The Prof G Pod with Scott Galloway - The State of Corporate Governance, Do I Prioritize Myself or My Team at Work? And How Men Can Find Their “Second Act”

Episode Date: October 30, 2024

Scott shares his thoughts on the age makeup and responsibilities of corporate boards. He then gives advice to a listener who has become indispensable at work and is debating whether to stay on for the benefit of his team. He wraps up by discussing how men are disproportionately evaluated on their economic well-being as a provider and gives advice to a listener who is in search of his “second act.” Music: https://www.davidcuttermusic.com / @dcuttermusic Subscribe to No Mercy / No Malice Buy "The Algebra of Wealth," out now. Follow the podcast across socials @profgpod: Instagram Threads X Reddit Learn more about your ad choices. Visit podcastchoices.com/adchoices

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Constant Contact has what you need to grab their attention. Constant Contact's award winning marketing platform offers all the automation, integration, and reporting tools that get your marketing running seamlessly, all backed by their expert live customer support. It's time to get going and growing with Constant Contact today. Ready, set, grow! Go to constantcontact.ca and start your free trial today. Ready, set, grow. Go to constantcontact.ca and start your free trial today. Go to constantcontact.ca for your free trial. Constantcontact.ca. Welcome to the Property 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 or voice recording to officehours.propjimedia.com. Again, that's officehours.propjimedia.com. I have not heard or seen these questions. With that, question number one. Hi, Scott and Ed. I would love to hear some of your thoughts on the state of corporate governance. Scott, you talk a lot about your experiences on corporate boards for both public and private companies. I'm currently on the board of directors for a smaller private company, so I've been trying to level up my abilities by learning more about best practices in this area. Naturally, I've been looking towards publicly traded companies and their governance

structures. But in doing some research, it appears that, much like you've pointed out in our political system, the average age of corporate directors keeps increasing. On top of that, the same people responsible for leading audit and compensation committees are now being asked to understand the strategic impact of cyber threats, AI, and climate change. So Scott, how do you evaluate board makeup, both from an age and skill set view? And what do you look for in companies that you think are poised to lead them into the future? Thanks. That's a thoughtful question.

So let's break down the numbers. According to data from the conference board, the number of directors aged 66 to 70 on S&P 500 companies has seen the biggest growth over the past four years. Oh, what do you know? It's more old people. There you go.

Directors in the 40s and late 50s, however, have declined over the past four years. Oh, what do you know? It's more old people. There you go. Directors in the 40s and late 50s, however, have declined over the same time period. Jesus Christ, technology is taking over, folks. And let me be ageist again. Young people get technology. They're just more, their brain can wrap their shit. I don't fucking understand this stuff. People think I have an amazing social footprint.

You know why? Because I hire young people to get this shit. I kind of have decent instincts around business, but we absolutely need more churn. All these CEOs, it's across boards of directors, or across between the land of the dead and golden girls. It's just like enough already. Millennials, those under 40, make up the smallest portion of board members, representing just 0.3% in 2023. I do think you should probably have one person in their 40s, maybe in their 30s on every board, especially if your company is being affected by technology, which is, let me think,

every company. First off, what is a board there to do? At the end of the day, a board really only has two jobs, and that is if and when to sell the company and to hire and fire the CEO, to make sure if you have the right guy or gal in the CEO spot, it's easy to be a good board. And then the chair of the audit committee has to be the adult in the room to make sure we're not gonna get sued or there's some fraud taking place, that what the CEO is actually saying is correct. Whenever I'm on a board, I typically call the CFO after the

board meeting because I find that the source of truth and don't use adjectives and embellishments. Boards, for the most part, corporate governance usually do a good job. Who makes up boards? What I call FIPS. That is Formally Important People who no longer are working full time but like the idea of staying involved in a company and bestowing their wisdom on a company and making a quarter of a million dollars a year to show up and get free dinner four times, read the board book, and most importantly get along with the CEO. And this is the problem with corporate boards, is that they get weaponized by the CEO.

Their job is to represent shareholders and all stakeholders. Now one of those stakeholders is management, but also stakeholders are shareholders, the employees that you don't see in the boardroom, the community, the government, children that you might be, I don't know, selling an addictive product into. And the CEOs of these companies are always one thing. They're always ridiculously fucking charming. They're the former rush chairman of their sorority or their fraternity.

They're very likable. The first thing they do is invite you out to dinner when you're on the board, maybe play golf. There's actually a lot less golf than there used to be. But they know you're in charge of their compensation and they manage you. I hate being on board, so I feel like I'm being managed. And so you get a lot of this.

And that is you find that a lot of stuff that's happening in the company is just kind of being filtered all through one lens. There's a couple of tells for a CEO, a good or a bad CEO, good CEOs don't speak that much during the board meeting. They bring in other people and they wanna highlight other management. And they let the CFO speak and they listen

and they answer questions. Now, how I've evolved as a director, I was one of my first board of directors when I was 34, my first public board of directors when I was 38. I've been on seven public company boards, about a dozen private company boards. I used to think that my job was to heckle from the cheap seats and try and play stump the CEO.

No, you're not, you're just being an asshole. You're there to be supportive of the CEO, offer advice, and a good director just listens for the first couple of board meetings. And what you want is a pull. You want them to reach out to you for advice. You want to be a resource around your area of expertise for other management.

In addition, you're there to represent shareholders in the community and you need to read the board book thoroughly, ask good questions. I used to send the board book to a colleague who was a professor of accounting and saying, what am I missing here? This is so fucking complicated. What stands out to you?

What should I be inquiring about or asking? But being a good director, good corporate governance, I think is really, really interesting. And managing the board, having a diverse set of viewpoints, someone who represents looks, smells, and feels. I mean, Nike was all white dudes for a long time, despite the fact that two-thirds of their customers and 80% of our athletes are non-white.

They figured it out, and now they have a much more diverse board that represents their stakeholders. That's what you need to do, and you need to have deep domain expertise, especially on the boring shit, accounting, operations, because there needs to be people in the room that can kind of smell bullshit and go, no, that doesn't sound right. Well, what about this? And also be a resource for the CEO and management. But I love corporate governance.

What are you there to do? You're a fiduciary. Thank you so much for the question. Super thoughtful. Super thoughtful. Question number two. Scott, I'm looking for your advice on my dilemma between loyalty to one's team and preserving your own individual sanity.

The background is I'm fortunate to have recently sold a company for an amount that secures my retirement and takes care of my family's future. The issue is that the new buyer is paying off the old shareholders through a combination of a guaranteed amount that was already paid at close and that part alone was enough to take care of me as a major shareholder, and a contingent amount based on team performance that'll be paid out over several years if the team hits collective top line revenue targets. Now here's the problem in my dilemma. I'm still a large revenue producer for the firm and my old team, who are amazing colleagues,

some of whom I've worked with for decades, has told me that if I were to leave early, they probably won't hit that out-year revenue number and won't get the contingent distributions. What that means for me is I'd have to stick with the firm for a number of years when, to be honest, I don't feel like this place is for me, just as you didn't when you sold your firm. So, do my obligations rest with my old team or do I prioritize my own mental wellbeing and desire

to start that next chapter in my life? Your advice is greatly appreciated, thanks. Thanks, Anonymous. If you hate your job, you're not gonna be very helpful to the company or to your employees. I think there's probably a middle ground here. I have some experience here.

My firm was acquired by Gartner, and we got a big chunk of money up front, and then an earn out. And I think I'm the only person that didn't stick around. And the earn out wasn't based on targets, it was based on time. Sounds like you have specific targets, and you feel responsible for hitting those targets

such that your employees can recognize the upside from their earn out. I get that, and that's very noble. There's gotta be an in between. Maybe you stick around, the upside from their earn out. I get that and that's very noble. There's got to be an in-between. Maybe you stick around, try and hit the earn out, maybe you're also just very transparent with them saying, I'm probably going to move on at the end of this year or the end of next year and see if you can't get them what they need.

But also a good manager is supposed to be able to replace themselves. And the fact that you have become indispensable means it's not a well-run farm and quite frankly, you have not managed it as well as you should have. In Germany, they force every senior manager to take at least four weeks off in a row because they don't want firms that are too dependent upon an individual. So I would say, okay, what is, let's say it's at the end of the year, they get the earn out based on targets. This year's almost up, maybe go another 15 months, make it clear to everybody that this year and next year you'll probably move on. Try and set the division up for success by replacing yourself or mentoring or advancing other people who

can help you. But boss, life's going fast and you have an obligation to yourself and your family. Yeah, be a good guy, but don't be a martyr. And it sounds like they've already made some good money. And yeah, enjoy yourself, move on to the next thing. When my firm was acquired by Gartner, we had a three-year earn out. I lasted nine months, nine months. I just, the culture was just not, it was just oil and water and there weren't bad people.

And it's a very successful firm. I did not know how to operate in a big company. I didn't like it. I felt like I was losing time to go do something else that I enjoyed. And so I wanted out. Everyone else stayed the full three years because there was a lot of money. I had made a lot of money on closing and wasn't as tied to the company financially as some of these other folks. But it sounds like you want to move on,

be good to your team, figure out a way to get them some additional compensation. Be transparent, you're thinking about your next thing and figure out a way such that you leave the operating group strong, such that everyone and the company that paid a lot of money for you feels like they're getting a return on their investment and employees get to make their money. But boss, don't be a martyr. It's your life. We have one quick break before our final question. Stay with us.

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I just don't get it. Just wish someone could do the research on it. Can we figure this out? Hey y'all, I'm Jon Flanhill and I'm hosting a new podcast at Vox called Explain It To Me. Here's how it works. You call our hotline with questions you can't quite answer on your own.

We'll investigate and call you back to tell you what we found. We'll bring you the answers you need every Wednesday starting September 18th. So follow Explain It To Me, presented by Klaviyo. 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 coworkers facing their own challenges with one another and get the real work done.

Tune into How's Work, a special series from Where Should We Begin, sponsored by Klaviyo. Welcome back. Question number three. Hey, Prof. G. This is Scott from Central Washington. I'm a big fan and I've been following your talks about the evolution of masculinity and the modern man and much of it resonates with me. I'm a 41-year-old former Green Beret officer who transitioned into wealth management as a financial planner about a decade ago. Now I'm a husband to a physician and father to two daughters, which led to another transition

as a primary caregiver and homemaker. I've recently earned my MBA, and while my drive to learn and grow is still strong, I'm wrestling with how to continue contributing financially. The traditional employee route isn't a fit right now due to my commitment to supporting my partner and being fully present for my daughters. What advice would you give to someone in my position? Ambitious but navigating a different path to contribution and fulfillment, especially in the context of how you talk about the modern man? Thanks. I look forward to hearing your answer. First off, it sounds passe, but thank you for your service. And Jesus Christ, what an impressive person you are.

The Green Berets, less than 1% of the army wears a Green Beret. Boss, I think a lot of us, a lot of men kind of at this age are trying to figure out a way, not to reinvent themselves, but stay economically relevant. I'm not talking about the way the world should be, I'm talking about the way the world is. And that is men are disproportionately evaluated on their economic well-being as a provider, and women are disproportionately and unfairly evaluated based on their aesthetics. I don't have a silver bullet here other than to say, are there support groups or are there circles of former or veterans who try and help each other out finding kind of that second act.

I also, I immediately think that, like when I hear of a guy of your background, what I immediately want and what I think you would have tremendous, get tremendous gratification around is I would love for you to be around young men. And is there a way for you to be a high school substitute teacher, to be a coach, to be in some sort of recruiting for the armed services, but just you around young men? And ideally make some money, but I just go to social. I think people who come out of the service have such incredible grit and a code, are really honorable, generally speaking, and in great shape, and have a fidelity to the flag, which I think we need more of amongst young people.

So just selfishly, I think, wow, wouldn't it be great to get an individual like this involved or around young men. If you're at home, you're going to need some sort of remote work. I don't know what your technical skills are, but what I would say is put together what I call a kitchen cabinet, find some people, be very transparent, looking for some advice. I'm trying to figure out my next thing. Is it okay if I call you or take care of for coffee every once in a while? Every morning, I'm going to send out two or three cold or blind emails or calls to other people who have served or people. People want to help you. People realize the commitment and sacrifice

that you made for our country. So they're generally inclined to take your call. If it's not a great job, at some point, just try some shit and see where it goes, right? The way to make a decent amount of money is by starting just to make money. And if you're good, they're gonna see it and they're gonna wanna hold on to you.

Also, this sounds kind of weird, but try and identify some small businesses in your area and call them and say, I know how to lead. I'm together. I'm obviously very disciplined. I need some flexibility. Is there a role for me? Again, thank you for your service.

That's all for this episode. If you'd like to submit a question, please email a voice recording to officehours at propgmedia.com. Again, that's officehours at propGmedia.com. Again, that's office hours at ProfGmedia.com. This episode was produced by Jennifer Sanchez and Caroline Chagrin, and Drew Burrows is our technical director. Thank you for listening to the ProfGpod from the Vox Media Podcast Network. We will catch you on Saturday for No Mercy, No Malice, as read by George Hahn. And please follow our Proppgy Markets pod wherever you get your pods for new episodes every Monday and Thursday.

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