The Defense Industry, Greatness Is in the Agency of Others, and What to Do When Your Partner Makes More Money Than You

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1:12Welcome to the Prof G Pod's Office Hours. This is the part of the show where we answer questions about business, big tech, entrepreneurship, and whatever else is on your mind. Hey, Prof G. Hey, Scott and team. Hey, Scott. Hi, Prof G. Hey, Prof G. Hey, Prof G. Hi, Professor G. Now, last week's Office Hours, we talked about Tesla, early career advice, and mentorship. I've served on a bunch of boards. The most difficult thing, hands down, is compensation. Do your best to try and take the worst part of other people's jobs off their plate such that you become indispensable to them. Because if you make their life easier, you're going to be indispensable.

1:48I never explicitly asked anyone to be my mentor. What I did was I would call people or I would say, can I take you out to coffee? I'd love your advice on some stuff. Today, we'll answer your questions surrounding the defense industry, why greatness is in the agency of others, and how to act if your partner makes more money than you. I have not seen or heard these questions. So with that, question number uno. Hi, Scott. In the Pentagon, where I work as an advisor, there's a lot of interest in defense tech these days. Whether it's autonomous robotic hardware, software architectures for common control of uncrewed platforms, or AI sales pitches on everything from smart weapons to mission planning aids, tech is all over my conversations.

2:31While some of the typical big tech players are active here, there's also increasingly a bespoke ecosystem of defense tech venture seeding defense tech startups. Yet DoD is not a normal customer. It can buy in weird and unpredictable ways. It's often asking for products that have limited commercial application, and it can struggle in innovation investments to get venture-backed companies over the valley of death. I'm curious what your sense of this market is and how I can help leaders better understand the business side of the defense tech marketplace. Thank you. Thanks for your question and your service, working as an advisor.

3:08I don't know what that means. I don't know if you're a lobbyist for General Dynamics or Northrop Grumman, or if you're a general. Anyways, so in some, this is a great business because the world is an insecure, hostile, violent place, and military spending is reaching new highs. According to the Stockholm International Peace Research Institute, countries spent a record total of$2.4 trillion on defense in 2023. In global military spending, the U.S. accounted for 37 percent, so over a third, followed by China with 12 percent, Russia with 4.5 percent, and India with 3.4 percent. Why the increase in global military spending?

3:50Experts say it's due to evolving geopolitical risks, including Russia's invasion of Ukraine. So as a result, despite of the spike in military spending, the defense industry is hiring. A new Financial Times report, which includes a survey of nearly 20 U.S. and European companies in the military sector, the defense sector, reveals there's a kind of a war on talent to find defense industry workers. It's being called unprecedented. Ooh, that's a big word. In fact, global defense companies are hiring at their fastest pace since the end of the Cold War. It's a really good business. And I think there's a huge opportunity because a lot of these companies, at least for a while, I'll think I'm warming up to it, like to virtue signal and pretend they're more woke, they're left-wing than they are, and don't want to take shit from their employees by working on the defense industry.

4:40And the reality is, I believe that the far right wants to spend money on the military no matter what without being very thoughtful about it, including approving capital for a class of warships that make absolutely no sense because, in fact, it creates jobs in their district. So there's definitely some weaponization of weapons, if you will. And people on the far right see voting on every single military contract is showing their macho. And then people on the far left are totally unrealistic and naive about the fact that there are a lot of people out there that And when they can take our Netflix and espresso from us and kill us, they will, in fact, do that.

5:17So there is, I think, generally an increasing recognition that the world is becoming, it feels like, increasingly insecure. And all of that leads to increased military spending. I also think you're going to see Japan and Germany dramatically increase their military spending. So I would bet that this would be a fantastic place to start a company and a fantastic place to work. And these companies always tend to make more money every year. They're slow, boring companies that, you know, as military spending has consistently gone up, these companies do really well. Also, unfortunately, I think it favors incumbents.

5:53I would imagine there's some smart people in the Pentagon looking for new technologies. But this is a capital-intensive business. And also, I would think that big tech would be sort of out of central casting because they know how to weaponize Washington. And that is my understanding is getting a military contract requires a tremendous amount of bureaucratic or administrative hurdles to clear. And it probably also helps to have your local congressperson leaning on people at the Pentagon to get you audience with the right purchasing or procurement people. You also, I think it would be a long sales cycle.

6:26But once you're in, you probably are in for a while. So all of that spells to me incumbents and big players. So just as there are capital allocators that have a certain amount of capital allocated for new fund managers, I would hope that the Pentagon has a certain amount of capital for new technologies or smaller companies. But I think this is a great business. And in some, I'm very bullish on it. Appreciate the question. Question number two. Hey, Prof G. This is Solomon from Chicago. I want to start by expressing my deep gratitude. Your podcast inspired me during a challenging period when I was disillusioned with my life and career paths.

7:03Your pod made business concepts so accessible and showed how value creation could truly uplift communities. Thanks to your influence, I just graduated top of my class with an MBA and a program associated with two of the top business schools in the world. Instead of pursuing consulting or investment banking, I've chosen to start businesses on the south side of Chicago to promote economic renewal. My question revolves around your powerful statement, greatness is in the agency of others. Our first business has been well-received, and I recognize a critical need to empower others to lead. what are the top two principles you follow when investing in your people ensuring both the success of your businesses and the personal growth of your team members also how do you course correct when things with an employee are not going well p.s i'm 33 and a father of three young children your wisdom on fatherhood and relationships have profoundly impacted me as well thank you for everything uh that's a really thoughtful and generous um question slash comment so uh thanks very much so okay greatness in the agency of others, if you want to be a solo practitioner and not manage other people, you can make a good living, but you're never going to have real influence or real economic security.

8:11I've always thought my competence is storytelling, but my superpower is the ability to attract and retain talented people who bring scale to what we do here. And whether it was my first consulting firm or L2 or this firm, I could just point to several, you know, usually young people who are just so extraordinarily talented and that I'm kind of the jockey, I don't know what the term is, or the pilot flying, you know, fucking F-15. And they're, you know, one person's the engine, the other person's the avionics, but they're really the aircraft. And I'm just occasionally, I have control of the joystick.

8:46But your question is, all right, so what is, what are the two principles you follow in investing in your people? Okay. This is not aspirational. One, at L2, we were very analytical and we kind of evaluated the majority of the people and we said, who are the kind of the superstars or the people who are in the top 10 percent? I don't have what I'd call an aspirational view of HR where everyone should work out. Everyone can work out. It's about finding the right role for them or getting them the right mentor. First off, I just believe interviewing is not a waste, but nearly a waste in that references are everything.

9:18So if somebody I trust calls me and says, this person is fantastic, you should hire them. They could come in for an interview and throw up on themselves and I would probably hire them. Why? I get fooled all the time. I find there's almost no, occasionally you meet someone who's so outstanding, you think this person would be good. And occasionally you just think, okay, this just isn't going to work. But for the most part, interviews are, I find a very difficult way to evaluate employees. So I'm an entirely a reference hire person. And if it's someone who we don't have a reference on, we will spend a lot of time diligencing that person and maybe even asking them to do the work on a contract basis before we hire them full time.

9:54because firing people is hard, emotionally taxing and expensive. And also it's one of the keys to building a strong organization. And that is, I have never, well, actually twice I fired someone too soon, but in a small company, it is Vietnam. It's hand-hand combat and you don't have the technology, the resources or the bandwidth to solve problems. And if people aren't working out, you need to move them along. And I've always been very much, okay, this isn't working. Here are the metrics you need to hit. And if it doesn't work, we're going to have to let you go. I let go of a lot of people over the course of my career.

10:32And I find that it's just as important as hiring because everyone in your organization should be able to look left, look right, and not necessarily like that person, but understand why they're there. And it's demoralizing to people when people are underperforming or just not very good and they get to enjoy employment and most of the same benefits they're enjoying. So what's the point of committing and being excellent? Anyways, so a couple of just hacks. I typically identify what I call the superstars and I overcompensate them and try and give them, make it very difficult for them to ever leave.

11:05Because my general rule, and I'm being a little bit cynical, is that 10 % of the employees at 120 % of the value and the other 90 % are negative 20. Now, you can't have all A players. You're going to have some people that just help scale the company and A players want to get paid a lot and have a lot of equity. So it's hard to build an organization just around eight players. The other thing I try to do is I believe people come to work to develop economic security for them and their families. The other thing I try to do is make sure they feel appreciated on what I call more psychic or more of the softer stuff.

11:35And that is you try to get to know them, try and understand what you think their objectives are personally and show that or demonstrate that you are making an effort to try and foot to those objectives and also give them the sense that If you do well, they're going to do really well. So I, for example, we have a big podcast deal with Vox. I have mutualized that deal and I'm giving everyone in Prop G Media a percentage of that. Now, were they involved in the initial deal? Do they work on my podcast at Vox? Some do, some don't. But I want them to feel that, one, I am very good at what I do. And if that results in economic upside, they will participate in it.

12:12So one, holding people accountable, demonstrating excellence, and also empathy, saying, I'm going to get to know you, I'm going to understand you, and I'm going to try and get you the economic security such that at some point you can have the same type of enjoyment and time with family that I've registered and that we're in this together. If I'm successful, you're going to be successful. But the key is finding and retaining the best employees, because again, as you referenced, greatness is in the agency of others. We have one quick break before our final question. Stay with us.

13:10I'm so excited to embark on this adventure with all of you. Make the best idea win! On brand with Jimmy Fallon. Series premiere Tuesday on NBC. I'm Christian McCaffrey, pro running back, and Abercrombie is an official fashion partner of the NFL. I'm not kidding when I say NFL by Abercrombie broke the internet last year, and I think this season's lineup is even cooler. And so does my wife, who keeps stealing all my hoodies. Stay fit for the season and Abercrombie's newest arrivals. Shop NFL by Abercrombie in the app, online, and in store.

14:07or milestone, all protected with end-to-end encryption. It's time for WhatsApp. Message privately with everyone. Learn more at whatsapp.com. Welcome back. Question number three. Hi, Scott. My name is Brock. I'm from New York City. For your Office Hours podcast, I have a question that might resonate with many millennial men. In an era where we celebrate equal pay and women's empowerment in the workforce, some of us find ourselves earning less than our female partners. While I wholeheartedly support my partner, there are moments when this reality leaves me with a sense of falling short, given the traditional expectations of men tied to financial success in our culture.

14:47My question to you is, have you encountered such a situation in your life, and what advice would you give young men like me to be supportive partners without feeling insecure about a financial standing? Best regard, Breck. This is such a good question, Ian. It's a question on a lot of people's minds, men and women, and I appreciate that you have the confidence to ask this question. According to Pew Research, 29 % of heterosexual marriages, women and men, earn about the same, about$60 ,000 each. In 55 % of heterosexual marriages, men are the primary breadwinners, earning a median of$96 ,000 to their wives,$30 ,000.

15:23In 16 % of marriages, wives out-earn their husbands as the primary breadwinner, earning a median of 88 ,000 to their husbands, 35 ,000. 50 years ago, in contrast, husbands were the sole breadwinner and 49 % of marriages today, that share is just 23%. So women's contributions have grown, but men are still seen and expected to be the financial providers. According to Pew, again, 71 % of American adults say it's very important for a man to be able to support a family financially, to be a good husband partner, whereas just 32 % say the same thing about women. And some men are expected to be providers regardless of how many subscriptions to the Atlantic you have or how much you read the New York Times or whoever you listen to.

16:06I also think that there's some evidence that this has real impact on marriages. There's data showing that when the woman in the relationship starts earning more than the man, the man is more likely to use erectile dysfunction drugs. They become much more likely to get divorced. Now, some of that might not be that the woman's disappointed in the man. It might be the man's insecurities. But we're definitely in kind of not uncharted waters here, but new waters, because I think a big part of a man's identity and self-worth comes not only from him, but from the world perceiving him as a good provider.

16:40I think you need alignment with your partner around finances, who's responsible for making the money. What's our approach to spending? In terms of women making more money than men, it's bound to happen. One, more women are attending college now than men. and two-thirds of jobs now require a college degree. The highest-paying industries generally want someone with a college degree, and you do acquire certain skills and contacts in college. So women, quite frankly, deserve to be making more money than men. In urban metros in the United States, people under the age of 30, women are now in most of those cities making more money than the men because they become more credentialed, more single women-owned homes than single men.

17:22This is a good thing. This is a good thing. And what we need to acknowledge, though, is that this is going to have a real impact on household formation. One, because men made socioeconomically horizontally and down, women horizontally and up. And when the pool of horizontal and up gets smaller and smaller, it means more or fewer and fewer young people are going to find a partner they find economically and emotionally viable. I, women, are going to have a tougher time finding economically and emotionally viable men. And there's going to be less household formation, lower birth rates, more loneliness.

17:56I don't have a silver bullet here. What I do think we need are more and more social programs and tax policy that put more money in the pockets of young people. As it relates to you, you're obviously doing well. The fact that your wife is earning more than you I think should be celebrated. I think part of being a man is taking economic responsibility for your household. But part of that is recognizing that your wife can be a great earner. When my kids were born, I was working all the time. And my wife was working at Goldman. And then when her career started to take off, I would make sure I could get home for bath time.

18:34I was there for the nanny in the morning. If the kids got sick, I stayed home because my wife was a baller. And everybody needs a stage on which other people applaud for them. And I try to be as supportive as possible. What I do see is some men who can't handle or feel threatened by their wife's professional success. And meanwhile, they're not as good professionally as they are. That bullshit won't haunt. So look, I'm not suggesting that there's a silver bullet here other than to say the world is changing and that your sense of masculinity around being a provider, a protector, and a procreator is still there.

19:11I appreciate the question. That's all for this episode. If you'd like to submit a question, please email a voice recording to officehours at propgmedia.com. Again, that's officehours at propgmedia.com.

19:32This episode was produced by Caroline Chagrin, Jennifer Sanchez is our associate producer, and Drew Burrows is our technical director. Thank you for listening to the Prop G Pod from the Box Media Podcast Network. We will catch you on Saturday for No Mercy, No Malice, as read by George Hahn. And please follow our Prop G Markets pod. Again, that's the Prop G Markets pod and subscribe wherever you get your pods for new episodes every Monday and Thursday. You won't get these episodes unless you subscribe to the Prop G Markets pod.