The Prof G Pod with Scott Galloway - Office Hours: The Future of Legal Tech and AI, How to Cope with Financial Stress as an Entrepreneur, and Why Young and Ambitious People Should Move to a Global City

Episode Date: September 20, 2023

Scott answers a question about how AI might benefit the legal industry. He then takes a question about dealing with the financial stress and uncertainty that comes with entrepreneurship. He wraps up with advice to a listener who is deciding whether to move to London and start a job in trading. Music: https://www.davidcuttermusic.com / @dcuttermusic Learn more about your ad choices. Visit podcastchoices.com/adchoices

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Ready, set, grow. Go to ConstantContact.ca and start your free trial today. Go to ConstantContact.ca for your free trial. ConstantContact.ca Welcome to the PropertyPod'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 officehours at propertymedia.com. Again, that's officehours at propertymedia.com. I have read a Twitter thread about hospitals and doctors providing high-end concierge services advertised as executive physicals.

The idea being that for a cost of several thousand dollars a year, a patient can get a customized physical in a luxurious setting that gives them information about optimizing their health outcomes that might be more in-depth than a run-of-the-mill physical. Are you aware of similar products or services that are offered in the legal arena? If you don't know of any examples, is there a legal product that you think is missing from the market? Love the podcast. Thanks for answering. So, look, demographics are destiny. You talked about health care, and I'm more comfortable talking about health care because I know more about it or I think I know more about it.

I think two enormous trends are one AI and two income inequality. And if you were to try and figure out where those or where that heads, these concierge services, I don't know what you call them, VIP medical services. So I'm in that market. I read about something or a friend recommended me or referred me to something called, I think it's called Atticus. And it's basically this super high-end Gattaca-fueling health clinic. And I think you pay like 80 grand a year and that's for you and your family and you get a health scan. And they're just all over anything. And basically the way I would describe it is taking healthcare I think you pay like 80 grand a year, and that's for you and your family, and you get a health scan. And they're just all over anything.

And basically, the way I would describe it is taking healthcare from a defensive disease-driven industry to an offensive health-related industry, where they say, we're going to look at everything and just figure out how to optimize all of your levels, do all your blood work, and say, you know, we're going to solve problems before they evolve into something really serious, and we're going to just try and optimize your life. And I love this guy, Peter Attia. And I like what he says, that basically, people shouldn't be focused on life extension. They should be focused on the quality of life. And he says, show me the last 10 years of your life when you're healthy versus unhealthy, and I'm going to show you an entirely different decade of life. So the healthcare system, the top 1%, all leads to these VIP, AI-generated services, what have you. In the legal field, I have no idea what's going on here. It seems that AI is mall with annual increases of 3%. And I just give it all these parameters and it'll spit back a first draft that a paralegal or a lower level lawyer would spit back. So at the same time, if you have good relationships or creative or smart,

understand the nuances of the specific tax code or legal compliance or zoning requirements, you can use AI like a freaking going from a spear to a howitzer gun and become an incredibly productive lawyer. So it all comes back to the same place. AI is not going to take your job. Someone who understands AI is going to take your job. So the best lawyers are going to make a lot more money. That's kind of what happens with technology is you create sort of a winner take most. And the question is, what do we do with that additional income or prosperity? The mistake we've always made is we don't use any of it to kind of retrain or focus on services for the people left behind. legal industry isn't going to be upended by this. I can see an environment where using AI and some really talented people, they say, okay, you're in this way class, pay us this annual fee, individual, wealthy individual or corporation, and we're going to give you a flat fee. And although we won't make as much money, it'll be more robust. What do you mean by that? The cash flows will be more predictable because you're on subscription. The way it works is with Foley Hoag is they would give me all sorts of kind of free money losing advice when my company was small. And then when L2 got sold for $158 million, they charged me like $1.5 million to do the deal. That's where they made their money. That ecosystem is a little strange. I think it's better if they just say, okay, startups, $10,000 a month, M&A deal when it happens. We're going to charge you a supplemental fee of a

quarter of a million, but we're just going to keep, as you get better, charge you a monthly fee. That way their revenues might not be as great, but they're more predictable. It feels like the legal market is kind of ground zero for AI. And as happens in any real innovation, the people who understand the technology and can incorporate it into their practice end up garnering or having access to cheaper capital. They pull away from the rest of the competition and those folks get rich. And the people who kind of sit on their hands

and make excuses for why they are immune to this technology shift and don't incorporate it into their everyday practice end up slowly but surely bleeding out. And that's the problem. It's slow. They'll find signals that they It's slow. They'll find signals that they're doing okay. They'll have one good quarter, but slowly but surely the oxygen

will be sucked out of the room in some, in some. To situate yourself between consumers, wealth and consumers, and law and healthcare is a good place to be. And also to situate yourself between AI and how it's going to disrupt either the healthcare or the legal industry is a fantastic place to be. Fantastic question. Fantastic question. Thanks for your time. Question number two. Hi, Prof G. My name is Matt. I live in East Village, Manhattan. I'm a longtime listener. For my question, I'm a fairly longtime small business owner. I work in the real estate space, but always kind of did it as a bit of a side gig from my full-time W2 sales job, which was a pretty decent paying job, even in New York. But I've recently quit that job and gone all in on my business. The question for you as somebody who's run numerous businesses is how do you manage your finances when you go from this steady W-2 income to strictly business income where some months you may absolutely brush it and make a ton of money. And then other months, you know, your personal burn as well as your business burn may be higher than the income that you bring in. Thanks for your help.

Thanks for your question, Matt. I appreciate your transparency. And this is something every entrepreneur deals with. A couple of things. Everyone's got to play to your advantage. At the end of the day, strategy is just answering one question. What can I or we do that is really hard? So your strategy, what can I competent, is either making money themselves or manages finances really well, and just be as frugal as possible when you're young. And I know that's not popular, and I know it's like live life, live for today. But boss, I'll tell you, the thing that saved my ass was I, for the most part, lived below my means, and that is I never got into debt. I always tried to spend less than I made.

The reality is if you are starting a business, you are going to have financial stress. So I thought I was rich when I was 30. I had just started profit, had profit was making, profit was almost profitable from day one because it was a services company. And that's the nice thing about a services company is that, you know, all of the expenditures are people. And quite frankly, people are easy to fire. They're much easier to get rid of than costs around R&D or infrastructure. So a services company is client-driven.

You can be profitable from day one. But when I started these companies, so I started profit, made good money, thought I was going to be rich, boom, divorce. And divorce took the majority of my assets away, not because of the divorce itself, but because I wasn't diversified enough. Divorce typically means you have to become a for-seller of assets. It always comes at the wrong time. I think I was a bit arrogant, kept doubling down on companies, kept not spending more, but investing more in my companies when I should have been taking money off the table and diversifying a little bit, and then clawed my way back to financial security. And then boom, the 2008 financial crisis hit. And that was about the time my first kid came marching out of my girlfriend, and that was a very stressful time.

And then I decided to start L2. And I had, I think, I don't know, a million bucks to my name, which no one's going to feel sorry for. But I thought at that point I'd have a lot more money given all the risks I'd taken and success that I'd registered. And it was costing me $100,000 a month to fund L2. And we got profitable in about seven or eight months, but I ripped through the majority of my savings. That is hard and it is stressful. There's no magic formula here. There's a couple of things. One, if you have a partner, be transparent with your partner about the risks you're taking and what his or her role is in financial support for the household. Two, throw nickels around like they're manhole covers

at your existing business. Don't kill yourself. Don't work 16 hours a day because you think that the world is going to recognize you're working 16 hours a day, but work efficiently and productively and very hard and find revenues. Set up some real benchmarks. And that is if this company is in break even by this date, I'm going back to getting a steady paycheck somewhere because the real stress happens when you enter into consensual hallucination that your business is working when it's not. And it begins to put pressure on the household. It begins to put huge pressure on relationships. Number one cause of divorce is not infidelity. It's not sickness. It's financial stress and pressure. So from the outset, if you're in a relationship and you didn't say if you were or not, you want to be very transparent and approach it as a team attitude. Your superpower as a young person, you sounded young, is to just quite frankly not spend any money. And then a superpower as an entrepreneur is to be really, really cheap and realize that expenses and spending money doesn't create a business. I fell into this trap all the time.

My most recent business, I raised a shit ton of money and then I went and raised 8,000. And then I went and leased 8,000 feet in a super Tony office and was like, what the fuck was I thinking? You know, it's revenues that make a business, not expenses. But there's no secret sauce here, boss. And then maybe at some point, trying to diversify some of that risk by raising money. I always started businesses with partners because I found, A, just psychologically, it's less stressful to have someone else you're talking about this with. And also to share some of the risks. You share some of the upside. But if a company is successful, there's going to be enough to go around for a lot of people. And then having a group of people around you who can be honest

with you about whether it's time to move on or time to raise capital, put together a kitchen cabinet. I think being an entrepreneur is sort of a young man or a young woman's game. When I speak to people, say, I'm going to go to work here for a while, get the credentials, and then maybe be an entrepreneur. I'm like, no. Entrepreneurs are kind of born. They're not made. And also being an entrepreneur, at least initially, unless you have a lot of money or rich parents, involves living pretty, you know, pretty frugally, pretty thin. And it's much easier to do that when you're young. Once you have kids, it is hard to live really frugally because guess what? That kid is really annoying and wants his own or her own

bedroom and schooling and clothes. And you just, you want to feel like a failure. Don't be able to provide for your kids or be worried you're not going to be able to provide for your kids. Then you really feel like you're failing on a cosmic level. What is the algorithm for wealth? Focus, find something you're good at that people will pay you for. There's a big difference. Something you're good at that people will pay you for. Spend less than you make. Create an army of capital that you can deploy. Then diversify it. Diversify it.

And then let time take over and don't trade. Anyways, I think you can apply those same things to building a business. Thanks so much for the question, Matt, from Manhattan. Thanks for the kind words. And good luck with your business. We have one quick break before our final question. Stay with us. Hey, it's Scott Galloway.

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wherever you get your podcasts. Support for this show comes from Indeed. If you need to hire, you may need Indeed. Indeed is a matching and hiring platform with over 350 million global monthly visitors, according to Indeed data, and a matching engine that helps you find quality candidates fast. Listeners of this show can get a $75 sponsored job credit to get your jobs more visibility at indeed.com slash podcast. Just go to indeed.com slash podcast right now and say you heard about Indeed on this podcast. Indeed.com slash podcast. Terms and conditions apply. Need to hire? You need Indeed. Welcome back. Question number three. Hey, Prof G, how's it going? I'm Nico messaging from Portofino in Italy.

I'm a big fan of your content and I've been following you since you published the four. I'm 23 years old, currently working in data analytics consulting in Milan, and I would like to ask for career advice. So last year I did a summer internship at an investment bank in London and got a return offer for an equity trading job, which will start in a few months. The trading job in London sounds really cool. The salary is great. Plus, after Brexit, it's not easy to get a company to sponsor your visa. However, I've heard that trading is sort of a pigeonhole and it will be hard to change industry in the future. On the other hand, I'm not really enjoying the current job in Milan and overall, Italy doesn't offer too many opportunities. So here's my question. Should I move to London and

risk getting pigeonholed, or stay in Milan and keep the consulting job? I'd love to hear your thoughts. Thanks. So this is a very personal decision, and you have to take into account things that you, you know, I don't know. Do you have a sick mother? Are you in love? Are you, you know, what is it? Do you get 90% of your emotional reward from your family, which all, and they all live together? I mean, there's some nuance here, right? Having said that, based on what you told me, my brother moved to London, move to London. Generally speaking, for people who are very ambitious, one of the key paths, one of the key algorithms to financial security and influence is to one, get to the biggest city in your country, and then, and then get to a global city.

And Milan isn't quite there. In the world of fashion, it's a global city. But despite the fact, I think it has about, I think it's 10% of Italy's GDP. But the bottom line is Italy is sort of gone sideways the last 10 or 20 years. And that is the amount of economic growth, two-thirds of all economic growth is going to come from 20 cities. And Milan isn't one of them, but London is. And the notion around trading, if you're at a big investment bank or a big bank, trading is a fantastic way to learn the markets. My ex-girlfriend worked at Goldman Sachs and FX trading or FX sales, I think she was in. It's no longer even there. It's all computers now. But guess what? She got amazing skills and she had the Goldman Sachs brand on her forehead and learned talented people and understood the markets and could leverage those skills for the rest of her life. So the opportunity to move to London, and typically when a bank moves you to London, they do it the best way, and that is they pay for everything. And they oftentimes have people who will help you find an apartment. Sometimes they'll even give you an expat package.

The opportunity to be in London. You speak fantastic English. Oh, my God, my brother, my brother, I'm going to see you at an Arsenal game. Because unless there's something I'm missing, you should absolutely get to London. And I can almost guarantee you that even if you at some point move back to Milan, even if it doesn't go well, you're not going to regret having moved there. To be young, to have the opportunity to move to another country, especially a super city being sponsored by an investment bank. Oh my God, stop with the existential hand-wringing. My brother, my brother, this is London calling. This is London calling. This is a fantastic opportunity. Congratulations. Do you realize that 99.9% of young men in Italy and Milan want to be you right now? Let me get this. You're going to move to one of the greatest concentrations of wealth in the history of mankind, right? Because of private property laws put in place by Tony Blair.

You are in a fantastic seat. And to not take advantage of that opportunity to head to London, I just think you would regret that the rest of your life. Everybody wants to be you. Everybody wants to be you. Take time to pause and register your blessings. My guess is there's some people who are irrationally passionate about your well-being that you owe a lot to, that you grew up in a great culture, that you probably have a great education. A lot of it is you, but most of it is not your fault. And that is other people and state-sponsored education or the incredible democracy that's in Italy or whoever, for God's sakes, encouraged you to learn English so fluently. You are just so blessed. So take time to pause and recognize your own achievements and how blessed you are that you have the opportunity to move to London and make a life for yourself there.

Well done, my brother. Well done. Thanks for the question. That's all for this episode. If you'd like to submit a question, please email a voice recording to officehoursatproptimedia.com. Again, that's officehoursatproptimedia.com. This episode was produced by Caroline Shager and Jennifer Sanchez is our associate producer and Drew Burrows is our technical director. Thank you for listening to the Prop G Pod from the Vox Media Podcast Network.

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