The Prof G Pod with Scott Galloway - Office Hours: YouTube’s Copyright Problem, Teaching Kids About Money, and Choosing Entrepreneurship

Episode Date: May 2, 2022

Scott answers a question about why you can still find copyrighted material on YouTube, and shares his thoughts on why big platforms slack off when it comes to content moderation. He also offers advice to a mother wondering how to teach her kids about personal finance, and to an NYU senior deciding between entrepreneurship and the corporate machine.  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 prop g pods 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.propgmedia.com again that's officehours.propertymedia.com. Again, that's officehours.propertymedia.com. First question. Hi, Scott. It's Ben from southeast London. This is a question about YouTube streaming copyrighted content all the time. I subscribe to Sky over here.

One of the reasons I did that was so I could watch Last Week with john oliver because it's that's who carries it in the uk and that is i think um on sunday night in the us and they show it on like tuesday um on the channel however in the meantime uh youtube serves me up a full pristine 4k rip of it um from another like a random channel like that's obviously just created to host this and then delete it and it does that literally every week same with bill maher another reason i was subscribed to the sky the sky package and i just like how is that okay you know i know youtube's defense is well there's so much stuff so we can't check it all. But my response to that would be, well, then you have to have less stuff uploaded if you can't check it properly. Anyway, just curious to get your thoughts. And I guess that was a slight rant.

Ben from Southeast London. Thanks for the thoughtful question. YouTube claimed about 0.2% of all views on the platform go to videos that violate its guidelines, whether copyrighted material, pornography, extremism, or misinformation. Or put another way, about 20,000 and 10,000 views on the platform were of videos that broke YouTube's rules and subsequently were removed. Now, that sounds good. Again, that's how they frame the data. But that probably means billions of views are, in fact, a violation of someone's IP rights where they're not getting paid. I bet that happens, let me think, on the major networks. Never.

And so they have to pay these people or they have to put in place. When I do my show or did my show on CNN+, hold me. I can't believe it's over. Anyways, when I did my show, they paid people to fact check everything. And they paid if we wanted to get a Tom Petty song playing in the background for 10 seconds, we'd have to pay somebody at Warner who owns a catalog $20,000 or $30,000. I know because we looked into this because I'm a huge Tom Petty fan and I was shocked how expensive it is. But here's the thing. This is what these firms engage in.

Their business model is basically not paying for content and also creating some sort of regulatory arbitrage where they don't pay any of these artists. They absolutely have the algorithms, the recognized music. What they did was they started running ads against it. So for some reason, if you were committing IP violation with your content, they get to monetize it even more, which made no sense to me. And finally, when the lawyers finally overwhelm the 7,000 lawyers at Google or Facebook, they say, okay, and they start figuring out ways to pay them. And then what do you know? They go after anyone else who isn't paying. So basically what we have is regulatory overrun in every sense of the word. And it trickles down to companies that once they get to a certain size,

they can just throw up their arms and say, oh, we don't know how to comply with the law. It would be too complicated. We need to let a thousand flowers bloom and create IP infringement everywhere. And they talk a big game about creators, but the reality is the folks you hear about making money on YouTube, for every one of those, there are a lot more people who are making less. And so while media consumption has gone up, there's been a consolidation of power. And that is the folks that write bestselling books and Beyonce, they're killing it. They've never made more money. But the folks who expected to get some sort of royalty checks for background music, I think it's been a difficult environment for them.

And these companies not only don't want to pay for the content. I mean, think about it. Facebook will say, oh, my gosh, we are spending $2 billion a year on moderation. Well, that's, what, 2% of your budget? But they're just not in that business. So I find an IP violation, like all things, it tends to accrete power to the few tech platforms that are so big that they can do it until they can't any longer. And then they turn around and starts their hats white and force all the little players to pay. In other words, look what Uber's doing. Uber wasn't

getting taxi licenses, but once they had kind of the market wrapped up, they are now going to the New York Taxi Commission and striking a deal with them. And they want to enforce the laws around regulatory standards because now they're in a position to afford to do that. They want to ensure that none of the little guys that pulled the shit they were pulling can do the same thing. Anyways, it all comes back to the same thing. Anyways, it all comes back to the same thing. The screed against the government, the screed against regulatory agencies, an ability for billionaires to no longer comply with the rule of law, the ability for a billionaire to commit securities fraud and blow past any regulatory filings and end up with the company, which I still can't believe that's going to happen, results in a lack of an algebra of deterrence where regulation is like suggestions,

not actually the law. Thanks for the question. Next question. Hi, my name's Rachel. I'm calling from Tashkent in Uzbekistan. I'm originally from New Zealand and my husband's from the US. We have three kids, boys aged 16 and 14 and a girl aged 13. My question is about the kids. In-game purchases, expansion packs, that kind of thing. I've always been a hard no on the in-game purchases. But now I hear more talk about the metaverse and this kind of whole new world that I don't really understand. I'm thinking maybe my hard stance on some of this stuff needs to be softened and the kids need to

learn more what these things are and how it works and what's the waste of money and what's not. So that would be the first part of my question. And then the second part of my question is in general, what are good strategies for teaching kids about, you know, finance and money and how to manage money and investing? You know, it's not a very middle class thing to talk about. We're pretty open with our children, but I always think there is more that we could be doing and exposing them to. So I'm just wondering if you've got any top tips or resources that you think are good for kids to learn about these things. Thank you. Rachel, originally from New Zealand, now in Uzbekistan. Rachel, it sounds like you are leading a really interesting life. With respect to in-app purchases, I try to acknowledge that the things I

value aren't necessarily the things my kids value. I learned early as a dad that if I wanted to bond with my children, I had this image that they would be into the same things I'm into. And what I found out is that if you aren't into what your kids are into, you don't bond with them because kids are selfish as they should be. And just because dad's into working out doesn't necessarily mean I'm going to be into working out. And I had all these images of us sharing stuff together. And what I realized is those images were images of them doing what I enjoy. And so I try to lean into the stuff they enjoy. And my kids, especially my younger one, really enjoys video games. And rather than making a

qualitative judgment on how they spend their money, I try to connect effort with money. They have chores. I try to come up with interesting ways that they might be able to make money. I opened a Coinbase account with my son and we started trading crypto. I mean, we're talking about 20 bucks and I made him do the learn to earn, which I thought was great. You watch a video and it unlocks $2. And I think it was a good life lesson for him to lose most of it. I give them allowance, which is a life lesson. And by the way, every third week, I tackle them on their way to the room after I've given them the money, steal it from them because that is also a life lesson, Rachel. Anyways, just kidding. Some allowance humor there. But my youngest will save up and buy a skin in one of the video games,

or he'll buy another type of weapon. So I think that rather than evaluating what is a good purchase and what isn't for them, I'm just trying to make the connection between working and money, and then letting them decide how they want to spend it. Because we're just, I can't imagine virtual real estate, but I think it might succeed and actually might be a decent asset class because that generation that is our kids has a much easier time assigning value to virtual goods than we ever did. And value is in the eye of the beholder. So I try to make a value judgment on what they're buying. I mean, quite frankly, I'm not sure I ever understood kids spending 300 bucks who don't have a lot of money on Air Jordans, but they do, and they get reward from it.

Just as I doubt my kids understand why I spent $120,000 on a Range Rover so I could feel 56 again in a British car that's actually not got great engineering and gets about seven miles a gallon. Anyways, in terms of learning about money, Ron Lieber at, I think it's at the Wall Street Journal, the New York Times, he writes a lot about personal finance, and I find he's really good around kids and money. And every parenting book I read only has one thing in common, and that is the one I read contradicts the one I read before it. idea other than tell your kids you love them a lot, provide them with some guardrails, although there's books saying creative households where there are no guardrails do better. But I do think they need guardrails. I think they actually feel more secure when they have guardrails. But beyond that, I don't know if there's an owner's manual, so to speak. I think around money, it's really important. I would argue that we should not have computer science classes. There's a suggestion. I was on the board of my kid's school that we have computer science classes across the curriculum. And I thought that we would be better off with financial literacy courses. I think people need to understand the basics around finance and

interest rates and savings and compound interest and how the stock market works and how you get a mortgage and why maybe the interest rate on your mortgage is just as important as the price you're paying for the house. I think there's just some basics that every person needs to understand by the time they're 18. If they don't understand it, they end up working their asses off and leaking a lot of economic value to third-party providers who are happy to step in and charge them 18% on their credit cards or buy a car and think that they're paying with no money down when they're actually paying a ridiculous interest rate, what have you. So I think financial literacy at a very early age is really important. But also I try to teach my kids, and again, I don't know if this is the right way, Rachel, but it's my way. I try and teach my kids about

capitalism. I tell them I'm going to the London airport. There's a duty-free place there that sells really expensive handbags and really expensive watches. And I tasked them with saying, okay, where would we, which watch, which bag would we buy if we wanted to make money if we wanted to put it back on the real, real and make some money? So I will FaceTime them and show them bags

and say, look it up, find it on the real, real. How much is it going for? Could we make money here? I'm trying to give them a taste for flesh, if you will. And the flesh is how to make money. I think capitalism is a wonderful thing. I think making and spending money is really a wonderful thing. And I think trying to figure out a way to instill in your kids opportunities to make money, and not only to make money, but what are the risks in investing? But I'm trying to get my kids very money-wise very early. And there's this notion that in family or in mixed company, you don't talk about money. Bullshit. Talk about money all the time. I tell my kids how

I make a living, what we spend it on, what I do with my extra money, why I invest in stocks. I'm trying to give them lessons on what moves the stock up or down, because when I was 12 or 13, I got $200 from my mom's boyfriend to invest in stocks. I bought 16 shares of Columbia Pictures, and every day for about three years, I called my broker, Cy Serra. And I'm convinced that those lessons on the marketplace and me getting excited and my greed glands going and understanding the risks around the markets have paid off exponentially for me. About a third of my financial security or my net worth comes from the companies I've sold or started and sold. But two-thirds of it comes from the market.

I have always been buying stocks, always investing, always diversifying, always looking at my portfolio, always trying to hire talented people to manage things like my taxes and my investing. And it is the reason that I'm financially secure. So let me review. In-app purchases, you know, whatever flicks their big. It's their money, but they only have a limited amount. Attach work to money and then they get to do what they want for the most part, I think, with their money. And two, financial literacy, Ron Lieber, and also you teaching them how you make money, how your family makes money, and how you spend it, and why it's important, and little lessons, it's not how much you make, it's how much you save. Very long answer to a very thoughtful question, Rachel, but let me finish where I started. Good for you for providing

that type of exceptional experience to your three kids. Best of luck to you. 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. 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, to give you a primer on how to integrate AI into your life. So tune into AI Basics, How and When to Use AI, a special series from Pivot sponsored by AWS, wherever you get your podcasts. Welcome back. Question number three. started two businesses, have joined pitch competitions. So my question for you would be, being an entrepreneur yourself in your 20s, how do you strike the balance between starting businesses

and being a professional in a corporation? In other words, how much time should you devote between getting a job versus building a startup? Thank you so much, Big Doug. Tony from NYU, first off, you must be an impressive young man.

NYU, and I don't think this is a good thing, basically rejects nine to 10 applicants. So the fact that you got into NYU as an undergrad is super impressive. So congratulations to you and your parents for raising you right. Anyways, startup versus corporation. This is a tough one.

A lot of it comes down to some basic questions. One, what is your opportunity set? I think we romanticize startups. Coming out of NYU, and my sense is just based on how articulate and thoughtful you are, you're going to get opportunities at great platforms, whether it's a JP Morgan, whether it's the IMF or Google. And we tend to romanticize entrepreneurship and undervalue just how powerful the U.S. corporation is.

The majority of entrepreneurs don't start businesses because they're so awesome. They start businesses for the same reason I did, and that is I didn't have the skills to be successful in a corporation. And I don't say that like a humblebrag, like, well, I'm just such a fucking maverick. I'm such a baller.

It wasn't that at all. I was too insecure. I was too immature. I incorrectly thought I was smarter than my boss and it bothered me that he made more money. Or if they went into a conference room, I thought they were talking about me. I hated not knowing what was going on. I wasn't very good at navigating the politics.

So after spending two years at Morgan Stanley, I was smart enough to realize I am not going to thrive here. And so starting a business for me was more a function of my deficiencies. Now, having said that, the highs are higher in a startup and the lows are lower. It's like conceiving a child. It looks, smells, and feels like you. It's very rewarding when the child performs well. It is devastating when it doesn't. Some people are just cursed to be entrepreneurs, just as there's some kids that are taking your

heartbeat and blood pressure with fake medical equipment when they're eight years old. Some people just have to be entrepreneurs that can succeed in a big corporation. If you are just jonesing to do a startup, you've been doing startups, it sounds like you have a little bit of that startup DNA, then I would say find a great partner. Try and leverage the platform that is NYU to get in front of angels and investors and plan on working 18 hours a day for three to five years to try and get something off the ground. Entrepreneur is synonym for salesperson and workaholic. I have never met anyone. I've never had a company succeed without having the majority of my relationships, my physical health, and generally my stress level just out of fucking control or going sideways because the marketplace doesn't care about your degree from NYU. It doesn't really care how good a person you are. It doesn't care how deserving

you are. It cares about the amount of ground you cover relative to everyone else. And a lot of that is just working your ass off, being smart, and also developing a talent for attracting and retaining other good partners. Try and find a partner that complements your strengths. And then those first five or eight employees, people who work with you, are everything, are the key to nothing great is build alone. Greatness is in the agency of others. So ask yourself a few questions. Are you great at selling? If you're an entrepreneur, you're selling customers, you're selling investors, you're just constantly selling all the time. Are you comfortable with abnormal levels of risk? I mean, it's just scary. Entrepreneurs sign the front of checks, not the back of checks. When I started L2, I used to come home and say to my partner who had just

given birth to our son, oh, yeah, work's going great. We need to put another 100 grand in this month. I'm like, wait, what? Don't you get paid when you go to work? She worked at Goldman Sachs and got paid every month. I worked at a startup and had to put my own money in. So you are taking real risks with your own money and usually other people's money, and it's a very public failure. And most people will never have the constitution to do that. Another nice thing about starting a company when you're young is that you don't have dogs and kids and you can keep your burn really low. What's nerve wracking is I started a company was 26, fine. I had a partner, a girlfriend at the time who could pay our rent.

We didn't need a lot of money. My rent costs $230 a month. My $280 a month? Anyways, I don't remember. It wasn't a lot. Driving a 1984 Honda, I think I spent like $1,000 a month. But now that I have kids,

when I started my last business, I was 42. And that shit was real. There was no fake in it. I had a kid. I couldn't sleep on a friend's couch. It has been very stressful. I think I've had more economic upside than many of my friends, but I think I've endured a lot more volatility and stress. Long-winded way of saying it's really situational. traction, and then let the market decide if you can raise a little bit of money, if you can attract people to the company, and give it a whirl. What is different about this day and age is that if your business fails, you can still go to work for a big company. Whereas when I was your age, if you didn't kind of track right into a big company and then right into business school,

you were sort of people really didn't like that one year out. They wanted you to be a certain mold, a certain type, a certain gender, a certain color. I mean, everything was just sort of like the world is optimized for one type of person, full stop. And now the corporate world wants people with different backgrounds. So if you're interested, hit me up on LinkedIn and we can set up a phone call

and I can get a little bit more nuance on your specific situation, your opportunity set and provide a more thoughtful answer. Thank you 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.propgmedia.com. Again, that's

officehours.propgmedia.com. Thank you. We will catch you on Thursday. you can learn the best path to turning that disruption into growth for your business. With a focus on clarity, direction, and effective implementation, Alex Partners provides essential support when decisive leadership is crucial. You can discover insights like these by reading Alex Partners' latest technology industry insights, available at www.alexpartners.com. That's www.aleixpartners.com. In the face of disruption, businesses trust Alex Partners to get straight to the point and deliver results when it really matters. Support for this podcast comes from Klaviyo. You know that feeling when your favorite brand really gets you. Deliver that feeling to your customers every time. Klaviyo turns your customer data into real-time connections across AI-powered email, SMS, and more, making every moment count.

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