Remarkable People transcript with guest Scott Galloway:
I’m Guy Kawasaki. And this is Remarkable People. This episode’s guest is probably the most outspoken person I’ve had on the show so far. His name is Scott Galloway. Scott is a professor of marketing at NYU Stern and the founder of Section4. He was also the founder of the e-commerce firm Red Envelope and the marketing firm Prophet.
A previous guest, David Aaker is vice chairman of Prophet. I highly recommend his presentation on YouTube called the Algebra of Happiness. In it, he tells it like it is and tells it like he sees it and explains what makes people happy. Spoiler alert: It is not pursuing your passion.
Scott served on the board of directors of Eddie Bauer, The New York Times company, Gateway Computer, Urban Outfitters, and the Berkeley Haas School of Business. In this episode, he shreds Facebook and Mark Zuckerberg, the thought that colleges should open back up in the middle of a pandemic, and cluelessness in general. I’m Guy Kawasaki. This is Remarkable People.And now here’s Scott Galloway.
Scott: Generally speaking, the people that are the happiest are the ones that you would might logically assume would be the least happy. And that is across income levels, ethnicities regional factors. The cohort that is the happiest are seniors. And generally, they’ve decided that life is short. They start taking stock of their blessings. They typically are out of, kind of that stressful income earning and child rearing years. And they, quite frankly, they just garner more perspective and they take things in stride. But, across almost every cultural economic cohort, the happiest people are seniors.
Guy: But what if you’re 25 years old and listening to this? I mean, the strategy can’t be: “Oh, well, the key to happiness is get old..”
Scott: Wait, just wait, let’s cut across and try and find a signal across all those demographic groups. If there is a secret sauce and there’s a bunch of them, there’s no one thing. But the thing that the strongest signal, according to most of the studies that have been done.. it’s really the, the depth and number of meaningful relationships at work.
Do you feel respected and admired, and do you respect and admire other people amongst your friends? Do you get a sense of joy and camaraderie and do you know, they feel a sense of joy and camaraderie from you? And then most importantly with your family, do you feel an intense level of support and love? And just as importantly, do you know, they know that they are intensely loved and supported? But the grand study, which is kind of the largest longitudinal study on happiness conducted over, I think 80 years.. all the principle scientists had to be swapped out cause they kept dying. But basically they started with 400 nineteen year olds, tracked them for 80 years until the last one died, measured every.. if I just all manner of things and then, and then constantly surveyed them on how happy they are and then tried to figure out correlations.
And they found that, that’s a 400 page study write up, and the first sentence is the best opening line of any academic study and it reads the following. It says “happiness is love full stop.” And that’s the best opening line for any. So again, it comes down, it comes down to relationships. Happiness is in the agency of others.
Guy: So what happens now in a pandemic where many relationships, particularly professional ones are digital?
Scott: You know, that’s an interesting question. I’m not sure I have a great answer. I believe COVID-19 is much more of an accelerant than a change agent. And that is if you took the three biggest trends in your business or in media or in income inequality or racial justice, whatever it might be, you just take those lines out 10 years. And that’s kind of where we are now, where the metaphor or the best example is: E-commerce grew approximately 1% a year as a percentage of total retail from 2000 to 2020. We were sitting at 18% of all retail was transacted through digital channels. And then in 12 weeks it jumped to 28%.
So we literally had a decade in 10 weeks and I think that’s happening across almost every major trend or line we see. And so, I would argue that same is true of your relationships. And that is, I think there’s going to be more marriages and babies, and second marriages, and a lot of divorces. I think if you’re in a good relationship, this reinforces it.
I think if you’re in an unhealthy relationship and you have kind of comorbidities, for lack of a better term, the relationship ends up in the ICU. I don’t know about you, but when I talk to my friends, my friends who are struggling with marriage or relationships, you look at it and you think, well, they weren’t great to begin with going into the pandemic.
Right? And then the folks that are blessed with a strong partnership, it seems like that partnership is helping them through this. So, in terms of work, you know, that’s a whole other ball of wax. I know you’ve done some thinking around this. The kind of remote.. I think the whole remote thing is really interesting, but I wonder if at the end of the day, a lot of them it’s gonna hurt or increase income inequality because, you live in Santa Cruz and you figured it out. You have the brand equity to kind of work remotely. I think a lot of people need the advantage to show that they can show up to work, establish relationships, put on a suit, put on a dress, have the EQ to navigate.. I mean, if you have those skills being at HQ, you’re three times as likely to be the CEO when you spent the majority of your career at HQ, You could run the European division and knock the socks off the cover off the ball. But it’s still, the CEOs are usually the guy or gal that’s around HQ and making in-person relationships with the key decision makers. Everyone’s so excited about working from home, but if you move your job to Denver, they might just keep moving your job east and it might end up in New Delhi. So, I think there’s gonna be a lot of unintended consequences from working from home.
Guy: Well, I know that you use two-by-two matrices. So if we were to concoct the two by two matrix where it’s, you know, skilled and unskilled contractor and employee. Those four boxes, sort of like how you did that for colleges, the ones that are going to survive, the ones that at risk, the ones that are going to die..
Scott: I’ve gotten so much shit for that Guy. You can imagine how many people..
Guy: I love that matrix! I love that matrix.
Scott: The chancellor of UMass Boston just called me and just told me I had shoddy, irresponsible work. I mean, anyways, that pissed off a lot of important people. But hey, anyways I’m glad you liked it. I got one guy.
Guy: So you must be doing something right. Ok, so, let’s take the four corners. So if you’re a skilled employee.. although you just said a skilled employee, may end up with his function or her function in Bangalore. So skilled employee: good or bad for a vis-a-vis pandemic?
Scott: I don’t think you need a matrix is what the data is pretty clear. And that is, if you’re making over a hundred thousand dollars a year, it means there’s a 60% likelihood you can work from home. And only a 10% likelihood you’ve been laid off. If you’re making less than $40,000 a year, only 10% of those people can work from home and over 40% have been laid off. So everything we feared… we’ve literally gone from an economy that had some very unhealthy attributes around income inequality, to a blade runner dystopia overnight.
So, let me ask you this, all right? So, I’m gonna give you a thesis and you tell me when I think about your life. I don’t know you well, but I know I have a sense for what you do professionally and your skills. You are in the top 1% economically, spiritually, professionally, brand equity, your presence in the marketplace. Over the last 12 weeks, you’re living your best life. I bet you’re wealthier. I bet you have less reason to leave the beautiful place that you live. You have access to great healthcare. I would bet the last 12 to 16 weeks, other than obviously the empathy for what’s going on, and our fears, that people in the top 1% are doing better than ever.
We’re living our best life. And this has taken.. we’ve literally moved from an economy that was unhealthy to this blade runner dystopia, where the 1%, billionaires have added more value to their wealth in the last 12 weeks than in any 12 week period previous. If you own tech stocks, if you have a job where you can do it over Zoom.. if someone had said to us 12 weeks ago, you’re going to have to hang out, your stock portfolio is going to go up, you’re not going to get on planes, you’re going to hang out with your family, you’re going to watch Netflix.. you’d say: “ok, I’m in.”
Guy: Sign me up.
Scott: Let me start right there. A distinct of knowing what’s going on outside of your neighborhood. How has your life been the last 12, 16 weeks?
Guy: Well, I would say that I agree and all that. I spend more time with my family, I exercise more, I surf more. I could focus on podcasting, which is my first love, et cetera, et cetera. But. the bulk of my income came from speaking, and speaking was getting on a plane. And so that has gone from a lot of money to, well, it went to zero for a long time and now it’s slightly ticking up. But my experience is if you get X for making an in-person speech, you get one fifth X for doing a virtual speech. All things being equal, the main part of my annual income is probably off 80%.
Scott: So I’ve had a similar experience. My biggest revenue line is speaking and my numbers aren’t as dramatic. I’ve gone from charging X dollars to get on a plane and go speak at, you know, the Radisson in Scottsdale, Arizona.
Guy: Yeah, I’ve been there.
Scott: When you think about it.. you get on a plane the day before, you get in late, you get bad food, sleep in a strange bed. You get up in the morning, the CEO wants to have breakfast with you, which is fine. And then you get a my “to do” thing, you do the speaking thing, you go back. Then, there’s a weather thing. You got rerouted through Dallas. You’re home later that night. Anyways, so it’s a two day tour on a minimum and you get paid X.
Now I get, I do these virtual fireside chats. I’m doing two or three this week. I get about a third of what I used to get, but I’m getting about twice as many.. I have twice as many because the elasticity. And instead of charging X, I charged one third X, so it’s doubled my demand. So I’ve lost about a third of top line revenue, but if I’m speaking at noon, you know, I literally roll out of my house at 11:45. I have a tech guy who lives with me and granted, I’m very privileged around this. I go to my guest house, he fires up the camera, the lighting and then boom: I’m on. And then by 1:10 I’m back having lunch with my family. So for me, the trade-off, there is just so worth it. It’s just.. for me, it’s been a reduction in one third salary, but it’s been wildly, a creative kind of spiritually or economically. And I would imagine the same thing will happen with you.
Guy: Yeah. I think it’s a matter of time and listen, I don’t mind making, let’s say I use your ratio. I don’t mind making three speeches to make what I would have made in one speech in two days. I’d make that trade-off all day long. So, yeah. That’s cool. So do you see any other, e-commerce is obvious, any other opportunities that the pandemic has created?
Scott: Yeah. There’s what I would call.. loosely speaking. I’m thinking a lot about this.. this summer I’m finishing a book called Post Corona. I’m trying to get it out as quickly as possible because, most of it’ll probably be wrong and perishable. But, the way I would loosely describe opportunities is, position yourself around what I would call the “Great Dispersion.” And if you think about the two most disruptable industries.. and I define disruptable as: “an industry that has raised its price as fast as inflation, without any underlying increase in customer satisfaction or productivity or innovation.” So let’s think about tech, where you’ve spent the majority of your life, examining tech trends. Every year, the product gets better and it gets cheaper. That’s kind of the gangster cocktail. Most industries, get a little bit better and a little bit more expensive. Healthcare and education have not gotten better. I mean, you could argue that the technology around health care has gotten better, but our life expectancy is going down. Most consumer satisfaction around healthcare is flat to declining, but the prices have skyrocketed.
And then my industry we’ve raised tuition 1400% over the last 30 years while inflation is up, you know, 120%. So we have raised prices just astronomically that have exploded. And if you walked into a class in 1990, and then one now, a lot of times it wouldn’t look, smell or feel any different.
So I think healthcare and education are going through this incredible dispersion because 99% of the people who will contract, endure and develop antibodies for the novel coronavirus will have never entered a doctor’s office, much less a hospital. And because they swept aside a lot of the regulation because we’re coming up with interesting technologies and remote medicine and telemedicine.. I’m coming out of college, I understand the intersection between technology and products to get into remote healthcare, remote medicine, to me seems like a great career. The same thing is happening in education. If we come out of this pandemic with 50% of classes online and you know, the dirty secret is the kids don’t come to college. They come to college for community, but not necessarily the community that takes place in the classroom. And there’s a lot of classes where you could probably match or nearly matched the in-class experience via Zoom or other technologies. And if you just take 50% of your classes online, you effectively doubled the capacity of the campus, potentially lower prices. I’m working with the University of California around trying to figure this out. So there might be this dramatic increase in capacity, in innovation. So I think education is an extraordinary opportunity. So, I think a lot about where I would want to invest my most precious asset as a young person. That’s my time, my human capital. I would be really interested in remote learning and remote health.
Guy: And, let’s take the extreme case. So, is an online Harvard education worth 60 grand?
Scott: Oh, a hundred percent. It’s probably worth more than that because Harvard… it’s about, I think it’s about a $350,000 or $380,000 ticket for the full four years. That’s worth exponentially more than that. And I’ll say.. you’ve got to keep in mind, and this is even more income inequality at work, kids who go to Harvard and Yale probably pay less tuition than kids that go to tier two schools. Because they have such extraordinary endowments, that while their sticker price is $58,000 a year, except for the international students who pay full freight, the majority of the kids don’t pay that, they get all kinds of scholarships.
And so the net tuition is much different than the sticker price, and the most well funded institutions often have actually lowered tuition over time as they get more and more endowments and financial aid and things like that. But the certification, which is really where the value is, the certification that Harvard provides an individual over the course of their lifetime is still much greater than $380,000. Now, when you start going into tier two schools and tier three schools, where we have convinced, we prayed on the hopes and dreams in the middle-class and convinced parents that you have to send your kid to college, no matter what the cost. And they don’t get into a tier one school, they get wait-listed at a tier two and they ended up at a tier three school at the same price… That’s probably not worth it, but we continue to kind of promote this cartel where a lot of middle-class households end up paying for mostly in debt for a Mercedes and get a Hyundai. But if you get into Harvard, if you get into a tier one school and MIT, oh yeah, it’s still a fantastic value.
What might be interesting, is that.. if that’s true, if it’s really the certification and the certification is more a function of getting in, I can see an environment where people apply to these schools, get in, and then don’t go and just put in on the resume “admitted to Harvard and MIT”, but didn’t go.
Guy: Really? And you think that’s a proxy enough for recruiters four years later?
Scott: Some of the most successful people in the world: Harvard drop-outs. The key isn’t the. education at Harvard, the key is getting in. Because what these universities really are is they’re the world’s most find rigorous HR departments in the world. If you can get into Harvard, it means one of two things. It means you’re like freakishly productive from the age of 15 to 17, or you have rich parents and both are forward-looking indicators of your success and your ability to add value, to affirm whether you’re going to in a private wealth management for Goldman Sachs.. If you went to Harvard and you have really rich parents or your fathers an oligarch or a Sultan of something, you’re going to be able to find a lot of capital for them. You have the right connections. Or you’re so freakishly remarkable at a young age that you will work 17 hours a day and be incredibly creative.
I just did some business with Goldman and it just struck me. I dealt with two young women there and I’m like, these are kids, they’re like 24, are just so goddamn impressive. And they all have the same credentials. They went to Ivy League schools, they were athletes. And so look, these schools, at the end of the day.. what we’re really doing, the value we’re adding is that we have the finest filter in the world of human capital. We run a full check on you. We make sure you take all kinds of tasks, you have to write, get references. I mean, the screening process is just so out of control, but.. I wonder if we move to a place where it’s the certification, and the certification as a function of getting in, not even going.
Guy: Wow. Wow. So that’s the way to save 380 grand. But, I would make the case.. so, for my career experience, I got my job at Apple because of a classmate at Stanford. And if Stanford, you know, at that time were purely virtual, I would have never met him. If I would’ve never met him, I would have never gotten into Apple. So it’s not just that I got into Stanford. It’s also that I met him.
Scott: The networking, yeah. No doubt.
Guy: And that might go away, right?
Scott: Oh yeah.. look, and not only that. I mean, if we really want to get kind of meta on this, I needed four years, and for me it was five years, to kind of marinate and get some maturity and get some intellectual curiosity. And get inspired, and row crew, and push myself harder than I’d ever pushed myself before. And fall in love and get my heart broken, and establish resilience, and build some tough skin.. you know, around my heart. And find that, wow, I’m really not meant to be a doctor. When you fail chemistry, it’s pretty obvious you’re not going to be a doctor. So look, that experience, that great liberal arts experience that you and I both experienced is, is priceless from a.. well, I don’t know, an interpersonal or experiential standpoint. But if we’re just talking straight economics and ROI, I mean, what’s the kind of prototype.. if we were to build someone out of central casting to go raise a hundred million dollars for the next great tech company.. It probably be someone got into Harvard, went a year, dropped out, went to work for a hedge fund and then quit after 18 months, and then started raising money for their startup.
Guy: You mean Jeff Bezos?
Scott: Yeah, or Zuckerburg or Gates.. There’s a profile here.
Guy: So, what’s your opinion— while we’re on the college topic, so many schools say they’re going to reopen, right? And I think that’s ludicrous. So have they basically sold their souls? I mean, are they doing it just because they need the tuition?
Scott: Yeah, it it’s a mix of arrogance and self-aggrandizement to believe that whenever you hear a university president saying: “we have a national responsibility to open our campuses”, that’s Latin for parents sending your tuition. Because.. I’m being very serious. If you’re a liberal arts institution charging $60,000 a year in tuition, you have 20,000 students.. in the next 12 to 15 days, you’re expecting $600 million in tuition or, or 300 or 400 million if you take out financial aid. And these are institutions, these are businesses that have very high fixed costs and are totally genetically incapable of cutting costs. So they’re facing… they’re staring down the barrel of financial crisis. Think about what other business has been able to expect cash flows within a two week period consistently for 40 years, except they increase in three to four percent every year? There’s no better business in history than education. And all of a sudden they’re faced with, five, ten, thirty percent of the kids not showing up.. and if you’re tier one, that’s fine. You just go into your waiting list. Well then tier two, all of a sudden there’s real demand destruction there. Cause all the kids who are going to come to your school cause they didn’t get into Stanford, they’re getting into Stanford because a bunch of kids are saying, well, I’m not going to go. So Stanford goes into their waiting list, and it waterfalls down until you get to a tier three school. I don’t say names anymore because I will hear from that school. They reached into their waiting list and they don’t have one. And then all of a sudden, overnight, their revenues are down 20 or 30% and they can’t survive that. And you don’t want to be the Dean of a school that oversees its rapid demise. You don’t want to be the guy or gal that kind of lost the school. And so they’re all making their own, this consensual hallucination between their CFOs and parents that yeah, we look forward to welcoming you back.
It’s outrageous. This is the equivalent of saying, okay, we invite your 18 year old to go to a movie theater with windows that don’t open 12 times a week, you know, what could go wrong? This is insane. And I want to be clear Guy, I think people make the mistake of conflating the argument around K through 12, versus the argument around opening universities, it’s a totally different argument. A nine year old at home who’s not in school, has a developmental disability.. it can bring the household down. It’s a single mother who can’t go to work, it’s nutrition, it’s all kinds of things.
The majority of kids who end up in college are middle-class and upper income kids, your 19 year old stuck at home for 12 weeks is a nuisance. It’s not a profound tragedy or threat to the household. So for me, it’s easy calculus. We can’t risk the types of outbreaks that we see happen when people cluster. And all these pros, these meetings, it’s crazy. These task forces trying to come up with protocols around AB classes, plexiglass, putting me in a hazmat suit when I teach in front of the class. None of that means anything unless these students sort of practice the same protocols off campus. And I don’t know about you, but when I got around alcohol at UCLA, my sole focus was to not distance. And this, the notion that.. these decisions are being made by people in their sixties, who quite frankly, weren’t very social in college.
And they’re under the impression that these students are going to maintain these protocols while off campus. So, in my opinion.. and some universities have done this, The University of Massachusetts has announced this, Cal state has announced this, I think Harvard’s announced this or some hybrid. They’ve said: “look, we’re the warriors against the virus. Our research labs are going to help figure out this thing. We’re not the spreaders, we’re not the enablers. And they’re going to let people live on campus if they want, but they’re going all remote. And any university president right now, that’s saying we’re going to have anything resembling a normal experience is just saying, please send in your tuition.
Guy: Now let’s suppose that you are the Dean or the President of a college in that struggle or perish quadrant.. what would you do then?
Scott: I’d do what every other organization is doing— I’d cut costs. I’d have an open and honest transparent conversation. I would immediately start furloughing people and laying off people and cutting costs. And I bright size the business. I’d use a crisis as a terrible thing to waste. I would invest massively— all this energy, all this bullshit and these protocols to avoid a pandemic that hopefully it’ll be over in a few months, or at least that will have crushed the curve. And I would move to online and I’d come out and I would cut my tuition by half. I’d have an honest conversation with the students and their parents and saying: “We’re going online. It sucks. It’s going to be an impaired experience. So in recognition of that, we’re going to cut you tuition in half”. I cut costs by 20% immediately, and I’d reach out to my alumni and say, we’re in a difficult situation here, and if you want us to continue to fulfill our mission, we need your help. And I’d also lobby my state elected official to say, all right, you’ve bailed out the largest cohort of wealthy people in the world, and that is the owners of small businesses in the US.. you need to help us. So, denial is very expensive.
I think you could see hundreds of universities basically start a death march. What department stores are to retail, tier three universities are to education right now. They’re about to go from the sixth or seventh ending to the ninth ending in about 30 days.
Guy: And the net outcome of that, don’t you think, is less educated kids? And, isn’t that a terrible outcome?
Scott: Ok, so it’s a complicated question. I think in the short term, there’s all sorts of bad things that might happen. And I think that.. Let me back up. I think it could end up being a net good. I think that this notion that all kids need to go to college, this construct we’ve invented as academics.. I’ve been doing a bunch of research, administrators have, most universities, good universities have kept their enrollments flat. They’re not educating any more kids. Despite your college, Stanford, has triple the applications it did 30 years ago, it hasn’t increased freshmen seats almost at all. Which means it’s nearly impossible to get into. And alumni generally like that because it makes the value of their certification. But is that.. Does that mean they’re still serving their mission? Their tuition has exploded, costs have exploded. We need to figure out a way to use technology to dramatically lower the costs, expand the capacity, such that we can take American public universities, which educate two-thirds of the kids in universities, like UCLA and Berkeley, back to the emissions levels where they were when I applied. Where they led in a third of applicants. Not 13% or 8%, because it’s generally represents a very unhealthy gestalt in our society.
And that is, we have fallen out of love with the unremarkables. Your title, your podcast Remarkable People— I say it, and this isn’t a humble brag, I was remarkably unremarkable. I had a 3.1 GPA. I was like in the 80th percentile. I didn’t have good grades, but I didn’t test well either.
And I applied to UCLA and I got rejected and I appealed, and the truth has a nice ring to it. I said, look, I’m the son of a single immigrant mother. My household income is $38,000. And if you don’t let me in, because I can’t afford to go to college where I can’t live at home, I’m going to be installing shelving. And this is my job. I’m going to make 17 bucks an hour, which is a good living, but that’s where I’m headed. And they call me back and they said: “you’re not qualified, but you’re a native son of California and we like your story”, and they let me in. And that’s why I’m here speaking to you. And if we don’t get back to admissions rates that give the admissions directors, the license and the bandwidth to let an unremarkable kids, we’re just going to end up where we are now. And that is— the children of rich kids and remarkable kids get all the spoils, but 99% of us are not in the top 1%. And I can prove this mathematically. We need to be back. We need to look back to a situation where America falls back in love with kids who are unremarkable, but might have remarkable futures. If we give them one of the greatest gifts in the history of mankind, and that is opportunities to get a fantastic education at a reasonable price, we need to move back to falling in love with the unremarkables.
Guy: I can just imagine what you think of standardized testing then?
Scott: Well, that’s just part of the industrial.. the industrial testing complex is largely, again, just to recreate more opportunity to wealthy people who can pay for people to take the test for them, which we’ve heard about some of that, or realistically tutors, testing prep, and it just shows.. there’s probably some sort of testing, but I don’t, I think on the whole.. I think the really thoughtful universities, I believe the administration, like the Chancellor of Berkeley has decided that they’re probably not going to continue, or they’re going to try and change the format of these tasks. What do you think Guy? What do you think of these tests?
Guy: All right. I think they’re no correlation to success, intelligence, anything..
Scott: I would agree with that.
Guy: It’s just, you know, who can get the best tutors. So, do you think that without a vaccine or treatment, that it is conceivable for business or schools to open? Because I don’t, I don’t see how it can be done.
Scott: I’m with you. I’m scheduled to teach 400 kids September 15th. This is kind of how it’s laid out.. My class is usually 160 kids and it’s 160 because the classroom will hold only hold 160. And we’ve said, ok.. By the way, the people running NYU and running Stern are some of the most thoughtful, decent people I know. And I’m out there like, making life hard for everybody, so I want to acknowledge that right now. And they’re doing their best, and they’re coming with all these protocols to try and keep faculty safe and students safe. But I, you know, I’ve already stated— I’m not going on back on campus until there’s a vaccine. And, and I think a lot of faculty feel that way. We want to be good citizens. We want to be supportive, but I just don’t think you’re going to have.. would we.. what happens to these small towns? What happens to Lynchburg, Virginia, when this population swells from 20,000 to 40,000, and a bunch of bartenders and janitors overwhelm the ICU locally?
I mean, it’s just.. a bunch of people who are proven to be super spreaders. Coming to a dense area, going into rooms where the windows don’t open.. It reads like the opening scene of Contagion II. So we absolutely shouldn’t have universities opening until there’s a vaccine. And also Guy, the more I think about it.. I’m scared. I worry that the term vaccine gives us cold comfort, that we shouldn’t be attacking the enemy in what I’ll call.. with MPI’s, not pharmaceutical intervention, because we all fall back on this notion that we’re going to have this magic bullet.
Americans love science and a magic bullet of a vaccine. And we were in a race toward splitting the atom at the end of World War II. We knew that whoever got the nuclear bomb was going to basically get to decide to end the war. But that doesn’t mean we didn’t do D-Day. It didn’t mean that we didn’t continue drafting people and putting them in harms way, and building super fortresses, and building Sherman tanks and fighting the war and fighting the enemy.. Here, it feels, we fallen into this a little bit in this cold comfort that the vaccine will solve everything. And when you read the surveys, the research only 50% of America has said they’ll take the vaccine. We can’t get to herd immunity, according to Fauci, unless we get to somewhere between 70 and 85%. So even if you.. Realistically, if you can distribute it and administered it to 70% of the populous that’s willing to take it, you end up with 35%, a third of America has the vaccine. So I worry that we’ve fallen into this notion that if we find a vaccine in a lab, we’re done.. and I don’t think we are.
Guy: I interviewed Jerome Kim who’s in charge of the International Vaccine Institute. And he kind of has said the same thing. I mean, it’s not as simple as.. Ah, anyway, ok.
Scott: Yeah, we put that.. It’s done. Yeah, everything’s fine now.
Guy: Now last question about the pandemic. So if Dr. Fauci called you up and said: “Scott, what the hell do I do?”, what would you tell him?
Scott: I tell them you need.. you need better sources of information. Look, I’m a fan of war history. My mother, during the Blitzkrieg, was taken by her father and her four sisters and her brother to a makeshift tube station where they would spend the night. And on the way one day during an alarm, a bombing alarm, her oldest sister was run over by a truck.
I mean, that’s the kind of sacrifices people were making to defend against the tyranny of the axis powers. And we get asked to put on a mask in Walmart, and people start bitching and moaning. And so, my sense is: A.) We lack national leadership.. but what’s not discussed enough is a lack of citizenship and the ability, or the willingness, to sacrifice. So what I would suggest, what I would want to see from our leadership and from our citizens is what I would call “the great distancing.” And that is companies adopt a certain number of households, those of us who are economically secure and think of ourselves as being competent, organized people, adopt households. And every one of these 105 million US households is adopted. And we plan testing, distancing, the right food, the right space, the right adequate childcare. And we schedule the mother of all lockdowns, where you aren’t delivered anything. You’re giving your groceries for 14 days, your Netflix, your online counseling if your kid’s struggling. And we shut this shit down for 14 days and you can take scheduled walks where there’s no, you will run into absolutely no one twice a day. And for 14 days, we severely distance and we put a nail in this motherfucking coffin. And that is, my small knowledge of epidemiology is if we can stay away from each other for 14 days, more than six feet, this thing goes away.
Instead, we have the mother of all slow band-aid rip offs taking place, where we keep waiting around for the silver bullet of a vaccine. So I would like to see what I would call.. national leadership and the resources to do “the great distancing,” where we all decide to.. those of us who are fortunate to be in the top quartile.. adopt households. Single mother with two kids in a small house, we’re going to move you to a bigger living space, we’re going to get you the groceries. We are going to set you up such that you can live some reasonable lifestyle for 14 days. We test the shit out of everybody. And everybody massively distances for 14 days. That’s what I would want to see. Otherwise. I just think.. we’re just in a forest fire. Americans have not shown an ability thus far to demonstrate adequate citizenship.We cannot count on federal leadership. It just isn’t there. Anyways, “the great distancing.” That’s what I would like to see Guy.
Guy: Is it really only 14 days or is it more like six to eight weeks?
Scott: That’s a fair question. I’m not an epidemiologist. My understanding is.. with the right amount of testing, if you can do rapid tests and ensure that people don’t catch it in those two weeks, that the 14 days.. but I want to be clear. I have no domain expertise around the epidemiology of this. So I don’t, I don’t want to give anyone.. that’s a long-winded way of saying, I don’t know. You might be right.
Guy: But, whether it’s two weeks or six weeks or eight weeks, the concept is that.. it’s a matter of personal responsibility, citizenship, making sacrifices, wearing masks, all that stuff. It’s not because we want the economy to pick up again and it’s not because we want to be reelected.
Scott: And people mistake liberty with the lack of sacrifice. What we’re doing now.. the absolute best way to reopen the economy is to get rid of this thing. And until it’s done, we’re not going to have a full-scale opening of the economy.. and Americans, our super power is sort of our optimism. Our super power as a nation is is our optimism. And it’s ended up.. it’s a comorbidity, it’s a pre-existing condition. And now I worry that.. that optimism is moving towards this silver bullet idea of a vaccine. Not recognizing that practically speaking, it’s probably not going to solve the problem.
Guy: Let’s talk about Facebook and social media at all. So first of all, do you believe that companies have a moral responsibility at all?
Scott: I mean, you’d like to think you could call on their better angels. I think if you were running Facebook, it would probably be a different company, but their primary responsibility is to increase shareholder value. In capitalism, we have this incredible agent called a for-profit corporation. And at the end of the day there, you’d like to think it’s not shareholders and stakeholders, and I get that, but they are sort of doing their job. I think the real failure.. now, look, I think Mark Zuckerberg is a sociopath. I think he’ll go down as one of the most damaging figures in history. And I think is number two is a $2 billion beard who will say anything to try and enhance her reputation or hold onto her wealth. I think they’re terrible for humanity and for America. So I don’t, in any way, want to let these folks off the hook.. but there’s a very valid argument that they are doing their jobs. And their job is to do delay and obfuscation, great innovation around products to increase shareholder value, and they have done that in spades. Who has not done their jobs is we as citizens. We have not elected representatives who hold these companies to the same scrutiny as we’ve held every other corporation in history. We’ve let them grow way too powerful. We’ve let them pervert our elections, engage in activities that depress our teens and incurred suicide rates and self-harm.. erode our tax base by not paying their fair share of taxes. You know.. just on and on and on. So I would argue, look— we would like them to behave, have more regard for the Commonwealth, show more character and more code. But if you’re waiting for them to call on their better angels, I don’t think that’s a good strategy.
I think we need elected officials to hold these firms accountable like they’ve held every other firm. So who’s at fault? We’re at fault. We need to elect people who, who have the domain expertise and the will to do the same things we’ve done with petroleum companies, tobacco companies, and other firms that create a lot of economic value, but have exceptionally damaging externalities.
Guy: But don’t you think it’s somewhat letting people off the hook by saying.. well, as the CEO, that’s their fiduciary responsibility. That’s what they should be. That’s what they’re supposed to be doing.. so we can’t hold them to a higher moral ground?
Scott: I’m with you brother. I just haven’t found it works. I don’t know how Mark Zuckerberg sleeps at night, but he does. And I don’t think he’s going to change. I think that if he figured out a way to.. if he figured out algorithms to garner more Chobani ads and the result was a genocide in Myanmar.. I think he would try and delay that information. I think he would try and avoid that scrutiny. I think he would threaten to sue the newspaper reporters.. oh, wait, they’ve done all that. They’ve done all that. So the history just shows right now.. today, their actions, you know, judge someone by the words, not their actions. They don’t.. their concerned for people’s safety, their concern for the sanctity of our elections.. I mean, think about it. Four years ago we found out, or four years ago it appears that Facebook had not made the requisite investment, such that their platform couldn’t be weaponized by people. Outside forces who were trying to suppress the vote in key swing districts.. And we might have an illegitimate president, but at a minimum, we have the sanctity of our elections have been damaged dramatically. And a lot of people would argue we have an illegitimate president who is putting people on the Supreme Court who are slowly but surely eroding a woman’s right to choice. So is Sheryl Sandberg.. an inspiring woman talking about important debate of gender equality in the workplace, or is she the worst thing to happen to women in the last hundred years? And yet, I get the sense she sleeps fine. I get the sense, she’s not, you know, she’s down with her actions. I don’t.. you know, “we need to do better..” That’s all I’ve heard in terms of her taking responsibility. And so I’d like to think what you’re saying is right. I’m just not waiting on it.
Guy: So if you are a, an entrepreneur, a small businessman.. let’s face it. You know, one of the reasons why Facebook does so well is because, if you are a real estate broker and you want to target people looking for houses in Santa Cruz, Facebook is the way. And there’s not a lot of good alternatives. So what does Joe Blow or Jane Doe do?
Scott: They advertise on Facebook. Florida Power & Light has a monopoly. I know they use natural gas, but let’s assume they use coal, which is putting emissions in the air. I’d still turn on my lights. I mean, they’re a monopoly or duopoly.. Facebook.. if a small business called me and said, I’ve heard your stuff, but it’s a really effective tool for us. What do you think we’d do? And I’m like advertise on Facebook, but vote for someone to break them up. Moral clarity is hard when you live in a capitalist society and your kids have access to healthcare based on how much money you have. And so I don’t, I don’t fault small business for using Facebook and by the way, Facebook it’s incredible. And from a small business perspective, I mean, it is just incredible. If you order a little black dress from fast fashion for $9.99, somewhere in that supply chain, there’s just bad shit going down. But I don’t expect people to stop ordering that little black dress for $9.99. I expect us to put in place regulations that ensure that our supply chain doesn’t allow child labor ,or that we don’t offshore or all of our pollution.
So look, I don’t, I don’t fault small businesses. I think I was really inspired by some of the boycotts around Facebook and I found it sort of surprising. Facebook will replace those advertisers overnight. I mean, not even overnight— in a minute. They have 8 million advertisers. It’s just.. it’s the most elastic supply, or, the most elastic revenue source in the history of modern business— the Facebook advertising business.
It just fills in.. another company sees the opportunity to buy placement and words and targeting advertising at a lower fee, and they just fill in that void right away.
Guy: So, what do you think when you see Tim Cook showing Donald Trump the “new factory” that Donald Trump brought back to America? Are you saying for Tim Cook, while that’s his role, fiduciary responsibility to the shareholders of Apple.. he should be palling around with Donald Trump, if that means that Apple’s not affected by the trade war?
Scott: Yeah, he’s smart. He realizes we have just like a crazy weirdo narcissist. And then if you show up and do a photo-op with him and tell he’s handsome and stay out of his way, he’ll leave you alone. And I mean, loosely speaking, Mark Zuckerberg is the most successful oligarch in history. An oligarch is someone uses their proximity to power to earn money in a corrupt way. I believe they’ve struck an unholy alliance. They’ve met two times, maybe three that we know of. And it appears that Donald Trump never said anything negative about Facebook. I think they’ve entered into this unholy alliance where he says: ‘I can weaponize your platform and put out lies and outrageous content, which I’m very good at, or my agents are very good at and it’ll get me reelected and I’ll leave you the hell alone. I’m not going to push on the DOJ to break you up’ I think that’s basically that the implicit or explicit deal they have. And when Tim Cook says.. ‘ok everyone in my company.. we’re not unethical people’, but, I think competition drives behavior. I think every action these guys take is on one thing and that’s getting the stock price up. And I don’t.. I’d like to think that they’re be more focused on other things, but that’s kind of their job. And so so I don’t fault Tim cook for doing that.
Guy: Do you think that people just don’t give a shit about being on the right side of history? Because 20 years from now, it’s gonna be hard to look back and say: “Oh, they were just doing their job.”
Scott: Yeah. But we sort of suffer from, in our society, we kind of suffer from this idea of what the Pope called the “gross idolatry of the dollar.” And our heroes.. you know, in Israel, the heroes are military leaders, in Britain the heroes are typically government officials. In the US it used to be athletes and celebrities. And I think it’s transitioned to billionaires.
My sense is that you’re a married man that’s sending out dick pics, and somehow you turn into a hero. That’s Jeff Bezos. You know, the media decides he’s a hero because he turned around to this bully, you know, how’d that happen? Or you call someone a pedophile or you commit securities fraud and say that you’re taking your company private at $420 and the funding’s secured when that was a lie. But as long as you’re an innovator, as long as you’re a billionaire, we’re down with you. I think that they have figured out, they’ve connected the dots and say, ‘as long as I’m a billionaire, I’ll be perceived as an innovator. And I will be loved. I will be universally lauded. I will be able to get away with almost anything. Young kids are gonna want to hang out with me and CNBC is gonna want to interview me and I’m gonna get to go to the Academy Awards with someone better looking and younger than me.’ I think the society has decided that it’s just really about money.
Guy: Geez. *laughter*
Scott: So, did I get that right? Do I have that wrong?
Guy: No—So do you have any reason for optimism? Any reason for hope?
Scott: Not quite a message of hope. Now— let’s look at the glass half full. We might be maturing. We might be maturing a generation of young people. How old are your kids?
Guy: 27, 25, 18 and 16.
Scott: You’re in the thick of it. So, and you can tell me, but I have 9 and 12 year olds, I started late. But maybe we’re just— hopefully— we’re maturing a generation of young people who are observing what’s going on and realize that our superpower is cooperation and they’re developing some grit. They’ve had to sacrifice a lot. I think if you’re at college right now, you’ve had to sacrifice a lot. I think if you’re a young person who is supposed to be making. friendships and potential finding mates, you’ve had to sacrifice a tremendous amount. So, maybe we’re a hopefully sharing a generation of future leadership that will realize our power as a species is cooperation.
They’ll realize that you can’t just shut down borders.. We have to cooperate with our brothers and sisters, that the greatest alliance in history was the North Atlantic Treaty, that we have to adopt best practices, that we have to show more comity of man, that if we let people, the bottom half of America.. if we put them in a situation where they, they can’t literally can’t afford to six weeks without a paycheck, they end up putting themselves in dangerous places. I’m hopeful that we’re maturing a generation of leaders that will repair the incredible death, disease, and disability that your, you and me, have levied on this country through poor short-term decision-making.
Guy: *laughter* Is that as optimistic as you get.?
Scott: I’m a glass half empty kind of guy. Sorry about this. Yeah, I’m.. just realistically, we like to think of ourselves as exceptional. We’re the wealthiest nation in the world. We spend more money on healthcare. We like to think of ourselves as the most innovative in the world. We have 4% of the world’s population and 25% of the infections and 25% of the deaths. Czechoslovakia has flattened the curve. And the company we’re keeping right now is Brazil and Russia in terms of a response and we’re the shortest midget among those three. Canada, just north of us, thinks they’re living above a meth lab. I mean, they’ve managed to crush the curve. They’re not that different than us. How did we, how.. American exceptionalism is a makeshift mack truck that’s a refrigerated morgue right now. How did we get this so wrong? How did we.. how.. we’ve seated the mantle of global superpower to China. China is now the most respected nation in the world. We’ve shown an absolute disregard for people who are economically disadvantaged.
We’ve taken every bad trend around income inequality and racial injustice, and just absolutely exploded. It. And, we have a leadership that doesn’t want people to wear masks until about six days ago. So look, I don’t— you know, I, I hope this is a real reckoning. I hope America looks in the mirror and says: “Ok, what the fuck is going on here?”
Guy: Well, I was at Apple when Apple nearly died and out of all the lessons that I’ve learned in my life is that if you go through a near-death experience, but don’t die, it’s often the best thing that ever happened to you. So, I mean, you would not sit down and say: “ok, our strategy is to nearly die. That’s what’s going to fix the problem.” But, I swear that’s what happens. It was the near-death experience for Apple was a good event in looking back, and it enabled Apple to become a trillion dollar company.
Scott: But I would argue that the differences, I bet you and your colleagues didn’t hate each other. You didn’t divide into red and blue, I think without some sort of national service, or something that creates.. you know, in the fifties and sixties, when we came together as a nation to pass great legislation, it was cause a lot of our leaders had served in the same uniform and they saw America as being more important than their political ideology. And because our young people don’t really ought to think have any sort of social service, because I think we’ve outsourced war, I think because you or, my generation has never really been asked to serve I would argue.. I don’t think you’re old enough for Vietnam. I know I’m not. I just worry that we don’t— we haven’t—we’ve almost lost the ability to come together as Americans. You’d like to think— Canada they’ve come together. I mean, there’s some bullshit up there, but they’ve managed to come together. Nations have managed to come together, but it feels like a lot of, Britain and the US, haven’t figured out a way to come together around this. So I wonder, I hope we, I hope we do.
Guy: Well, maybe, it’s not clear it can.. but maybe the pandemic ultimately will force us to come together because the virus doesn’t give a shit what party or what race you are.
Scott: That’s right. Are you hopeful around this? Do you think? Do you see us coming together on this?
Guy: I mean, I’m, I’m a three quarter full glass kind of guy. It’s just in my DNA. And I like to believe it, but I think it—it may be— it may be natural selection. I mean..
Scott: I mean, that’s an unknown, right, think about it.
Guy: Right? I don’t know.
Scott: Well, now that I’ve bummed your listeners out, next week on Remarkable People, Mary Poppins! *laughter*
Guy: But I have to say, I watched your videos and I read your stuff. And man, your YouTube video about the algebra of happiness or the math of happiness. I sent it to about 10 parents who said you got to tell your kids. Ok, so to cap it off, the piece of advice that I loved in that was that basically the career path for young people is a contrary to the bullshit about do what you love and the money will come. Basically, you said, find something you’re good at and work your ass off. Right? I tell people that, listen, if you went to work for a startup and you really didn’t care about dogs and cats and pets, but you went to work for a startup that was going to sell dog food and pet food online.. maybe you were a PHP programmer or whatever, right. But you went to this startup and all of a sudden you’re selling a million cans of dog food per day. Trust me when I tell you, you will love dogs and cats. All right.
Scott: So I’ll talk a little bit about the notion you bring up. And then, I’m going to try—I will end on a happy note here.
Guy: Ok *laughter*
So first off, we have two types of speakers at Stern, and we have speakers three times a week. And they’re from one of two cohorts: they’re either really impressive substantive people, or they’re billionaires. We’ve decided that billionaires have just incredible perspective on life, and they always end with the bullshit advice of follow your passion. And the guy on stage telling you to follow your passion made his billions in iron ore smelting.
And what I tell the kids, as you said, is ok— passion connotes this notion that if you don’t love what you’re doing, it must not be your passion and you should give up and leave that job. And most of us decide that our passions at a young age are sports or opening a restaurant or a club, or going to work for Vogue. And generally speaking, those industries are over-invested with human capital, which drives down returns. So you’d better be cursed and get incredible psychic income from those fields because you’re going to get a lower return on investment relative to other industries. Your job is not to find your passion, if you will, but it’s to find something you’re really good at.
There are a lot of tax lawyers in this nation that fly private, get great health care, have access to a selection set of mates that is much more interesting and attractive than they are, which makes them love tax accounting.
Scott: If you are good at something, and you’re willing to put up with the bullshit, the grit, the perseverance, the political jockeying, and accompany to just become great at it, become best in the world at it— whatever it is, the accoutrements of that will make you love whatever that is. So, that’s your job, find something you’re great at, and it doesn’t have to be.. I wanted to make my life in professional sports and I got to UCLA and realized real fast, I just wasn’t very good at it. And so I found, okay, I’m better at things like marketing and accounting. And kind of this business stuff, which seemed really dry and awful at the time. But I thought maybe someday I can be, I can be great at this.
And then the thing I’ll I’ll end on, and this is from.. I’ve been thinking a lot about the pandemic, coming back to the pandemic, what the opportunity is. You asked me what the opportunity is professionally. I think there’s a meaningful opportunity professionally to lap the competition. What do I mean by that? I’m not in a workaholic, but as a matter of fact, I love not working, and I want to spend more time the rest of my life not working. And in order to do that, I try and apply what I call functional speech. So you’re in the Bay Area, Jerry Rice— Hall of Fame wide receiver. Never the fastest guy, but they had what people called functional speed.
He could accelerate and decelerate, fascinating receiver, got more and more touchdowns. I think he got to pick your punches and know when to really accelerate. And if you’re blessed with the ability to work from home right now and make some progress, you should be working 24/7. Because big swaths of the economy are shut down and a lot of people can’t work at full capacity. And that’s the time when you really turn on the jets, because despite what TV will show you with NASCAR, the races are won in the pits. If you can shave two seconds off your time in the pits going 220 miles an hour, that’s an eighth of a mile advantage. While a lot of the economies in the pits, if you can work, go 24/7. I said to my family about 16 weeks ago, for the next 12 weeks, I’m just going to work around the clock seven days a week. Cause I see a big opportunity here cause I can do what I do regardless while everyone else is closing their studios, not writing, whatever it might be. I’m going to go really hard cause I want to work less when we come out of it. So there’s a meaningful opportunity to lap the competition. Now the profound opportunity Guy, the profound opportunity.. and this goes back to the notion of, Lennon had this great quote that sometimes decades go by nothing and happens. And then you can have weeks where decades happen. And I think the profound opportunity is sort of the repair and the cementing of key relationships. And that is, I think a lot of people are struggling: emotionally, financially, professionally. And I think if you can bring real grace and generosity, and reach out to people and offer a hand—stop keeping score—like, did you let your friendships wane because of perceived slights or bullshit competitiveness?
Are you not the kid to your parents that you want to be? Do you, if you had to say goodbye to your siblings over FaceTime, cause one of them got really sick, is the relationship where you would want it to be? If you can demonstrate real grace and generosity and reach out to people, there’s a profound opportunity to cement and strengthen relationships and meaningful opportunities to lap the competition professionally. The profound opportunity presented in COVID-19 is the opportunity to repair and cement our key relationships.
Guy: Hallelujah, now that is the way to end the podcast!