The Prof G Pod with Scott Galloway - Uber’s Potential Acquisition of Expedia, Why Is Europe Always Lagging Behind the US? and How to Outsource to Grow Your Company

Episode Date: November 6, 2024

Scott explains why Uber’s potential acquisition of Expedia would be a strategic move toward building an all-in-one travel platform. He then discusses why America is the best place to make money and Europe is the best place to spend it. He wraps up with advice to a listener looking to outsource work to grow his business.  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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Hey, Prof G. This is Ryan. I'm coming to you from Denver, Colorado. I have a question just regarding the recent rumors that surfaced about Uber's potential acquisition of Expedia. Would love to get your thoughts on just the financial feasibility of this deal. Thanks for all you do, Prof. G. I'm a weekly listener of all the pods and love the content you put out. Keep doing what you're doing. Pete Slauson Ryan from Denver, Colorado. Thanks for the

question and the kind words. By the way, I think just Colorado should run America. I think they do a great job there. A, it's spectacularly beautiful. I just bought a home in Colorado. Anyways, where am I going with this? All right. So the Financial Times reported that Uber recently explored the possibility of buying Expedia, the $20 billion travel booking giant. By the way, they have a fantastic new CEO. They do a great job. I actually use Expedia.

I think they are incorporating AI in very subtle ways to remember of remember who I am when I show up at the site and they know my economic weight class, kind of tells I stay out, they do a very good job. And I like kind of the UI, if you will. Big picture. This would be Uber's largest acquisition to date and would further diversify the ride hailing company.

In the past few years, Uber has expanded into other businesses, including train and flight bookings, food delivery, logistics, and advertising. Some of Uber's deals since it went public in 2019 include its expansion into food and beverage delivery via the acquisition of Postmates for, I think it was about 2.7 billion, and Drizzly for 1.1 billion. I bet they overpaid for that thing.

Drizzly, 1.1 billion, really. It also went into the freight and logistics business through a 2.25 billion purchase of Transplace. Uber also purchased Careem, a Middle Eastern ride hailing business for $3.1 billion. Wow, that's serious shit. So this is essentially, companies can either expand horizontally or vertically, and that is they can go after similar businesses or they can try and find, basically offer more businesses to the same consumer. And that is they can go after similar businesses or they can try and find,

basically offer more businesses to the same consumer. I kind of like the idea of one app that uses AI. And I say, okay, so tonight I'm going home to London. I like the idea of hitting the app and using AI. It says, okay, when you want to travel, da da da, how many people? And it kind of does the whole thing. It says, all right, these are the flights we think when you want to travel, da da da, how many people, and it kind of does the whole thing.

It says, all right, these are the flights we think you'd want to go, these are the hotels we think you'd want to stay at, by the way, we're going to, it's asking you a bunch of questions once you figure it out and say, I want this, use voice enabled AI. We're going to set up the Ubers, we're going to set up the right seat for you on the plane because we know your preference.

There's going to be a travel app that just takes you off the table. And I also think that Uber has such an incredible Uber's primary asset is it has user interface and custody of the consumer, incredible trust with I don't know, I don't want to have 100, 200 million people. Also, I would absolutely be going shopping if I was Uber's head of corporate development right now, the stock is up 56%, meaning they're kind of playing with the house's money and Expedia's market cap, just under 20 billion. They probably have to pay 25 or 30. Their stock is up 24% a year to date, but Uber's market cap is 173 billion.

So you're talking about what is potentially probably about a 15% dilution for them to have those assets and those additional consumers. I do think there'd be synergy there. More Uber towards Expedia than Expedia towards Uber. Also, Dara knows the company really well. What are the successful acquisitions? Well, first off, very few of them, only one in three acquisitions works or pays off. Why? Because it's kind of a lazy CEO's way to greater compensation. What do I mean by that? All behavior in a company can be reverse engineered to the compensation of the senior executives.

And the way compensation works for CEOs, the following, the compensation committee looks at the compensation of CEOs in that industry of companies that size. So there is an incentive to get bigger. Also, there's an incentive to diversify into other fields such that it smooths out your earnings. And everyone's looking for the transformational acquisition that's going to do for their company what Instagram did for Meta or what YouTube did for Alphabet, right? A great acquisition can be transformational, but you almost always overpay because the assets you want are expensive and they want a premium, they can only sell once,

and they almost always, generally speaking, overpay for the acquisition. So most acquisitions don't work out well, and the most valuable company in the world, Apple, effectively does almost no acquisitions because they see their culture as being very important. They don't want to overpay, and they'd rather build stuff. Anyways, in this instance, I think it's a really interesting idea. I like it. The dog likes it. Question number two. Barton Hey, Scott. This is Barton in San Diego. I'm a long-time listener, and I always appreciate hearing your good faith, well-thought point of view even when I disagree. Something you bring up a lot is how Europe has stagnated economically while the US enjoys

growth over recent decades. For me, it seems like the growth is mostly on paper and mostly for the rich while the average European enjoys in practice a much higher and more secure quality of life. What am I missing here? And what do you think the U.S. can do to ensure that security while maintaining growth? there's some truth to what you're saying, because most of our stats look at economic growth in aggregate, look at household income in aggregate. First off, let's acknowledge the U.S. has been driven by the prosperity of the top 1%. And I think one of the unhealthiest metrics we have

out there is the Dow Jones or the NASDAQ, because it gives you the impression that the economy is doing really well. Well, guess what? 1% of the American populace owns 90% of the economy. So essentially the Dow Jones Industrial Average and the NASDAQ are metrics on how well the 1% is doing. And guess what?

71 new highs this year. So, okay, spoiler alert, the top 1% are absolutely killing it. But also, the American public lets it happen because one of our superpowers is our optimism. And people believe there's a shot they're going to be in the 1%. So how would you categorize or how would you summarize the American economy? I still believe that America is the place that if you're talented and want to go flat out, you just want to run so fucking hard, you want to leave it on the field.

You're not working to live, you're living to work, you want to run so fucking hard. You want to leave it on the field. You're not working to live. You're living to work. You want to be economically secure. You really want to go after influence, power and economic security. America is absolutely the best place. Things just go slower in Europe. Average incomes in Europe lack 27% behind the U S with wages that are 37% lower. If you took out London out of the UK,

essentially the household income is lower than it is in our poorest state in the US, Mississippi. Between 2010 and 2023, the US saw its GDP grow by 34%. While the EU managed only 21%. So a lot of people say, what's the difference between Europe and the US? I mean, it's a few things. On a very base DNA level,

the US is everyone who decided to leave and Europe is everyone that decided to stay. Think about that. The people who left, and by the way, they're selfish. My mom left two siblings that were still in an orphanage. Both her parents were gone. That was a selfish move, but she came to America and off a secretary's salary. My mom lived and died a secretary. But we as an upper lower middle class family, I think we had better lives than the majority of our family that stayed in the UK. Now, why is that? Risk taking infrastructure, natural resources, incredible education institutions, structure, natural resources, incredible education institutions, geographically blessed with

friendly Canada to the north and harmless Mexico to the south, more oil reserves, you know, we're the largest energy producer in the world, largest coal, I mean, we're just so blessed. We're one of the largest agricultural producers in the world. We produce the brightest minds and not only that, the brightest minds in the world all want

to have one thing in common. They want to come to the U S. So we're just blessed with a ton of attributes and back to risk aggressiveness. One of the stats I love is that there are dramatically more per capita entrepreneurs in the U S coming out of college, but even more importantly, we have the capital to fund their dreams for every startup in Europe. There's 1 million in venture capital raised for every startup in the U S there's 1 million in venture capital raised. For every startup in the U.S., there's 5 million in venture capital.

So we have five times the risk capital. Anyways, long-winded way of saying, I'm not entirely sure, but I think it's about risk aggressiveness, it's about capital and some of the natural blessings we have. And if Europe wanted to inspire growth, they would need to have government subsidies to tech companies and also a bigger investment in a world-class engineering educational institutions. Thanks for the question.

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Hi, Scott. I'm in my mid thirties, married, and have a 2-year-old. I manage 3 properties while working 2 jobs. Growing up, my parents always did everything themselves to save money, so I've had a hard time outsourcing tasks to contractors. Even though I know hiring help would make things easier, I tend to focus on money I save doing it myself, which ends up taking more time and adding stress. It's becoming harder to manage, especially with the two jobs and caring for my toddler. I want to scale up and start investing in commercial properties, but the

amount of work I already have is holding me back. Do you have any advice on how I can change my mindset to be more comfortable with the outsourcing so I can grow my business? So anonymous, first off, you're a young man with, who's raising a kid and you own real estate. This puts you in the top 10% of men in terms of your success. You're already building a future for yourself,

for your family. So the first is, yeah, you're stressed out, men in terms of your success. You're already building a future for yourself, for your family. So the first is, yeah, you're stressed out, but just be clear, don't be hard on yourself. You're doing really well. And if you are feeling stressed and occasionally sort of overwhelmed,

that's kind of where you should be. The arc of happiness where you have the Y-axis is happiness and the X axis is age. It looks like a smile. And that a zero to 25 is beer, prom, making out. It's a lot of fun, Star Wars. 25 to 45 is what I call the shit gets real part of your life. It's hard, economic stress.

Kids are stressful. I mean, I know it's supposed to be all like fun and hallmark moments and things that make TikTok. It's not. Generally speaking, when people have kids, they're less happy. They're happier over the long term, but during the child rearing years, it is stressful. So look, in terms of how you develop a mindset around growth, what I have found, I mean, it's a double-edged sword because you kind of want to be all over everything. I think that's the attribute of a founder and an owner.

But at the same time, if you're fortunate enough to find someone good, a good property manager, someone who comes to work for you as an intern and they're good, this is what you got to do. You got to be generous with that person and make it near impossible for them to leave. Why? Because greatness, right? And more boring word for that is scale.

Greatness and scale is in the agency of others. And my, my kind of core competence is storytelling, but my superpower is the ability to attract and retain really talented people. And by the way, that's not just paying everyone more. If someone isn't working out, you got to get rid of them. You're a small company. You don't have time to find the right role for them. I am everyone more. If someone isn't working out, you got to get rid of them. You're a small company.

You don't have time to find the right role for them. I am pretty harsh that way to get to the first 10 or 20 super people. It takes me 30 to 50 and it's not fun. It's not aspirational. It's not pleasant, but it's hand down combat in the beginning. But when you find someone really good, you got to sit them down and you're going to say, this is our plan. We're going to buy commercial property here.

We're going to build this asset and I'm going to give you, you know, one, two, 3% of the profits, whatever it is, give them ownership. You want them to act like owners. And the only way to make them act like owners is to make them owners. And that is say, I have my shit together. This is my plan. This is how we're going to raise capital, buy commercial properties is the opportunity, and this is why you are going to participate in our success.

You'll, you should be able to recognize those people and to let go and to not be all over them. So give them some slack, but the key to any type of scale, the key to you not being totally stressed out. And by the way, you're going to be stressed out. owners have to be all over, almost everyone, almost all of the time. Greatness is in the agency of others. Focus on finding the right others and keeping them.

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 of propgmedia.com. Again, that's officehours at propgmedia.com. This episode was produced by Jennifer Sanchez and Caroline Chagrin, and Drew Burrows is our technical director. Thank you for listening to the ProfG Pod from the Vox Media Podcast Network. Please follow our ProfG Markets Pod

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