The Prof G Pod with Scott Galloway - Office Hours: Where Do Companies Keep Their Cash? Dealing With Burnout in the Workplace, and Advice on Reentering the Workforce After Having Children

Episode Date: March 29, 2023

Scott discusses cash management practices at companies and then gives his thoughts to a listener experiencing work-related burnout and exhaustion. He wraps up with advice about women looking to reenter the workforce after focusing on childcare. 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. Welcome to the PropGPod'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 profgmedia.com. Again, that's officehours at profgmedia.com. First question. Hi, Prof G. This is Joel from Boulder, Colorado. Can you share with us where medium to large companies keep their tens of millions or hundreds of millions of cash? And where should smaller companies keep their hundreds of thousands or millions of dollars of cash? Based on the most recent news, it appears that the U.S. government could backstop bank accounts with balances greater than $250,000. So perhaps my concerns about where to keep cash will become

less important. My motivation for asking this question is personal, because through hard work and a lot of luck, the weather forecasting company that I helped to bootstrap 15 years ago is doing well, and we keep large amounts of cash to smooth out the seasonality of our revenue since we focus mostly on snow forecasting for skiers and riders. We keep most of our cash in a money market fund and in one-month treasuries, and I want to be sure we're being responsible and also want to see if we can learn from the cash management practices of bigger companies. Thanks for the question, Joel. And congratulations on living in Boulder, Colorado and running what appears to be a super cool business.

You're sort of the envy of every young person that's a skier to live in Boulder and start a business servicing or a tech business serving the ski community. Anyway, it's good to be Joel. So, according to Investopedia, companies mostly keep their cash in commercial bank accounts and low-risk money market funds. Companies also keep smaller amounts of cash, petty cash, for office-related expenses. A 2020 survey conducted by Treasury and Risk revealed where companies hold cash in short-term investments. About a quarter or 26% of respondents said that their company holds all their cash in short-term investments, about a quarter or 26% of respondents said that their company holds all their cash and short-term investments in bank deposits, which include certificates of deposits, CDs, and time deposits. So in sum, most corporations hold their cash essentially in

short-term, low-yielding, very liquid, very low-risk securities. And occasionally, I was in the board of a publicly traded company. We thought, okay, we have so And occasionally I was on the board of a publicly traded company. We thought, okay, we have so much cash. Should we go into be a little bit more aggressive with our cash management and maybe invest in some securities diversified, but kind of going for the yield hunger games. And at the end of the day, we decided not to, because we don't get any credit for making extra money vis-a-vis investments. And if something goes wrong, we're going to get taken to the woodshed by investors and the press. Now, that's a public company. That's a company with outside investors. If you own your company, you obviously want to be responsible and make sure that you have enough cash to smooth out

the bumps. But for example, at Prof G, I'm the only shareholder. And if we aggregate cash, I decide, all right, am I going to invest it in the company or am I going to take it out and invest it in something? The bottom line is the cash is yours when you own the company. So it's up to you what you want to do with the cash. So there's a difference between a private company or a company that's owned by a sole proprietor or a family. They get to decide what kind of risk they want to take. But a publicly traded company or a company with outside investors

is sort of always better off just being in very bulletproof, safe, short duration cash. I don't think you're missing anything here. A good treasurer should be able to give you some insight on the best way to manage your cash. And if you have a lot of cash, I mean, if Google has $120 billion and treasuries are yielding 4% or 5%, they might make $5 or $6 billion a year just off their cash in what is fairly bulletproof securities. So, in sum, ask your banker. If you think you're not getting the right yield, talk to your board if you have that. It doesn't sound like you have a board, but in sum, you want to err on the service of our communities in the place that we grew up. There was a part of your conversation with Tim Wu a few weeks ago that really resonated with me, as the both of you were talking about the exhaustion and burnout that senior officials in D.C. feel after a few years.

My partner and I resonate with Tim's feelings towards his decision to leave the Biden administration and currently feel similarly burnt out. My partner and I both feel like our jobs are all consuming and we finish our weeks absolutely exhausted. Because of this, we feel there is no energy left to think in terms of building our futures towards things like homeownership or nourishing our hobbies. I guess my question is, how do you know when it's time to look for something that isn't as ambitious or cause-oriented to save your own sanity? Thanks. That's a really interesting question. And the first thing is, it's great that you have a partner to talk through these kinds of issues with.

There's a wisdom in crowds, even if the crowd is only two people. And the best partnerships are one where you and your partner can have open and honest conversation and benefit from a different voice, a different viewpoint, and kind of work through stuff. That's how I process stuff. I don't make a single important decision now. And I've changed as I've gotten older without speaking to a lot of people, either personally or professionally, an important decision. So I think what it comes right down to is some people get so much reward from giving and social work and helping others, and God loved them, that that's a form of psychic income, and it energizes them. However, if you're at a point where you feel like you're exhausted and you're not enjoying

it, it's a real drain on you, and you're not building economic security, I do think it's probably time to consider a career shift. And that is, I believe that you need to affix your own oxygen mask first. I don't think you're any help to the world or to your partner or to your kids if you want to have kids if you yourself are stressed out and not healthy and just burnt out because you are helping others all the time, I get that. That's noble. But might you be more effective? Might you be a better caregiver for your children, for yourself, and then ultimately other people if you build a bit of an economic base and have a balanced, rewarding life? Wall Street, but I do think your obligation in a capitalist society, at least initially, is to provide economic security for yourself, such that you are not a tax on society, and then for your family, such that you can raise children in a warm and secure household and your partner feels a little bit safer and less anxious because he or she is not as financially insecure. I think that's sort of step one. Some people decide that they don't want the accoutrements or need the accoutrements of money, lower their burn, and get a lot of psychic income from working a nonprofit and

helping others. And those people, like I said, are one of the foundations of a society that you have people like that. But if the tax on your health and your mental wellness is greater than the psychic income you're getting from helping other people, and you're also taking the financial hit, I would seriously consider, after discussions with your partner, one of you perhaps going into the private sector and being a little bit more focused on building a financial cushion. Maybe it doesn't have to be both of you. But in a capitalist society, it is very stressful not to have economic security.

And I think if there is a cadence to it, you establish economic security for yourself, then your family, then for others. And then you hopefully have the time, treasure, and talent to start giving back to other people. That's not to say you need to be philanthropic and socially minded along the way. But at the end of the day, boss, you're not going to be much help to the world, to your partner, to yourself if you are stressed out all the time. Thanks for the question. 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 Welcome back. Subscribe wherever you get your podcasts. Published by Capital Client Group, Inc.

Welcome back. Question number three. Prof G. Cassidy from St. Louis here. I applaud your focus on young people, but some of us who have been following you for a while are no longer those young people anymore. Speaking on behalf of women in particular

who left the workforce to become what I've heard you call a care worker, my reasons include having four kids and taking care of family. How do you advise those of us looking to re-enter, especially now that we are competing with younger, more available generations? For myself and those of others who have matured through child rearing, I can guarantee that our EQ, empathy, and life experience can outrock those we might keep competing with. Thanks for the question. I think a lot of people struggle with this.

In the community, I was in at Delray Beach. You had all these incredibly talented women who took a five or a 10-year break from the professional world to take care of kids and miss having their own, you know, just having their own stage that people they don't know apply for them call work. And also, in many instances, are better at that whole money thing or whole making money thing than their partner. So, I think you have a lot of women who

at different times struggle with how to reenter the workforce because the bottom line is the workforce is biased against women. I think the educational system is biased against boys, and I think the labor force is biased against women. Specifically, specifically, ovaries. What do I mean by that? Once you have kids, the workforce, corporate America is not good at A, supporting childcare, and B, figuring out a seamless reentry into the workforce. As for ageism, according to a 2021 survey by AARP, about 80% of older workers have experienced age discrimination in the workplace. I can't get over how ageist the tech community is.

I remember hiring a guy for our tech team who was in his 50s, and you just got the sense everyone in their 20s was like, dude, what happened? Why aren't you a CEO by now? I think that's the last, not the last, but probably the biggest ism or ist, ageist or ism, ageism that hasn't received the attention it deserves in terms of opportunities to create a more productive, healthy society. And here's the bottom line, your skills atrophy, you get kind of out of shape. So how do you get back into the workforce? I don't think it's any different than when you try and enter the workforce. You're going to call all your friends. You're going to try and get interviews. Maybe it's some consulting gigs. Whatever it is, just start and get out there and start talking to people. Are there other women who have reentered the workforce who might be sympathetic and want to take an emotionally vested interest in your reentry into the workforce? Are there ideas for small businesses with other friends that might provide some flexibility?

Does your old employer who thought well of you have ideas or people who you used to work with? Can you track them down and say, I'm thinking about reentering the workforce? But we have done a terrible job. Once a woman has kids, her earnings go to 77 cents on the dollar. Women are actually in urban centers,

young women under the age of 30 or childless women, I should say, are actually out earning young men now. But once they have kids, it plummets. So I want to be very straight with you. We as a society have done a terrible job of maintaining professional trajectory for women with children. It costs the economy and generally speaking, it's just not the right thing to do. So is this an opportunity to sort of shake the etch-a-sketch and do something that you might find more rewarding than your last job?

But let's be honest, this is getting out a spoon and eating shit and calling people that don't want to hear from you and doing the same thing when you got your first job. And that is being really aggressive and calling on people for favors,

trying to do meetings every day and every day, one foot in front of the other. Cassidy from St. Louis, thanks for the question. That's all for this episode. If you'd like to submit a question, please email a voice recording to officehoursatpropgmedia.com. Again, that's officehoursatpropgmedia.com. This episode was produced by Caroline Shagrin. Jennifer Sanchez is our associate producer, and Drew Burrows is our technical director. If you like what you heard,

please follow, download, and subscribe. Thank you for listening to The Profiteer 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 markets show. 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 Housework, a special series from Where Should We Begin? sponsored by Klaviyo.