Scott Galloway: Unfiltered lessons for business and life

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Hey folks, Jeff Berman here. I am thrilled to share some of the new names who will be joining us at this year's Masters of Scale summit. This may be our biggest stage yet. Reed Hastings, Meredith Whitaker, Van Jones, Amjad Masad, and more. Will be there with us October 20th through 22nd in San Francisco. If you're building something great, or you want to build something great, We want you there with us too.

Join us at masters of scale dot com slash apply twenty six. That's mastersofscom slash apply. twenty six. Everybody interviewed everybody and we liked each other and we had fun. And you know, couldn't pull this off now, but we used to all take company trips, no spouses allowed.

Consumption of alcohol encouraged. It's a pretty good bet you recognize that voice. That's business professor, best selling author, and prolific podcaster Scott Galloway. He's reminiscing about how he built company culture early in his career. I had read this study when I was younger saying

The number one source of retention. In any companies if the person has a friend. If they have friends at the company. If they get that dope a hit when they walk off the elevator and they see friends. Hey buddy.

This week on Masters of Scale, we've asked Scott Galloway to answer your questions. Think of him as the slightly acerbic, sharp witted friend at the office who's not shy about giving advice. It's a bit of a different episode for us. A great hang with Scott's typically unfiltered ticks. We think you're going to enjoy this one.

You gotta have incredible talent at every position. Like this huge push. There are fires burning when you're going out. Can you believe it? And then you go back to this is totally gonna be amazing. There are so many easy ways. So I have no idea what to do. Sorry, we made a mistake. But you have to time it right. Oops. It just seems absolutely nutball. Ten years later, I'm like, well, that's just how you do it. We haven't made it just how you do it. This is masters of scale. I'm Jeff Berman, your host.

Scott Galloway is the creator of a popular newsletter and podcasts under the brand Prof G Media. He's also a business school professor at NYU and the author of best selling books about our economy and culture. Scott agreed to tackle a wide range of topics with us. Most of them inspired by questions from you. We're getting into issues like when CEOs should speak out on politics, AI disruption, and building company culture.

First, we wanted to hear about Scott's approach to scale in his own life and work. Scott, welcome to Masters of Scale. Oh, thanks for having me, Doug. You've done an extraordinary job scaling the distribution of your ideas Your worldview.

What has worked best for you on that front, and what can our audience take from that as they try to extend the reach and influence that they have? People consistently come up to me and say, I just think the amount of content you push out is remarkable. You must work eight hours a week. I'm fundamentally a lazy person. I work thirty to forty hours a week. I'm really outstanding at doing nothing. What I'm Pretty good at. So my core competence is storytelling.

My Superpower though is attracting and retaining talented people. I have fourteen people at Prop Two Media, so If you wanna scale your content, you gotta focus on what part of this content am I really good at, then hopefully you have the resources. To hire talented people to kinda build it out. That's the most obvious thing. And some people don't have those resources. I'm blessed. But if you find people who are good, you want to hold on to them, give them a vested interest and ownership and your success.

From a qualitative standpoint, and then I'll talk about channels. I'm in a very blessed position and that is I have people who love me unconditionally and I have economic security, which gives me license to say pretty much whatever the f I want. Mm. Not that we've a problem with Scott's F bombs, but we don't quite have the same license here.

We have to bleep those F bombs mostly to avoid being blocked by podcasting apps in certain parts of the world. Anyway. On with Scott. Your willingness to be Kind of unfiltered.

Over the long term draws people in. So when I write my newsletter I have a newsletter that goes out to half a million people every Friday. I write as if only my sons are gonna read it and I want them to understand the world and I want them to understand me a little bit better in an entirely unfiltered raw way. And I'm very vulnerable. I talk about things like Yeah, I talk about sex. I talk about

My strain relationship with my father. I'm a fifty nine year old man that hasn't gone over the death of his mother twenty years ago. I talk about stuff in a very kind of open raw way. And from a marketing standpoint, the space I'm trying to fill or the opportunity I saw is that Straight white men don't talk about their emotions. And people usually in my business are so busy kissing the ass of somebody who they want to invest in their next round or whatever. They don't say this company's stupid and the CO's done a terrible job.

So if you can be really kind of I hate the word authentic, but if you can be a bit raw and unfiltered, I'm profane and vulgar. It turns off people, it turns off advertising, but I think people appreciate it and it's authentic. I'm generally a profane and vulgar person. It's not an act. So I would say try and be if you're in a position Uh having some economic security and most young people don't, but if you do and people who love you unconditionally

You have an obligation to speak in an unfiltered manner. And then in terms of channel strategy, I always said How do I get in front of the emerging medium? Trying to be as unafraid around content as possible. I think that really resonates with people in a world where the uh if they feel as if media and content are so starched. And so biased.

And then I personally am trying to occupy the space at men my age who don't you know, aren't really open or don't really talk a lot about their failures or their successes or their joys or their Upset in a really honest way. Yeah, and thank you for doing that. I mean, there's precious little of that being role modeled by business leaders.

On the political side of it. To the extent there ever was neutral, and I'd argue there never was neutral, the there's certainly no more neutral. And we know historically in countries that have faced threats to the their democracy, business leaders are the last bulwark. They're the last line of defense. And yet. There remains this extraordinary fear about speaking out. Go back to Michael Jordan, Republican Spy Speakers, too. What do you say to business leaders who are struggling with when to take that public position?

or even internally with their team when to say something about an issue that is going to inflame passions on one side or the other, if not both. So I've been on the board of seven public companies, I think seventeen or eighteen private companies, and generally speaking I tell them not to. And that is for the most part Like if you're Ben and Jerry's

Or you know, hobby lobby or whatever, and and part of your identity as a political position, fine. But for the most part, I think the American corporation is meant to be a platform to help people garner economic security for them and their families. And I feel like the tech sector got a little out over its skis, and that as CEO started virtue signaling and trying to appeal to their younger employees by emoting and articulating these fairly progressive values. That sometimes they're disingenuous. And that is that when really push came to shove

They weren't just honest. I like a CEO who says, I'm here to make money and create shareholder value that you'll share in. And we're gonna be good citizens, we're gonna be ethical people, we're gonna be respectful of one another. But we don't have to take a political stand on everything, and I don't need to weigh in on George Floyd is the CO of a company just because it happened. And I I like kinda the wrap of trying to unless it's part of your identity, stay out of it.

And At the same time. I think government and Citizens make the mistake of believing that We've personified companies.

Companies are for profit, they are so good at making money. US corporations make more money in a year than You know, whatever, a hundred and fifty of the hundred and ninety nations in the world making a decade. They're so good at making money they shouldn't be trusted to do anything else. And unfortunately. They've done a great job of personifying themselves and we believe them and we believe that they're actually trying to

Connect the world. You know, make the world a better place. No, they're not. They're trying to increase the value of their share such that the CEO can exercise his or her options and buy their second golf stream. That is their entire fing focus, and to believe anything else is just naive. For ninety nine percent of CEOs, my suggestion would be just avoid it at all costs and say We're gonna try and create economic security for you and your family such that on weekends, whatever you wanna do politically, recreational, if you wanna be a DJ or you wanna go to a

Yeah, save the whales. Rally, it that's your business and we respect your viewpoint. But that's not why we're here. Masters of Scale focuses on the positive lens of scale on how to get there, you know, uh the entrepreneurial journey to make it happen. But

There's a concern that we don't talk enough about when a company's influence goes beyond what's healthy for society or for even the business itself long term and You talk a lot about the quasi monopolistic companies in our universe and that they're great investments. I'm curious at what point or or how you think that scale is actually bad for society.

That's a thoughtful question. Society is basically economies kinda go through a similar cycle on that is there's a group of talented, hard working and lucky people that Garner disproportionate amount of wealth. They tend to become exceptionally influential on government and policies. And they encourage policy makers to create policies that further enrich them. Not

That they don't love their country, but No, do away with the Import tax on my input, whatever it is, right? Give me favorable tax status. Tax corporations at the lowest rate since nineteen thirty nine, which is where we are with

In the US. And then income inequality skyrockets. And the bottom ninety nine percent at some point decide the fastest way to double their income is to either kill or Get rid of the one percent and we have a revolution and we start over. The same can be said for companies, and that is companies

And in this environment with kind of network effects and access to s to capital being such a weapon. That once you get to a certain point, if you have relationships with ninety three percent of the global corporate workforce, you know, Microsoft if you have ninety percent of the search market.

Google if you have two thirds share of all social media globally. Matter. Can anyone catch up? And then you have so much power and so much wealth. And you have a government that with Citizens United can take your money.

Do you just end up with companies that are sort of impossible to topple, impossible to disrupt, distinctive the product quality. And I think that happens. And The reason why We have such a

proud legacy of antitrust until like the last thirty years. Is it there are a few breakups we look back on and think that we screwed up. When we broke up the A T T into the baby bells. All seven of those companies were more valuable than the original A T on their own within about a decade, and things like fiber and Analytics and Cell and Broadband were all lying fallow in Bell Labs because

ATT didn't want to disrupt itself. So yeah, these companies get so big and The reason that Antitrust has been sort of asleep For twenty or thirty years is one because these companies have weaponized or taken advantage of the fact that money can just wash over government to any greater extent than it ever has.

I think too big to fail, or whatever the term you want to use, concentration. uh power, I think the best thing we could do for inflation would be a series of breaking up everything from big chicken and big pharma to big tech. So yeah, I think these companies get too big. And whether it's Teddy Roosevelt.

Tresbusting, breaking up The aluminum companies, the oil companies. I think we have a proud legacy of Anti Trust that we've sort of shelved and I think we're paying the price for it. Well, and and often these companies are getting fined and the fines are just a rounding error when you're talking about trillion dollar companies paying a billion dollar fine. So LenaCon has come in with a different perspective on how to approach this and has been demonized for it. Although I saw this morning even Bill Gurley was praising her for how she's approaching some of the gaming of the pharmaceutical world.

What's the answer? I mean okay, so on a macro level. I think you empower Lena Khan and and Jonathan Cantor and we need new laws that or not new laws, but maybe apply the Brand Disney test where it's more of a market channel power and we need to start breaking in companies. And there's evidence that that's already happening,'cause quite frankly

The worm is turned. Consumers see Yeah. They hear stories about several houses on the block where their daughters are self cutting. And they think well why is Instagram even allowed? Uh for a fourteen year old girl.

It's impossible to opt out. I'm fairly sophisticated with technology and I've tried to figure out parental control. Shouldn't it be the other way around? Shouldn't it be really difficult to figure out a way For Instagram to be on my fourteen year old's phone. And So I think consumers are just fed up. And so the consumer support has stiffened the backbone.

of regulators and legislators and lawmakers, despite the fact they've had forty hearings on child safety and social media and pass zero laws, it does feel as if we're on the precipice. The decision to break up or the decision that Google has found guilty of monopoly maintenance. I think people are getting a little bit sick of Thinking that Apple is Um totally

I don't know. In no way complicit with this when it would be pretty easy for them to age gate. All of their devices. And I think companies are starting to feel a dealing with these companies. They just feel as if Okay, they're starching all the margin out of the ecosystem here. And even in the marketplace when you have seven companies responsible for a quarter of the market gains.

It means four hundred ninety three of the S P are actually just not doing that well. So these guys are feeling it, parents are feeling it. And what can we do about it? I think the most immediate thing is Anitrust.

And then I would remove section two thirty for all algorithmically elevated content. I just don't understand why these companies wouldn't be held to the same standards. As old media. NewsCorp paid seven hundred fifty million dollar fine for circulating misinformation around dominion voting machines. That was a dumpster fire compared to the nuclear mushroom cloud that was on Meta.

They're off scot three. So I would remove section two thirty content for all algorithmically elevated content, additional regulation, and more aggressive antitrust would probably be where I would start. We wanted to share with Scott some questions from our masters of scale community on a wide variety of issues. Not only is Scott Game to tackle pretty much any question in any area of business or life, but we also thought a set of wild cards his way would make this more entertaining both for him and And for you. You referenced the dozens of board seats you've held.

Sally from our audience wanted to know is a board member Scott, how do you assess whether a company has a strong company culture, whether it is a healthy company culture. Is it something you even are caring about and are trying to figure out? And is it a forward looking financial indicator for you when you're sitting on a board? Yeah, but generally it's hard for the board'cause the board doesn't spend much time in the company and the the company's everything about the company is filtered through the CO. When you've when you terminate a CO, I'm going through this right now on my boards. You find out all this stuff about the CO because all of a sudden you're forced to speak to the people below that person.

And generally. When you're dealing with the CO of a public company, you're generally dealing with the rush chairman or the rush chairwoman, and that is the most popular person in his or her fraternity or sorority. And they become very good friends with the board because the board's in charge of their compensation. And they edit in manicure kind of the messaging that the board gets.

And I demand or I ask of every board member that at least two or three of his or her reports or other people in the company come in and present something because we just want to get to know these people. Generally speaking, the way a board the the board gets very few indications of culture that can go on glass door. But generally the way we evaluate culture through a shareholder lens, quite frankly, is retention. And that is you should have

eight to twelve percent turnover a year. And if you have a lot more than that, something's wrong with the culture of the compensation. We don't know how much we don't know. We don't know how in the dark we are. And it's also difficult because if you start talking to too many people in the company, it makes the CEO insecure. And you ha you want to respect their ability to get sh done and

So it's difficult. I I would I would say that For bigger public companies you have more of an idea because there's more liquidity around Messaging and Employees bubbling up. I know more of it. I I feel like I'm better at building a culture as a CEO than I am and I've never built a big company. But

than I am observing or assessing a culture from a board level. Yeah, boards basically are there for two things. They're there to hire and fire The guy gal running the company. They're there also to decide if and when to sell the company. That's about it. And maybe make sure the chairman of the audit committee is smart enough to know if there's fraud. But other than that, we're just kinda heckling from the cheap seats. It's the CEO that makes most of these decisions. And so for the the board to start making comments about culture, what's right and what's wrong with it.

I don't know. I would say if you're really really having issues with the culture and they bubble up to the board level, that means you Should have fired the CO about six months ago. What I try and do As a CEO, when I used to all hands, especially in small companies.

I used to try and imprint values from the beginning. I used to start off every all hands with. I'm Scott Gower, the CEO of Profit Brand Strategy. We are about a passion for brand and attention to detail and camaraderie. And you know, couldn't pull this off now, but we used to all take company trips, no spouses allowed. consumption of alcohol encouraged. I mean all the sh that makes HR people go crazy now because

I had read this study when I was younger saying The number one source of retention. In any companies if the person has a friend. If they have friends at the company. If they get that dope hit when they walk off the elevator and they see friends. And so I thought and I do that now with Prop G Media, which is fourteen people.

I tell them anytime four of you are together, you have my credit card. And I'm not exaggerating, Jeff. They've sent pictures to Uh to me from Tulum. We all got on a plane today and went to Tulum. It's like a Tuesday. And I've said this to them.

Any four of them together at any time. I don't care what they're doing. They've got my credit card. So I feel better about my ability to create a culture. than I do assessing it from a board level. Jeff, have you served on many boards? Yeah. And uh I mean, I served on the board of Buddy Media, which was founded by our mutual friends, Mike and Cas Lazaro, and they did an exceptional job managing the board in part by answering the questions before they got asked. They were proactive in messaging to the board and they came up with their own metrics for managing culture.

And to your point, if half of a board's job is to decide when to hire or fire a CEO. to be proactively messaging things are good or hey, things aren't great, but here's what we're doing to fix what isn't working. Yeah, I i look the best COs are the ones that say this is what I'm worried about. They signal problems. I find boards don't mind Bad news, or the hate of surprises. Surprise. Okay. You've had a problem with our operations in China for nine months and

I mean, how long have you known about this? Or What, there's seventeen lawsuits all around Discrimination and The chief legal counsel is now forcing you to tell us about this. I mean so I've always said as a good a good CO overcommunicates during bad times and undercommunicates in good times.

And I've always tried to practice that as a CEO. I always say to people, if you don't hear from me, it means you're doing really well. When you're in my office a lot, it means something's wrong. And I think good COs Especially during bad times, overcommunicate with the board. We have a problem here. I'm gonna look into it.

This is what's going on. This is my plan. This is how we're gonna try and fix it here. But you know, you should know this quarter's we're probably gonna sh the bet in terms of earnings. I think good CS tend to underpromise and overdeliver. And are very transparent and also willing to make mistakes. It's interesting to go to all hands and just look at the body language of everyone.

I love going to All Hands until you know I'd say I'd love to come to an All Hands sometime and I just think it's really interesting to just you can just see the body language in the room of how people are reacting to what they're saying. Um but it's so important now because There's so much transparency and young people are so mobile now and they change careers so quickly. The biggest structural change from COVID is probably remote work and it's especially acute. In the US, seventy to ninety percent of office space is released in Europe, it's like forty to sixty in the US.

And so trying to create a culture without everyone in the same place at the same time is especially challenging. I think that's probably the biggest challenge I think facing these guys right now is how to How to maintain and cement. And by the way, it's not all Sunshine and Daisies. I mean, the culture of Morgan Stanley when I started there, it's the only real job I ever had was we own your ass. You have no life.

You're gonna be emotionally and mentally taxed. Physically unfit. And you're gonna make more money than your parents did by the time you're twenty eight. Do you want that? I mean, if you don't want it, if you want balance and you want to be a DJ and you wanna get into great shape and you wanna work out and make sure you're home for family time and dinner. Go somewhere else.

That's a culture. Some people want that. And then I worked very closely with Levi Straussen company. They would give everyone. Summer Fridays.

Spend time with your kids. Oh, you're coaching little league, we're gonna give you another four hours a week. It was a very maternal culture. So I I think the uh there's all sorts of cultures that work and as long as you're just kinda clear And you can articulate not only who would do well at this company, but who it's not for. Still ahead, Scott weighs in on AI in the job market.

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Humans will never be more intelligent than AI. Those were great at AI and those that went out of business because they weren't. How do we build a future? That is human centered. I'm Rana El Calyubi. And on my podcast, Pioneers of AI, we answer that question and so many more.

As an AI scientist, entrepreneur, and investor, I know what it takes to build AI that works for everyone. Every week, I sit down with the pioneers shaping our future. And we take you behind the scenes of the AI that's transforming our lives. Find pioneers of AI wherever you tune in. Welcome back to Masters of Scale. You can find this interview and more on the Masters of Scale YouTube channel. Up next, I ask Scott how he approaches talent retention in his own company.

I wanna be the most influential thought leader in the history of business. And I wanna create a ton of economic value. I wanna create economic security. I want to get wealthier. I don't know. Maybe I'm too much virtue signaling, but a close second. I want to create economic security for

people I work with. When I was younger I wanted to pay people less than markets such that I could grow shareholder value, give them options, then we'd all get rich. Now I want to overcompensate people'cause I don't want to take Outside capital. And my goal is to pay people somewhere between thirty and eighty percent more than they would get in the market.

That's one of my goals. I got the idea from Netflix. They said they wanted to be the best compensated employees in that deck. And I thought That's so unusual to say to purposely say we want to overpay people. And I thought I like that. I am gonna try and do the same thing. But I think just being very straight and very honest, what are your objectives? 'Cause if you're the founder CEO of a company

Your objectives are gonna bubble up no matter what. Y you know, you get to make these decisions. And then imprinting that DNA very early in the company so people You know, it's like conceiving a child. The the company's gonna look, smell and feel like you. And that's why it's so rewarding and so disappointing because next to having children, it's the thing you care most about if you're a driven person. My companies before my kids were were literally my children.

They look, smelt, and felt like me, they disappointed me, they enthralled me. And I was up late at night worried about them every night. As we sit here in now the fall of twenty twenty four, I think uh legally we're not allowed to have a business podcast without talking about AI. So a couple of AI questions, uh one from Shelly who emailed us Asking us to ask you Aside from upskilling with AI What should white collar workers be doing to change their approach to both their jobs and the job market?

I use AI a lot and What I've said is AI is not gonna take your job. Someone who understands AI is gonna take your job. So I've used AI for every component of my job and I find it can't replace anything. When I first started playing with AI, I thought, Oh, I just gotta Seven figure book deal for to write a book called The Algebra of Masculinity.

I wanna write the first chapter and the last chapter and I want the middle ten chapters. Written by AI with really thoughtful prompts. And it is what it is. It comes back very anodyne. It comes back like a GPU wrote it. It's just not gonna work. But I can type in Give me ten.

Rites of passage from boyhood to manhood across different cultures. And seven of them I knew and but three of them I didn't. And then I'll do a deep dive on the three or It can't produce a board deck for me to present to a board of a company I'm running. But after I do the deck. I can feed it into AI and say, pretend you're a tier one V C

Who is a bit of a hard ass. And is very focused on Shareholder value through technical innovation. What are likely the questions I'm gonna get from this person and you upload. So I think of it the way I use AI is as a thought. It doesn't replace anything I do. It's just a thought part of it. What I would say is

Just start using it and your own mind will start Figuring out ways you can incorporate it. You're the warrior. This is a weapon. But you're the warrior.

And so you just wanna become masterful with this weapon and you wanna make sure you don't show up on a horse. Back when everyone else is in panzer tanks. But I don't have any blinding insight around What components of your job it's you know, people sure let it Use it to write stupid or fairly innocuous emails.

Um, don't get used to it though, because it does write like a yeah a computer, but I would say Try to take fifteen, thirty, sixty minutes. A day, even if it's spending time with your kids to try and time sneaker drops, which I'm doing with my fourteen year old using AI. And you just get competitive with it.

My fourteen year old and I planned a spring ski trip. by asking an AI to compare the last ten years of weather data to last year and project where we were likely to have the best skiing conditions in the western half of the United States. Um I I love that personal example of uh and it worked out great. And I love the example of doing it with your kids, getting them comfortable with with the tools of when their schools are largely banning the use of them. Scott, the other AI question that we wanted to ask came in from an audience member named Julie on LinkedIn. Who is curious about your take on AI and a gentic future for the business of marketing, the challenges and opportunities of using AI agents when it comes to brands. Curious for your take on that.

I think that AI, the biggest impact AI will have around industry. And I guess this has to do with chatbots is gonna be around healthcare. And when I think about My litmus test for evaluating the disruptible how disruptible an industry is as I look at its price increases relative to inflation and whether There's been the underlying innovation to support that.

Increase. And the two sectors I see are most disruptable by those metrics are Healthcare and education. In healthcare seventeen percent of our GDP Well

mother whose child suffers from diabetes spends five months of her life managing that child's Healthcare. And it strikes me that AI and chatbots should be able to help her navigate The health insurance, the referrals, the prescriptions, the delivery of the The medicine, if and when she should actually go to the doctor, uh you know, uh home glucose monitoring, all that stuff.

give her back two, three, four months of her life. I don't think AI is gonna reduce health care costs. I think what it's gonna do is give people back time. Which I think is probably even more valuable. Noah Kagan, entrepreneur from Austin, wanted to know as we sit here, you and I are talking, I believe 43 days out from the election. And roughly half of eligible Americans are not going to vote. In this election.

How do you think about leveraging technology to get more Americans both to register to vote and actually to cast a ballot? Oh, it's easy. Put it on phones. And Bradley Tus just wrote an entire book on this. Voting on phones. But it's not gonna happen because It would benefit Democrats because

When the number of people voting goes up, it's good for Democratic candidates and the number of people voting goes down, it's good for Republicans,'cause old people who tend to be more Republican Tend to be very good at voting. And so There's too many people that would just find reasons for why, you know, voter fraud or whatever it is, but if you wanted to get Eighty, ninety percent of people voting.

Just make it easy and put a have Apple design an interface, put it on Spotify or whatever and Oh, you know. And elevated every day in people's algorithm. Wanna vote? I just Click here for yes.

Yeah, so make it more accessible. I mean or and at the same time, is a natural selection are the fifty percent who aren't voting should they not vote? I find it so weird the media is constantly talking about undecided voters. And the media and candidates is a general cardinal rule, never say anything negative about voters. To say you're an undecided voter at this point is in my opinion saying I'm a village idiot. If at this point you haven't figured out enough

To make up a decision between these two, whatever way you're going. I just don't get it. But you drink gasoline for breakfast? Like Who on earth is an un I just can't figure they're so close. They're so close. I can't figure it's so close for me. Uh uh.

So this undecided I just I think it's hilarious. Or I don't know if it's These people want attention or Are pretending to be more thoughtful than they are. I don't know. I I can't understand. I just can't imagine at this point. Anyone's an undecided voter. I think the majority of people are like me in my twenties. I wasn't obsessed with politics. I didn't think about it till the week before the election and sometimes I voted and sometimes I didn't, if it was convenient for me. Yeah. And uh I've got Bradley's book teed up to read. So great recommendation. He's a creative thinker.

Last question from an audience member, and I'm conscious that this may be a hard one to answer with the amount of information they offer, but I think it's an important one. David emailed and he said, I own a fifth generation business. We're well established and respected. We're over a hundred years old. And he's been running it for the last ten years. He's been trying to grow it organically through acquisition, broadening services, but they've plateaued and and even regressed. There's a lot of longstanding workflow, institutional norms, et cetera, that are making it very hard for them to break through. And at times he just wants to replace most of the team and restructure the entire company. But he's concerned about doing that in a company this old with this many loyal employees.

I know that you probably have a hundred questions before you could give him specific advice, but what steps do you think David should be taking to figure out what to do with his company at this point? It's so situational because It could be a group of employees who are very good at what they do and Market dynamics are bigger than individual performance. And it might be in an industry where there's just headwinds and there's very little they can do about it other than potentially cut costs. He might have a bad culture with a group of employees that have become

Where it just needs new people that are overpriced and not very good. What I would suggest is someone like this needs a kitchen cabinet or a really talented board of directors who have a vested interest in their success. But are quite frankly a little bit rapacious. Are just gonna look at the numbers. Just look at the growth projections, look at the value of the company and

are gonna have enough experience to know your compensation Costs are out of line. Your vendor relationships are not strong. You're too reliant on a small number of consumers. You're in an industry that sucks. We need to either figure out a way to cut costs. Or raise the capital to try and Invest in

Growth categories in your industry. It's so hard to read the label from inside of the bottle. And one of the big mistakes I made as a young entrepreneur was feeling that leadership was me figuring it all out. that I I needed to understand, I needed to portray this image that I knew it all and made the right decision. And once I made a decision, I was more

interested in convincing other people that I was right than actually being right. And where my companies did much better as I matured as a manager is when I brought in people who just had a lot more experience than me or could look at the company dispassionately. And say You've spent too much money here. This isn't working. Kill the product.

Kill the thing. It's just not working. Or Yeah, you're not investing enough in technology, it's pretty clear here. Or you're undercompensating your people in this space or Why don't you have any salespeople? Or We're in for a rough ride.

You need to cut costs. And I'll help you figure that out, but there's just no getting around this and It's just very hard to do that in isolation of without external voices. What I would suggest is You need a board of people who are emotionally or financially invested in the success of the company.

But have enough distance from it to say Boss, you're the problem. Eventually get a bad king. You need to bring in a professional CEO. Right. You know, William Lauder round Estee Lauder and the family said, Okay, we need to bring in an outsider. So

Uh with a family run business, I think it's especially important you have a kinsha cabinet or a board of directors or advisors that can give you no mercy, no malice advice. Great. Last question, Scott. You talked about being open and vulnerable, especially as a white man in this world. Is there something that you've read that has inspired you to rethink your life or to talk more openly about What's going on in the real stuff.

There were some seminal books going on. I read The Winds of War and I thought about World War Two and The Diary of Anne Frank, and it was the first time I had any sort of connection to my Jewish faith. And But the author that is really kind of made me just feel much better about the world was John Irving and he wrote these books about such strange people and It's like Wow, I'm not as

And it gave me a as a young man I was so insecure about my attractiveness, or I was so insecure about sex, I was so insecure about How weird my family was. And then you read about

A home for unwed mothers that provides abortions or you read about it Guy's life changes because he's hit by a baseball and This man who has his ear bitten off by a dog and his mother gets assassinated. And you're like, Wow. I'm I I'm not as weird as I thought.

You know, I I should have done this. I feel like I should have written him a letter saying You made me just feel more comfortable in my own skin, recognizing my skin is no less Or more strange than anybody else's. Perfect place to wrap. Thank you, Scott. Appreciate you being on.

Thank you, Jeff. There's a reason that Scott is one of the most popular hosts and guests in America. You may not always agree with him, but Scott's unvarnished and deeply researched takes help us expand our own ways of seeing the world. He's a unique and prolific voice in the business media ecosystem, and you can find his shows The Prof G Pod and Pivot. Wherever you listen to podcasts.

I'm Jeff Berman. Thank you for listening. Masters of Scales await what original. Our executive producer is Eve Tro. Our senior producer is Trisha Bobida. The production team includes Tucker Legerski, Masha Makatanina, Brandon Klein, Timothy Lou Lee.

Our senior talent executive is Stephanie Stern. Mixing and mastering by Aaron Bastanelli and Brian Pew. Original music by Ryan Holiday. Our head of podcasts is the tall Malad. Visit mastersofscale.com to find the transcript for this episode and to subscribe to our newsletter.

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