The Prof G Pod with Scott Galloway - Office Hours: The Hectic Housing Market, Funding Scholarships, and Building Your Personal Brand

Episode Date: May 9, 2022

Scott answers a question about the state of the housing market as investors buy up an increasing share of available homes. He also offers his thoughts on how to smartly fund scholarships, and shares his tips for how to brand yourself as a thought leader.  Music: https://www.davidcuttermusic.com / @dcuttermusic Learn more about your ad choices. Visit podcastchoices.com/adchoices

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cards, savings accounts, mortgage rates, and more. NerdWallet, finance smarter. NerdWallet Compare Incorporated. NMLS 1617539. Welcome to the Profit 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.propertymedia.com. Again, that's officehours.propertymedia.com. First question. Hey, Prof G. Joey here from Indianapolis. I'm 24, and I currently work as a senior acquisitions analyst for an operator and property management company. Our investors are mainly private equity firms that are proactive to the current state of inflation and the federal interest rates. for an operator and property management company. Our investors are mainly private equity firms

that are proactive to the current state of inflation and the federal interest rates. According to the John Burns real estate analysis from April, homeownership is now the largest expense in relation to income at any time in the last 32 years, and rent price growth is up 5% year over year. By raising rates, Burns says the Fed hopes to cool demand, so supply and demand come back into balance, but this also indicates a strong demand for rental properties. Are investors in the SFR space on the brink of overfilling the cup on high rents, or do you think we're only at the birth of this,

where institutional investors will dominate the space and homeownership will become rare air for first-time homebuyers. I work in the industry, so I see the trends we have placed as we acquire. And on one hand, we're thankfully doing well. But for my own personal financial security and future, I hope to own a home sometime before I'm 28 or 29. Thanks for your thoughts.

I first heard you on Paul Rabel's Suiting Up podcast and I've been following you ever since. I appreciate you being perspicuous in your approach to teaching the public about finances and for your enthusiasm and vulnerability in sharing your stories on your pod and in your books. Cheers to the dog. Joey from Indianapolis. Thanks for the kind words. I get the sense Indianapolis would be kind of a fun city to, or an interesting city to make a life in and build a family. But that's just because I applied to the University of Indiana because I saw the movie Breaking Away in like the late 70s, early 80s. And was totally fascinated with the idea of going to a big state school and wanted to go to Indiana. And they rejected me.

They rejected me. But anyways, still haven't forgiven them. I am pretty long real estate. I find it's just an incredible asset. It has scarcity value. It's tax advantage. So I think you're in the right industry. I understand your fears about not being able to buy real estate. Real estate, according to Philip Schiller, Yale economist, Nobel Prize winner, he says, look, that the investment or the wealth building attributes of real estate are overdone from a pure investment standpoint when you counter in maintenance and everything else, that you're just, you know, a lot of people are better off renting. Having said that, it's sort of forced savings. It's also tax advantage. So I think almost every home I've owned, with the

exception of one, has gone up in value. And so I think it's a wonderful way to build security. I would be very hesitant right now to lever up too much to go into the market. This feels very frothy. So typically, home ownership kind of, I think, varies between sort of 62% and 68%. And when it gets above kind of 65%, that usually signals it's getting a bit frothy. And right now, it's 66%. That's up from 64.7% in 2019. According to the Washington Post, nearly one in seven homes sold in America's top metropolitan areas went to investors. So that's what the fear is. I don't know if that's necessarily

a bad thing though. Data from Redfin showed that the share of American homes sold to investors hit a record high 18%. So that's almost one in five. During the last three months of the year alone, investors bought about 80,000 homes worth $50 billion. So that's bad on this part. But if shit gets real, the best place to buy an asset is from a for-seller. So a corporate orphan, an investment fund that needs to get rid of it, or a bank, or the city hall. So while I think in the short run, it might be bad, I wonder if in the long run, it creates a lot of opportunity when the market corrects, which it always does. Since 2019, home prices have spiked 30%. Can you imagine that? So again, we flood the market with stimulus. What does that do? It sends asset prices skyrocketing. Who does that benefit? People

who already have assets, i.e. old people. Who does that hurt? People who don't have assets yet, like yourself. So I think we need to cut off the fucking heroin here, right? We need to stop the crank. And if the economy goes into a recession, so be it. Guys coming into their income earning years, young men and young women such as yourself, they deserve their shot. They deserve a shot to buy real estate that's been foreclosed. And I'm not saying send the economy into a depression because that has impact on everybody. But for God's sakes, all of this is nothing but thinly veiled, keep me rich. And when I say me, I mean baby boomers. Actually, I'm Jen.

What am I, Gen X? I'm Matt Damon. Whatever. Yeah, I'm the same age as Matt Damon. Not as talented, not as handsome, but a similar age. Anyways, what have we seen here? Housing inventories declined to less than 1 million units available for sale by January 2022. There were fewer units available for any other year on record back to 1999.

In April, mortgage rates reached above 5% for the first time. That should stop, I would think, the price increase. But we're also trying to get our arms around inflation. I just don't see any way around it. It depends. It's very market-driven. It's situational. But I have friends, young people trying to do everything to stretch to buy a home. I'm like, I don't know. I would probably wait right now. That's not what you asked. Short-term, yeah, it sucks. It sucks not to be able to buy a home. But long-term, I think the market always corrects. We are going into recession. I believe I've never seen an economy be able to raise interest rates.

And just more generally, God, this is a long-winded answer. I apologize. I think you're in a great industry. I think you're in a great city. And you're absolutely going to get there. Imagine you have a house right now and create a fake mortgage payment and start putting it into ETFs or a basket of investments and let those run. Because I worry right now real estate, and I don't know what it's like in Indianapolis. So it's situational, but you know more about this

than I do. But it feels like it's very frothy in the real estate market. Oh my gosh, I need to stop talking. Joey from Indianapolis, thanks for the question and the kind words. Next question. Hey, Prof G, I'm Larry, a retired gentleman pixel rancher here in Ventura County, California.

Worked in advertising, et cetera, for over 30 years. And being older than you, I get all your jokes. My question is about smartly funding scholarships at universities. I don't mean mega monsters like UCLA or USC either. I graduated from a state university. My late brother got his PhD from UMass Amherst. My focus is on liberal arts, humanities, and design photography.

What are your thoughts? Thanks. Hey, Larry from Ventura County. So a retired pixel rancher. I heard your question. I thought, what type of crop is pixel? That's literally how much I know about agriculture. But I think what you're saying is you're a retired ad man. So this is a complicated question. In terms of how to fund scholarships,

it's unfortunate, but the elite universities are so awash in money that if you get into Princeton, you win the lottery twice because you not only get into a great school, but you can show up to financial aid and say, I can't afford it. And that is Cal State, our junior colleges, our vocational schools, our nursing schools. I was so moved. My last episode that we filmed before the next day finding out that the network was being unplugged was I went back to my high school.

I went to university high school charter in West Los Angeles. And I was expecting, I spent the day there with the principal and the kids. I was expecting some big sob story on all these stats on kids failing, dropping out, being addicted to drugs and not going anywhere. And what I found was entirely the opposite. Get this, 97% of the kids are going to graduate and 92% are going to college. And I started thinking about, I'm going to do some major virtue signaling here. I'm going to give away some money to 10 kids and the career of the college counselor. There are women, a really wonderful woman named Paula Van Dorn, who was really taken with. I said, where do I want this money to go? And this goes to your question of how I think we should fund scholarships. And she said, well, it's up to you. And I said, well, I don't want to give money to the kid going to Stanford

or MIT or UCLA or even UCSD. He or she's going to be fine. They're killing it. They're going to track money or they can afford to borrow money. I want the money to go to some kid who's thinking about going to nursing school for two years and is worried that they don't have the money. I want the money to go to someone that's going to Santa Monica College and maybe hasn't had a remarkable tenure at high school, but thinks, you know, maybe I have remarkable potential. Or the kid going to, you know, name it, Cal State X, and just doesn't have the money, doesn't have their shit together at 18. Why? Because I was that guy. I was that kid. So how do we fund scholarships? I think what we need to do is sort of like Warren Buffett's approach to kids and inherited money. Give them

enough money such that they can do anything they want, but not enough money such that they can do nothing. And I think there's some form of that. And that is, I think right out of high school, we need to give kids enough money such that they can go to college, but not enough money such that they're not smart consumers. They should absolutely pay for some of it. I go back to when I went to college. Anyone could get to UCLA. I didn't really have much, if any, financial assistance from my parents, but I managed

to get through it. It involved one summer literally living off Top Ramen and bananas. No joke, I lived for 11 weeks off of Top Ramen and bananas. I love both of those things. And joke, I lived for 11 weeks off of Top Ramen and bananas. I love both of those things. And why did I do that? Because if I didn't save $2,800 by fall when school started up again, I wasn't going back for my junior year at UCLA. And guess what? Over the long term, that was really good for me. I'm fundamentally a lazy person. I began connecting work and saving with good outcomes. And I didn't take for granted that I just got to go to college and I could borrow money. I did get financial aid. I was

a Pell Grant kid. But I think a certain amount, I would like to see more scholarships for kids coming out of high school. They then become consumers to figure out which colleges deserve their money. Public college, public high schools are where America gets better. I was really moved by the superintendent, Alberto Carvalho, who was described as the LeBron James of the Miami school system, and then shifted over to LAUSD. And he said that, why wouldn't high schools be a rallying point for the community? And I just love that. We're so infatuated with elite universities. I'm the same way. Public education is my thing, but where have I given my money? I've given it to Berkeley and to UCLA, which are outstanding institutions. But do they really need it? Do they really need it?

Doesn't Santa Monica Community College really need money more? Doesn't university high school really need it more to say to the kid? The questions were so raw. I know I'm going on here. This 17-year-old girl stood up, super impressive, super curious, and she just was very honest and laid it on the line. She said, I'm going to nursing school

and I don't know if I can afford it. What do I do? What do I do? So I'd like to see more financial aid coming out of high schools. It says to kids, maybe you don't have your shit together. Maybe you're not going to MIT. Maybe you haven't peaked at the age of 17. But we love you and we see potential in you and your story hasn't been written.

So I'd like to see financial aid move back to the senior year of high school as opposed to the freshman year at a university. Thanks for the question, Larry. 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, 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. Support for this show comes from Constant Contact. You know what's not easy? Marketing. Capital Client Group, Inc. 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 Welcome back. Question number three. Hi, Scott. This is Fraser from the Rochester, New York area, and I would love some of your thoughts around building a personal brand.

While not everyone can be Adam Grant, I believe the rest of us still have an opportunity to make an impact. In my case, for example, I've made some progress in the admittedly niche area of quality manufacturing and management. I've published in the top industry periodical and occasionally speak at global conferences, but I'm not sure what my next best steps are. What is achievable? What will have the greatest ROI in personal brand? Or what might even generate some supplementary income? Given your relative success in many different media formats, television notwithstanding. What can you share about the challenges in generating consistent weekly content, progressing from one platform to another, or targeting audiences while you move from a niche to a modestly broader audience? Thanks in advance and keep up the great work.

Frazier from Rochester. Thanks for the thoughtful question. So my last session of my brand strategy class is a session called, and it's the most popular session, The Brand is You, and that is how do you establish momentum? So many people think about marketing a brand across an inanimate object that they're, you know, the company they work at or what's the brand of IBM, but they don't sit down and say, what's my brand. So right off, you want to establish, if you can, do sort of a personal audit. And that is personally and professionally, what attributes do I want to be known for? And I have a natural inclination. I'm an empathetic person. I'm a detail-oriented person. I'm a provocative thinker. I'm strategic. I have an incredible sense of style.

What is your visual metaphor, right? I've always said, if you like bow ties, wear them every day. If you have big, crazy, frizzy hair, have out-of-control, crazy, frizzy hair. If you're in good shape, get in great shape. If you're losing your hair, shave your head. Visual metaphors, identifying some core attributes that you want to reinforce every day in terms of your own behavior. You want to find a medium. And that is right off the bat, what am I good at? There's so many meetings. There's texting, there's emailing, there's writing, there's speaking to large groups, speaking to small groups, there's LinkedIn, there's Instagram. Figure out what medium you are best at and then say, I need to be in the top 1%

of that medium. I decided in 2008, I was going to be in the top 1% on Twitter. It's taken me 14 years to aggregate a half a million followers, but it pays off. I then decided I was going to be in the top 1% on LinkedIn and I invested in that medium. And then I found this emerging medium called YouTube and I started doing videos. So think of yourself as a brand, right? I need core attributes that are differentiated. Think about a logo or visual metaphor. What is it about your person aesthetically that stands out? It can be something as weird or as wearing vests all the time. I don't know what it is, but such that people can recognize you in your peripheral vision.

Figure out a media strategy or specifically a channel. What are you really good at? Some people just give great text. You know those people that are just so good and precise and concise and cogent and funny and know all the memes and know all the symbols and just like they can be really boring in person, but they're like really charming and interesting and provocative in terms of texting. I'm good in front of large audiences. I'm not that good in front of small audiences. I'm also not that good on the phone with people. So I try to calibrate around the things I'm good at. Do you enjoy writing? Writing is powerful in terms of a medium. If you're good at writing, you want to take every opportunity you can to submit articles to different journals because the moment you write something and it's well done, people immediately associate two things with your brand. And that is one, this personurchase, your reputation, there's purchase, how you behave in person, and then there's follow-up. We over-invest in, or we spend 99% of our time thinking about

the in-person stuff. Over-invest, if you can, in the reputational stuff. Get in journals, get published somewhere, get a following on a platform. Now, you have checked the box around one key step, and that is go niche the specific crowds out the general and try and be the man or the woman on LinkedIn or in journals or on Twitter that just constantly puts out content around quality manufacturing in management circles. Quality manufacturing. I mean, I don't even know what that means, but I should know after a few years that you're one of the top six or eight or 10 people. You're going to write about it. You're going to speak about it. I'm a quote unquote thought leader. I have spent the last 30 years starting businesses. 22 years ago, I started 20 years ago, 22 years ago, I started focusing on brand and innovation. I've done a ton of research there. The first class, first time at NYU, I made $12,000 a year. By the way, if there's a community college you could teach that topic at,

teaching is a fantastic way to learn about a topic because at the end of the day, the teacher is just the best student in the class. They're just kind of one week ahead of their students. That's really what you do when you teach. So if you have the opportunity to do seminars or teach a few things, a few things once you get to that level. Greatness is in the agency of others. I have eight people working with me at Prof G, people that do my graphics, people that do the videos, people that produce this podcast, people who do research, people who turn the chicken shit that is Scott Galloway into chicken salad. And I'm being humble there. They turned my chicken salad into fucking chicken fricassee cocaine on top of it. I am talented. But the reason I've managed to get scale and the reason why I was paid $150,000 this morning to speak for

an hour in front of a group of fintech professionals is because I figured out early on my point of differentiation. I had insight into how technology disrupts traditional industry. I found these new mediums and I pounded away at them up at night, figuring out interesting things to say on Twitter, interesting things to post on LinkedIn. I taught a shit ton. I tried to think of interesting ways to display data using different mediums on emerging mediums, including YouTube. And then as soon as I could afford to, I started investing in a team that could make the whole greater than the sum of its parts. So there are a lot of baby steps you can take. Having a brand is not only deciding who you're for, it's deciding who you're not for. And that's okay. I spoke at a iconic, iconic gathering of a bank, and they got pissed off because at the end, I'd made a joke

about Adam Neumann walking away with a 10% commission on $13 billion in losses of other people's money. And that offended them because they were involved in that entire fiasco. Okay, so be it. That was probably a bad move. Probably shouldn't insult the people that I'm a guest at. But anyways, processing. I'm literally on processing, Fraser. Thought leadership is a fantastic way to make a living if you're blessed enough. I would be dead by now in any other society. But because I have figured these things out, brand associations, the right medium, the right visual metaphors. And also most importantly, most importantly, greatness is in the agency of others. As soon as you have a little bit of money to invest, hire people to do your research, hire people to make your slides sexier, find good

editors and make your content really sing. Fraser from Rochester, University of Rochester, Wegmans, Kodak. And there's a third up there I used to spend time on Lake Canandaigua I was in love with a woman who was a doctor

and her family had a house on a lake more information than you wanted Brazier from Rochester 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.propertymedia.com. Our producers are Caroline Shagrin and Drew Burrows. Claire Miller is our associate producer. If you like what you heard, please follow, download, and subscribe. Thank you for listening to the Property 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,

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