The Prof G Pod with Scott Galloway - Office Hours: Valuing Etsy’s Stock, Tips for Naming Your Business, and How to Ask for a Promotion or Raise at Work

Episode Date: November 15, 2023

Scott gives his thoughts on Etsy, specifically its potential as both an investment opportunity and as a business. He then offers advice to a listener struggling with naming their business. He wraps up with guidance on how to approach seeking a promotion or raise at work.  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 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 email a voice recording to officehoursatpropgmedia.com. Again, that's officehoursatpropgmedia.com. First question. Hey, Scott. Liz here, longtime listener. And I've got a question about Etsy stock.

I've been a holder of Etsy for quite some time, and it's gone from about 20 all the way up to 300, down to 100, and now it's back in the 60s. Curious what you think of Etsy, the business, and what you think might happen with the stock. One of the things I've seen over the years is regardless how, if the economy is bad, Etsy still does okay, because many people become Etsy sellers. And when the economy is good, people buy more things. So I'd love your thoughts. And again, thanks for all you do. First is Etsy is a little engine that could. I would have thought Etsy would have gotten run over by Amazon and that Amazon would just flip on a crafts button and just put it out of business. And it hasn't. Etsy has carved out a really nice niche for itself. I think it's got about a $7 billion market cap. Its P.E. ratio,

the trending 12 months, is 26, which is fairly healthy. Etsy absolutely was a kind of a pandemic darling. The company reported $1.7 billion in revenue in 2020, up 111% year on year because a lot of people weren't home looking for stuff to do. Also, the thing that drove it was actually the sales of face masks, along with purchases of home decor and furniture. So some highlights from the recent quarter, consolidated revenue was $636 million, a 7% increase year-on-year. Consolidated gross merchandise sales came in at $3 million, a 1.2% increase year-on-year. At the end of the quarter, Etsy had $1.1 billion in cash, so that was a lot of cash. And during Q3, Etsy repurchased about $300 million worth of its common stock.

The company said its gross merchandise sales will decline in the low single-digit range during Q4 2023. I guess they're coming off some of that pandemic high. Etsy CEO Josh Silverman said there's no doubt that this is an incredibly challenging environment for spending on consumers' discretionary items. After the company released Q3 results and missed analyst estimates for revenue, shares of Etsy fell more than 4% at extended trading. Etsy shares are down about 44% year-to-date. According to Etsy, the e-commerce site has over 95 million buyers and 7.5 million active sellers. This feels like it could be an acquisition, but eBay can't afford it. So it would either be Amazon. I think it's sort of, well, unfortunately,

I think there's only one acquirer here and it's probably Amazon. Look, in sum, I don't know the company that well, and they do really well. And it might look cheap from 300 down to 60, but it looks like you've done really well from 20 to 60. And at a PE of, what was the PE again? I think the PE was about 26 and it's not growing that fast. As a matter of fact, it looks like it's going to be flat to down. I would say that it looks kind of fully valued. Now, having said that, if it's a small part of your portfolio and you like it and you're learning and you're anchoring off that $300 number, which you should not do, you should just look at the stock where it is now. And that's one of my flaws as an investor.

I look at the 52-week high and that's what I anchor off of. And what I realized I should have done in some cases was said, okay, Airbnb might be 10% off its $200 high, but it's trading at a crazy multiple. I probably should have sold more. So ignore the past. Ignore the past. Look at similar companies. Look at its price to sales. Look at its price earnings. Look at its enterprise value to EBITDA. Look at its sales growth and then kind of do, you know, a quick kind of thumb test or temperature test. And if it's crazy, if it seems it's crazy overvalued relative to other companies, you might want to think about pairing or taking some money off the table because it sounds like you've made some money here. In general, though, in general, though, and you sound fairly young,

Liz, you don't want to try and find needles in the haystack. You want to buy the whole haystack. And that is you want to buy funds, ETFs, exchange-traded funds or index funds. They give you an opportunity to participate in the entire market such that you don't have to be a genius and try and time the market. You just get kind of rich slowly because the market's natural trajectory is up. And as always, I recommend that you exit the futile attempt of trying to pick stocks unless you have some sort of passion for something or I don't know, just will find it fun or interesting and go into, go into exchange traded funds and low cost ETFs.

Thank you for the question, Liz. Question number two. Hi, Scott. My name is Andrew. I'm 30 years old and I'm currently an IT manager for a clean energy company in Boston. I've always had an interest in starting my own IT business, specifically related to cybersecurity. Recently, my company did a large round of layoffs, and although I was not included in that, my motivation and faith in my current employer has been shaken. This has inspired me to start working on that business in my spare time and hopefully one day make the leap to doing it full-time. My question relates to something I've been getting hung up on, the name. I've read some advice about making sure the name you choose is easily pronounceable, unique, relates to the type of your business, meaningful to you, etc.

It seems that anytime I come up with something I like, it's already registered in my state. I know this is not the hard part when it comes to starting a business, but I want to make sure I choose something I don't end up regretting down the line. What's your advice, and how did you come up with the names of the businesses you've started? I'm an avid listener of the show and also a big fan of Nantucket too. Thanks. Naming is, I think, the most difficult part of branding because everything's taken. And you're right. The criteria you've laid out are exactly right. It needs to be easy to spell and recognize, too. Ideally, the URL is available.

That's a big one. Ideally, it connotes something or has some sort of connotation to the business you're in. And you'll come up with 10 great names. There are five great names that do all of this, and they'll all be taken. My history of naming is not, you know, I haven't draped myself in glory here. My first company was a company called Aardvark, and that was pet supplies. And the reason we did Aardvark was AOL's marketplace used to be alphanumeric, and that is Aardvark came up first in the alphabetic listing. Then I started a company called 911 Gifts, the right gift right away.

And then someone reminded me that recipients think you thought of them last minute. And I had to mid cycle or mid year after raising 60 million bucks, change the name to Red Envelope because I said I fucked up and the branding expert had picked the wrong name. And we changed 911gifts.com to Red Envelope. We'd actually come up with Box and Bow and Silver Lining. And then the chief merchant, a woman named Christine Dang, very talented woman said, do you know the history behind red envelope? She showed me these pictures when she was a kid in Asia of getting a red envelope with gold coins. And I thought, that's it. People can smell authenticity and heritage. So we went with the red envelope. I think kind of, not I, we kind of nailed it there. Profit, my strategy firm, P-R-O-P-H-E-T, felt kind of good. It had sort of religious overtime, which I didn't like,

but see the future. That's what consultants are supposed to help you do. We got the URL because it was early. My most recent ed tech startup is Section 4. I like the idea. I'm into military history and there was a section, I forgot what it was, Section 7 or something that was basically the British plan to fight off the Nazis if they invaded. They called it Section something, and I don't know, I decided that Section 4 was a good name. It confused people. We changed the name to Section. That was a better branding move because it has more connotation with a class, you know, the section in a class. Look, this is so hard. What I would suggest is the following. There are things you can do on Twitter, and there are market research platforms where you go out and ask people to come up with a name.

You're going to have to get a lawyer involved. You're going to have to find out what is available right away. But I would crowdsource a name. I would describe the business to one of these platforms and then it goes out to thousands of people and they come back with naming ideas. Maybe you offer a prize or something like that. but I would definitely crowdsource it. I would open it up to as many people as possible and immediately have on tap. I don't know if there's an app for this, so you can do it more inexpensively, clear it through legal means, but you're thinking the right way. And this, I just got to warn you, it's going to be a frustrating experience. There's no silver bullet here. Almost everything is taken, but have at it. And I guess all I can say is best of luck to you.

But yeah, naming is really difficult. Sorry, I don't have more inspiring news. Maybe I'll see you on the island. Thanks for the question. We have one quick break before our final question. Stay with us. Welcome back. Question number three. Hi, Pravji.

Now, let me introduce myself. My name is Kareem and I am from Toronto, Canada. I work in a marketing team at a pharmaceutical company and I've been enjoying what I do. I've had a very exciting journey to get to where I am right now. And I've been in my current role for about a year. And I've had something on my mind for the past few months, which brings me to a big question. Is it the right time for me to ask or maybe even bring up the topic of possibly getting a raise or a promotion. I've been thinking about this for a long time and I can't help but wonder

whether it should be me to bring it up or should I just hang in tight until they share with me the good news. Thank you so much for all what you do. And I'm looking forward to hearing your thoughts. promotions and raises, because most firms, once they get beyond a certain size, say, you know, at the end of the year or in June of every year, we sit people down and we talk about compensation, which is usually bonuses, salary increases or promotions and or none of the above, right? And do a review all at the same time. This is a big part of what I've done at all my companies. When someone does something especially good or not so great, I do an email or a file about this person at the end of the year. I try to be very thoughtful

about their compensation, their role, their title, all that good stuff. And if anybody comes to me off cycle and asks for a raise or promotion, I say, we don't do that. There's only one time during the year we consider this, and that is in, you know, December. And the fact that you don't know when that time is, is sort of strange. What I would suggest is the following, is that you find out when and where you hear about compensation and salary increases, and that you establish a relationship with a mentor or your boss such that it's informal enough such you could say, you know, which should my, you can ask very straightforward, which my expectations be around a bonus or how are bonuses evaluated?

What about promotions? You know, you should just have more insight. And I think it's okay to take your boss or a mentor to lunch and say, I would like to be promoted and I'd love your advice on what I need to do to increase the likelihood I get promoted. I think that people like ambitious people. You know, it depends if you can kind of read the tea leaves. Is the company growing quickly? Are you well-liked there? Are you generating revenue? A manager's job is to manage expectations. And then ideally, if they can, I don't want to say exceed those expectations. I always work for growth firms. A few of those

firms have done really well. So we were in a position to kind of surprise and delight people. Sometimes in a big company, it's not growing that fast. There just isn't, if a company is only growing 2% a year, it's hard for them to give out 4% raises even, because that means they're going to have to reduce their profits or if their profits themselves aren't growing faster than 4% a year. What you don't want to do is set up a win-lose situation where they're looking for excuses not to give you a raise or a salary. So it's be a good citizen. Don't bring it up more than once a year. Be grateful. Don't be bummed out. And if you really think they're screwing you over, start looking for another job. But I find as someone who manages a

lot of people's expectations, when they're constantly pushing me for raises and promotions, I find that I here or a relationship with your boss that you can start having these conversations and find out when is the compensation window and get advice on what you should be doing to reach your goals. Thanks for the question. That's all for this episode. If you'd like to submit a question, please email a voice recording to officehoursatproptumedia.com. Again, that's officehoursatpropgmedia.com. This episode was produced by Caroline Shager and Jennifer Sanchez is our associate producer.

Andrew Burrows is our technical director. Thank you for listening to the Prop G Pod from the Vox Media Podcast Network. We will catch you on Saturday for No Mercy, No Malice, as read by George Hahn, and on Monday with our weekly market show.