Reflecting on Corporate Training and Mentorship

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If you'd like to submit a question for next time, you can send a voice recording to office hours of propertymedia. com again that's office hours at propertyme dot com or post your question on Scott Galloway subreddit and which is my feature it in our next episode plus . Now you can call our text us a question at two hundred one four seven two three six five six. Again, that's two hundred one four seven two three six five six. All right, let's bust into it. Our first question comes from a listener who emailed us. Why aren't more alarm bells going off about the rule changes such that SpaceX can get into the NASDAQ and inexpens will be forced to buy shares? It seems like corruption to me, also the fact that there's no recourse against Elon no matter how atrocious his behavior may become. Thanks. Okay, some context here. Major stock indices are rewriting their inclusion rules specifically, if not explicitly to accommodate blockbuster IPOs. SpaceX most immediately, but open AI and Athropic are also in the pipeline for twenty twenty six . For the NASA one hundred, their new fast entry rules mean mega cap stocks can be added to the index just fifteen trading days after their IPO down from the historic seasoning period of three months, this applies to companies with market cap ranking within the top forty members of the NASA one hundred and fast entry inclusions won't require an already listed security to be dropped allowing the index to temporarily exceed one hundred constituents. Footsee Russell also changed rules to allow faster inclusion of mega cap IPOs in the SMP five hundred, the SMP considered shortening the seasoning period, waiving minimum flow requirements and removing its profitability requirement, but ultimately said it wasn't making any changes dealing a setback to SpaceX. They're keeping the traditional bar, twelve months public plus four consecutive quarters of GAAP profitability. So what is some of the impact of this change? More than thirty trillion in assets are benchmarked in the S and P five hundred dow Jones Nazak composite and FoC Russell indices . Analysts estimate conservative force buying of fifteen to thirty billion across S and P five hundred NASA one hundred and dug blah blah blah blah with more aggressive float weighted scenarios running far higher see above being forced to buy these things. Goldman Sachs analysts estimated the NASA fast entry rule change alone could trigger up to sixty billion in force buying across NASA one hundred . Okay, so I think a lot of the pushback here is people I'm a hammer everything I see as a nail. I think it's income at quality. I think people are just so sick of these people and the amount of money they're making and when they see these outrageous valuations that are difficult to justify and that all of the shareholder gains from zero to a trillion have been captured or in the case of SpaceX trying to go out to retail investors at one point eight trillion that all of that juice has been squeezed by private institutional investors . And the IPO market has in fact become sort of the last stop on the chump train. And that is when Google and Public, I think it was an eighty billion dollar market habits up , you know, five hundred fold. Retail investors have had a chance to garner tremendous five hundred five hundred X return. If you get that from SpaceX after it goes public, what would that be two trillion? That'd be I don't even know what is that a gazillion? I don't know what that is. So I think people are naturally pissed off and another they vent their anger anyway. Any change is an opportunity to ship post these companies. I don't think waiving the rules here is necessary. I'm not as excited about that because at the end of the day, these indices are meant to be a reflection of the most important largest market cap companies. And all three of these companies already are that. If Anthropic was founded five years ago, if it had been founded in Europe, it'd be one of the five most valuable companies in Europe. So I think including them in these indices , I think you can make a pretty rational reason for it. And being forced to buy these companies like you're some victim, well, you're forced to buy Monsanto who brought us Agent Orange, at least I think you are. I wonder if Phil Morris is in the S and P five hundred. Anyways, my point is these indices probably include a lot of companies that on your own you wouldn't buy shares in. That's why it's an index. It does bring up an interesting point in that is it unfair that a new public company gets juiced beyond its public market reception because it's automatically included in these indices. Should it go through a hazing period where it shows its fair value once retail investors have some time to play with it before you decide whether it should go into the index. I think that's a viable argument . I don't know if you know I worry this is going to this is another technique to get a first pop out of the gates. I would like to see sort of a cooling off period before you decide whether it should go into the indices. But essentially , companies used to take seven years to go public. Now they take twelve, and these companies have gone faster , but having the most important companies and these are important valuable companies in the indices, that doesn't, I think on balance, this kind of makes sense. I probably still would have waited a little bit just to see what that first trade is because it does feel like this is a convenient means of creating demand that hasn't been there for other IPOs thereby creating a false print on the first print. Like if this is these companies are getting that additional demand right out of the gates that every other company going public hasn't enjoyed . At the same time , you know, one of the big complaints is that retail investors haven't had access to these companies . And also if you're in S and P indices or index funds and you don't want to own these companies, then sell your S and P index fund and go into, I'm sure there's a lot of funds that don't include the magnificent ten. My guess is there's probably even an ETF that is the S and P minus these ten companies because a lot of people think they've been overweighted and now they're responsible for forty percent of the SMP. So when you buy the SMP, you're effectively buying the magnitude ten to almost forty percent or forty three percent . I think that is not dangerous but not smart. And that is the whole point of buying index funds was diversification and the S and P is becoming dramatically less diversified. So in sum , these indices are supposed to reflect the most valuable and important companies. These are those companies even distinct of the fact they're not public yet. But the idea of creating artificial demand upfront which is doesn't give you a fair litmus test on the initial trade. I can see some concern there. I would have asked for at least a thirty or sixty day cooling off period to make sure that these companies still qualify . But what this reflects is a broader trend that the S and P five hundred is no longer really diversification as you're concentrated now amongst ten companies. And what does that mean for you you? If don't like, you know, you don't like chick file A, don't eat a chick fil A. You don't want to be an enforced investor in SpaceX, anthropic and open AI, then sell your S and P index funds and go into other funds, which I'm sure there's a ton of them that don't that avoid these companies . But really, I think the learning here is that to believe you're diversified in an S and P or SPY index fund, you're not. You're all in America . You're mostly in tech , and you may want to think about other index funds that look at other asset classes and other geographies. Thanks for the question. Question number two comes from Reddit. SpellSad eighty three dash fifty two says Hi Scott, I'm twenty seven years old and I've spent the last three and a half years in construction equipment sales and had lots of success. In a few weeks I will be starting a new job also in sales at a software startup working fully remote. What advice would you give to someone number one on transition to a fullingy remot e role, specifically sales and number two, working at a startup gosh . Okay, a twenty seven boss, I would argue the office is a feature, not a bug and do everything you can to get around other c oworkers . There's evidence saying you're forty percent more likely to get promoted if you're in the office . And I think you're in the kill zone and that is I think you're in the exact wrong demographic to be working remotely . I think you want mentors, you want to find friends, mates, one HR hates this, but one in three relationships begin to work and ninety nine point nine percent of them have been consensual . So I think the office is a future not a bug for a twenty seven year old male. Now having said that, working remotely , I think you got to be pretty disciplined about a schedule and deadlines. Setting up deadlines for the number of new business calls you're going to make, the number of meetings you're going to go to in person . You know, you got to come out of the gate strong because you're going to have to impress everybody and they're going to have very, very adroit anode metrics, number of calls you make, number of deals, or conversations you set up and your close rate . And I think you want to figure out a way to be in person with clients and coworkers as much as possible . And you may, I don't know, you know, I don't know how I think being at home, just trolling LinkedIn, trying to set up meetings . I don't think that's good for a twenty seven year old man. So I think that one, try and figure out a way to get out of the office or get out of your home as much as possible such that you can meet with clients face to face, meet with your boss, meet with your coworkers as often as possible . I think that's hugely important . And in order to do I would have been a disaster remote work at your age home alone. I just would have been really good at walking my dog and getting more exercise in, which is not necessarily a bad thing, but you're going to have to be very disciplined and set metrics for yourself every night before you go to bed or whatever saying I need to do the following things . And I guess in sales , especially with remote work, they're good at creating metrics for you But I would I would be careful not to fall into a world of making good money. Again, I'm preaching here because my way isn't necessarily the right way, but it's my way. But I think the only way you really get ahead is through rel ationships and remote work doesn't set yourself up for relationships or strong relationships. So the reality is I see the glass is half empty here and I would try and figure out a way to show a certain level of performance and then such that you can get to a position that involves more peer to peer contact and peer to client contact. And if you're going to be at home, you just got to set up a schedule and deadlines to hold yourself accountable, which is difficult I find at your age. I find it difficult at my age. Anyways, sorry I'm not more optimistic there, but congratulations on the job. If you know how to sell, you can always make more money than you deserve. The most overcompensated people in any company are the salespeople and everyone resents them because they're willing to do one thing other people aren't. And that is get out of big spoon and eat shit. And that is call people who don't want to hear from you. And when they say don't call me again, you say, Oh, I think that means I should call you back in three months and just have, I don't know if salespeople play with the right toys or the wrong toys or if they have exceptionally high or exceptionally low self esteem. It doesn't matter . If you can sell, you can always make a good living you. And develop the ultimate skill set, which is the ability to endure rejection. So clearly you have that skill set if you're doing well in sales. Anyways, congratulations to you and best of luck . We'll be right back after a quick break . Support for the show comes from upwork. Scaling a business takes time, but it's not entirely a straight line. There are stops and starts and times when you need to sprint and bring in talent fast. And Upwork can help your team grow quickly by bringing in specialized freelancers so you can meet the moment and take your business to the next level. 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As a member, you get access to a dedicated three person care team, including a functional health expert and longevity clinician. They review your blood work and build a plan personalized to you. Then, whatever you need, such as supplements or prescriptions are shipped to your door every mon th, and their full body testing goes beyond blood work. For example, you can get gut microbiome analysis, genetic testing, cancer screening, and more. It's testing, plus clinical support, plus intervention, all in one membership. Here's some data. ninety three percent of members see meaningful improvements from their first to second round of blood work. Right now, listeners can get twenty percent off membership at gogevity. com slash profg ar's geo gev i ot com slash profg for twenty percent off your membership Welcome back question number three . Hey Scott. I enjoyed your podcast and I won't know if you ever come back to a question and drill down further, but I want to follow up on the value of an investment banking career early in one's path . I heard you tell somebody on a recent podcast that the value of an investment banking experience basically was learning to work hard, attention to detail , getting along with others, and you also referred to an approach to work . My challenge for you is if you're somebody who's applied himself and gone to college and applied himself in college, you know, you probably know how to work hard. You probably know attention to detail. You probably know how to get along with others. So from my perspective, if you came out of college and did investment banking for a few years. And those were really the primary skills that you walked away with . That just feels sort of redundant and maybe even a loss or a waste of time relative to learning something more applied that you could use in the rest of your life. Now maybe you do learn some really important applied skills . Maybe there's something about for in your case doing fixed income that actually useful for the rest of your career, whether it's spreadsheets or balance sheets or other economic considerations . But I would love for you to clarify that. Like which is it? Is it the soft skill s? Is it the hard skills ? But what makes the value of an investment banking career? Thanks for the question. So I'm trying to increasingly recognize that in my age, a lot of times I don't know what I don't know because the world has obviously changed a lot. I was twenty one when I showed up at Morgan Stanley in nineteen eighty seven . And my only skill set was I interview well. Why did I go into investment making? The only reason I even went into if you asked me what investment banking was the day I showed up, I don't think I could have told you . But I had a roommate my senior year, as a lot of young men are, I was very competitive with him and him with me. And his dream was to be an investment banker. So I thought, if he wants to do it, I'm going to do it. That's why I wanted to be an investment banker. Also, I thought it would impress my mom and I thought it would impress strange women. You know, I had no fucking idea what I wanted to do. So I thought, I'll just be awesome and be an investment banker and got the job . And I think you're right. I think if you have a really strong skill set finance and discipline , then you won't you wouldn't have registered or there wouldn't be the same upside as I received. I didn't have those things. At UCLA, my primary skill set garnered was how to make bones out of household items. And I was not disciplined. I was not , you know, I didn't work hard . And so Morgan Stanley was kind of like the Marines for me . And that is a really sort of was a swift kick in the ass. And also just learning about the capital markets, you can't learn that strictly from a book . When I showed up I think two months later or six weeks later, it was Black Friday, October, I figure it was nineteenth, nineteen eighty seven . And one of the MDs' in the investment bank group said we should go down to the trading floor because you knew it was a big day . And it was just mayhem on the trading floor. And trying to understand what was going on , I think the SMP went from fourteen hundred to nine hundred in one morning and everyone thought it was the end of the world, but just trying to understand what was happening and how humans reacted to it. And there were some layoffs in the trading department . You just got to feel for business and then meeting with the county commissioners for LA and proposing and trying to understand how a quarter percent increase in sales tax was going to fund this subway in LA that is now still opening stops . You start to connect at least I did finance and the bond market to capital formation and building things and tax free bonds versus bonds for real estate and the credit market. So I think I learned a lot and there's nothing about the hierarchy of the corporate sector that you can replicate in school, I don't think. Could you have shown up with stronger skills if you went to a better school or took school more seriously. Absolutely. But I think those kind of it was a two year program when I went. You went two years and they went back to business school. There was eighty seven analysts in my class and literally I think eighty four of us went back to business school . I think that path or that sort of mentorship or trainee program where you work your ass off and you get decent pay or good pay and you get that stamp on your forehead. I like that model unfort.un Andately I think, a lot of investment banks Goldman doesn't doesn't even hire out of business school anymore. They find people at undergrad and they'd say don't go back to business school because we'd rather just train you in the two years here will give you more skills. So I look back, it's the only kind of job I've ever had. Since then, I wasn't very good at it and I wasn't very successful at it, and I didn't have the skills to navigate a large organization. What do I mean by that? I was literally too insecure . People go into a conference room and I would think they were talking about me. I resented anybody senior to me that I think was as smart as me. And the reality is they're probably out smarter or smarter. I was just too immature to navigate a corporate environment. And if you can navigate a corporate environment on a risk adjusted basis, it's a better place to get wealthy You know, the guy who is my boss is now the vice chairman, and I think he's probably made hundreds of millions of dollars and had much less tumult and indigestion than I've had as an entrepreneur up and down and up and down. So the American Corporation is still the greatest wealth generator in history . And you do need skills to navigate it. You've got to be mature. Occasionally, there's going to be injustice. Someone not as smart or talented than you is going to get promoted over you. You're going to have to put up with bullshit. You're going to have to get emails telling you that we've changed this approach. You don't even know why. It makes no sense . It just there's that. In exchange, they'll remove that mole for you. They'll give you health insurance. You get rich slowly . They have their incredible platforms for creating shareholder value . You meet a lot of smart people. So I think that entrepreneurship is vastly overrated and the corporate world is vastly underrated because it's just cooler and sexier to start your own business, you know, ignoring the fact that six out of seven businesses aren't around in about seven years or small businesses. So I got a lot out of it. It's kind of like again serving in the Marines. I'm glad I did it past tense. I still think that working for a corporation right out of school if they have some sort of formal training program, it's a fantastic way to meet peers , get a good training, get a good swift kick in the ass, deepen your skills. And if you're like me and you don't like it, that's a blessing too. I think your twenties are about figuring out not only what you like but what you don't like. You want to workshop your twenties to figure out what you're good at. So and to just be around that quality of human capital that Morgan Stanley was able to attract was hugely beneficial for me, and my two had there were three analysts in my department in Los Angeles, one went into private one went into the fish business and rolled up a bunch of fish distribution companies in Chicago and then sold the private equity . The other guy is a personal wealth manager in Connecticut . And then one of my other analysts in my class went on to be the CEO Helmann Friedman at the age of forty or forty five. I think he's probably the most successful among us. And I'm sure a lot of people went on to do it. Another guy owns my stallmate, another guy is a private equity guy, and he owns God a boat company. I forget what it's called. I tell myself Hinkley. Hinkley's like picnic boat . Anyways , so I think these two year three year analyst programs, at least for me, were hugely accretive. I get what you're saying around showing up with more discipline. If I'd shown up with some of the skills you described, I would have been more successful there , but I still think you get a lot from those formal training programs at high caliber companies. The basic