The Prof G Pod with Scott Galloway - Office Hours: Will Boom Supersonic Planes Live Up to the Hype? Buying Amazon Stock and Taking a Gap Year Before College

Episode Date: November 16, 2022

Scott takes a question about the future of Boom Supersonic. He then shares his thoughts on owning Amazon stock and offers suggestions on how to best take advantage of a gap year before college. 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 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 officehours at profgmedia.com. I have not heard or seen these questions. First question. Hi, Scott. My name is Nate Chavitz. I live in Bend, Oregon. I am a pilot. I love airplanes. I also love how passionate you are about new ideas that are designed to change paradigms. So I'm going to ask you about Boom Supersonic.

My overall question is, how does this business still exist? And I say that because I look at their marketing and they will tout Los Angeles to Sydney in seven and a half hours. And yeah, that would be great. I just don't actually think there's any way to do that. And I know that there's no way to do that with the Overture because if you look at the range of the plane, it cannot fly from Los Angeles to Sydney.

It can't even fly from Seattle to Tokyo. Also, the plane doesn't fly at all. It doesn't even have an engine. And to really put a point on all of this, I started thinking about the point of the Overture and the plane that they're building. And one of the things they keep the plane that they're building. And one of the things they keep talking about is how there hasn't been any meaningful innovation or something in aviation in the last 50 years, which is not true, but I will leave that to

the side for now. But they're saying we need to build a plane with all this new technology. And what have they come up with? The overture, from what I understand, flies only 300 miles further than Concorde, but it does it carrying fewer people more slowly. How does this company exist? So thanks for the question. You put me a little bit on my heels because I'm an investor and I love this. And also, I want to acknowledge that I think you bring up valid points. The company has not announced

an engine manufacturer. It hasn't solved the propulsion problem. Keep in mind, the expected launch date is 2029. They do have a prototype. They have done wind tunnel tests. They have very talented people working on this company. The CEO is a former Amazon operations person. They've hired a ton of people out of Gulfstream. The management team reads like a who's who of sophisticated aviation. So they've got a good team. They've raised a lot of capital and they still have to figure out the propulsion or specifically the engine manufacturer. But my understanding based on investor updates is they have several opportunities or partners who are very interested and they'll be making an announcement soon.

I think your point about LA to Sydney is a good one. I don't know if the Overture has the range, but I think most of the desired routes they've talked about, and the most popular route I would imagine will be New York to London. They do have it. I'm not an engineer, but if you had supersonic technology 50 years, it means the avionics, the propulsion, and the materials would all be dramatically better now, and that supersonic travel should be, A, better and cheaper now.

I just think that logically in terms of the cadence of technology. And the data I've seen on it is that they are continuing to hit milestones, and they're looking to have a fully functioning prototype by 2025 or 2026 and have their first one in operation in 2029. I also just think the economic opportunity is enormous. You have people flying private. The number of people who have entered the private aviation market is up something like 10 or 15 fold in the last decade or two decades. It's just exploded, especially through COVID as it's brought in a new group of people, sort of the, not the, just the wealthy,

not the uber wealthy. And private aviation used to be the playground just to the uber wealthy who will spend 50, 75, 100 grand to go one way on a private plane from New York to London. So I think you're going to see a huge market for people wanting to pay 10, 15, 25 grand

to get to London in three and a half hours. And if the Concorde could do it with very, you know, technology that was developed in the 60s, I can't imagine that Boom's not going to be able to do it. It sounds like you know what you're talking about. I will acknowledge that I don't think they have proof yet around the LA to Sydney route in terms of the legs you need for that. But I have seen the data around the plane itself, the avionics. But in addition, people much smarter than me, specifically big airlines, United and American Airlines, who have very sophisticated engineers and due diligence committees, have put down hard cash money orders with boom. So I'm super excited about this. I think it's overdue. I find the innovation in aviation has

been fairly uninspiring. I think it takes longer to get from New York to Dallas now commercially than it did 50 years ago. Most, I think, of the innovation has been around economics, and that is trying to save money to get people from point A to point B as economically as possible. I find flying to be a near inhuman experience, especially in coach, the way you have to sit for an extended period of time, that the staff is overworked and underpaid. So I'm not, I think there's enormous opportunities for innovation, and I think a lot of it comes down to speed. And that is, if I'm not, I think there's enormous opportunities for innovation. And I think a lot of it comes down to speed. And that is if I can get, I'm in London right now, if I could get back to New York and call three and a half or four hours, I would probably go next week

because I have a few meetings. I go for two or three days, but I'm not going now because of the jet lag and the eight hours or seven hours, whatever it is, it's just too much. So we will agree to disagree, but I think you're being a little bit pessimistic. You sound a little bit like me. I get the sense we'd get along, but I put a substantial amount of my own money in this, sort of a multimillion-dollar investment, which is a big investment for me, because I think it's time for supersonic travel again, and I'm excited about it. But I guess we'll see. But I will see you next to me as we go to Hawaii in like, I don't know, two hours

and we get lays when we get there. They say, congratulations, we're putting a lay on you. You got here so fast. Wouldn't that be nice? By the way, new season of White Lotus, gotta watch that. Anyways, thanks for the question. Question number two. Hey, Brough G, this is Mark calling from Mississauga, Ontario.

My question is about Amazon. Currently, it's treading at a 52-week low. Looking at this company, I'm thinking, you know, their dominance in the cloud market hasn't significantly changed in the retail market as well. But love to get your thoughts here. Is this a unique buying opportunity for Amazon? Mark from Mississauga,

Ontario. Love the Canadians. Love the Canadians. We get a lot of inbound interest or a lot of questions from Canadians. They're friendly. They're smart. How do you get a hundred drunk Canadian fraternity guys out of your pool? Hey guys, would you please get out of the pool? I love that joke. I love that joke. Anyways, Amazon. Amazon is one of my three or four largest holdings. I have owned it since 2009, I think. I've sold a little bit to pay for a house in 2013. But it's been an unbelievable gift, even despite the fact that it's been, get this, cut in half. It's off 48% in the last 52 weeks.

That hurts, especially if you bought a year or two years ago. With the S&P down 20%. Again, it's a growth company. They overhired. They're going through layoffs. I think they have more competition. Its 52-week high was 188. Its 52-week low was 88. I don't know where it's trading right now, but it went below. It went sub a trillion dollars. So look, I'm trying to get out of the business of stock recommendations because the market is bigger than any individual and I don't want people to lose money based on something I said. I'm more afraid of that than the reward of them making money on something I said. So I just tell people what I have. I own Amazon stock. I don't have any intention of selling it.

It feels to me like it's not cheap, but obviously it's insanely less expensive than it was. It's the number one e-commerce provider in the world that has about 50% share of e-commerce. It's also the largest cloud company in the world. I believe that the most accretive action and what will likely happen in the next two to three years if the stock does not recover is that Andy Jassy will spin AWS because AWS, in my view, is arguably one of the most valuable companies in the world trapped inside an e-commerce company that is maturing. AWS, an independent AWS, would be a stock that you buy a little Rachel for a bat mitzvah you'd put in your retirement account. No matter how expensive it was,

you would buy AWS. It'd be one of those must-own stocks. So I think if the stock continues to underperform or goes down, I think they're going to spend AWS. And that would be wildly accretive to shareholders because AWS, when unleashed from the confines of e-streaming and an e-commerce company, is going to soar. It's going to soar like the boom overture. Thanks for the question, Mark. 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, 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.

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Go to ConstantContact.ca for your free trial. ConstantContact.ca. Welcome back. Question number three. Hey, Scott. This is Mike in Dallas. After listening to your interview with Richard Rees, I've been giving more and more thought to having my high school son take a gap year between graduation and heading off to college. I do have concerns that institutes of higher learning will look at this gap year negatively, much like an employer would if there was a one-year gap in employment. So what advice would you give him to best use this time, whereas potential universities would look favorably upon this decision? Thank you. Oh, hi, Mike from Dallas. Thanks for the thoughtful question. So in sum, Richard Reeves points out that an 18-year-old

male has a prefrontal cortex sort of equivalent to a 16 or 17-year-old girl. And that is, they just mature later. And the kind of gas break or executive functioning of a young man just isn't as developed as a young woman. And as a result, they oftentimes don't do as well in school and can run into more emotional problems. I have personal experience with this. I showed up to UCLA when I was 17. This was back in sort of the space race. I was born in the mid-60s when my mom was super excited that I was so smart that I was sent to fifth grade when I was in the third grade for English and math.

And the idea was skip a grade and become like a Doogie Howser. And the reality is it's totally flipped. And that is now in wealthy neighborhoods, people are holding their boys back and lying about their ages because it ends up in research that the smallest boy in a class is much more likely to be depressed as an adult. He's more insecure. He has less confidence. He's more likely to be bullied. I mean, all that stuff, right? So, I think redshirting for a year, as Richard Reeves refers to it, is a really good idea. So, what to do? Something. A job, something in national service. I wouldn't say traveling. I mean, maybe some traveling, have some fun, but have something. I mean, it's pretty obvious. It'll be impressive to the university, volunteer

work, getting a job, doing something, exploring some sort of artistic endeavor. He's going to have to show something. He wants to be more eligible for school after those 12 months, which means he's going to need to show something for it. So I would encourage it, but I'd have a plan and he needs to get on that plan right away because a year goes really, really fast. Also, there's some data. I think 92% of kids who are planning to go to college and take a gap year still go to college. And that's every parent's worst fear is that if he doesn't keep tracking, he's not going to end up at college. That's not true. The majority of kids who are planning to go to college, the vast majority who are planning to go to college and take a gap year

still end up going back to college. And two, colleges don't mind the gap year. I know NYU doesn't, and I'm pretty sure most universities don't. We're fine. We're down with the gap year. We think it makes sense. I'd like to see national service that makes it easy for kids to do a gap year and bring some structure so they don't have to sit down with their parents and figure out how to be productive, but at the same time, enjoy myself, at the same time, find something attractive to admissions directors. I mean, that's a pretty difficult needle to thread. But in sum, in sum, a gap year, I think it's a great idea as long as he's on board with it. But yeah, I'm a big fan. Thanks for the question, Mike.

That's all board with it. But yeah, I'm a big fan. Thanks for the question, Mike. That's all for this episode. Again, if you'd like to submit a question, please email a voice recording to officehours at propertymedia.com. Our producers are Caroline Shagrin and Drew Burrows. Sammy Resnick is our associate 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 next week. What software do you use at work? The answer to that question is probably more complicated than you want it to be.

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