The Age Divide in Protests, How to Start a Business in a Downturn, and How Scott Measures Impact

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Speaker 2 Welcome to Office Hours of Property. This is a part of the show where we answer your questions about business, big tech, entrepreneurship, and whatever else is on your mind.

Speaker 2 If you'd like to submit a question for next time, you can send a voice recording to officehours of propertymedia.com. Again, that's officehours at profitmedia.com.

Speaker 2 Or post your question on the Scott Galloway subreddit, and we just might feature it in our next episode. First question.

Speaker 3 Hello, Professor Galloway. You discussed with Kathercock Richardson the effectiveness of the No Kings protests.
She said that nonviolence and that people can see themselves in the group is important.

Speaker 3 I agree, but I see very few young people and when I do they're mostly in cities. What is that about? It's their future, not the people in the protests who are older like me.

Speaker 3 Young people can organize around Gaza and that's fine, but not this, which has direct impact on their life. Why do you think this is the case?

Speaker 2 That's a really thoughtful question. So nearly 7 million people took to the streets nationwide on October 18th as part of the No Kings Rallies, one of the largest single-day demonstrations in U.S.

Speaker 2 history. Unlike earlier waves of activism during the first administration, the crowds this time skewed older.

Speaker 2 In D.C., the median age was 44, according to data collected by researchers at American University who studied protest movements.

Speaker 2 The typical attendee was an educated white woman in her 40s who learned about the rally through friends or Instagram.

Speaker 2 The first thing, one of my many failings is the gap between my intentions and what I actually fucking do. I have all these big ideas, and then, okay, okay, then what do you do? Nothing.

Speaker 2 And I wanted to take my boys to the tube station where their mother slept during the Blitzkrieg, and I couldn't figure out which one it was.

Speaker 2 And then, of course, my son started playing video games, and the other one didn't get home till later from boarding school. And boom, it was just easier to sit around and watch the Chelsea game.

Speaker 2 You know, see above, kind of low-character father who virtue signals a lot. Anyway,

Speaker 2 the thing I noticed about the protest, I did watch a lot of it on television, is just how old and how white it was. And I couldn't figure it out.

Speaker 2 So find that young people's risk aggressiveness and social consciousness can be channeled in very positive ways. I think they're good actors.
I think their heart is in the right place.

Speaker 2 But I would argue, and again, I'm going to sound boomer here, that protesting someone who is acting like an autocrat, creating an orgy of corruption that will turn away both financial and human capital.

Speaker 2 is ultimately going to reduce our prosperity, our freedoms. And I think the world right now is in a state of chaos because of the lack of a superpower with its heart in the right place.

Speaker 2 So I would argue, and again, as an old white dude, you know, I found real,

Speaker 2 I was really moved by this protest where mom and dad seem outraged because perhaps they

Speaker 2 recognize that a lot of the things that helped them get to where they were are under attack right now.

Speaker 2 I just don't think they find it that interesting or that emotionally engaging, or put another way, I don't think they find it as fashionable.

Speaker 2 So it did really strike me, though, that older people and wider people seem to be into the No Kings movement. I was just happy to see a lot of people turn out.
About 7 million people are about 2%.

Speaker 2 Supposedly at 3.5%, that's when you foam and change, that that's when

Speaker 2 the crowd, if you will, becomes undeniable. And so we got to 2%.

Speaker 2 But I found the whole thing just incredibly inspiring that people take time out of their weekend to peacefully protest.

Speaker 2 And as Heather Cox Richardson, who I adore, pointed out, that the most effective protest is peaceful protest.

Speaker 2 One of my biggest fears around these ICE raids, I feel like the administration is hoping for violence.

Speaker 2 They are hoping that someone loses their shit and rams their car into an ICE car, or worse, that there's violence against an ICE

Speaker 2 agent.

Speaker 2 So I was a big fan of the No Kings protest, but what it comes right down to is I think young people just don't find it that compelling, that fashionable. And I don't think that they have.

Speaker 2 I think the problem is I think we fucked up.

Speaker 2 I think we took civics out of high school curriculum and replaced it with computer science, hoping all our kids would be Mark Zuckerberg and trying to figure out ways to make billions while encouraging young girls to self-cut.

Speaker 2 And I don't think young people probably have a sense, a strong a sense for our history on the positive side and how important it was to have co-equal branches of government, rule of law.

Speaker 2 and are more engaged in what they believe are the injustices of levied against special interest groups, which are very real.

Speaker 2 Simply put, it just didn't catch on among young people.

Speaker 2 I don't fully understand it.

Speaker 2 But at the end of the day, as long as people are engaged in civil protest, I think it's a good thing. But I noticed the same thing you did.
Very much appreciate the question.

Speaker 2 Question number two.

Speaker 2 Hi, Scott.

Speaker 4 It's Johnny from Perthshire in Scotland. My company is starting a new whiskey distillery in the Scottish Highlands.

Speaker 2 I'm fortunate to have brilliant business partners, a passionate, hard-working team and supportive shareholders.

Speaker 4 We're not trying to be disruptive, but we are doing things a little differently, focusing on quality and traditional production in a way that stands us apart from much of the industry.

Speaker 4 As you may know, Scotch whiskey, like most alcohol categories, is going into a bit of a dip. I'm confident consumption will recover over time.

Speaker 2 People have drank alcohol for millennia, but this downturn could last five to ten years.

Speaker 4 My question is, what advice would you give to a young company launching into a challenging market cycle?

Speaker 2 Thank you for all your hard work and advice.

Speaker 4 I'm really glad you're enjoying your time in the UK, but I hope you'll make time to visit Scotland, explore some of our characterful distilleries, climb some of our majestic mountains, and of course, enjoy a good dram.

Speaker 2 Oh my God, hello. So first off, I love Scotland.
I go to Scotland probably once a year. I did my 50th birthday party, 60, at the Fife Arms, a hotel in Aberdeen, Scotland.

Speaker 2 And I had everyone wear a kilt, and I colour-coded it based on their kilt or the shield or the pattern or whatever you call it was based on how long I knew you.

Speaker 2 If I knew you longer than 50 years, you got one type of kilt all the way down to people I've known 10 years or less.

Speaker 2 So I am an enormous fan of Scotland. Okay, so anyways, back into your question, what advice to give a young company launching into a challenging market cycle?

Speaker 2 I find, so first off, alcohol is in fact a little bit fucked.

Speaker 2 So according to Bloomberg, shares in the world's biggest beer, wine, and spirits producers have collectively lost $830 billion in market value over just the last four years.

Speaker 2 A Bloomberg Index tracking roughly 50 publicly traded beverage companies is now down 46 percent from its record high in June 2021. The downturn has been made worse by U.S.

Speaker 2 tariffs, high interest rate swing on consumer spending and inflated commodity prices. One of my predictions, every year I do a prediction deck, one of my predictions in

Speaker 2 It was either November of 22 or 23 was that you could short a basket of drinks companies because of GLP-1 drugs. In addition, young people are drinking a lot less.
They still love to get high.

Speaker 2 They're still abusing substances. They're just abusing psychedelics and ketamine and mushroom chocolates and ecstasy instead of alcohol.
So the alcohol industry is getting the shit kicked out of it.

Speaker 2 On the Scotch industry specifically, about 90% of Scotch whiskey production is exported. In 2024, global exports of Scotch whiskey were $5.4 billion sterling or about

Speaker 2 $7 billion. That's down 3.7% from 2023.
When you think, okay, down 4%, that's not a collapse.

Speaker 2 Your ability to raise capital, your ability to get distribution partners, when a business is shrinking, that means everyone's fighting over the existing business, and it is especially hard to break in.

Speaker 2 In that same year, the industry shipped around 1.4 billion bottles, up about 4% in volume versus 2023. Because the value fell while volume rose, that means the average price per bottle is declining.

Speaker 2 So they have less pricing power, a clear signal of more bottles sold, but at a lower average revenue per bottle. What I think that means is essentially the pricing power has gone down because

Speaker 2 I think you have a difficult time

Speaker 2 predicting supply, and you can't do it real time. You can't ramp up or down production as easily.

Speaker 2 But compared to 2019, Scotch whiskey is down, but not out. Export value is actually 10% higher than before the pandemic, and volumes are up nearly 4% from last year and about 7% from 2019.

Speaker 2 Back to your question. I find that the best best time to start a business is when it's in, not in a down cycle, but bottoming.
And it's hard to time this.

Speaker 2 But if I were to look back on my nine businesses, the most successful ones, and I tried to discern the difference between the inputs, between the success and the failure.

Speaker 2 What drives success and failure? Was it the idea? A little bit, but I've had good ideas that have gone out of business. I've got bad ideas that I think got sold.
It's really all about timing.

Speaker 2 So what is the right timing? The right timing is to be investing in the bottom of the the U of a recession. Why? Because people, inputs, office space are all cheap.
When I started,

Speaker 2 and by the way, the companies I started in 1999 during the froth or in 2007 when the markets were expensive, people were expensive, real estate was expensive. It was easy to raise capital, too easy.

Speaker 2 So you're under the impression that if you raise a lot of capital, it was a good idea. You start spending like a fucking drunken sailor

Speaker 2 to build a mediocre business and you wake up and you've spent $30 million or $50 million. I've done that.
And you've built sort of a mediocre business.

Speaker 2 whereas the businesses i started right out of business school in a recession in 1993 and then again in 2009

Speaker 2 uh people are inexpensive and if the business works i mean you're fighting

Speaker 2 you're becoming a warrior if you can make a business work in this environment it means you have something it means you have a great scotch and then as the winds kick up again and hopefully they will in alcohol Well, is this a structural or cyclical change?

Speaker 2 Remains to be seen. But my impression impression is people are moving into dark alcohols.
But a great training, a great Navy SEALs training for running a business is starting in a recession.

Speaker 2 Ideally, you don't want it to go down. Ideally, you want to be at the bottom.

Speaker 2 It's difficult to time this because when things come back, you have a tight, lean, mean, fighting machine called a business.

Speaker 2 And as it comes back, you get a natural lift because you already have the scale, good people. You're ready to catch a wave.

Speaker 2 So in 2009, when I started L2, a benchmarking firm, the luxury industry was in the shitter.

Speaker 2 I started benchmarking all their digital digital activities.

Speaker 2 And then when the market came back and the internet was coming online, they all wanted to approach their business differently, open up new channels. Chanel and Hermes didn't sell things online.

Speaker 2 They said they would never sell on the internet. Okay.
Famous last words. And I said, yes, you will.
And I'm going to track your progress and help you build an amazing digital presence.

Speaker 2 Anyways, so I got lucky and the people

Speaker 2 I could start a business. on, I think I maybe put in $700,000 or $800,000 of my own capital on the L2 and ultimately ended up selling it for $158 million.

Speaker 2 I did one round of capital, raised $17 million, took $7 million off the table, meaning I gave myself and other people in the company an opportunity to sell some shares.

Speaker 2 So I really only raised $10 million, didn't spend very much of it. So this is a capital that went from zero to $160 million in value in about seven years with very little outside capital.

Speaker 2 And a lot of that was just timing. I mean, it was just a great time to be in business from 09 to 17.
That was just an incredible bull market run.

Speaker 2 And then picking the luxury business, which was on an, you know, even, you know, champagne on top of cocaine. So actually, you're in, I think, a decent part of the cycle to start a business.

Speaker 2 Now, how are you successful? Simply put, you throw nickels around like they're manhole covers. You watch every goddamn cent.
You review every bill. You negotiate for every bill.

Speaker 2 And if you need to, keep your costs on the labor side down.

Speaker 2 I don't know if you have the ability to do this, but with some of your senior level employees, you may want to give them equity as a form of compensation.

Speaker 2 So at all my companies, I think we paid people 10 to 30% below market in current comp,

Speaker 2 but I would give them double or triple the industry standard in equity such that I could keep my cash burn really low. But if there was an exit, they would do really well.

Speaker 2 But throw nickels around like they're mad hole covers, be constantly innovating every day. What should your management style be as the head of a small business?

Speaker 2 Be all over fucking everything all the time. I was, everybody talks about, you know, I remember being on these panels of entrepreneurs.
It's the right, the right culture, the right environment.

Speaker 2 Well, my environment was I was all over everything trying to improve every goddamn thing every day. What's going on with this? What's going on with her? What's going on with this client?

Speaker 2 Is this person happy? Is this person unhappy? Why does our site look like shit? Why are we not getting, you know, why are we not getting financial reports as quickly as we should?

Speaker 2 Why are we spending so much fucking money on legal services? How do we get our input prices down? How do we we establish new channels of distribution?

Speaker 2 Do I need to get on a plane to go visit Tesco or whatever the hell it is?

Speaker 2 I actually think entering into the market in a bit of a down cycle, hoping that it's cyclical, not structural, that's a question mark right now. Thanks for the question.

Speaker 2 We'll be right back after a quick break.

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Speaker 2 Welcome back onto our final question.

Speaker 5 Hi, Scott. My name's Graham from Colorado.
I've heard you say many times that you are going to avoid a political run because you think you can affect greater change from, quote, outside of the bottle.

Speaker 5 So my question today is, what change have you seen affected from all of your thoughts on your podcasts?

Speaker 5 I think that you come to each one of your podcasts with a lot of intention and cogency and pragmatism. And I really appreciate all those thoughts.

Speaker 5 But I am curious if you have any numbers or metrics or ROI that you can speak to where you have seen your ideas actually being implemented or digested in the bigger political ecosystem, whether from lobbyists or politicians, et cetera.

Speaker 5 Really curious on your thoughts here and excited to hear back. Thanks for your time.

Speaker 2 Thanks for the question. So, metrics.

Speaker 2 So,

Speaker 2 again, just being very raw, my key metric is how much money I have. I know that sounds pathetic to say, but it's a metric I grew up with.
And I think, okay, is this business making money?

Speaker 2 Is it making everybody at the company economically secure or wealthier?

Speaker 2 And not only that, it's a really unbelievably granular metric. I know how much money Prop G Media has in its checking account right now.
I know how much we're paying people.

Speaker 2 I know that we're getting CPMs at $47 for me to read an ad for

Speaker 2 an insurance company or a car company. So that's one metric.
The more substantive metrics are

Speaker 2 more qualitative. So

Speaker 2 I started talking about the dangers of big tech in 2016.

Speaker 2 And

Speaker 2 I just know I'm having an impact. I know that when Senator Warren said, if we didn't have any trust, we'd all be saying, let's bing it instead of Google it.
I know she got that from me.

Speaker 2 I know that, or someone on her staff got that from me. I know that when I started talking about income inequality, I was a raft of people talking about it, but it's gotten a lot more attention.

Speaker 2 And most recently,

Speaker 2 when Governor Moore or Governor Newsom's offices reach out to me to have me on or talk to them about the struggles of young men, I know I'm having an impact.

Speaker 2 So that is really rewarding. And as I get older, I'm trying to wean myself off of the metric of money.

Speaker 2 and into more qualitative metrics around having an impact around things that I I feel passionate about and also things that are somewhat of a nod to the incredible advantage and blessings I've had.

Speaker 2 But I don't have specific metrics.

Speaker 2 Unfortunately, the metric that's always in your face is the number of likes you got on a social media post, which I really hate because I think how you have real impact is your heart's in the right place.

Speaker 2 You're data-driven. You're fearless about...
saying certain things.

Speaker 2 I know I'm virtue signaling right now, but in 2017, when I said big tech, be careful, these guys do not have our best interests at heart. People accused me of catastrophizing.

Speaker 2 And no, the only question here is, should Sheryl Sandberg or Jeff Bezos run for president? I'm like, folks, be careful. This shit, there's real danger here.

Speaker 2 And then when I started talking about young men five years ago, I was called Andrew Tate with an NBA. I'm like, no,

Speaker 2 just because you're advocating for young men doesn't mean you can't advocate for women concurrently. We've been walking chew gum at the same time, that empathy is not a zero-sum game.

Speaker 2 But how do I know I'm having an impact?

Speaker 2 I have dialogue with people at quote-unquote the highest levels, levels.

Speaker 2 And I am starting to Governor Moore just in a state-of-the-state address in Maryland announced that the focus of his administration in the coming year was going to be on the struggles of young men and boys.

Speaker 2 A politician could not have said that five years ago. No fucking way.
No way. So I think we are having a real impact.

Speaker 2 And then the most rewarding actually thing is when young men or mothers come up to you or send you an email. That is very rewarding.
But what are my metrics for trying to have an impact?

Speaker 2 On a very base crude level, does this business work? Is this message working?

Speaker 2 Am I seeing programs in a dialogue that is clearly impacted or influenced by what we're doing here? By the way, I'm saying I a lot.

Speaker 2 Greatness is in the agency of others. If you want to have a real impact, you need to build an organization with people who are really talented.

Speaker 2 Otherwise, you're just going to be a sole contributor and you're never going to have that much impact.

Speaker 2 You know, unless you're Noam Chomsky or someone who's just such a fucking genius, which I am not, it's about attracting and retaining really talented people who can hopefully scale the message and the impact you're having.

Speaker 2 And I have, that's my superpower. My, you know, core competence is communication, but my superpower is an ability to attract and retain people more talented than myself.

Speaker 2 That is absolutely, I know so many people who come to me and say, I want to build what you've done. And I'm like, okay,

Speaker 2 hire fucking amazing people, figure out a way to pay them a lot of money. That's the key.
The majority of people that do what we do here do it as sole proprietors.

Speaker 2 It's them in two turntables and a microphone or a laptop. And they want to know why they're not having the same impact.
It's like, well, folks, Prof G Media is about 25 or 28 people right now.

Speaker 2 And they are all really talented, well-compensated, creative, hardworking young people, which doesn't get me 25 times the impact I would have. It gets me 50 fucking times the impact I would have.

Speaker 2 You know, this shit just doesn't happen. Anyways, as I get older, I want to have more impact on social issues.

Speaker 2 I especially want to pay it back and ensure that the amazing things that gave me the prosperity I have are still in place. Pell grants,

Speaker 2 big admissions acceptance policies at universities, a tax policy that puts money in young people's pockets, tax credits that engage and activate the private sector around development and do away with NIMBY laws.

Speaker 2 pass YIMBY legislation such we have 8 million new homes in 10 years. I'm speaking to a bunch of people about the affordability crisis for young people.

Speaker 2 So I guess it's a mix of things and accountability or a mix of metrics. But you'll know it.
You'll know if you feel like you're having an impact on things.

Speaker 2 What is dangerous is to have your measurement be likes and algorithms and social media.

Speaker 2 That the people in 10 years, 20 years and 50 years who will look back on it and admire, trust me, pretty much didn't give a flying fuck how many likes they got on a certain post.

Speaker 2 That is the danger that we all

Speaker 2 that we no longer control the algorithms, the algorithms control us, and we all start barking up the same tree, which makes us stupid. Appreciate the question.

Speaker 2 That's all for this episode. If you'd like to submit a question, please email a voice recording to officehours at proptimemedia.com.
Again, that's officehours at profitmedia.com.

Speaker 2 Or if you'd prefer to ask on Reddit, just post your question on the Scott Galloway subreddit, and we just might feature it in an upcoming episode.

Speaker 2 This episode was produced by Jennifer Sanchez. Our assistant producer is Laura Jannaire.
Drew Burrows is our technical director. Thank you for listening to the PropGPod from PropG Media.

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