Scott Galloway's No Bullsh*t Business Advice for Creative People

26:19You need to be more thoughtful. I have license. Sam Harris is one of my role models, said if you have people who love you unconditionally, which I have, if you have economic security, which I have, you have an obligation to speak your mind because I'm in that position. And I do that. I try to be totally unfiltered. I also try to apologize. I get it wrong a lot. I'll make a snap judgment on something. I'll say something stupid that's not funny. It's offensive. They say art is getting away with it. So I try to engage in what I call art, and that is be very provocative, but get away with it. And occasionally I don't because I say something stupid and offensive unnecessarily.

26:54And I'll say on the next show, I got this wrong. I apologize. I shouldn't have said that. But I can play, I can draw outside the lines a little bit more than most creators because of that economic security. If I'm you guys, I want to be provocative and thoughtful, but I really want to be, I want to err on the side of saying, okay, what is the real downside here? Are we risking our livelihoods and the livelihoods of other people? because when I lose those sponsorships, I still have the money to pay my people pretty well. You know, I can afford to go negative one year. Most creators can't. So I, you know, I think like you guys have to thread a needle, right?

27:33You have to be aggressive and provocative, but at the same time, you don't want to turn off Aetna or State Farm or whoever it is that's advertising your podcast. Yeah, and I think that, you know, like we ran into each other at Cannes Lions at the Hotel Ducap. And I think, you know, being there, what I was fascinated with, you know, we, again, we've been doing this for 13 years. There's been a lot of ups and downs, but largely across those 13 years, we've been in the ads business. That is the business of being in media or being a YouTube creator. I think now at this stage in our career, being at Cannes, look at the ads business, and I think about all the different places that advertisers can put their money, the influx of content creators, the influx of, hey, if it's not Colin and Samir, there's a line of shows that I could probably advertise on.

28:21How do you see the ads business playing out over the next couple of years as it pertains to the creator economy? You know, we are starting to see like traditional like Netflix is moving into the ads business. Now you see, you know, YouTube taking up timeshare on connected TVs. There's an influx of content creators. Like I'm looking at this as new creators and, you know, creators have been doing it for a long time. Like how should we be looking at the ads business as a whole when it comes to our economic stability? well there i think the two biggest trends at least in my mind one's very good for content creators one is very bad if you will or let me start with what's quote unquote bad so income inequality or is out of control in podcasting there are 600 000 active podcasts that are producing content every week i would bet the top 200 do 95 of the revenue and 200 percent of the product.

29:17If you're outside of the top thousand podcasts, it means that you're doing it to build McKinsey's consulting business, or you enjoy it, or you're getting people to buy more CRM software, right? It's not a standalone economically valuable business, or you're a sole proprietor with very low costs that continues to do it and makes a little bit of money. Once you get into the top 200 or top 100, these business become multimillion dollar businesses with exceptionally high margins because, you know, and I'm very open about this stuff. I think people should talk about money. I wish more people had talked openly about money so I could learn more about it when I was younger.

29:55You know, my podcast franchise of Prof. G, Pivot, Kara Swisher is kind of my business partner around this. You know, it's like a 15 to$20 million a year business. We can't spend three or$4 million if we tried. I mean, there's only so many producers and sound effects you can have. So it's a massively profitable business. The first two, three years we were losing money. All three of those podcasts are in the top 200. So it is income money. So if you're not in, okay, so think about it. Top 200 out of 600 ,000. If you're not in the top 0.03 % of podcasts, you're losing money. So this is a difficult business.

30:38The good news is there's very low barriers of entry. The bad news is there's very low barriers of entry. So anyone with a mic is in this business. It takes years to develop. You've got to be very good, very disciplined. Anyone who thinks they're going to go into this and make a lot of money, I'm not sure, but I think the economics or the likelihood of success are just behind the likelihood of you becoming an NBA basketball player. I mean, it's just a shitty business from a probability standpoint. But if you become one of those top 200 out of 600 ,000 podcasts, it's a small but wildly profitable business.

31:11So the economics of podcasting are just – it's income inequality gone berserk. All the money is going to the top 200 or maybe the top 300 podcasts. The good news is that I believe there's been an overinvestment in subscription. And that is I don't know if you guys have gone through the same existential conversation I go through with my team every 12 months. Like, let's put everything behind a wall so I don't have to talk about Zip Recruiter or how much I love or don't love Flying Virgin Atlantic or that I've given up food and I'm just eating athletic greens now. I mean, it's just literally, and I think, okay, let's test the passion of our listeners.

31:53Let's put it all behind a content wall. Let's be HBO or paywall and create better storytelling and we won't have to deal with selling advertisers and all that nonsense. Here's the bottom line though. I actually think there's a pretty big opportunity. If you can do what you guys have done and establish an audience and a following, advertisers are having a really difficult time reaching affluent consumers, especially affluent young men. Because affluent young men, where do you reach them if you're Pepsi? Where do you reach them if you're Virgin Atlantic? They're watching Netflix. They're not watching ad-supported television.

32:30They're not listening to ad-supported radio. They got Spotify. Most of them live in urban centers that have very strong zoning rules. In Paris, you are not allowed to have a billboard that is visible from a green space. So there's a regulator in Paris that goes around, walks through every park, and if they can see a billboard or an ad, that company has to take it down. So the ability to aggregate an audience that is willing to listen to your ads, and you guys do host readovers, people don't mind them. They like you guys. And so when you're reading and saying, this is why you should buy the F-150 Lightning, people kind of like it.

33:05Their screen is a little bit more down if you do kind of personal experience reviews. I've been wearing Viore, what I call douche wear, like athleisure. And I like it. My kids are on green light. So I can pretty much reach out to a company and say, I love your product and I use it if you want me to talk about it. I'm wearing Warby Parker's. I absolutely love Warby Parker. I love American Express. I have an affinity for a credit card company. I drive a Range Rover. I'm that guy. And I'll speak to it. if advertisers can find a good audience that they can reach, they'll pay real money. And so you've seen the CPMs, the ad rates and the sell-through rates, again, for the top 200 podcasts where you guys are, have gone up.

33:50So the ad ecosystem for people who've aggregated an audience, I think the economics actually look pretty good. So in podcasting, I think we're the only ad supported medium right now at a direct response. You know, the big tech guys, it's growing at double digits, And I've seen the CPMs and sell-through rates go up. So what do you have? You have the same winner-take-most dynamic in our economy where the folks, if you're in the top 200, I mean, it's really good to be you guys. It's really good to be Colin and Samir. Now, there's 500 – there's 1 ,000 podcasts who look at you guys, get inspired, and try to do what you do and just get nowhere near any sort of money because the advertisers want scale.

34:32They would rather pay double the ad rates for a pod that gets three or 400 ,000 downloads than one that gets 100 ,000 because they just don't have the time or energy to come up with the creative, track it. So it's literally income inequality gone crazy. That's the bad news. The good news is that the economics for the people who do aggregate that audience are getting stronger and stronger. So the the thing that I think about a lot, you know on that last point of like there's You know a thousand people who get inspired not just by us But other creators that they watch whether it's you or a youtube creator they watch they're watching mr Beast and there's probably millions of people who watch mr Beast and go I want to be a youtube creator now a lot of people are acquiring the skill of Acquiring attention like the acquisition of attention is a skill that a lot of young people are gaining right now, whether that's through making TikToks or Instagram or podcasts or YouTube videos or blog posts, is that a monetizable skill?

35:32Like when you talk about looking at a industry that has a 90 plus percent employment rate for young people to like develop a talent in one of those industries, is the acquisition of attention one of those skills? Or do you think what happens to this crop who's really good at making cool shit online, but maybe isn't like cut out for the independent media business? There's never been a commodity as monetizable as attention. We live in an attention economy. If you think about the companies that have grown shareholder value the fastest, what they've done is they're either capturing attention or that the GPUs behind what you need to power to grab attention, right?

36:12NVIDIA powers AI. AI is grabbing more and more of people's attention. Google, Netflix. I mean, think about the companies have added the most shareholder value. Meta, 40 % of the planet is on a meta platform every day. And what do you know? The company is worth over, I think, bumping up on 1.3 or 1.5 trillion dollars. Attention can always... I invested in the Reddit IPO. Not a great business if you look at the numbers, but here's the thing. Second most traffic site in America behind Alphabet. And if you look at the top 10 outside of Wikipedia, they're all worth between like$300 billion and$3 trillion at Apple.

36:53And this company is going public at$6 billion. I thought, oh, that's a great buy. Reddit could be worth 10 times what I went public at solely because of the amount of attention it captures. The majority of companies that capture that kind of attention at scale figure out ways to monetize it. So what do you want to do as a young person? On the first day of class of my brand strategy course, I'm like, you have to become, I won't call it a creator, but an influencer. I need you to pick a medium. It can be LinkedIn. It can be Instagram. It can be TikTok. It can be X. Pick one of these platforms. Find out what it means to be in the top 1%.

37:28So I think if you're on Instagram, if you have, I don't know, 55 ,000 followers, I'm pulling that number out, puts you in the top 1%. I'm like, pick your medium. Find out what it means to be in the top 1%. And by the end of the course, you need to be in the top 1%. LinkedIn, it's going to be more wonky B2B content, right? You're going to have to find a niche and start publishing about it. On X, you need to engage in like a mass follower strategy. You know, every night, this is how I got my first 10 ,000 followers. I followed 200 people and they followed me back. You know, there's different ways.

38:00You need to find a medium, YouTube. What are the top 1 % of YouTubers? But commit to finding a medium because we're all better in different mediums. I'm good in front of large crowds. One-on-one, I come across as insecure and aloof at the same time. Everyone has mediums they're good at or bad at. I'm terrible on the phone. What is your medium? And then commit to being in the top 1%. And then every day, Mr. Beast it. Get honest, open feedback and say, all right, I need better cameras. I need better sound. I need better humor. I need more data. I need to edit it better. Just every day, start editing.

38:37It's hand-hand combat. Just like tiny changes every week. What can we learn? Your background didn't happen by accident. Your background is very cool. It connotes your lighting. I imagine there's been probably 30 or 40 tweaks just in what I'm seeing right now. And arguments, and we get it wrong, and we get it right. This stuff is the nuance here, the thousands of little decisions. But if you have the ability, can you write well? I think that's kind of the lost art. I love writing and I'm good at it. I aspire to be great at it. I'm still not great yet, but it's the hardest thing I do because the vast majority of people, I was a consultant, meaning at the end, I was a consultant.

39:19That's how I made all my money in the 90s and 2000s, which loosely meant I rented my brain to old white guys. And most of these guys, I would come up with a reason why they needed to spend a million dollars a year on my consulting firm. And I do shit like write their speeches, write their earnings reports, because most of these guys didn't know how to write. They couldn't write. So if you have the ability for long-form prose, or you have the ability to create video, or you have the ability to come up with snappy, funny things in 280 characters or less, you want to drive a truck through that and learn how to become great at it.

39:54Great at it. And if you become great at it and you start aggregating a following, money's going to follow. And it might not even be direct money. We talked about winners and losers. that's a big part of how we built i ran a business intelligence firm called l2 we started putting out videos all of a sudden every brand in the world knew us every the ceo of walmart would call and say come down and present to the board because the someone on the board saw one of our winners and losers videos on youtube so your ability to monetize attention is it's it's going to happen It may not happen how you think.

40:30It may not be people selling ads on YouTube. It may just be B2B reverse inquiry, people awareness. You can always monetize attention. That most monetizable asset in history. It's also, there's huge externalities from it. Just said it over for a little bit. Anytime we've taken one substance and converted it to another, whether it's fossil fuels to petroleum, whether it's plant-based calories and meat-based calories, there's emissions. And the biggest emission in our world right now, I would argue, is not carbon, but it's the rage and polarization that's being emitted from an attention economy where companies will do anything to maintain your attention.

41:06So they'll create addictive patterns. They'll create rage. They'll start spreading conspiracy theory because people will click on something that says mRNA vaccines give you cancer or whatever. And unfortunately, we haven't regulated as we have a little bit with carbon, as we have a lot with meat-based calories. We haven't had any regulation around the emissions from an attention economy. Anyways, I got a bit off script there, but oh my gosh, you can always monetize over the long-term attention. I want to ask for a young creator who's on that journey of trying to gain that skill of gaining attention, for that person who is not taking care of their finances being a creator.

41:52I heard you say on The Daily Show that young people should find non-vanity industries. What are some of those non-vanity industries that a young person could go into to actually make money right now, even if their goal is to become a creator and they want to monetize attention that way? But if they're looking at it as, I'm coming out of college, I need to get a job, what does that mean? What are these non-vanity industries that young people should go into? you? Well, it's easier to talk about the vanity industry and then anything but. So anything you wanted to do as an eight-year-old is a vanity industry.

42:29I thought I was going to be an athlete growing up. That's how I wanted to make a living. And then I thought, oh no, maybe I want to be a rock star or no, I'd like to really be an actor. So anything that sounds really cool means you're going to bang your head against a wall for very little money. And this is my investment strategy. A friend of mine is starting a membership-only club in downtown Manhattan, and he knows all these artists, and he's got the head of a modeling agency to invest, which connotes there'll be a bunch of good-looking people there. And he's going to do all sorts of art gallery shit, and he knows all these.

42:59He's partnering with a music label. I'm like, sign me up for membership. I want to hang out with people younger and hotter than me. I won't get near it from an investment standpoint. There's an overinvestment of human and financial capital in the vanity industries, which drives down returns. So modeling. art, acting, sports, open a nightclub, open a restaurant, fine, you better be in the top 1 % or it's going to be a very difficult way to make a living. I don't want to crush anybody's dreams, but if you go into one of the vanity industries, you got to set up certain guideposts and say, if I'm not making this amount of money by this time, I need to think about something a little bit more boring.

43:37The top 50 % of tax lawyers have a house and take wonderful vacations. the top 10 % of actors are Uber drivers. If you're not in the top 1 % as an actor, you're doing a side hustle. There's 180 ,000 people in SAG-AFTRA. 83 % of them didn't qualify for health insurance because they made less than$23 ,000 last year. And these are the 180 ,000 best actors and gaffers and sound people in the world. It's not easy to get into that union. It means you've already done a TV show or been in a good Broadway play. And basically the unemployment rate there is 80 plus percent. So the non-vanity industries always have a higher ROI because they have a lack of capital or human capital.

44:19So this is a decent strategy for a creator. The specific crowds out there general, you want to start with, I'm going to know more about this little niche. And it might be, okay, I know more about nuclear power as it relates to you know, powering, I don't know, developing nations. What's happening with nuclear power in developing nations? I understand more about the supply chain in Mexico than anybody else. I mean, really go really, really, really niche and say, my goal is I'm going to own something. Now, you might be really drawn to like, okay, I want to talk about dating or sex or what it's like to be a millennial, just keep in mind, that's kind of a romance vanity thing.

45:08People are very interested in that stuff. And people have a tendency to think their views are much more fucking fascinating than they actually are. What you want is to be to own something. And it can be so narrow. I owned luxury as an academic. I saw that no academics were following luxury in a data driven way. So I started doing a ton of rigorous research around luxury brands. And I went even narrow. I'm like, what is the digital footprint and competence of luxury brands? And then we kind of owned luxury for a while. No one else was doing it. The specific crowds of the general, and then Procter & Gamble and Unilever called us in the same week and said, could you do this kind of work for a CPG firm?

45:44We're not in luxury. And the name of the company was Luxury Lab. And I hung up the phone and I said, hey, everyone, the new name of our company is L2. We're expanding into all consumer products. But I don't think I ever would have done work for P &G if we hadn't established that kind of leadership position in the luxury space. So one, just be honest with yourself. Are you mistaking something you're good at for your hobby? I'd like to be a DJ. I got a pretty good ear for music. I should be quarterback of the Jets right now. I'm 6 '3". I got a good field of vision, pretty decent arm. Okay, there's about, I got to UCLA and I realized that I was not an athlete.

46:20I was a weekend athlete. They have real athletes, by the way, 49 Olympians, 40 athletes, nine coaches, go Bruins. But if you all of a sudden start doing – really trying to own a category that's not romance, what I would say is the following. You're five to ten times more likely to develop economic security. And then as you get older, you know what you become really passionate about? Taking care of your kids. Being the sibling, my dad is 94 and my dad – I want my dad to live a nice life. That is very expensive. I can partner with my sibling. My sister is outstanding, logistically, really good, a better manager than me.

47:00She manages it all, and I pay for it all. And I love being able to do that. I'm passionate about that. I'm passionate about doing crazy cool vacations with my spouse and not having the, God, the fucking amount of economic stress I've had my whole life. It's just like haunted me. And when I got economic security kind of in my late 40s and early 50s, I felt like I had a two-year exhale of stress. I'm like, oh, God, I just like don't miss worrying about money. And those things you want to talk about feeling passionate. I mean, it'd be great to be throwing the ball for the Jets right now. But having economic security is really awesome.

47:41And anything that will provide that type of economic security will make you passionate about whatever that thing is. And that thing is more likely to provide you with economic security. if you're in the top 10 % of metallurgists, if you're in the top quartile as an academic of

48:04federal funds, interest rate movements, you can make a really good living. In the passion industries, you have to be in the top 1%. So like I said, I don't want to crush anybody's dreams. What I would just say is be honest. Is this a romance industry? If it is, it means there are 10 ,000 fucking podcasts about this. But if you have the domain expertise and interest in something that quite frankly, it doesn't have as much curb appeal, it's a much better way to make a living. Yeah. I think about, you know, like for us, you know, we're both in our mid thirties and like, I think we've probably growing up at the time when like the social network, the movie came out and we lived through the Facebook and like the young people having these explosive returns on, their ideas.

48:51I think even looking at your story and thinking about like, okay, you know, I first came across you as a creator and really looked up to you as a storyteller, but your business was monetized in a different way than a traditional media business, right? Like you were acquiring attention from companies that were then paying for a service. And correct me if I'm wrong, but L2 sold for like 160 million. That's right. So when I think about like, obviously that's some level of like extreme economic security where Colin and I, funny enough, when we first started working together, we were just like, we want to make movies.

49:27We're like, okay, but let's work and let's get some economic security and then we can make movies. And I still feel like we're on that path where we're like, okay, one day we're going to have some event that's going to unlock our ability to just make whatever the hell we want to make. And it's kind of a strange, you know, As a 35-year-old man, I've started to understand and unpack and psychoanalyze myself of this way of thinking. But I'm just curious, if you were in our position right now, what is that path to an exit for YouTube creators who have built an audience or podcasters who have built an audience?

50:00Or is it just because we love it, we just look at this on a long window and say, we're going to do this as long as we can and keep growing our revenue? Well, you just brought up the movie business. So I'm going to double-click on that because it illuminates what I was talking about. And there's a basic axiom as it relates to your economic success and professions. And I wish I'd learned this earlier. There is an inverse correlation between how sexy a job is and its ROI. Full stop. The cooler a job sounds, the harder, the more you're going to bank, the lower the return on your investment will be.

50:35Let's talk about movies and media. Who are the three key players in the purchase of Peacock that want, or I'm sorry, of not Peacock. Oh shit. It's a Paramount. They've got great movies. They've got networks. They've got Paramount Plus. That's a sexy asset. MTV, who's in it? Bronfman was in it. David Ellison was in it and ultimately won. And then there was Sherry Redstone. The three pivotal players all had one thing in common. They were billionaires, billion our kids that's who should be making movies is people whose dad made billions of dollars because it's an incredibly shitty business i mean it's it that is the most difficult business and another general rule in terms of content creation is a following the return on your investment distinctive whether content creation is a shitty business which is another talk show So, but generally speaking, a decent rule is your ROI will be inversely correlated to the size of the screen.

51:44You guys should absolutely make movies after you are rich. After you are rich. Because if you want to make movies for the big screen, oh my God, you better have a rich spouse or a parent who's given you hundreds of millions of dollars or maybe be Martin Scorsese. I mean, maybe you're just fucking crazy genius. Assume you are not. So find me a documentary filmmaker, and I'm going to say, oh, that means you married someone rich, right? Oh, you're a bored spouse looking to have relevance, and your wife has said, Jesus Christ, just go make documentary films, and we'll go to the Venice Film Festival, and we'll spend$3 million highlighting the diamond trade in Africa.

52:30and if it's super successful, we'll only lose 2 million. That is the movie business. And the big, big movie business is a series of temple movies. I just saw Deadpool and Wolverine. You go to the next screen size down, the TV, big business, difficult, getting more difficult, but it's still a huge business. The screen you want to be in business with is the small screen, is the phone. So if you're starting it as a content creator, I think the first thing you've got to ask yourself is, what size screen am I producing content for? And if it's anything bigger than a phone, you better love it because it's going to be really difficult.

53:07The size of the screen is inversely correlated to the ROI. I doubt you guys. You guys are already in a tough business. Podcasting is a tough business. If you show or maintain the kind of trajectory you're going to make, you're going to start making good money. In terms of an exit, these businesses usually aren't exit businesses. What they are is, so again, in the spirit of candor, because I want your listeners to learn, what we do is we pick a distributor. Like Vox is our distribution partner. What they do is they basically sell ads against our, you know, they say they help us with production.

53:43They do a little bit. They're talented people. They help us something called customer acquisition, which I've never figured out what that means. You know, they'll host the Vox house at South by Southwest. They get us awareness. They do events. They're really talented people. And more than anything, they're just super pleasant. They're super nice people. If I just take them a podcast because I have enough credibility right now, I can get a split of like 70-30. I get 70%. They get 30 % for selling the ads. Our deal's coming up in May. We have the credibility now where I can go to iHeart, Spotify, Amazon, Sirius, and say, would you like the four-year deal to distribute our content and sell the ads.

54:24And they might decide, I mean, who knows? Time Warner might decide CNN needs to be in podcasting if we sign up Prop G, Pivot, and on overnight. We're kind of credible in tech and business and podcasting. And what you want to do is you want to garner an irrational deal. That's every entrepreneur's dream. I want an irrational deal, right? Something that makes no sense because the quote-unquote economically, because the quote-unquote acquirer has decided there's some sort of strategic rationale for having that asset. That's what every entrepreneur dreams of, is getting an irrational deal. If you guys get a large enough following, YouTube is a little more difficult because the problem with YouTube is that whenever you have a big tech firm in between you and the consumer, they're usually very good at starching out the majority of the unearned margin.

55:10And that is they will figure out a way to insert themselves in between you and the end consumer and fuck you. And so anytime you are dependent upon one of a small number of big tech firms for your distribution, watch out, watch out. And YouTube creators, it's even worse than podcasting because here's the thing, no real big tech company controls podcasting. Apple a little bit, not really, but there's Apple, there's Amazon, you can pull up a podcast using almost any technology. So there's no real big tech firm that is standing in between you and the consumer. So, but your kind of business usually doesn't have an exit.

55:51What it can have is fantastic cash flows. And then maybe at some point it turns into a TV show, it turns into books, it turns into a speaking tour. So I make 3 million bucks a year speaking, doing speaking gigs. And COVID, I was making 5 million a year because everyone was letting me do virtuals. I think that one of the reasons I'm able to get kind of a million plus per book that I write now is because of my presence on these platforms. So if you establish a large following, what you should be able to do is establish a flywheel. It might be events. You're both like young, handsome guys. If I saw you were hosting an event, I'd think, oh, wow, there's going to be other young, cool, handsome people.

56:32I would like to go to that event. First one will lose money. Second one will break even. Third one, you start to make money. Oh, these guys have a TV show, a radio show on Sirius, whatever it is. If you establish a presence on YouTube, what I would say is you want to establish a flywheel of ancillary revenue streams because it is very dangerous to be dependent upon Alphabet. It is very dangerous to be dependent upon Amazon because overnight they can tweak the algorithm and decide that, oh, we have figured out a way to capture more of that advertising revenue. Now, TikTok has put pressure on Alphabet, and now they're all being, not all of them, but most of them are being a little bit more promiscuous, fair, whatever you want to use in terms of the split.

57:15You guys probably know more about this than I do. We get very little money from YouTube. We don't have good production value. Look at me now. I'm in Aspen right now. I look like I'm in a hostage video. Look at me. I look like Joe Biden in five years. I look like shit here. You guys look young and handsome and cool, and you have the bookshelf, and I'm sure you selected the titles that are like wonky, but anyways, I'm sure you have sapiens behind you or whatever it is. So, but you, but I, I'm not, I have a face for podcasting. Our videos got like 40 or 50 ,000 views on YouTube because we haven't invested a lot in it.

57:47And because I'm always on the road, I need, I need kind of, I need sort of remote capabilities, which quite frankly, look at the difference in your screenshot, look at the difference in mine. And my tech guy does a great job. He turns literally chicken shit into chicken salad. But you guys look fantastic. But you guys have to show up at the same place and time together. I think I have been in the same studio with Kara in seven years. I think we've been in the same room six times, unless it's a live event. Anyways, the key is establish a large following and then start being really thoughtful about what are other ways to start making money.

58:22You want to be very careful when 90 plus percent of your revenue is being derived from a big tech platform because your margin is their opportunity. And YouTube has actually, I think, become a little friendlier and has established a better reputation for trying to monetize and get creators some money. But be clear, they have absolutely no problem tweaking the algorithm and taking money from you and margin from you. These are literally the worst partners in the world, hands down the worst business partners in history. In terms of, you know, there'll be really well-publicized examples of people making millions on YouTube and Mr.

59:01Beast and on Meta. You're much better being, for example, do you guys have a newsletter? No one can get in between me and my half a million consumers. It's in big tech. The email technology is not a big tech firm. It's pretty democratized. It's pretty cheap. So I love that business because I know no one's going to show up and say, oh, we have a new algorithm for our partners and invite me to dinner and tell me how they're fucking me. That is what you want to do. If you're a YouTube creator, you want to create an ecosystem of other ways to monetize it and be very careful about having your revenue totally dependent upon one of these guys.

59:38So on that topic, as well as the topic of irrational deals, Mr. Beast did a deal with with Amazon that's reportedly, you know, 100, 120 million. He confirmed that deal on our show and is shooting that show now. There's been a lot of conversations about YouTube versus Netflix and kind of digital media converging with traditional media. You've played in both worlds. YouTube came up quite a bit on the Netflix earnings call. Do you think these, like there is a true streaming war between those two players? Do you think there is a convergent event happening between our world and the world of traditional Hollywood?

1:00:18Or are those like pretty clearly separate and there's a few outliers like the Mr. Beast deal? Always converging. I mean, Mr. Beast will go upstream into TV shows. I could even see a guy like that having a movie because he has such an incredible following. And I imagine you guys started as a podcast. Did you guys start as a podcast or YouTube videos? Well, we started in 2011 as YouTube videos. Uh, so we've been, and, and with the podcast, we're uploading it to YouTube. Yeah. We were pretty early. Yeah. And where do you make more money on YouTube or on podcasts? YouTube definitively. Yeah. Okay.

1:00:50So that's your home base, right? And, but you want to be thinking about, okay, so I'm coming at it the other way. We get, each one of our pods gets three or 400 ,000 downloads. We only get about 50 ,000 views of our pods on YouTube. We're not optimized for it. That's not our home base. And we're making very little money there. But we're making a lot of money in pods. But we're trying to figure out a way to diversify that revenue stream. Yeah, things are absolutely converging. And that is the media stars of tomorrow is going to be a guy like, I don't know, Fareed Zakaria or Chris Cuomo that has a podcast, really solid YouTube, produces books, makes some money speaking.

1:01:38They're what are called decathletes, right? The people, the media, you're not going to be able to be – you guys are too young for this. Jerry Dunphy from the hills to the sea. This is Jerry Dunphy at KBC News and just reading off a teleprompter because he had broad shoulders and nice hair. You're going to have to be someone who's an athlete. You know how to curate. You know how to do great YouTube videos. You've got a solid podcast game. You know how to write books, or you know how to bring together the ghostwriter to write a book. You have a team that can start producing events for you. I mean, everyone's turning into the people who really do make real money in media, unless they're like a Joe Rogan.

1:02:16He doesn't need to be multimedia. But is he a podcaster or a video guy? I don't know. He's doing both, right? But I don't see – you can't be – I think success in media, you can't live in isolation of one medium. You're going to have to do other stuff. I go on TV once a week just such that – Williams-Sonoma was one of my biggest clients in the 90s. I built their first website. They found that if they have the web, they have catalogs and they have their stores. They found the moment they get a customer to buy from more than one channel, to buy both off their e-commerce site and in the store, that consumer becomes worth 160 % or 60 % worth more over their lifetime once they get people to become multi-channel consumers.

1:03:02So your ability to get people to download the podcast and listen to you in their ears, who also occasionally watch the videos, and then ideally maybe subscribe to the newsletter or show up to an event, that consumer becomes a fanatic. And that's what you want. It's not only about the number of consumers you have, but the intensity of them, right? And advertisers, and ultimately, if you ever were to do an exit or sign up a long-term contract with Spotify, who likes both your podcast game and your YouTube game and says, I mean, to be in the top 200 right now, we're going into the frothy part again.

1:03:39It was frothy four years ago. It's getting frothy again. And you're seeing these big deals, smart lists, Dax Shepard is really talented. We're starting to see these big irrational deals again. And that's what we all want. But most of those people have presence across a bunch of mediums. Dax is a celebrity. The SmartList guys, they're TV stars. They're TV and movie stars. And they do a tour together. They did a Netflix thing together. So it's a Williams-Sonoma strategy. As soon as you get some level of success, you want to say, okay, what's our next medium? And it might be 10 % of your existing medium.

1:04:15But if I were coaching you guys, how many views do your videos get? So I'd say the average does between 400 and 500 ,000 on YouTube. Yeah, that's extraordinary. So you're getting 10 times the viewership on your videos that I get. How many downloads do your pods get? Would do like 100 ,000. Okay, so I'm getting - It's quite the inverse, yeah. There you go. So I got better podcast game, terribly weak video game. You're the opposite. it. And here's the key. You want to create a flywheel and get good at both because if you can do two X on one medium, but you do X in two mediums, the latter firm is worth twice what the former is because you'll have more intense consumers because you'll be multi-platform.

1:05:06So if you have the good problem of getting to the point where you guys are with video, you want to start thinking really hard about podcasting newsletters and the like, such that you develop an intensity of consumer and you're not subject to the whim of some panda update on YouTube or whatever it is they call it. But multi-channel is where, in my opinion, where the real content creators who become really, really enduring and famous and make really good money are the ones that are going to have really solid game across multiple mediums. I want to ask you about your book, The Algebra of Wealth. For me, and this goes for a lot of people, I think it's a product of algorithms and of these platforms.

1:05:52We are continually inundated with shit we should do. And specifically when it comes to finances, it's like there's no shortage of this is what you should do with your money. This is how you should do it. And my first reaction is, that's bullshit. Or like, I'm not going to believe this. I'm very skeptical. You are someone that I've watched you and followed you for a while, and I do find that you are helpful and you do cut through the BS. So I wanted to ask you, with the algebra of wealth, what is that algebra of wealth? What is the formula? What's your perspective and your take on it that is perhaps different than the loads of here's what you should do content we get on a daily basis.

1:06:36Right. So I'll tell you who the book is for, who it's not for, the inspiration for it, and then I'll give you the actual algebra where I tried to distill wealth creation down to a formula. So the inspiration is that study. And that is, you know, that study, there's all sorts of research showing that you are the average of your five closest friends, same politics, same body mass index, same sports teams. I mean, everything. You end up wearing the same clothes, same political affiliations. Take your five closest friends who you hang out most with when you're a teenager and young adult, you're the average of those five people.

1:07:11What's interesting is there's a wrinkle, and that is one of those five people will end up economically secure despite not having made much more money than the others. And so the book is, what are the characteristics and behaviors of that one person who didn't make much more money than the other four, but ends up much more economically secure? That's the inspiration. I wanted to do a deep dive into people who are undeservedly rich. The postman, the guy who was a letter carrier his whole life who retires with$4 million. What are the characteristics of that person? And then who the book is for. It's not for the person who needs to cut up their credit cards and isn't allotted debt and can't get their shit together financially.

1:07:51This book is for someone who's working hard, is pretty good at what they do, is making money, and wants – says, okay, economic security is really important to me and I want to make good decisions. and so the it's a to a certain extent it's a memo to myself my younger self because i made a lot of mistakes financially i did a lot right i've always been i've always made a lot of money i've always made a lot of money but i've ended up broke twice and it was exactly the wrong times when i went broke when i had my first son it was a great financial recession and i ended up having made millions maybe even tens of millions of dollars under that point i ended up broke and my first emotional reaction when my first son was born was not one of excitement or hope or gratitude.

1:08:36It was fear and anxiety. Because I thought, okay, I'm a father. All of a sudden, I feel that immense obligation. Do you guys have kids? Not yet. Not yet. No. Okay. So the moment you have kids, God reaches into your soul and turns on the switch and you're like, okay, it's no longer about me. I have these paternal healthy feelings that I'm supposed to protect this child. In a capitalist society, it means being a good provider. And right then, I'm like, oh my God, my first sentiment as a father is I have failed my son. That was just an awful feeling. And I never want to go back there again. And if I just had a little bit more character and been a little bit smarter with financial decisions, I wouldn't have had that feeling of anxiety and upset.

1:09:20So I wanted to write this as if I was trying to coach my 25 and 35-year-old self. So let's talk about the algebra. The algebra is wealth is a function of the following things. The first is focus. Find something you're good at. Don't follow your passion, follow your talent. Anyone who tells you to follow your passion is already rich. Try and figure out in your 20s what you're really good at. Do you have the ability? Are you a good student? Then go get a graduate degree and become certified. And 99 % of the public can't do what you do because you need certificate. You need to pass the New York bar.

1:09:53You need to have a degree in anesthesiology. You need to know how to do specialty construction for nuclear power plants. You know how to install energy efficient heaters. You know how to fix an EV, right? Develop a skill, a talent that puts you in the top 10 % within 10 years and maybe within 20 years, you think I could be in the top 1 % in an industry that has a 90 plus percent employment rate, which by the way is 98 % of industries. Like I said, I would try and avoid the romance industries unless from an early stage people are telling you, you are the Lionel Messi of that industry. Fine. But if you find out, no, I'm 29, I'm playing AAA ball, I'm not having a great season, maybe it's time to think about another industry.

1:10:42Find your focus. Go all in on it. All in. Try and own it. Try and be great at it. And then finding that talent will create, in an industry with a 90-plus employment rate, will hopefully create a decent amount of currency, professional currency, which leads to the next part of the equation, which is stoicism. It's probably the wrong word. The word is probably discipline. But recognize that people aren't as impressed with your shit as you are, and that while you can't control exogenous factors such as the marketplace, you can't control how much you spend. And wealth, people have a tendency to think that wealth is a function of how much money you make.

1:11:17That's probably 49 % of wealth. 51 % is how much you save. And that is your ability to spend less than you make and deploy an army of capital that goes out and kills for you in your sleep. Because the definition of rich is the following. It's passive income that is greater than you're burned. So I have a close friend who runs the M &A group for an iconic investment bank, makes between$3 and$12 million a year, and spends all of it, between his ex-wife, Alimony, Child Support, Home in the Hamptons, FlexCheck Card, Master of the Universe Lifestyle. I think he spends almost all of it, and I can tell you he is very stressed out.

1:11:55He is not rich. My father, who is 94, gets$52 ,000 a year between Social Security, his pension from the Royal Navy, and he owns about a dozen washing and drying machines at a trailer park where he goes and empties with his healthcare worker at the quarters out. I think that's his most joyous moment. My father was raised in Scotland and has a very weird relationship with money. He spends$48 ,000 a year. He's that guy that when we go to a Mexican restaurant on Friday, asks for his half-finished frozen margarita, he asks for it to go, right? He's that guy. He spends$48 ,000 a year, and at the age of 92, he's making 52.

1:12:36His passive income is greater than his burn. That's rich. And the way you get there is with a certain level of stoicism of controlling your spend. And there's a lot of ways you can do that. My attitude is don't ever give yourself the opportunity to spend. I think 99 % of us, including me, will spend everything we get our hands on. You live in an economy where the most brilliant people and the best technology are there to offer you at exactly the right moment an upgrade to premium economy. Oh, wait, there's two people looking at this room. You better book now. Oh, wouldn't you like to add flourless chocolate cake to your smoothie from Joe and the Juice?

1:13:13Yeah, I love flourless chocolate. I mean, there are so many brilliant people grabbing you by your ankles, turning you upside down and shaking you like a rag doll. It is so hard to hold onto money that comes to your hands. So try and figure out a series of automatic savings vehicles. Find out immediately if your company offers them, what the government offers, and if you can, try and get it taken out of your checks so you never, ever see it. That is the easiest way to start saving money and building wealth. I call that stoicism. Try to control your emotions, control your spending, find reward from relationships as opposed to things.

1:13:48Don't be that fucking idiot ordering a 400 bottle of Grey Goose at some club at two in the morning or thinking that a car is going to help you attract mates. My first bonus at Morgan Stanley was for$28 ,000 when I was 23, a lot of money in 1988. I went out and bought a$35 ,000 BMW. If I bought a Hyundai for$12 ,000 and put the rest of the money in SPY, I think I'd have enough money to buy seven Ferraris now, which leads me to my next thing, and that is compound interest and time. Our species has a flaw, and that is because for the majority of our time on this planet, we haven't lived past the age of 35.

1:14:23We cannot wrap our brain around the fact, you guys are in your mid-30s. You're probably going to live 70 more years. You're probably going to work another 40 or 50. And you know it, but you don't believe it. Because the majority of men were dead by the time they were your age. They broke a bone, which was death. They fought a war where they were going to die. Something happened, right? If you look back across many of us, if you look across, if either of you've had an appendicitis, you probably would have died, right? You might have had a childhood thing. You wouldn't have survived. Anyways, our brain can't compute we're going to be around that long.

1:14:59We also can't compute how fast it's going to go. Wow, my life has gone really slowly, said no one ever. You're going to wake up in a moment and you're going to be my age. And if you can figure out a way to just put, you know, you guys are doing well, a thousand bucks, even in your mid thirties, a month away in savings, you're going to be fine when you're my age. Hope this podcast gets sold to Spotify for tens of millions of dollars or hundreds of millions. But just in case it doesn't, that's your plan B is appreciating how fast time will go. And with a little bit of discipline from that stoicism and that focus, getting money out of your, getting money into an investment before you even have it.

1:15:40It's amazing how fast time will go. And you think, oh my God, the market's only returned 9 % since the beginning of the market. 9%, that's nothing. That means every 24 years, you're getting 8x your investment. It'll go so fast. Compound interest is so powerful. And then the final thing, and I didn't appreciate this, and this is how I fucked up is the power of diversification. I had been raised as an adult on this diet of go all in, go all in. So when I started a company called Red Envelope and went public, I was that guy that borrowed money against my stock and bought more stock because I thought, I'm such a baller that anything that I devote 110 % of my efforts to, which I was doing, in this unbelievable internet economy, e-commerce, cool company, oh my gosh, go all in.

1:16:30And you hear all these stories about Mark Zuckerberg turning down$20 billion and Steve Ballmer borrowing money. There are examples of that. Assume you are not that person because what happened to me was there was a great financial recession. There was a longshoreman strike and all our merchandise got caught on a ship eight miles offshore. And a credit analyst at Wells Fargo, a pre-scient credit analyst, saw the credit crisis coming and pulled our line of credit. And my company, which was trading at eight bucks a share in the market, and I was worth, I don't know, several million dollars, went to zero in about three weeks.

1:16:58And all of a sudden, I was not only not worth$10 million, I was worth a negative two or three million. And if I just diversified a little bit, if I just taken some, Warren Buffett just sold half his apple stake. Because when you're rich, yeah, sure, it's about getting richer, but it's mostly about not getting poor. And 40 % of Berkshire Hathaway stock portfolio was in one stock. So we took it down to 20. And you want to do the same thing. Diversification is risk-free return. And here's the thing, Daniel Kahneman, the behavioral economist, taught me this. He's one of my role models. And that is the loss aversion.

1:17:37And that is your money doubles. You bought Nvidia six months ago and it doubles. That feels really good. It doesn't feel nearly as bad as when a stock gets cut in half. And that is you don't need to be a hero. You don't need to find the needle in the haystack. You can buy the whole haystack. Don't worry about it unless you're in the business and financial planning or you're passionate about it. Don't put yourself under the delusion that you know how to pick stocks. You don't. The smartest people in the world who go into alternative investments, hedge fund managers, underperform the S &P by the amount of their fees.

1:18:10CNBC and hedge funds and mutual funds are probably the biggest grift in the modern economy. They have no fucking idea what they're doing. You want to buy low-cost ETF and index funds, diversify, have someone else diversify for you that once NVIDIA becomes... I get 80 emails a day asking for advice between 80 and 90. The number one question I get, I track all of them is, is it too late to buy NVIDIA? And I'll say, I don't know, but that's not that helpful. So this is what I would suggest. Buy SBY, buy an index fund. And the Magnificent Seven are about 28 cents on the dollar in terms of market capitalization of the total S &P.

1:18:48So 28 cents on your dollar will go into those firms. And if they double, you'll participate. And if they don't, there's a correction and the other 493 stocks have their day in the sun, you'll be fine. Because the opportunity to make 20 % in a year will give you some happiness, but you won't be as happy as you'll be bummed out if you lose 10%. And you don't need to be a hero. If you put a little bit of money away every month and you diversify, you'll end up economically secure. So diversification is something I did not appreciate and even after making a lot of money, my lack of diversification made me vulnerable in market corrections.

1:19:27Diversification is your Kevlar. Last week, I found out an investment. The investment I was most excited about, this tech space, primary care, healthcare messaging company. Loved it. Tier one VC, lucky to get into the deal. Baller CEO. Investors that are like the titans of industry. I invested 5 million bucks, a lot of money for me. I found out last week it's a zero. Went out of business, pulling the plug. The investment I would have been most excited about,$5 million is a lot of money. It's not a lot of money to me right now. I never put more than 3 % of my assets in any one thing. So here's the thing.

1:20:05I was bummed out for about 30 minutes, and then I was fine. Because diversification is my Kevlar. I can take a bullet to the chest, and it may knock me off my feet, but I get right back up. Whereas when I had 120 % of my net worth in red envelope, I almost never got up again. I was so shattered, so upset. I almost lost my mojo. I almost got stuck, depressed. That's the scary thing is you get stuck, right? You lose your confidence. You lose your drive. And a huge loss can do that to you. So to review, focus. Find your talent, not your passion. A little bit of discipline and stoicism. Save more than you spend.

1:20:46Appreciate how fast time is going to go on the power compound interest. Try and figure out automatic savings tools such that the money never gets to your hands. And finally, recognize the power of diversification. Amazing. You got that down. Yeah. That's good. It's a lecture. There we go. Thank you for my talk. Very helpful. Honestly, thank you. I'm assuming we've kept you and you have somewhere to go. uh well i i always pretend that i'm busier than i am to create an artificial sense of scarcity such that people think i'm more important than i am uh amazing scott thank you so much for joining the show um thanks thanks best of luck to you congrats on all your success thank you thanks scott