May 2, 2024

Episode 303 - Scott Galloway: The Algebra of Wealth

May 2, 2024

Scott is the Founder of L2 and a Clinical Professor at the NYU Stern School of Business where he teaches brand strategy and digital marketing. In 2012, Professor Galloway was named “One of the World’s 50 Best Business School Professors” by Poets & Quants. He is also the founder of Red Envelope and Prophet Brand Strategy. Scott was elected to the World Economic Forum’s Global Leaders of Tomorrow and has served on the boards of directors of Eddie Bauer (Nasdaq: EBHI), The New York Times Company (NYSE: NYT), Gateway Computer, and UC Berkeley’s Haas School of Business. Scott co-hosts the Pivot podcast with Kara Swisher. He received a B.A. from UCLA and an M.B.A. from UC Berkeley.

What is the role of luck in financial success? And how can we make decisions that will put us in the best possible position to experience long-term prosperity? Joining us today to unpack these questions is Scott Galloway, a talented public speaker, author, entrepreneur, and professor of marketing at NYU Stern School of Business. His latest book, The Algebra of Wealth: A Simple Formula for Financial Security, explores key lessons to help you optimize your life for wealth and success. He is the host of a thrice-weekly podcast, The Prof G Pod, and co-hosts a podcast called Pivot with esteemed tech journalist, Kara Swisher. Scott also has a very popular blog called No Mercy / No Malice, where he shares his thoughts on wealth, business, psychology, and more. In today’s conversation with Scott, we delve into the lessons he’s learned about economic success and the contents of his new book, The Algebra of Wealth. Tuning in you’ll learn how the economic stress he experienced as a child shaped his life, the important role that luck plays in financial success, and why he believes people should follow their talents rather than their passions. Scott goes on to expand on why diversification is essential for financial success before sharing key lessons from the various businesses he has started, built, and sold. We also discuss how he manages his financial worries, his hopes for his children, and how he defines success. Tune in to hear all of Scott’s valuable insights as we take a deep dive into the forces that shape our economic outcomes, and the algebra of wealth!

Key Points From This Episode:

(0:00:18) Introducing today’s guest, Professor Scott Galloway.

(0:05:43) Unpacking the title of his book The Algebra of Wealth, and what it refers to.

(0:10:39) The pursuit of wealth as a whole-person project and why balance is rarely possible.

(0:13:38) How stoicism can help you spend wisely and resist temptations.

(0:19:23) The difference between working hard and having character when it comes to wealth.

(0:22:20) Why it’s so important to acknowledge the role of luck in economic success; how Scott’s awareness of luck impacted his financial decisions and made him diversify.

(0:30:41) The concept of having enough, why people always want more, the benefits of giving back, and the role that luck has played in Scott’s wealth.

(0:35:31) Why Scott believes people should follow their talents, rather than their passion.

(0:39:31) Scott’s thoughts on the work-from-home trend and why he is a big proponent of an office environment and in-person work for young people.

(0:41:23) The key ways that physical exercise contributes to financial success.

(0:44:37) Scott’s thoughts on financial planners, how to take advantage of technology and low-cost EFTs to diversify on your own, and qualities you should look out for in a financial planner.

(0:50:08) Scott’s approach to investing in private businesses, his history of starting and selling companies, and why diversification is key.

(0:52:26) What the average person should do when there is excitement about a particular stock.

(0:56:06) Scott’s insights on the most beneficial way to trade money for time, how he manages his financial worries, and his biggest financial concerns when it comes to his children.

(01:03:32) How Scott defines success in his life, and what he has learned so far from starting ketamine therapy.

Read The Transcript:

Ben Felix: This is the Rational Reminder Podcast, a weekly reality check on sensible investing and financial decision-making from two Canadians. We're hosted by me, Benjamin Felix, and Cameron Passmore. Portfolio Managers at PWL Capital.

Cameron Passmore: Welcome to episode 303. And this week we welcome someone that I think many listeners will be aware of and actually might have one of his couple of podcasts in their regular feed. This week is Scott Galloway. Also known as Prof G. And he's just released what I believe is his fifth book called The Algebra of Wealth: A Simple Formula for Financial Security, which is an excellent book.

Scott's a professor of marketing at NYU Stern School of Business. He's also a public speaker, author, entrepreneur, and someone who's had an incredible life of making a lot, earning a lot, losing a lot. A lot of lessons in Scott's life. He's also the writer of a very popular blog called No Mercy / No Malice. On the podcast front, he has his own show, The Prof G Pod. And he's also a co-host of Pivot with Kara Swisher. Ben, how did you enjoy this conversation?

Ben Felix: I enjoyed it very much. Scott is someone who is very smart, very opinionated. With opinions based on research though. He's not just saying stuff. However, he allows his own experiences to inform his perspectives as they should. But he's very smart, articulate. And he's been successful. I think just that alone makes him very, very interesting to talk to. And a lot of great answers to the questions that we asked him.

I'm going to give away The Algebra of Wealth now before we start the episode. He says that it's focus, plus focus being on your career, plus stoicism, times time, times diversification. He's basically saying find something that you're good at to earn money and something that you somewhat enjoy.

Cameron Passmore: And that the market values.

Ben Felix: Yeah. Find your talent. But don't chase your passion. Anyway, he'll talk about that. Find something that you're good at then that makes money that you want to do. And then don't get wrapped up in consumption and spending, which is a stoicism piece. Start early and diversify. That's his formula for economic success, which is fairly basic. But I think he gives a lot of colour to how to think about each piece of that.

Cameron Passmore: He's also super pragmatic with real concrete advice, which I thought there's a ton of takeaways in this conversation based on, like you said, evidence. He intertwines lots of little factoids that he knows. But his own real-life experience, he's had an incredible life around money and around people with money. And I think this is a very valuable conversation.

Ben Felix: Yeah. And he's an incredible speaker. Every answer, it's that classic presentation style. He tells you what he's going to tell you. He fills in, he tells you. And then he tells you what he told you.

Cameron Passmore: Clearly a pro.

Ben Felix: Yeah. He's an incredible, incredible speaker. I think this is a great episode.

Cameron Passmore: Awesome. Okay. With that, let's go to our conversation with Prof G, Scott Galloway.

***

Cameron Passmore: Scott Galloway, it's great to welcome you to the Rational Reminder podcast.

Scott Galloway: It's good to be here, Cameron.

Cameron Passmore: Yeah. Thanks for agreeing to come on. And congratulations on your new book. It's terrific.

Scott Galloway: Oh, thanks for saying that.

Cameron Passmore: Off the top, how did economic stress when you were growing up shape your life?

Scott Galloway: Well, I think it's both a bad and a good thing or a double-edged sword. I think a lot of people in the US grow up economically strained. And by the way, this isn't a story of poverty. I describe my household as upper, lower middle class. My mom was a secretary. It was just me and her. Our household income I don't think was ever above – call it 40,000. We weren't poor.

But I do remember things were different for us. When I went to a junior high that was integrated, all my white friends left and went to private schools and I stayed because we didn't have the money to go to private school. And that ended up I think being difficult in the short term but probably positive in the long term for a lot of different reasons. But I wasn't as well educated as some of my peers.

I don't know how you guys grew up. But when you're a little bit less advantaged economically than your friends, you feel as if you're on your heels and not on your toes. And there's like this kind of this – I call it like this ghost following you around kind of whispering in your ear that you're not worthy. And it was also more than anything. It was really stressful for my mom. When you're the only "male" in the house, you feel that stress. You absorb a lot of it. And that was the hardest part. You can have a lot of fun as a kid on not a lot of money. But it was hard on my mom more than anything.

Now the flip side is, at a very early age, I got very hungry for money. And I've often said that I wouldn't have what I have if I had what my kids have now. I'm not entirely sure how I'm going to instill grit and hunger in my kids because they have a very nice life. If I wanted to buy a baseball uniform, I had to deliver papers. I had a paper route. I walked dogs. From the age of 12, I was making money and got an appreciation for money. And also, at a young age, recognized that if I wanted to help take care of my mom, if I wanted to have a nice life in America, it meant money. And that was very motivating. From a very early age, I was very economically focused. I would call it a double-edged sword.

Ben Felix: Can you describe what the algebra of wealth is?

Scott Galloway: Yeah. What I try to do is I do a lot of research on best practices around developing economic security. You've both probably seen the research where you are sort of the average of your four or five closest friends. The peer groups begin to look, and feel, and smell like each other. Body mass, same weight, same political values. Often times the same income level. There's sort of this regression to the mean of the sum of your friends.

What is different is where they end up economically. Five people making the same amount of money, three end up in sort of the same area. One will end up financially secure. One will end up not financially secure. And so, I wanted to understand what are the habits, and strategies, and behaviours that separate people who make the same amount of money but end up financially secure versus who end up financially insecure. And I kind of came down to a few things. One, the first is focus. Finding something that you're good at. Not necessarily following your passion. But find something that you think you could be in the top 10%. Maybe even the top 1% that you have a natural aptitude for. That if you invested a great deal of energy, and time, and commitment, and certification that you could develop mastery.

And here's the key point. An industry that has a 90-plus percent unemployment rate. And the majority of industries have a 90-plus percent employment rate. If you want to be an actor, a DJ, open a club, a restaurant, be in fashion, be in modeling, be an athlete, then you need to be literally in the top 0.1%. Whereas in most Industries, if you're in the top median, if you're in the top half, you're going to be able to make a living. Maybe even a good living.

My view is focus on something that you could be great at that has a 90-plus percent employment rate. And then mastery of something, in the accoutrements of mastery. Whether it's camaraderie, relevance, prestige, money will make you passionate about whatever it is. No one dreams of growing up and being a tax lawyer. But the best tax lawyers in America fly private and have a broader selection set of mates than they deserve. And that will make you passionate about tax law having those things.

The other components are – I call it stoicism. But that might be the wrong word. But recognizing that no one is as impressed by your stuff as you are. That you live in an economy that got millions of psychologically-tested triggers to figure out a way to get you to upgrade from economy, to economy plus, to economy comfort, to business class. Why not throw in an extra set of cool laces or socks with your new pair of shoes? Do you want to order the flowers chocolate cake from down the road when you're having the delivery of your lunch? Just at every turn, there are new wonderful ways to spend more money in a capless society. And developing the muscles early around saving more than you spend is really hard and really important. Creating wealth isn't about how much money you make. It's about how much money you save and then you deploy as an army of capital. And how early you develop those kind of savings muscles.

And then diversification, this is where I really screwed up. I was always kind of 120% or 130% invested in one thing. Mostly my own startups, which you can do when you're younger. But it was for me really devastating financially with the great financial recession. And before that, the dot-bomb implosion in 2000. Any one stock in any given day has a 50.1% chance of going up. But if you picked any five stocks in the S&P and held on to them for 10 years, no one has ever lost money.

Diversification is your Kevlar. You can take a bullet to the chest and survive because you don't want to find the needle. You want to buy the whole haystack. And those boring returns are really staggering over time. The S&P has returned about 11% a year since 2008. That doesn't sound like a lot. But that means every 21 years, your money's up eight times.

The key is diversification and getting into low-cost ETFs. And then also having an appreciation. We're recognizing a flaw in our species. And that is, for the majority of our time on this planet, we haven't lived much beyond 35. People have a tough time calibrating how fast time is going to go now that we're living into our 90s. And recognize that if you start saving young, you're talking about your army that's going to get to go out and fight for you 30, 50, 70 years. Being patient and recognizing time's going to go faster than you think. And that you don't need to be a hero. If you just bat for average instead of swinging for the fence, you're going to be fine when you're my age.

A focus on your talent what you're good at. Develop mastery. Spending less than you make so you can save. Appreciating the power diversification. And then letting time take over.

Ben Felix: Love it. Very nice.

Cameron Passmore: For those who are interested in your investment story, we're recording this on April 8th. And this morning on The Prof G pod, you went into details with Ed Elson on your story. Listeners might want to check that out for a bit of background. One of my favourite phrases of your book, Scott, inspired this next question. Why is the pursuit of wealth a whole-person project?

Scott Galloway: Well, I think balance is a myth. You can have it all. You just can't have it all at once. And I'm not suggesting this is the right way. But it has been my way. Economics were really important to me. And when I survey my kids, when I say my kids, the students in my class, around where they expect to be, about 80% to 90% of them expect to be making over $600,000 by the time they're 30 or 35, which means they expect to be in the top 1%.

I don't know anyone that wasn't smart – and by the way, they should expect that. The average salary coming out of NY Stern this year is $212,000. Now granted that's juiced by some private equity salaries of 300 or 400. But, still, that's a lot of money for a 28-year-old. They expect to be in the top 10%, if not the top 1%.

I've never known anyone achieve that who isn't either born rich or kind of genius that doesn't do nothing but work for 20 to 30 years. And I've had periods in my life where I've had a lot of balance. And that are usually periods that my net worth is going down. And then I have periods where my relationships are struggling, my health is not great. I'm stressed out. I'm not sleeping well. That's usually when I'm making a lot of money or making progress towards making a lot of money.

And I'm not suggesting you need to be stressed and have unhealthy relationships. But I just hear so many kids in school talk about the importance of balance. And I get it. But when you're young, in my view, the hardest part about achieving wealth is in the atmosphere. It's like a rocket that'll expectorate 90% of its fuel just getting out of the atmosphere. Getting that initial base of capital, getting some professional momentum, that's the really hard part. That's the soupy part of the atmosphere on your trip to financial security. And I think you want to do the things you can control. Some of it's not in your control.

I was devastated financially because of things outside of my control. The dot-bomb period, the great financial recession. But I'm also very wealthy now because of things outside of my control. A bull market that I got in front of in 2008. But you can control how hard you work. And I've just never met anyone that is financially secure that didn't have an extended period in their life where they were pretty much totally devoted to work.

And I've started my own companies. And my prime income-earning years were very stressful. It's not that my life wasn't nice. But I was getting into the office. I was waking up. I always was made time to work out. Into the office by 9:00. Work till 7:00. Go home for bath time. Go back to the office. Work till 10 or 11. Go home. Grab something to eat. Start email. Bed at 12 or 1. Wash, rinse, repeat. I worked on Saturdays. And I would go into the office on Sundays to be supportive of the people in there on Sunday.

And I did that for years and maybe even decades. It came at a huge cost. It cost me my hair. It cost me my first marriage. And it was worth it. And I know how awful that sounds. But I have a lot of balance now because I had very little when I was Ben's age.

Ben Felix: You talked earlier about stoicism with respect to spending. What do you think people can do to defend against modern temptations?

Scott Galloway: Well, one is to realize that you're up against a really formidable enemy. And to start just seeing how powerful these tricks are to give you the sense that you are being manipulated online to spend more money. And also, to recognize just anthropologically, especially when you're in your mating years, do you want to peacock a little bit? Do you want to show your feathers?

And I'm not suggesting that every 24-year-old should be a stoic. You want to have some fun when you're young. I'm not suggesting you save every dollar. I was the idiot that took his first bonus check and bought a BMW and hung swim goggles off the rearview mirror to make myself seem more athletic and attractive than I actually was.

I recognize some peacocking, some fun. Really enjoying your youth. I get it. I get it. But it's difficult the ability to separate what others think of you from what is really important. I mean, I write a lot about masculinity. And there are three reasons women are attracted to men in reverse order. Number three is kindness. They want someone who's a good person. It reflects generosity, confidence. Two is intellect. The fastest way to get someone attracted to you is to demonstrate intellect actually through humour. People who are very funny are generally pretty smart. But number one is not resources, but your ability to signal that you're going to have resources. That you have a plan.

And I think it's important that every young man – three-quarters of women state economic security is a key criterion to make only a quarter of men. It's especially important for a man to be able to signal, even if you don't have wealth, that you have a plan. I'm going to vocational school to learn how to be a plumber. I'm an Uber driver. But I'm saving to buy a second car, lease it so I can start hiring more dri – whatever it might be. I'm in my second year of business school. Whatever it might be. You got to have a plan. And also, show a willingness to have some discipline.

And that is you don't need to buy bottles at clubs to impress people. Be thoughtful about whether you need one cup of coffee from Starbucks. And what would happen if you save seven bucks a day over a year? Start to really understand some of the muscles around saving and where you really spend your money. Have a budget. Really understand what you're spending.

And then what I did, my best savings years were in college. If I did make $3,300 over the summer between my years in college, I wasn't re-enrolling at UCLA. That's how much money – I'd rack up my fraternity bills. And if I didn't pay off like $2,000 in back fraternity bills and then pay $1,000 in tuition, I wasn't re-enrolling for my sophomore or junior year at UCLA. I got together with a group of guys and we gamified it.

And we used to have a whiteboard and we had a contest around who could spend the least money. And that summer, I spent $73 a week total, including rent. And I lived on Top Ramen, bananas, and milk. And our big treat every Sunday night is we go to Sizzler with this coupon we got out of The Daily Brew at UCLA where, for $3.99, it was unlimited all-you-can-eat. And the entire crew team used to show up and like clear the place out.

And we still had fun. That's the great thing about being young. Time with friends and some beer is just fun when you're young. When you get older, you have no choice around spending. You get kids. You get mortgage. The time to sort of gamify it with someone else is when you're young. And it's especially powerful if you can gamify it and find a partner, a spouse, boyfriend, girlfriend that's on the same page with you and gets really into saving. And you track it every month, every week, every day and turn it into a bit of a game. How much money can we spend?

Because a thousand bucks saved when you're your age, Ben, it's 10 or 20 grand when you're my and Cameron's age. And the thing is that you don't realize. And it's important you learn this. You're going to be looking in a mirror and look like me and Cameron in no time. It's horrific how fast the next 20 to 30 years.

Cameron Passmore: I appreciate that Scott.

Scott Galloway: But wasn't it yesterday, Cameron, when we were Ben?

Cameron Passmore: I don't know. We're 49. I know.

Scott Galloway: Wasn't it yesterday? There you go. Literally, it goes so fast.

Cameron Passmore: Crazy. I have a 25-year-old. It blows me away. We're joking last week. It was his birthday. He's halfway to 50. It's nuts.

Scott Galloway: Yeah. I get together with my college friends and I see them and I'm like, "It was 40 years ago now." Anyways, find someone you're compatible with to gamify with. Have a really strong budget. And recognize that no one's as impressed with your shit as you are. And try and really be thoughtful about deploying an army at capital. Because if you deploy an army when you're young, it's going to be an unbelievable fighting force.

Now, hopefully, you're a baller and sell the next great novel, sell your business. Great. That's what my mistake was. I'm like, "I'm really good at what I do. At some point, I'll sell my company for tens or hundreds of millions. Or I'll have a big investment." And then I woke up in my early 40s and my first kid came along and I'm like, "That event never happened." Or it was supposed to happen. But I never got quite there. But I never really did a good job of saving. And I was much more financially insecure than I had hoped or expected to be given some of my success to that point.

A lot of this is a lesson to myself around – whereas my best friend, Lee, never made a lot of money. Made good money. But I remember at the age of 23 or 22, he picked me up and we go to the beach together and he'd be like, "I got to find $2,000 for my IRA." I'm like – and I said this exactly. I said, "If saving $2,000 at this point in my life ends up being anything meaningful, shoot me." And that's how stupid and immature I was.

Because here's the thing, Lee is now financially secure because he was thinking that way at the age of 22. He has millions of dollars saved. And I don't think he ever made a lot of money in any given year. That sort of ability to control your emotions and recognize that all that consumption is a bit of a psychological trick being played on you in a capitalist society and no one else is that impressed by it. They're impressed by men who have discipline, can save, and have a plan.

Cameron Passmore: How is working hard different from having character?

Scott Galloway: Something I found in the research that I thought was surprising, and that is there's this myth. Kind of the Senator Warren or Sanders rap, that all billionaires crawled over people to get to where they are. By virtue of the fact you're a billionaire means you're not a good person.

And what I found is actually the opposite is true. And that is the difference between wealth and extreme wealth is that extremely wealthy people are generally people that are beloved and they've created a lot of allies along the way. I mean, here's the bottom line. You want people to give you the benefit of the doubt. You want people to think of you when they're in a room of opportunities. You want them to include you in investment opportunities when you call the bank because you're struggling and you need a second on your house or – and the person says, "This is a high-character, good person."

Greatness and economic security is in the agency of others. Along the way, recognizing that an opportunity to help somebody else, to live up to your word, to work hard, to try and show, to talk well about people behind their back. And I didn't have this when I was younger. I was just focused on me. I wouldn't describe myself as a high-character person growing up. I wasn't mean. I wasn't a bad person. But I was always very focused on me. And what I should have been more focused on is how you can just take small opportunities to help other people. Even little things.

If you ever get in a position of management, a little bit of a few kind words to a subordinate, recognizing an opportunity would be great for someone. When someone gets fired or laid off, I used to run from them like they were toxic. And now what I realize, that's when you run to them. You call them and you say, "I have some ideas for your next gig. This is who I know at this firm. How can I be helpful?" That's the opportunity.

And, also, the biggest source of financial stress or the way to snatch defeat from the jaws of victory is divorce. And I know this personally. At the age of 34, I was financially secure. I got out of the gates really fast, out of business school. I had a brand strategy firm called Profit. I got divorced and I lost 60, probably 70% of my net worth because you split it. But, also, because now you're managing two households. You lose another 10% or 20% because your costs go up.

In addition, the other thing that's financially ruinous is a divorce from your business partner. Show me a really successful person that's financially stressed, I'll show you some that has either had a divorce with their spouse or divorce from their business partners. That can kill a firm. You start going to war with your business partners. And you don't get along. And you go after each other. And you spend all this time, and energy, and money on legal bills sometimes fighting each other.

What is the difference between wealth and extreme wealth is someone who brings a great deal of forgiveness, generosity, and love to their relationships and has built a series of relationships and allies along the way?

Ben Felix: Can you talk about why it's important to acknowledge the role of luck?

Scott Galloway: We have a tendency to credit our grid and our character for our successes and blame the markets for our failures. And the reality is market dynamics trump individual performance. If I look at my net worth, I patterned it out. I started working in 1987. I was 21. I started working at Morgan Stanley. I look at my net worth and it almost perfectly tracks the NASDAQ. Is that a coincidence? Or is it the fact that I've been in tech? And when the market was frothy, there were opportunities everywhere and I had more money and more opportunity. And I could take more risk as my assets were up. And then what do you know? By late 2008, I was broke.

The reality is a lot of this is not in your control. Now there are certain behaviors and things you can do to shield yourself and put yourself in a better position. But I think it serves two purposes. And that is to recognize, "Okay, I'm wealthy now." It's mostly because I was born a white heterosexual male in California and I got access to free education that was accessible. UCLA and Berkeley. 76% admission straight undergrad. I got into Berkeley graduate school with a 2.23 undergraduate GPA.

And when I was really starting to make good money in my 40s, the market went on an unprecedented 15-year bull market tear. That is not my fault. I'm here with you guys largely because I'm talented. I'm not a humble guy. I work hard. But because I had wins in my sales at exactly the right time. At the same time, when I was really hurt hard, a lot of that was not my fault either. And the lesson is the following. And that is nothing's ever as good or as bad as it seems.

When you get laid off or you have a stock cut in half, recognize that, yeah, some of it might be you. But a lot of it is not your fault. Forgive yourself. And that's I think one of the keys to success is the ability to mourn and move on. Have resilience. And at the same time, when you're killing it, and your stocks go up, and you get promoted, and you bought a house and it doubles in value in 5 years, realize a lot of that too is not your fault. And to be humble. You are never more prone to a really big fall, a really bad investment or life-decision after a big win. Because you start believing your own press. You start believing you're good at this stuff. And maybe you are. But a lot of it is luck.

I think it's forgiving yourself, and having humility, and recognizing that a lot of the things that happen – you do what you can. You work hard. You try to be a high-character person. You try to position yourself for success. Recognizing a lot of your failures and a lot of your successes at the same time are not your fault.

Cameron Passmore: How did your awareness of your luck impact how you make financial decisions?

Scott Galloway: I diversify more. I realize that, one, as I've gotten older and I've gotten more economic security, something I never appreciated when I was Ben's age was the power of diversification. And that is I was always going all-in on what I thought was a great idea. And when it didn't work out, it was not only a huge hit financially. It was a huge hit to my mental health.

And what I realize now is that diversification is so powerful. Because what I've learned after being in and around finance for the better part of 30 years and working with the brightest minds in finance is that nobody has any idea. I mean, you know one management team's better than the other. But across my portfolio, did I know meta was going to go up 4.5X over the last 15 months? You just don't know.

I have a ton of private investments. One was up 30X. I felt good about it. I made the investment. But I didn't know it was going to skyrocket. And then I have two, three private investments right now that I was just so confident and they're probably going to zero. Your key is to diversify. And that is you never know what number is going to come up. You might have the strongest feeling it's going to come up black or red. But you just don't know. What you want is you want chips on a number of numbers.

Now, when you're younger, you don't have that. Sometimes you don't have that luxury, especially if you're starting your own business. But I serve on a lot of boards and the first thing I tell entrepreneurs is, "As soon as there's liquidity event or a fundraising," I'm like, "take some chips off the table. Diversify. Sell some stock and invest in not only a different company but a company totally unrelated to this one." Because you don't need to be a hero.

The TSA and the CIA got to get right a thousand percent of the time. You only have to get it right – if you have enough investments, you only have to get it right some or most of the time. And the winners will more than take care of the losers. But don't put yourself in a position – I tell kids applying to college, the easiest way to get rejected is to have your heart set on one and only apply to one school. You want to diversify. You want to give yourself some Kevlar. That way, you can sleep at night. And now I don't put more than 3% or 5% of my assets or my net worth in any one stock.

I've never appreciated diversification. And the good news is that because of population growth and technology creating more productivity, the market's trajectory over the medium and long term is up and to the right. And you just want to participate in that.

Cameron Passmore: You mentioned Facebook, Scott. And I remember your conversation with Aswath Damodaran 15 months ago. I remember that conversation distinctly. And we know what Facebook has done since then. How do you square you this diversification belief which we all share with people like Professor Damodaran who is, I believe, a successful active trader?

Scott Galloway: Yeah. It's tough to square that. What I will say is that he will tell you that he does believe – I mean, first off, very few people are Aswath Damodaran. He literally is the valuation dean. But in his portfolio, he's pretty diversified. And I think he's even said on my podcast he recommends diversification as an investment strategy for people.

I mean, when you start stock picking, you're investing against Ken Griffin who has 400 PhDs and supercomputers looking at trades every day and trying to figure out where those anomalies. And everyone has access to the same information. The question I get the most is from mothers and young men asking for life advice. The second biggest – I track all these. The second most inbound increase I get is the following. Is it too late to invest in NVIDIA? That's the question I'm getting like two or three times a day.

And what I tell people is the bottom line is I don't know. But when you invest in SPY or an index fund, 33 cents of your dollar will go to the magnificent seven. Because on a weighted adjusted basis, they're now 33% of the S&P. If they continue to skyrocket, you get to participate.

But let's say they're a little bit overvalued and they come down and the other 493 stocks finally get their time in the sun, you have 67 cents on the dollar in those. What I tell people is invest in NVIDIA. But invest by buying the entire S&P. Because you're going to get some money into these high-growth, high-flying companies. But you'll also have some diversification, some Kevlar in case they are in fact overvalued.

For young people, for someone Ben's age, I would say 50% to 70% in low-cost ETFs or index funds. But then take 30% to 50% of your capital and maybe have some fun and do stock picking. One, I think you'll learn. Two, if you're on a podcast like this, you might actually occasionally run up against an idea where you think there's dislocation and you have an opportunity. And, also, it's kind of fun. You do learn about the markets. It's an interesting way to gain information about the markets.

But I would still take the bulk of your Capital at any age and put it in low-cost ETFs or index funds unless you have sort of what I'd call an asymmetric opportunity for your own business. Right? You're going to buy a second van for a carpet cleaning company. The house next door is up for sale and you know how to renovate it. You know the value. And you can do it without a broker. Occasionally, you're going to get opportunities from asymmetric upside. Then it's okay to, I think, over-invest. But most young people would be better off handing off all of their assets or the majority of their free capital to a low-cost index fund and then putting all of that effort they would spend trading stocks or thinking about stocks into making more money at their core job.

I bet 99% of the population is better at their day job than they are investing. Figure out way to be great at your day job so you can make more money and give it to other people who are going to charge you 20 or 30 BPS of Vanguard or low-cost fund and don't let fees chew up your returns.

Ben Felix: I don't pick stocks at all. But I have a good chunk of my net worth in PWL, the firm that Cameron and I run. How do you think about the concept of enough when people are always programmed to have more?

Scott Galloway: I don't know if you ever get there. I have more money than I ever thought I would and I'm anxious all the time. Every day I'm thinking about how I get more. And I think it's because I was wired that way. Going back to being financially insecure.

I talk about real numbers and I realize it's crass. But I think people not talking about money, it's just an effort to keep poor people poor. Because then they don't have expectations on how wealthy people should behave. I crossed 100 million several years ago and I've decided, anything above that, I'm going to give away. I don't see how that's going to make me any happier.

And also, it's consumption for me. It makes me feel masculine. It makes me feel like a baller to give money away. And I'm still not secure enough to do what Mackenzie Scott does who's a role model of mine. She gives it away anonymously. I want credit for it. But it still makes me feel really strong and like a good citizen. But I'm still trying to make money. I don't know. I don't know if I'll ever feel like I have enough. It's just the way you're wired to compete.

What I have done is I've ramped down the amount of time I spend at work. I work 40 to 50 hours a week. Now I used to work 60 to 80. And I've gotten better at spending money. I think you can be good at spending money. I spend a lot of money. And I spend it on experiences and that make me feel closer to my family and my friends. And I find that really rewarding. Because I think what happens with a lot of people who are successful is they work so hard and they're so wired for that scorecard of money and relevance professionally that they end up with poor relationships with their spouse, their kids. And they're kind of never in the moment.

I'm trying to be in the moment more, Ben. I'm trying to realize the past is immutable. The future is not out of your control but more malleable than we'd like to think. And just be a little bit more in the moment. To slow down. Because I'm one of those guys that's constantly on my phone or thinking about tomorrow. Or your whole life up until your age, Ben, people are training you to not think about today. But to think about the future. That's kind of the definition of success according to educational institutions. To forego current consumption and leisure for future.

But at some point, you got to say, "Okay. My kids – I got another five Christmases with my youngest, another two with my oldest." And, actually, I'll probably have zero with my oldest who's already at boarding school. I wasn't ready for him to leave this soon. I mean, Cameron will attest to this. 90% of the time you're ever going to spend with your kids is up until 18. And then the rest of your life, it's 10% in their life.

What some economic security, and some perspective, and some maturity has afforded me is I do now – I say no to stuff. I say no to opportunities. And I try and do wonderful things with my family and friends and really enjoy it. Really try and slow myself down and just be in the moment. Because it's going really fast. And I know at the end, I'm going to look back and I'm going to be grateful that I had at least enough presence to enjoy some of the economic security and try and slow, slow down a little bit.

Ben Felix: I've got two follow-up questions. One is how old do you think I am? Because you've referenced my age a few times.

Scott Galloway: Dude, you look like a kid. You look like you're 28.

Ben Felix: Yes.

Scott Galloway: Just good moisturizer?

Ben Felix: Yes. I'm 36-years-old. 37 in December this year.

Scott Galloway: There you go. That's a kid. That's a kid. You don't know it now. But that's a kid.

Ben Felix: I'll take it. I'm glad that I look 28 though. The second follow question is – you mentioned crossing $100 million. Do you have a sense of how much of that is – this is a tough question to answer. How much of that is luck? And how much of that is the good habits and the stuff that we've been talking about?

Scott Galloway: The smartest thing I ever did was being born in America. I think I'm a top 1%. I think I'm remarkably talented and hardworking. Which means if I was born in Tehran, I might be making $30,000 a year. If I was born in South Africa, I might be making $80,000 a year. I wouldn't have the kind of wealth I have unless I'd been born in America for a lot of reasons. A lot of that is luck.

I think I've always would have figured out a way to make a living. I like working. I'm talented. But the type of wealth that I've been able to aggregate as a function of being born in America, being born a white heterosexual male, which offered me unfair advantage through the 80s and 90s when I was raising capital. I mean, it never dawned on me that the only people raising money in Silicon Valley for internet companies were white dudes. I mean, it never like dawned on me. Why aren't women – I didn't even ask these questions.

What I would say is I knew I would be a high performer. But the real kind of extraordinary prosperity is not my fault. It's being born in America. At the right place and the right time. If I'd been born in 1920s Germany as a male, I would have ended up dead on a Russian field somewhere. So much of it is out of your control. I would say that it's 51% luck and 49% your own character and your own talent.

Cameron Passmore: Why do you think people should follow their talent rather than their passion?

Scott Galloway: Well, people oftentimes mistake their passion for a hobby. And those hobbies tend to be in really shitty-paying industries. And that is I wanted to make my living as an athlete. And, fortunately, I went to UCLA which disabused me of that notion really quickly. But it's just the worst advice we give young people. Follow your passion. And I hate it because we have billionaires tell them that and the guy on the stage who made his billions made it in iron ore smelting. And he's telling a group of young people to follow their passion.

When someone tells you to follow their passion, it means they're already rich. And what I would suggest is that you want to find something you're really good at and becoming great at it. And the accoutrements of being great at it will make you passionate about whatever it is. But just be careful. Keep in mind that the passion fields – anything with the arts, sports. We know these things opening a restaurant, a nightclub, all that shit. I want to be a DJ. Okay. But unless you have very clear signals at a very early age that you are in the 0.1%, what I would suggest is that you go find a way to make money and be a DJ on weekends.

Ben Felix: How do you think someone can find what their talent is?

Scott Galloway: Your 20s are supposed to be about workshopping. And so, I think the first thing is to say. "Okay, as much as people are criticizing college, if you have the ability to do two things, one, get certified." And I don't care if it's a scuba instructor's license or a bachelor's degree from a prestigious university. We live in a LinkedIn information economy and people want to see certification. Can you get certified? Trade school, vocational programming. But some sort of certification that says you have made it through criteria screens that show you're very good at something or have some certification.

Getting to a city when you're young before you collect dogs and kids, you're just going to get thrown more opportunities in your face and you might stumble onto something you didn't recognize. When I was 17, I thought I wanted to be a pediatrician. But my first chemistry class at UCLA, again, said, "Okay, you're not going to be a doctor."

But your 20s is for workshopping stuff. Get to a city. Try to get certified. Try to be really honest with yourself about what you're good at, you could be great at. But I don't know if there's like a way to say take the test, take the Myers-Briggs test, meet with people, ask for help, interview, look at different industries. But keep in mind your 20s.

There are some people that know exactly what they want to do from the age of 10. Assume you are not that person. And recognize your 20s are kind of for workshopping stuff. And when you find something that you're good at and think you could be great at it, really think, "Okay, what would be required for me to be amazing here?"

But there are also some tactics. Develop domain expertise that you can communicate in social media platforms. It's very hard to be in the top 1% of anything now without having a really big footprint social. And I don't like social media. I don't like the companies. I don't enjoy posting stuff. But I recognized early, if I wanted to be a thought leader or have presence, I needed to have hundreds of thousands of followers on these platforms.

Think of yourself as a brand. What do you want the core associations to be? What do you want your points of differentiation, and excellence, and mastery to be in? And then how do you communicate that mastery using some of these new mediums? Get to a city and develop a kitchen cabinet of people who can give you honest feedback around where you excel and what you're good at. And just be honest with yourself.

One of the smartest things I did was I got a job in investment banking right out of UCLA which was considered getting the brass ring. All my friends wanted it. I got it because I'm competitive. And I wanted to impress my mom and strange women. And after two years, I realized I was a terrible investment banker. And I didn't like it. Okay. Next. Didn't know what I wanted to do. I thought, "Okay, I'll get more certifications." I went back to business school and found entrepreneurship and strategy consulting. I would have never thought I was good at that. 20s is about workshopping. Being honest with yourself. Set of mentors. Getting to cities. Trying to get certified.

Cameron Passmore: Okay. You got to expand on that, Scott. In this work-from-home environment, Zoom-based teams, and you say work to a city, how do you square that?

Scott Galloway: Well, I think remote work for young people's a disaster. and I appreciate the question. I would also say if you're under the age of 35, or before you have kids and dogs, or if you're ambitious, get into the office. The office is a feature, not a bug. There's surveys showing you make more money when you're in the office. You're 38% more likely to get promoted.

Keep in mind, with every promotion, there are two or three people who are eligible. And the person who's going to get the promotion is the person who has the best relationship with the decider. And relationships are a function of proximity. If you're the person in the office every day showing how hard you're working and having coffee with your boss and that person develops an emotional investment with you, you're going to get promoted. While you can, get into the office.

Also, HR hates to talk about this. One and three relationships began at work. By not going into work, you're giving up a set of friendships, a set of mentors, and potentially a set of romantic relationships. I just think it's a disaster for young people remote work. Now I'm not suggesting that they have to be in the office every day. And I'd also like to see a new classification of worker called caregivers that are either taking care of young children, or aging parents, or their own mental, or physical health that are given more license to be at home more. But for a young person, the office is a feature, not a bug.

And, absolutely, get to – two-thirds of all economic growth is going to happen in one of 20 cities over the next 30 years. You'd rather be good in New York than great in St. Louis. Actually, St. Louis is probably a bad one. Because I think that city is up and coming. But big cities, there's just opportunities professionally and personally bumping off of you everywhere. It's also really hard. It's expensive. It motivates you to be successful. And at some point, you'll probably move. It's difficult to move into Manhattan at 45 with three kids, if not impossible. Before that, get there. Go hard. Work hard. And workshop opportunities and establish relationships.

Cameron Passmore: How important is physical exercise to financial success?

Scott Galloway: If you look at the Fortune 500 CEOs, the thing they have most in commmon it's not that they got Ivy League degrees or even that they're white males, it's almost all of them, about 97% of them, report they work out four or more times per week. It's a fantastic way to clear your head. It's a fantastic way to signal success.

It says that you have discipline. It says that you commit to something. You're generally have stronger mental health. You're going to be more attractive to mates. You're going to feel better about yourself. Who's the guy that breaks up fights at a bar? It's usually the guy that's big and strong.

And for me, it's been my anti-depressant. My dad got me working out when I was a teenager. I've worked out four times a week for the last 40 years. And it's just how I kind of maintain some reasonable semblance of mental health. And I think it signals professionally and personally that you're someone that can be counted on and someone who has character and discipline.

I think it's paramount. I think it's really difficult. And as you get older, if you're not working out you're not healthy, you're not going to have the same endurance, physical and mental endurance, as your peers at work. You're going to be more prone to depression. You're going to be more prone to illness.

Diabetes is not a key component of success. These being – and, unfortunately, I think we've – in the US, we have this industrial food complex where they want to get you addicted to shitty food and then hand you over to the industrial diabetes complex. And we've decided – certain clothing companies and fashion companies have decided that obesity is finding your truth. No, it's not. It's finding a ventilator. It's finding diabetes. And I'm not suggesting we shouldn't have sympathy and create food stamps and food programs to get people out of food deserts.

But when I was in school, I don't know if you remember this, Cameron, I don't know where you went to school, we had something called the Presidential Fitness Awards. And when I had a growth spurt, I couldn't do pull-ups. I worked out every day to get that goddamn award the next year. And it was a great thing. Physical fitness was celebrated. And then it was cancelled because it was seen as fat shaming.

And I think we can have it both ways. I think we can have empathy for people who are genetically born bigger or don't have access to money and have to look at the ratio of calories to dollars. But for God's sakes, to romanticize it and celebrate it, it makes no sense to me. It's a huge component.

And, unfortunately, it's been weaponized because there's so much money in obesity. 70% of Americans are either obese or overweight. And there's a lot of money in it. When obesity went from 30% to 40%, McDonald's stock was up 12X during that same period. McDonald's, General Foods, PepsiCo, these aren't companies. These are indices for obesity.

And so, they've done their best to try and tamp down the sad truth, and that is the biggest pandemic, the biggest killer in the world is not COVID. It's obesity. 82% of people who died from COVID had two morbidities. 88% had one. And they were almost always weight-related. This is the pandemic that the industrial food complex and the health industrial diabetes complex doesn't want to talk about because they're making so much money off of it.

Ben Felix: I want to ask about professional financial planners for people who are seeking their own economic security. What role do you see for professional financial planning?

Scott Galloway: I would argue that, at your age, you want to take advantage of technology and low-cost ETFs and just diversify on your own. And the reason why is that I think when you get to Cameron or my age and you have more complicated taxes, having some good advice. And if you get above a certain net worth, having some good advice makes sense.

Unfortunately, oftentimes, up to a third of your returns can be stolen or melt away through fees. While I'm a huge advocate of leveraging other people's intellectual property, I think, early, you want to be careful not to get into a relationship where you're paying a lot of fees.

The financial industrial complex is also a bit of a scam. What I've come to believe is that no one has any idea. And so, if you look at hedge funds and alternative investments as an entire asset class, they've underperformed the S&P by the amount of their fees.

I'm not suggesting that they're all grifters. But show me someone who's advertising and charging 1% or 2% of your money every year, I'm going to show you great marketing. I mean, even Warren Buffett has said that they not sure they can beat the market any longer. And he suggests investing in low-cost index funds.

I think as you're get older and maybe have a little bit more of a complex investment strategy, I think, occasionally, to hire somebody to look at your stuff. I also think it's going to be a great use of AI, to have AI models look at your portfolio. But don't do what my mom did. My mom invested through Merrill Lynch and Dean Witter and they took 1% to 2% of her pretty small net worth every year to have a guy just underperform the market. And I think there are millions of Americans that are caught in the same trap. And then you think, "Oh, 1$ or 2% a year, that's not a big deal." Well, if you're only getting 8% a year, which the S&P has done, that takes a quarter of your returns away.

The bottom line is I think you can, with low-cost ETFs and some research online, do most of your planning yourself. And then as you get older, don't be afraid to reach out to people or even ask for advice. I do think a financial planner at some point does make sense for people, especially if they're financially just not literate. It's a double-edged sword for me. I'd have them reconciled. I'm not going to say don't have a financial planner. But just keep in mind, there's a cost there. And what's most mendacious about it are that the costs are hidden.

When you buy a car, you know the utility you're getting. You know how much it's costing. Usually, the fees are hidden when you're investing in a mutual fund from some company that has a very rich-looking guy on the cover advertising on CNBC convincing you that they have some insight into the market.

I think two-thirds of the fees here should be starched away. We all want to think that we're going to hire people smarter than us. I generally find very few people are smarter than the S&P.

Cameron Passmore: What should people be looking for in a financial planner? For example, in our world, we do index-like investing at a relatively low cost integrating with financial planning. And I know you talked about your adviser at Goldman. I believe that you called a thought partner in a fiduciary. I think that's how we would view ourselves as well. Do you see value in that intersection?

Scott Galloway: Yeah. You want someone who you think is representing your interest. The reason I love Goldman is that they bring me funds and stuff that they have that they generate fees on all the time. And then I say, "Well, I have an opportunity to do this." And they'll say, "You should do that. That's a better opportunity for you." They're putting themselves in my shoes.

The first thing is to establish trust and make sure your clients feel like you're serving their interest. Low cost is obviously huge, the fees. But somebody who you think really understands the markets better in terms of diversification and can save you from yourself. And then, also, someone who's very thoughtful about your – unfortunately, I think taxes plays a huge role in wealth, specifically tax avoidance. And I hate to use that word. But moving to Florida from New York was hugely creative to my personal net worth. Investing in certain types of assets where I could qualify for 1202. Holding on to certain stocks longer than a year. Everything. Buying a house. Putting in an LLC so I could depreciate it. I mean, that's where I think I would call it tax advice is really important. Sort of a holistic strategy. Low fees and someone who you feel is managing your life holistically.

I'll say to Goldman I have a great investment opportunity. And I'm like, "That's better than anything we can offer you. Do that." But they'll help me go find the money. Should we borrow money against your house? Should we sell the stock? And they are my thought partner. Looking at taxes. Looking at diversification. And help me work through these issues. A fiduciary, low fees, and someone who looks at the entire picture and anticipates your liquidity needs and helps you figure it out.

Ben Felix: Yep. Makes sense. Sounds like what we do, which is good. Because, for a minute there, it sounded like you didn't like what we do.

Scott Galloway: Look. You guys, it's very situational. I think people, when you really take a vested interest in your client's prosperity, you're going to do just fine. I think a lot of these big institutional companies are in the business of branding and convincing people that can outperform the market and taking 2% of their assets every year and not really providing them. Yeah. Anyways, I think it's situational.

Ben Felix: Yeah. Agree. We talked earlier about investing in private businesses. I mentioned that I'm invested in our firm, PWL. How do you think people should think about opportunities like that to invest into private business? Maybe their employer? Maybe something else?

Scott Galloway: Well, that's how I got wealthy is I started companies. I started a strategy firm called Profit when I was 26 that I sold for 33 million seven years later. Or was it 10 years later? Anyways, and then I started a company called L2, which was an analytics company which we sold for 160 million. My two big hits when I needed it when I was younger were starting my own companies.

And you probably going to have to over-investment. It's going to be difficult for you to diversity as a young person starting a company because you kind of got to go all-in not only personally, but financially oftentimes and reinvest in the company. And that's both nerve-racking and stressful. But the upside is enormous. The market is good at measuring risk versus reward.

What I would suggest to you is go all-in. But the first opportunity, you have to maybe take some money off the table. Maybe the company goes cash flow positive. You want to reinvest. But at some point, you want to say, "Okay, I got to start diversifying. I got to start investing in real estate. I got to start putting money in stocks that are totally unrelated to what we do." And if you ever have the opportunity to sell a piece to the business or you're really making good money, there's all these stories of Mark Zuckerberg doubling down and turning down 10 billion and then being worth 60 billion. Great. Assume you're not Mark Zuckerberg. And that is, when you're young, go all-in. Be very concentrated. I get it. You're trying to build a business.

But at the first opportunity, especially – do you have kids?

Ben Felix: I've got four kids. Yeah.

Scott Galloway: Okay. You need – at some point, unless the company spending off a lot of cash flow and feels pretty bulletproof, you want to start at some point. You're at the point where you don't want all of your eggs in one basket. You want to have some diversification. Either buying a home. Putting in some stuff in stocks that will grow tax-deferred.

But I think by the time you get to your age, you need to be thoughtful about how do I start to diversify a little bit? Even if it means putting off some cash flow. Wouldn't it be great to reinvest and grow the business? Okay. Fine. But I also need to take 10, 25, 50, 100 grand a year and put it in stuff that's not this. Because nobody knows. You just don't know what'll happen, right?

Cameron Passmore: How do you think people should react when everyone's – and you mentioned NVIDIA earlier. When everyone's getting excited about an investment, what should people on average do?

Scott Galloway: Invest in index funds. Look, one of the things I've learned in investing is to not trust your emotions. And that is when everyone's piling into something, watch out. Because whatever's hot – for example, a pretty interesting strategy would be to just look at whatever is the hottest sector for MBA is. Because they're generally rearview mirror looking and to short that sector. Because they go into it after it's already had huge run-ups.

And now you never know when stuff gets hot. Sometimes that creates its own momentum and it continues to go up. But, again, I always regress to NVIDIA could go up another 30%. Meta seemed overvalued two weeks ago. And it's gone up another 10% or 15%. What I would suggest is participate in all of it. Because the hot stuff – generally speaking, your return on investment is inversely correlated to how sexy something is.

My two biggest wins in the last year were I bought claims against a bankrupt FTX from claimants who didn't want to hold on to them. I bought them for 23 cents on the dollar. And I invested in a company being brought out of bankruptcy that was an electronic nicotine delivery system. Basically, a vaping company. And these are not romantic investments.

And then all my high flyer stuff where I invested with kind of tier-one VCs and cool tech stuff is not done as well. I've invested across every part of the cap structure, angel, venture, growth, IPOs, growth companies, mature companies, distress companies, bankruptcies. Generally speaking, the sexier something is I find a little lower the return. I bought a bunch of Florida real estate. But the key was I bought it when it was really unsexy. When there was just for sale signs everywhere in 2010 and '11. No one wanted Florida real estate. I would not buy it now. Because now it's very sexy and it's very expensive. The same is true of industries. The sexier the industry, the lower the return.

If someone brings me an investment opportunity for a membership club in New York for fashion and music industry, I'm like, "Oh, my God. That sounds so cool. I won't get near it." I want to be a member. But I won't invest in it. And then someone else shows me a business plan or an investment for a SaaS company that does scheduling for healthcare maintenance workers, I think, "Well, I'd like to put a gun in my mouth just hearing about this business." I'll write a check.

Your return on your human and financial capital is inversely correlated to how sexy the business is. You want to be a billionaire and become a millionaire? Go into movie producing. The chances are if you meet someone who's investing in independent film production, it means their spouse has made a shit ton of money and they want you to find something to do on evenings and weekends.

You're opening a club? You're opening a restaurant? Just keep in mind, investments – the more they become over-invested, the lower the returns. The cooler it is, the more likely it is to get over-invested.

Where I've made my biggest wins is running into the fire. And don't trust your emotions. When something sounds awful, "Oh, bankrupt FTX? Oh, those guys are never going to get their money back." Wait. They own 15% or 20% of Anthropic that just got valued at 20 billion. That means they own $4 billion worth of Anthropic. That's 30 or 40 cents from the dollar and they're being sold for 23 cents before the cash. Okay. It may sound crazy. The company stinks. Okay. Run into the fire. NVIDIA, some of this stuff right now, I would be careful. But, again, the way to manage all of this is through index funds.

Ben Felix: Yeah. That's a good answer. What do you think are the most beneficial ways to trade money for time?

Scott Galloway: Well, decide what you can do that no one else can do. If you've got a decent job in a city, maybe you want to get a cleaning person and take that four hours and invest it in working out. I mean, there's some advantages to cleaning your own place. Some people find it cathartic. But for the most part, start thinking about what can you do really well? Or what's good for your mental health? Or what's going to give you access to more relationships? And, over time, try and outsource everything else. And that's a story of privilege. But I've always had – since a pretty young age, I've always had an assistant. And my attitude is anything she can do as well or better than me, she's going to do.

And I try to figure out – I love to do nothing. I'm great at it. And it's fine to do nothing as long as it's planned. But almost everything else in my life, slowly but surely, I've outsourced. And one of the first concepts I learned in economics, the comparative advantage of nations. Figure out what you're good at as a nation. The US is great at software, weapons, media, and universities. And so, we go very hard into those things. And we outsource a lot of agriculture, a lot of manufacturing, whatever it is, to other nations. Do the same thing yourself. The moment you have some money, think, "Where could I free up 2, 4, 8 hours a week to reinvest in my company or what I'm really good at. In my job. Or my own mental or physical health. Or more time for relationships." But in an information economy, you can get so many people to do so many things for you. I'm a big fan of outsourcing from a fairly young age. Not being dumb about it. But where can you free up time for things that will ultimately make you more successful?

Cameron Passmore: How do you manage your financial worries that you're so transparent about?

Scott Galloway: You know what helps me is I just write down everything I own. Having a budget and knowing where all the bodies are buried, and how much everything is worth, and how much money I'm spending gives you a sense of control. You're taking control. I think the anxiety comes from the unknown. Not knowing what bills are coming in. Not knowing what investments you have and if you could sell them. And how much they're worth? And what would the tax hit be?

Whenever you don't really know what's going on, you're in for an unwelcome surprise. Or it's calling you guys. Say, I'm a client of you, guys. It's calling you and saying, "I'm really anxious about money." One, tell me if I should be. And sometimes anxiety is common sense. You might tell your clients, "Yeah, you're out over your skis. You're not making a lot of money. You just got divorced. And your investments aren't doing well. Your anxiety is common sense." And then that means we need a plan. Maybe it's cutting your spending. Maybe it's doing the following things. But just having a plan and knowing where you are. And having a plan is how you handle anxiety when things aren't going well.

For me, because I'm wealthy now, it's just writing out everything I have and going, "Okay. Calm down take a beat. You're fine." Because what's strange is I have 40% of my assets in real estate, 40% – I just went through this with Goldman and on a podcast. 40% in private Investments. I only have 10% or 20% of my net worth in public stocks and they control 90% of my mental health around investing because they have a scorecard.

When Airbnb's way up, and Apple's way up, and Amazon is way up, which is my three biggest holding, I'm like, "Champagne and cocaine. I just feel great about myself." And then when the stocks are way down, I'm like, "Oh." And what I don't realize is it's only a small part of my net worth.

And so, I just write out what is everything? And then I do scenarios. Well, what would happen if I lost half of my net worth?" And the reality is, at this point, I'd still be okay. And it gives me comfort. But, one, it's knowing where everything is. Having a handle on it. Reaching out to people and being very transparent. This is what I have. Should I be worried? Should I be doing other things? And, also, having a thought partner. Whenever I have a bad investment, I talk to my wife about it. I want her to know everything that's going on.

Here's the thing that causes mental anguish is other people not knowing what's going on. The addiction that has the highest suicide rate is gambling. And this is where I think online trading can be disastrous, especially for young men who are more risk-aggressive. And that is you can be down. You can be doing terribly. And you don't want to know how badly you're doing, so you ignore it. And, two, nobody around you has any idea that you have lost all this money. And the reason that's the highest suicide rate is that, if you have a meth addiction, people figure it out and they try to intervene. Or an alcohol addiction.

If you're addicted to trading or online gambling, you can get so far in over your head and no one else knows. And then you wake up and say, "All right. There's only one way out." I think it's talking to people, especially your financial planner. Or, ideally, your spouse. This is what's going on. This is what we lost. This is what we gained. This what I'm worried about. But just talking about it. Almost like talk therapy.

Because, in our society, money plays such an important role, especially I think with a man. It's kind of our self-esteem and our self-worth in this society is kind of dictated by our bank account. So I think having people you can talk to openly. We all share screenshots of our wins. You need people you can talk to about your losses, "Oh, I'm really fucking worried. I made a stupid mistake here and I'm worried I'm not going to have enough money next –" just talking about it. And then someone can say to you, "Well, okay, this is the plan." Or, "No. You shouldn't be worried." But, yeah, you need thought partners around that stuff.

Ben Felix: What are your biggest financial worries with respect to your kids?

Scott Galloway: That they grow up indulged assholes. That they don't have an appreciation for how hard it is to make money. That they never develop the hunger that I had. I mean, I think it's the same fear that most parents who have been blessed as we had feel. That they're just never going to develop that fire. They're going to be good people. They're being raised by good people. Or at least I think they are. And they show evidence that they're going to be good people. But where's the fire coming from?

I had fire. I wanted to take care of my mother. I knew early. I'm not that handsome or that interesting. If I want to find a woman who's cooler and better looking than me, I need money. And I know that's a crass way to think about it. But I figured that shit out early. I figured it out very early. America is a loving, generous place if you have money. It's a rapacious, violent place if you don't. And we all like to tell ourselves this myth that you can't buy happiness with money. Oh, that's bullshit. You sure can. That's bad news.

The good news is it tops out at a certain point. Once you get to a certain point, you don't get any more happiness. But up until that point, middle-income people are happier than lower-income people. Affluent households are happier than middle-income households. It is really important. And I connected those dots really fast. And I knew that if I didn't get there, no one was going to get there for me. I had all sorts of help. Pell Grants. I'm a child of affirmative action and the big hand of government. I am a product of big government. Thanks for your good work, everybody. But that's my fear. My fear is my kids don't grow up with that grit or that hunger.

Cameron Passmore: Our final question, Scott. How do you define success in your life?

Scott Galloway: This is going to sound weird. I just did ketamine therapy. Have you guys heard about this?

Cameron Passmore: Oh, yes.

Scott Galloway: And it was like burning man for me. I had always been curious about it. But I always found an excuse not to do it. I struggle with modest depression and anger. And someone had suggested ketamine therapy. And I just went into it very intentional. I said, "Okay, what is my purpose here?"

And I came out of it. And it didn't illuminate anything. It just sort of solidified what I thought, and that is I'm writing a book on masculinity and I'm looking at different cultures how they define masculinity. And, oftentimes, it's seen through the lens of a religious service or the first time they heard their own cows without someone older trailing them. Whatever it might be. Certain physical feats.

And what I thought about or the way I define masculinity or becoming a man, if you will, is this notion of surplus value. And what do I mean by that? As a young person, you're getting love, affection, attention, resources from your parents, your colleagues, your education system, the government. At some point, you start taking care of others. You start generating tax revenue. You hopefully build a business where your expertise where you can offer jobs for other people. You'd start taking care of your family, your neighbors. Maybe you serve your country. You start adding more value then you take in and you get to surplus value.

And some people never get there. Some people are a tax on their relationships, their family, and the country for their entire lives. I think it's getting to a point of surplus value. And what I kind of came out of this ketamine therapy was my job, my purpose is to love my kids and the people around me more than I've been loved.

I looked at relationships growing up as a transaction. And that is if I wasn't getting more than I was receiving from business partners, romantic partners, friends, I would feel cheated. I'm not getting as much out of this relationship as I think I'm giving. And I recognized as I got older that that's not a road to happiness. That my job and my purpose is develop the skills and strengths such that I can provide more than I take and I can take care of others. That true masculinity starts with taking care of yourself. You want to be in great shape. You want have a plan. You want to be mentally, and physically, and emotionally strong. And then you go one circle out. Start taking care of your family. Another circle out, start helping your friends. Another circle, community. And the real expression of masculinity is planting the seeds of trees the shade of which you'll never sit under. I think that's a man's purpose. And that's my goal.

Cameron Passmore: That's a good answer. The book is The Algebra of Wealth. Great book. The podcast is the Prof G Pod. Scott, it was great to have you on. Thank you.

Ben Felix: Yeah. Thanks, Scott.

Scott Galloway: Thanks, guys.

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