the time who are thinking about their PhD that teaching is a wonderful way to make a living. And if you're good, you'll find ways to make money, whether it's consulting or speaking or writing books. So, in sum, if it's a good university or a decent university, and I'm not a snob, but, you know, I was on Megyn Kelly, the conservative talk show. So, I was on her podcast and a bunch of people

got angry that I went on. I'm like, you know what, if you're going to be part of the resistance, you got to go behind enemy lines. And she said, I went to mediocre schools. I went to Syracuse and Albany State. Those are both, Albany State is a good school. Syracuse is a great school. I'm not talking about Harvard or Yale, but a good school, a good school that's respected, that does good peer review research, has a talented faculty, good student enrollments. If it's a good university, that's a huge thing. If you have the money to do this and it doesn't put a huge strain on your lifestyle, oh my God, brother, to be you in your mid-30s and headed into academia, I can't tell you how many people call me and say, you know, I'd like to teach as if that's some novel idea and we're going to roll out the red carpet because you're the CEO of some company.

And then, you know, we interview them and like, okay, boss, what's your syllabus? What's your course outline? What's your subject matter? And they kind of like fall apart and think that we just wanted them to come teach because they're so fucking fascinating. It is hard to get these roles. It is hard to get these positions. Almost every successful person envisions themselves in dead poet society, teaching people, and then they find out it's real work and really competitive. So if you think you'd be great at it, if you can commit to being great at it, and you have it as a platform and you can afford it in the short run, I say go for it. Thanks for the question. Question number four.

Hey, Prof G. Max from New York City here. You've talked at length about the importance of exercise and some of the struggles that you've had with body image. What role does nutrition play in all of this? What does your diet look like? What is your relationship with food? Very interested in your insight and huge fan of this show. Thanks. Thanks for the question, Max. That's ironic. I just mentioned that I have body dysmorphia. I think it's called body dysmorphia. So I have a healthy relationship with food in the sense that I don't want to avoid it, but I'm not what I'd call a big food person. I try to be more thoughtful. For the most part, I think the body's a pretty decent regulator and I give into whatever it is I want at the time.

And I just try and regulate or modulate. And that is our instincts have not caught up to the industrial food production of trans fats, of proteins, of sugars. So I try to cut down on the sugar, the trans fats. I absolutely love meat. I could eat meat three times sugars. So I try to cut down on the sugar, the trans fats. I absolutely love meat. I could eat meat three times a day. I try to only eat it once a day or once every other day. I try to mix it up. I do think we're omnivores. I'm doing this thing called athletic greens. I have smoothies in the morning. My diet is pretty good, pretty good. I do a breakfast. If it were up to me, I wouldn't eat breakfast. And now there's research saying you don't need to eat breakfast. It used to be, oh my God, breakfast is the most important

meal of the day. But I usually have a pretty healthy breakfast, toast with something on it, maybe ham with some brie. I eat a lot of oatmeal. I think that's very good for you. And then lunch is usually just kind of catch can. I'll try and have some fish or maybe some chicken or something. And then dinner, I usually, a lot of times I go out for dinner, but I do a big dinner. This is where it falls down for me. I usually start drinking. Alcohol consumption for me is probably the least healthy part of my diet. I drink two or three times a week, but I drink a lot.

I drink probably two, three, sometimes five drinks. So when you add that all up, it means I'm, I don't know, what's the term? An alcoholic, but I'm a functioning alcoholic and I'm your functioning alcoholic. Supposedly one drink a day is actually pretty good for you. I drink too much. I'm trying to modulate that. I'm trying to take that down, recognizing that at my age, you can get away with so much shit when you're younger, but as you get older, you need to just modulate, recognizing your body's going to start to turn on itself. In terms of my own body image, I've always struggled with it.

But I think one of the keys is not only working out, not only having good nutrition, but I also think it's okay to cheat every once in a while. And then figuring out how you get comfortable in your own skin. And I think working out makes you comfortable in your own skin and feeling like you're not, you're never going to be the ideal, but just being kind of the strongest or one of the best versions of you, if you will. Anyways, I apologize for not being more prescriptive. I'm not a nutritionist, not a therapist, just sharing my own views. But again, modulate, you know what's good for you in terms of food, modulate up or down around the trans fats, the sugars, the salts, et cetera, and then modulate up in terms of how much you want to exercise. I promise you, if you can reallocate four to six hours a week into fitness in three, six, 12 months, you're just going to feel great. Thanks for the question. That's all for this episode. Again, if you'd like to submit a question, please visit officehours.propgmedia.com.

That's officehours.propgmedia.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 Prop G Pod from the Vox Media Podcast Network. We will catch you on Thursday. I get the same thing every time. I get a burrito bowl with brown rice, pulled pork, mild.

Sometimes if I'm feeling a little hot, a little saucy, I go for the medium sauce because that's how the dog rolls. That's how the dog rolls. That's right. All salsa, no chip. 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? How will AI affect both? And how are these tools changing the way we use to do it. So what is enterprise software anyway? What is productivity software? How will AI affect both? And how are these tools changing the way we use our computers to make stuff, communicate, and plan for the future? In this three-part special series, Decoder is surveying the IT landscape presented by AWS. Check it out wherever you get your podcasts. Hello, I'm Esther Perel, psychotherapist and host of the podcast, Where Should We Begin?, which delves into the multiple layers of relationships, mostly romantic.

But in this special series, I focus on our relationships with our colleagues, business partners, and managers. Listen in as I talk to co-workers facing their own challenges with one another and get the real work done. Tune into How's Work, a special series from Where Should We Begin, sponsored by Klaviyo.