Episode 22, it was incorrectly reported that the average age of a Vietnam foot soldier was 19 and was actually twenty two.
I don't know about you, but we are feeling 22. That's a reference to a Taylor Swift song. I'm so down with the young people.
A Catch 22 is a paradoxical situation from which an individual cannot escape because of contradictory rules or limitations. You must have experienced to get a job without a job. How do you get to experience the atomic number of titanium is 22.
When I was 22, I spent my fifth year at UCLA watching the Planet of the Apes trilogy over and over and smoking a lot of pot. And look at me now. We're now at one hundred and eighty third most downloaded podcast in the United Arab Emirates.
I am feeling one 81. Go, go, go.
Welcome to the twenty second episode of the Prop G Show and today's episode, we speak with Joel Stein, an American journalist and author. He's an all around hilarious guy. I would never write that. Someone else wrote that for me. What would I write? Joel Stein is the kind of guy you'd like to do MDMA with. He is interesting, insightful, funny, irreverent, fearless, the kind of guy that was always carrying the best bud in college and ended up being much more successful than all of us anyways.
Interesting guy, someone you'd want to roll with. We talk with Joel about his book in Defense of Elitism, as well as what other power structures are at play in our current political environment. OK, let's bust right into what were the biggest stories or the most underreported stories.
Tick tock. Tick tock is again, to recap, the president has decided he's a real estate broker and wants to get involved in basically a socialist construct where the means of production are controlled by the government. He's decided that tick tock should sell to an American company and he even wants to pick which company.
And then and then Twitter decides to enter the fray and says they're having conversations.
Or put another way, Jack Dorsey, who gave what was one of the most unsatisfying interviews I've ever heard with The Daily, where he would just talk really slowly and thoughtfully and say we need to do better as a firm learning.
If there's one thing I wish we could do, both shut the fuck up, you and your rage machine. What does any of this? It is Sheryl Sandberg with yoga pants. Boss, it's still a rage machine. You haven't done a damn thing. And not doing a damn thing with a nose ring in an earnest and thoughtful voice still means see above. You haven't done anything.
But that's neither here nor there. Actually, it's more there than here. But Twitter announced they were in discussions potentially with ticktock to acquire them.
This is the ultimate jujitsu move. And by the way, when I say jujitsu don't feel triggered, I'm actually showing respect for the Japanese art form that uses the competitor's weight with non weapons to do some sort of incredible I'm going to take your weight, your momentum and use it against you. The Chinese, as is the case across almost everything geopolitically right now, have pulled this ultimate gangsta jujitsu move and said, OK, if you're going to force us to sell to a company, President Trump, we're going to sell to Twitter, which effectively means with a market capitalization of twenty five or twenty billion dollars, when Tick-Tock likely goes for 30 to 50, that the combined companies bite dance would be the primary shareholder.
Or put another way, oh, you're forcing us to sell to an American company. I got an idea. Will effectively sell to a company smaller worth less than us, thereby meaning that we're effectively acquiring that company. I think this is just such genius. Twitter needs a full time CEO, potentially. Vivian Pappas, the general manager of Ticktock U.S., could become the CEO of Twitter. They need a full time CEO.
Half of success is showing up, meaning the Jack Dorsey, if he shows up at best, could be a quarter as successful as any other tech CEO, given that he's part time, which is just absolutely ridiculous. But again, that's another talk show. They need product development effectively. What this is, is Jack Dorsey recognizing that shutting down Vine is a forty to fifty billion dollar mistake. Or put another way, that reanimating this type of product is going to cost them forty to fifty billion dollars.
This is difficult to get done because is pretty soon Twitter shareholders are going to realize they're going to get diluted and the new largest shareholder will again be a Chinese company. So I'm not sure this passes muster in the law of unintended consequences. Donald Trump teeing this up for a acquisition of Microsoft pretty much means that it's not going to happen. It just I just doubt that's going to happen. Supposedly, Apple can express some interest, I think the most likely acquirer from a profit standpoint.
Disney. Two hundred and thirty dollars billion market cap, they have the balance sheet, they have the cash, they have the currency to acquire it. I think the pandemic has exposed some of their weaknesses around their business model. In terms of parks, obviously in a postponement world will likely be a little bit challenged for a while or very challenged for a little while. They are content machine feels a little bit dated right now, still dependent upon domestic box office theater releases, which is just dumb in terms of the cadence and the timing.
And it's a smaller business, but no one is better at managing content than Disney. So imagine what they could do with that supreme content algorithm. Arguably, the best content algorithm in the world right now is the tick tock algorithm. It's not about the creators, it's not about the platform. It's about that algorithm that takes you down a rabbit hole and just figures out, what, 30 second weird dance or piece of video you would like to see next.
It really is intoxicating and addictive. Could we end up in the same place as Instagram? Mariel's absolutely. What Israel's that is the new R&D department of Facebook, i.e. tick tock. It's basically a rip off. But Disney, in my mind, is the most logical acquirer has the strongest fit. A lot of people say it will not happen because Disney looked at tick tock and found that it was a toxic cesspool, which it is. But is there an opportunity to put in place the safeguards and the content moderation to take tick tock in a different direction?
The general manager, Miss Pappa's, claims that's where they want to head. And that fits to Disney's kind of brand, if you will. What I do know or what I would predict is I think it's just unlikely that the president is going to orchestrate some clean acquisition to Microsoft. I just don't see it happening. I think there's too many moving parts here. But again, an incredibly interesting move by the Chinese, if you will, to potentially sell, i.e., acquire Twitter.
What else do we got going? Amazon is in talks with Simon Property, the largest mall owner in the US to turn abandoned J.C. Penney's and Sears stores into fulfillment centers. Hmm. This is really just an extension of what a lot of the best retailers have done, and that is Best Buy said, OK, let's look at our stores and let's not think of them of stores and liabilities. Let's think of them as fantastically located, well positioned, well lit, well staffed warehouses.
And if you order flat screen TV from Best Buy dotcom, it gets to your house faster in Delray because they fill it out of the Boca Raton store versus ordering from Amazon.com. OK, we're Wal-Mart. Let's think of our fifty five hundred stores is distribution centers for Click and Collect. This is largely the same thing where Amazon says, OK, we have to counterpunch against the people counterpunching against us and let's take stores and let's turn them into distribution centers.
I think this is smart for both Amazon and Simon that needs to rethink their business. And look at that. The underlying asset, the real estate, is really the core value here, even if it becomes a distribution center as opposed to a retail gathering point. What does all of this indicate again? Again, covid-19 and accelerant. We're moving a decade forward.
We knew that the mix between offline and online would change. We also probably didn't realize as quickly as it would happen is that a lot of existing retail space would immediately be converted to to warehouse space.
I bought a condo in Red Hook because I wanted to roll with the young people and they were planning the developer. This Italian developer was planning to turn all of Red Hook into this kind of innovation center with new campuses and learning facilities and cool restaurants and places where you brew your own whiskey. What ended up happening? They sold everything to Amazon as Amazon is now delivering everything to a bunch of wealthy people on an island called Manhattan. And Warehouse Space, as boring as it is, is the new black.
And when I say the new black, I mean something that's going to give above market. Otherwise, a company that I think is one of the most disruptive companies are best run companies over the last twenty years is Prologis, which is in the very boring business of warehouses run by what is arguably one of the brightest minds in business, Hamid Moghadam.
And there's the lesson here. For those of you who are contemplating where to allocate your most precious capital and when you're young, your most precious capital is your human capital because you don't have any money. And then as you get older, you have less time, which I guess makes it more precious. But that's not your biggest decision. Hopefully you've aggregated some wealth in your biggest decisions around how to protect your capital. But the lesson here is the more boring the business, the higher the ROIC preload.
The stock has outperformed its peers and the whole notion of fulfillment or warehouses. Isn't this fun and isn't as sexy as a whiskey distillery. But guess what? It makes more money. We'll be right back with our conversation with Joel Stein. Everyone needs a great pair of wireless earbuds to drown out background noise, especially when you're working from home with kids running around or your roommate is on constant calls. But before you go dropping hundreds of dollars on a pair, you need to check out the wireless earbuds from Rakan.
You already know Rickon ear buds start at about half the price of other premium wireless earbuds, and they sound just as amazing as other top audio brands. Their newest model, the everyday E 25 earbuds, are their best ones. Yet, with six hours of play time, seamless Bluetooth pairing more bass and a more compact design that gives you a nice noise isolating fit.
These earbuds are comfortable, which makes them perfect for conference calls or bingeing as podcast retcon earbuds are both stylish and discreet, with no dangling wires or stems to distract anyone during video calls. You've heard me talk about how this company was co-founded by Ray Jay and celebrities including Snoop Dogg and Mike Tyson are obsessed with Ray Khan's Mike Tyson. I still watch on YouTube his greatest knockouts. Pick up a pair and see what the hype is all about. Now's the time to get the latest and greatest from Ray can get 15 percent off your order at Braken dotcom slash prop.
That's right. Derakhshan dotcom slash for 15 percent off on wireless earbuds by Rakan Dotcom Proff.
We're back. Here's our conversation with Joel Stein, an American journalist and author of In Defense of Elitism Why I'm Better Than You and You Are Better than someone who didn't buy this book.
He's actually a very thoughtful and funny guy. I was excited to get him on the program. It was here's our conversation with Joel. Joel, where does this podcast find you?
I am in Los Angeles. You ask everyone that you really want to know.
No, let's skip right into it. Actually, with all of way out where they're from. I am from L.A.. Where in L.A. are you.
I am in like Griffith Park. Hollywood, Los Feliz. Yeah.
Yeah. I used to live of Harvard and Franklin.
Yeah. So, you know, it's not a bad place to be. I used to live in in Chelsea, in Manhattan for a long time and kind of psyched not to be in New York right now as much as I love New York.
Why did you move. I went to college in California and I really couldn't go to school. I'm sorry. I keep asking more questions, but, you know, that's what you do.
That's what that's the job. I went to Stanford and this is the longest I've ever gone in the podcast without mentioning that. So you've done a great job.
So let's actually let's use that as a jumping off point. Give give us your definition of elitism and who are the winners and losers in this age around this notion of elitism?
Yeah, well, it's in the middle of a flux, which is something I talk about in the book, that there's always a battle between elites and that's usually how revolutions take place. And right now, there's a battle, the same battle that Nietzsche talked about and the same battle that Parado talked about in his nineteen hundred essay, the circulation of the elites. I call them the intellectual elite and the elite and the intellectual elite is the one that I talk about defending in my book.
So that's the one that Sarah Palin and Trump talk about. As far as you know, do you see that Aubrey Huff video, the baseball player, about not wearing a mask where he talks about soy boys and professors and the kind of people who wear masks? Yeah, that's the elite that I'm talking about. And the boat elite, which I got from this speech Trump made probably two years ago at this point where after railing against the elites in the election, as so many Republicans had done effectively, he's suddenly out of nowhere at a rally said in Minneapolis, actually said, why are they the elite?
Like where the elite we have more money and nicer houses and bigger boats like where the elite. That's the difference to me. There's there's a group of elites who put all their love into power and money. And then there's a group of elites that care more about influence and ideas in a different way. I think what we're experiencing now in so many places around the globe is this battle between these two kinds of elites.
So this term elite has become kind of a negative moniker. And I think that we all want to be we all want power because power as a means of garnering more economic security, more safety, more self affirmation influence. And there's different currencies of power. There's education or certification is a is a currency of power. It's only a third of Americans have undergraduate degrees. Less than 10 percent have graduate degrees. But they probably control 70 or 80 percent of senior level positions in our economy and our politics and our cultural institutions.
And so they become I mean, that's a form. I guess they're the elite. And then people who don't have those degrees say, well, what? Their outsized influence is unfair and there's currency, if you will, and going after those institutions, is there isn't this just sort of a transfer of power? And when one group doesn't have power, it goes after another group accusing them of having unearned power. Yeah, a couple of things to unpack there, first of all, you listed you are a business professor, but you listen to economics first, which is a very American and modern way of looking at things.
I don't think this revolution is all about economics. I think this is about. Influence in how and who is in the power structure, it's people feeling like these elite institutions and these elites are smug and don't respect them. And the amount of my friends who are liberal who say, why are these people voting against their own interests when they themselves are rich and voting for higher taxes and that they see that as altruistic? And the people who I visit in my book in the county in Texas that had the highest percentage of Trump voters who love Trump aren't doing it for their own interests.
They're doing it because they are worried about this country and they look at cities, they see homelessness, and they see people who don't know their neighbors and people staring at their phones. They see a dystopia and they don't want the whole country to become that way. So it's not just it's not just about economics. And I know Hillary Clinton started to say that in her deplorable speech, that sometimes people don't vote just on economics and people didn't want to hear it because it's not a very it's not a very Marxist way of looking at the world.
The second thing you're saying is that is this just the fact that people feel like they're not getting their fair share? Right. And totally the balance in developed nations economically and power wise right now is definitely out of skew. But that just kind of riles people up. And usually in those situations, you don't have a revolution from the bottom where, you know, in the Luddite Ned Ludd kind of sense, people destroy the factories and then the cobblers take over the world again.
What you have instead is an opportunity to rile people up and for one group of elites to take power from another group of elites. I think that's what you're seeing in places like India and Hungary and Turkey and the US and Britain. And we can name almost every country. You had somebody had a great quote from your interview on NPR that I'm going to read and get your further thoughts on, we are in a world of extreme expertise. And instead there's this movement that people should just operate from their gut, as if education and expertise made you immoral and untrustworthy.
And instead, you just want someone who claims he knows more than the generals and just has good instincts. That's a dangerous place to be. And so we're moving to projecting strength. And trust me, I'm I'm the decider or I'm trusting my brain as opposed to bringing in it. It seems like William Barr and Donald Trump have now decided that they understand Section 230 and the FCC is no longer the place where we make these decisions. Is that is that accurate?
Is this moving us to an instinct over expertise, a dangerous a dangerous movement?
Yeah, I don't want to just blame Donald Trump is clearly a symptom of a cultural change around the world. I don't even want to blame the Republican Party that this is happening everywhere. Like I mentioned, doctors, but it's also happening, you know, with our liberal friends on Facebook who use headlines as grenades to throw it other people without reading the articles. There's again, that's a political capital. There's so many others where people just don't have any respect or trust of expertise.
And they feel like with all the information that's out there now, we're all equal at everything. And that can lead you to some scary, scary results. I mean, from the left and right now, what do you think?
What kind of leadership is required to get us away from this?
You know, the kind of thing where you ask people to do hard things I think might be effective. What I also realized as I was trying to give people a solution at the end of my book was that. That's not my expertise. What I wanted to do in my book was, was to realize that there's a big thing going on, there's a massive change going on.
And I wanted to go figure out why that change is going on.
And I feel like people jump to how do we solve that thing, because there's pain and you want to get rid of the pain. But I think people skip the step of figuring out what's causing the pain so that that's what I wanted to do in this book. I wanted to go talk to people who hate the elites. I wanted to talk to people who are trying to bring them down. I want to talk to people who are defending kind of the neo liberal status quo that people don't like and figure out the root causes of this.
And then, you know, my expertise at best is reporting it's not I'm not a politician. I don't know the exact answers. The only answer I could come up with that seemed clear to me because people have been saying it to me since I was four years old and they called me precocious, was that the elites need to be a lot less smug. You know, that's not a solution. That's just a tip. And that's all I could really come up with.
Protip when you were out there writing this book, talking to people were the one or two instances or learnings where they kind of changed your view, you thought, wow, that's that's a I don't call it a surprise, but something that illuminated your really went against what your preconceived notions were. What shocked you out there?
I spent some time with Scott Adams, who created Dilbert. Yepp. Who's become a real Trump fan from the very in perspective, this notion that there are no facts and there is no truth and experts are just con artists who don't know any more than anyone else. Mm hmm. That notion is a lot stronger than I thought. And when you drill down and you think people are just going to kind of at some point admit that it's not true, they don't.
So there's a real anarchist tear it all down. In essence, let's vote for a guy on TV. It doesn't make a difference kind of attitude to me. It's just like we elected Snooki as our president. We just didn't care. At some level. We think that we either think the institutions are irrelevant and things will be the same without them or that the institutions are so strong you can't tear them down. But it's a dangerous concept.
Let's talk about so you've written this book about the leaders, and then I'm going to put forward a thesis and you tell me where where I got this wrong or what you found. We tend to think politically bucketing the world into two camps. And aren't there three camps right now? There's the far right, which kind of, for lack of a better word, I would call the white patriarchy and feel like the Republican Party now represents them. And if you look at the demographic mix of the Republican Party, it's mostly old white dudes.
There's the far left that immediately is constitutionally unable to acknowledge any points on the right. And anything that Trump says are Trump followers say is they view as wrong and don't want to see if there's any merit or anything worth listening to. And then there's the third who are in the middle. And that's where the fight that's where the fight for our future, the fight from a move away from a trajectory towards an autocracy moves. First off, do you buy that notion that we've been kind of try vacated?
And if so, what is their view on the leaders and what is the role that it's played in the fight for the middle?
Well, I think we're always try to forget it. But the the far left, the left has got left. Her in the right has got righter. Yeah. And especially the right the right has gotten really past democracy. Right. But the middle is largely people who just don't give a crap. I mean, do you remember during the 2016 election the description of moderates?
I've heard they just don't give a crap and that's great.
They're living their life. They don't really care. It doesn't affect them much. They're not recipients and they're not, you know.
Right. But you remember CNN during the 2016 election decided to get undecided voters and they had them like watch every debate and talk to them afterwards. And they would change their mind every every debate. They'd be like, yeah, I think she's good. Like those people in Florida decide who the president is.
Yeah, well, I can tell you, we just don't give a shit down here in Florida, record levels of infections and we just don't seem to give a shit. So, Joel, I would like to end this with you. From an exterior viewpoint, it looks like you have led a very interesting and rewarding life. And what advice would you give to your kind of caught your 25 year old self? Well, that's interesting.
I usually avoid advice giving, but I think giving advice to myself seems like a good exception.
I guess I would tell myself to be less tied to my perceived identity. You know, I think a lot of things that I didn't do was because I didn't I didn't want to be thought of as that kind of person or I didn't want to think of myself as that kind of person.
OK, so your own your own personal and your own personal sort of identity should not become should not become doctrine, should not become dogma that you want to remain open minded around, you know, avoid guardrails in your life, like try and be open to new opportunities. I'm trying to make this more actionable for our young people.
Yes. And also to other ideologies. Right. Yeah. So every time I get in the conversation with someone who disagrees with me, I don't have to try and win that argument. I can try to enter that discussion with the hope that my mind has changed. So a lot of guardrails that prevented me from being and not just workwise, probably all kinds of ways. Like I spent a lot of my life thinking I am a person who isn't athletic and, you know, just wants to work in the world of the mind.
So I don't care if I'm out of shape. And that had that was not a smart decision for a while.
Mm hmm. OK, so rapid fire, Joe, first thing that comes to mind, Trump, Biden, and I know you don't. What's your instinct? Although you're supposed to ignore your instinct and I know you don't like to make predictions here. So what's your non instinctual non expert Nunnally viewpoint? Trump. Biden, who wins?
Oh, God, this is the kind of thing we just talked about not doing. Right. And didn't we learn two thousand six.
I want to push you, but I don't want your I don't want your identity of who you are to turn into dogma. So I want you to be open to other things, including predictions. Trump, Biden, you were out there.
What do you think? I don't see how, given what's going to be insanely bad economic situation and the coronavirus of anyone who's president, no less an unpopular one wins re-election. Yeah, I mean, historical data, I shouldn't say. I think historical data tells you that it it doesn't mean it's right.
Piece of media you would recommend for other people right now that you've consumed around covid Yashima podcast.
Sam Moore, I don't know that he's a professor who studies, you know, the he's he grew up in Germany and he's Jewish and he is very concerned about and studying his whole life kind of the dangers of autocracy to democracy, kind of democratic backsliding. And he interviews people every week about it. And I think it's just having a global perspective on Democratic backsliding, I think helps Americans from thinking this is all Trump, this is all racism. This is all whatever it is, and seeing the whole picture of what's going on in all these countries.
Joel Stein is a journalist, author and cultural pundit. His latest book is called In Defense of Almeida's and Why I'm Better Than You and You Are Better than Someone who didn't buy this book. He joins us from Los Angeles. Joel, thanks for your time today.
Oh, it was fun. Thank you. We'll be right back. There are a lot of blue light glasses on the market, but they're not all created equal. Many blue light glasses don't filter enough blue light, especially in the range that matters. Felix Gray glasses filter out 90 percent of blue light in the most damaging range and eliminate 99 percent of glare through a proprietary industry leading lens technology. Most clear blue light lenses only filter about two to three percent of that range.
Two to three percent.
Come on, come on. That's too much blue light. Felix Gray frames are hand finish from durable, super lightweight Italian acetate order. Online glasses shipped directly to you with a hard case and lens cloth included a freelance clock to hold a phone, try them for 30 days risk free. If your screens aren't easier on the eyes, send them back for a full refund. Go to Felix Gray glasses dotcom property for the absolute best quality blue light filtering glasses on the market that's flying gray wine glasses, dotcom slash sprog.
Do what I did and start taking care of your eyes. Feel better, work smarter. Shipping returns are free. That Felix Felix.
Free glasses, dotcom property. Welcome back. It's time for office hours as a reminder, we're here to answer your questions about business trends, big tech career moves and more. If you'd like to submit a question, please email a voice recording to office hours at Section four. Dotcom question one.
Hello, Scott Yeltsin from Belgium. And I would love to hear your thoughts on special purpose acquisition companies. Stocks have accounted for 38 percent of U.S. IPO filings and raised over seven billion dollars in each one of twenty twenty more than the total capital raised by institutionally backed IPOs during that period. For private businesses, selling to a Spok can be an attractive option, as the owners are often private equity funds.
Sparks also pay a premium compared to a typical private equity deal, and being acquired by a spark can also offer business owners what is essentially and the faster IPO process. So what I'm wondering is. Do spox also have benefits for us as investors, are they a good way for retail investors to get in on part of the gains usually captured in the private markets? Or should we see this as buying a lottery ticket solely based on the team's reputation? Thank you, Scott.
All right, Yeltsin from Belgin Yeltsin. Isn't that weird. Hold on. I thought, I thought you retired after after leading the revolution or the fall of Russia. Wait, that's Boris Yeltsin. That's Boris Yeltsin by the way.
Great hair from Boris and that guy looked like he knew how to party anyway.
Anyway, Icepack SPAC stands for special purpose acquisition company Cmax are companies with no commercial operations that are formed strictly to raise capital through an IPO for the purpose of acquiring an existing company, also known as the Blank Check Company. Several media outlets are saying Sfax are having kind of their moment. Well, that's not that's not a surprise. They are having their moment. A recent report from Goldman Sachs said that of the 56 banks it examined since January, 18 outperformed the S&P five hundred in the first three months after an acquisition, but lagged the broader market in the year after the completed deal.
The report also found that 51 SPAC offerings so far this year have raised a record. Twenty two billion. That's up one hundred and forty five percent from the same period a year ago.
Another report from Renaissance Capital in July looked at two hundred and twenty three SPAC IPOs since the start of 2015 and found that 89 of them that went public had an average loss of about 20 percent compared to the average aftermarket return of thirty seven percent for traditional IPOs since 2015. Only 29 percent of the in this group had positive returns. So what does this back is? Back is basically someone with credibility, like a Bill Ackman or Jason Mudrick from Major Capital who are known for providing above market returns and have great brand.
And these sort of do all the shitty work that has a certain amount of lag. And that is they do all the filings, they get the company, if you will, effectively public. They raise money. They kind of go public. They get all the administration of an IPO out of the way such that they can just add water to a company and boom, it's trading. So it bypasses to a certain it's like insta IPO. I'm an investor in several private companies and it's shocking how long it takes to get the company prepped for a public offering in terms of doing all the audits, lining up the right management, the right filings.
It's at least a six month process from the moment you say, OK, let's go public, you can't really file for about six months, then essentially a spec arbitrage. Is that time to market by saying, OK, the window is open. And right now we have such a dramatic opening in the marketplace. You're seeing the few companies that manage to get out are doing really well because there is a I think, a reduction in supply across certain sectors that have been hamstrung by the by the pandemic.
And you're seeing these kind of global disruptors just absolutely exploding, whether it's lemonade or big commerce, which is sort of a Shopify light, a company that grew, I think, 30 or 40 percent last year, that's trading at 20 or 30 times revenue.
I mean, just crazy up 3x in its first couple of weeks as a public company.
So a lot of a lot of investors are seeing the opportunity to offer a great private company the opportunity to do insta IPO and kind of take advantage of that arbitrage. Now, what's the opportunity for retail investors?
I say buyer beware here, because as is the case with most innovation around the public markets, companies are staying private longer because the institutional investors want to register that upside in just about the time they want to get out. And not that they need capital because they can find all the capital they need in the private markets, not because they need liquidity. Because you can find liquidity in the private markets. They go public increasingly around the time where they think I'd just like to sell my stock to someone else.
So in my opinion, the retail investor is paying a substantial premium for this stock. And I would say buyer beware. And I think the evidence shows that even if you can get a short term pop over the long term, prospects underperform in the short term. This year, the best performing stocks, because the market has got the market's appetite is greater than supply. And sparks are taking advantage of that arbitrage, if you will.
If that was confusing, listen to it five times. It is five more downloads or if you didn't like it for this podcast to an enemy.
Next question. Hi, Professor Galloway. My name is Matt and I lead a team of product photographers under the brand creative umbrella for the Wisconsin based retailer Coles. In 2008, with the Great Recession, Coles was down eight percent in comp store sales in the sky was falling. Fast forward to Q1 of twenty twenty and Kohl's is down forty three percent comp due to covid-19, shuttering a thousand plus stores and furloughing eighty five thousand employees for a couple of months.
During this time, our online sales increased significantly, but our margin fell from thirty five percent to 17 percent due to the increased operating costs of shipping more product. Cole, stop dividends and stock buybacks for the near term and introduce longer net 90 invoice payment terms. They also introduced curbside pickup, which was long overdue, downsize some of their stores and lease the space to all the Implanon fitness. And now we are test piloting some essential products, such as hygiene and diapers, Coles has a great loyalty and rewards program with their credit card and Kohl's cash.
But I think it has an opportunity to be simplified as it can confuse new customers with everything going on in the acceleration of digital. How does a place like Coles compete against Amazon, Wal-Mart and Target? Do you think any acquisitions make sense? And if so, who or what? Perhaps something that could layer on recurring revenue. Appreciate your podcast. It's helped enlarge my world view and the work I do at Coles thinks, wow, that's a really thoughtful question.
I'm not sure I have as thoughtful an answer. I think Coles is one of the best run companies in the world of retail. But unfortunately, individual performance is trumped by market dynamics. And that is, you'd rather be a good company and a great market than a great company and a shitty market and being kind of near essential. I would describe Coles is near a central Wal-Mart Target kind of deemed as essential, allowed to stay open and Coles is sort of near essential.
Also, Coles is sort of a no man's land, and that is if you're a fast growing company with less than a billion in revenue or less than a billion in market cap, there's still dramatic upside. If you have more than 10 billion dollar market cap, you have the currency to go make big acquisitions or be bold and invest in technology. Kind of between one and 10 billion is sort of no man's land. And Coles has sort of woken up and was sort of the interesting department store with great management, the little engine of the medium sized engine that could and has sort of woken up and found itself in no man's land.
I think they're going to have to take some big risks. And the Coles loyalty program is a great example of this. I think their foray into fitness is a very interesting idea. Maybe it's an opportunity to scoop up something inexpensively as obviously the workout or the athletic or the fitness industrial complex is really hurting. I would probably take a page out of Wal-Mart's book playbook and think about opening some sort of health care clinics in store, trying to figure out if there are small brand acquisitions they can make and go vertical and offer some proprietary brands or or I would think about hiring an investment banker and selling right now, because I think Coles is really in a difficult spot and they need to figure out a way to either merge with another great department store, like I could see a Coles in a Nordstrom's getting together.
And I haven't thought through the brand positioning there of the merchandising. But you have two incredible management teams, fantastic real estate, different complexion in terms of the national footprint. I wonder if there's any synergy there. Is there any synergy?
I don't know if there's synergy, but essentially Coles has to prepare for a world where they have to do kind of one or two things. Management and their stakeholders isn't going to let them milk the company and go into decline mode. They're going to try and make Nana Young again. And I think they're either going to have to double down on a recurring revenue subscription program, whether it's across apparel or other categories, and figure out a way to increase the stock price 50 or 100 percent from these lows based on having the fastest growing part of their business being some sort of recurring revenue bundle.
Or they're going to need to merge or be acquired. I don't know if they have the currency with three point six dollars billion to make very interesting acquisitions at this point, because fantastic company, great management team, I would be thinking very creatively and very aggressively around what they can do to move to subscription, whether or not they should be merging with another company where they can cut their costs collectively by 20 percent and reinvest in technology or be thinking about selling coal as a fantastic company in a difficult place right now.
I've got an email from New York here. First of all, I love your work and wish I had a chance to take your class of business school. I would trade Adam Grant for you any day. I was wondering what extracurricular activities you would recommend to young professionals to not only boost their resume, but enhance themselves in the person to which a college athlete. I think the lessons in teamwork, discipline and selflessness make me a better person unemployed today. Living in the city, there are countless nonprofits to get involved with, so many noble causes, not to mention the option of starting around the time, is a finite resource.
What activities do you find most impressive in the additional information section of the recipes that come across your desk right now?
Thank you so much for the kind words. And also I am so jealous and envious of Adam Grant. I think he's fantastic. He's sort of Scott Galloway plus a lot more substance credibility. And he's one best teacher about five times at war. And then let me see at NYU, I have one, but I have not one at zero times anyways. But thank you for saying that because I will get I will come for you, Adam Grant, I.
I will conquer you. I will squash you. Anyway, thanks for saying that.
OK, so in my opinion, the quote a quote unquote additional interesting is just stupid.
I don't like it unless it's something go to where you're good and could be great and don't do it from a resume standpoint. Do from a standpoint of what you want to do with your spare time. I find and I'm biased because I was an athlete in college when I find that someone is an athlete. So let me back up. Who do we hire? We did an analysis. We ranked everybody at L2.
I know you're not supposed to do that. I know it's not aspirational that anyone who ranks low, we just need to better find a better environment for it. It's the company's fault. No, it's not. It's their fault. Hire them anyway. You could hear it on that one.
But we found when we looked at when we divided people into Quintiles based on their performance, we generally found that the top quintile had the following attributes. First they were female and if they had been male, I couldn't say that. But it's okay now to say their female, because as long as you are biased for underrepresented communities, you're OK. But we try to ignore that and not hire based on gender. But we did find that over indexed female.
I think young women just mature faster. But anyways, most of the men we had working for us under the age of twenty five were still boys too. They graduated from World Class University. And again, we talk a lot about how the better schools. It doesn't matter now. It does matter the better schools get more applicants and they're able to get better human capital. It's not that they do anything different there or turn you into a better person, but they start off with the best raw material because these schools get ten applications for every one they let.
And effectively, universities right now are giant organizations screening for the best human capital and you get best human capital in best human capital out. So we found that recruiting at, quote unquote the top schools. And I'm not saying Harvard or Yale, but the pens, the UVAs, the Berkeley's of the world, the schools, the Michigan's of the world. And then the third thing we found was athletes were very successful, at least in our environment, in a service business that was very demanding, required a lot of teamwork, a lot of discipline.
And so I have a bias. If someone road crew, if someone was in diving, if someone was a gymnast, anything that requires incredible discipline, ability to endure pain or push yourself really, really hard, ability to play with others, we will hire, especially. So a female athlete from a world class university was kind of an automatic hire. And I wasn't to say that we would have all three if, you know, we obviously hired a lot of men.
We obviously hired a lot of non athletes. We hired people from non prestigious universities, but those for us were very strong signals. So I think sports, athletics, physical fitness or physical accomplishments through sports, anyone anyone who finishes in Ironman is probably not lazy and probably not afraid to work pretty hard. The other stuff I wouldn't let the tail wag the dog here, do stuff you love, do stuff you're going to be great at. You feel feel comfortable talking about it and talk about it.
And also I think the nonprofit stuff only put it down if you're really genuine about it, only put it down if it's something that you're passionate about. I think it just begins to feel a little bit, I don't know, a little bit performative. Thanks for the question. We love your questions. If you'd like to submit one, please email a voice recording to office hours at Section four Dotcom.
All right, Algebra of Happiness Vox reported that American men still aren't wearing masks because they're afraid of looking weak. All right. If you're that fragile, the mask isn't the problem. A Gallup report from July found that three in 10 Americans sometimes rarely or never wear a mask. Specifically, the survey found that a third of men compared to 54 percent of women responded. They always wore a mask when outside their home and the 20 percent of men said they never wear a mask outside their home.
In other words, men are not mask. And can you imagine people in 1944 refusing to wear a gas mask or ignoring orders to turn out the lights during a bombing raid? I cannot. Why? Because people were willing to sacrifice. We've conflated freedom with a lack of discipline, a lack of comity of man, a lack of citizenship. Our optimism and technology are not going to replace sacrifice in order to embrace life in each other. We need a great distancing and that includes wearing a mask.
I want to talk a little bit about masculinity, and that is people have conflated toxicity with masculinity. And I speak to a lot of young men and I think that they need to embrace their masculinity. The question is, what is masculinity? And what I suggest is getting to a point of that masculinity, but first, identifying what it means to be masculine. And masculinity, I believe, is a wonderful thing. When I was 20, when I was a young man in my 20s, I thought that masculinity meant a few things.
One, I thought it meant being able to party harder than anywhere else. I loved having a reputation or aspired to have a reputation for being a crazy fun guy. I worked out to be ripped, not to be healthy. I would go to the gym to try and be huge and look good or look masculine such that I could attract a mate or believed I could attract a mate by being ripped rather than going to the gym to be healthy on the inside.
And then finally, I thought that sleeping with as many strange people as possible made me masculine.
What I found is I have gotten older is a masculinity has changed. And then masculinity means being a good neighbor, being a generous person, taking economic responsibility for my household. And let me be clear, sometimes taking responsibility economically for your household means recognizing and acknowledging that your partner, your wife, your girlfriend is better at this whole money thing than you and being more supportive of her and her career. That is also masculine.
I think it means I think it means taking an interest in a child that is not yours.
I think that is the ultimate expression of masculinity in many species.
The individuals that are chosen to lead the herd, if you will, are the ones that show the greatest strength in terms of their ability to help out the other elephants. Are you that person? Are you that masculine citizenship?
Voting makes me feel strong, like bull taking an interest or an irrational passion in the well-being of a child that is in yours.
The key is to define early what masculinity is or put another way, stop acting like a boy as I did, and start acting like a man. Our producers are Caroline Chagrinned and Drew Burrow's, if you like what you heard, please follow, download and subscribe. Thank you for listening. We'll catch you next week with another episode of the property show from Section four and the Westwood One podcast network.
Do you have kids? No, I do. Sam Moore, that's that's the part where you go, yes, I have X number of kids and they're this age. Oh yeah. I have an 11 year old boy named Lazlo Lazlo.
Yeah, that's an awesome name.
Radnofsky name is also an incredibly obvious thing to do to try and find Stamford's son named Laszlo.
Yeah. You should write a I'm sorry. Go ahead. OK, an 11 year old boy. What else?
There's a little word cloud, which is the least elitist thing you can do in my book that describes the most elitist things about me. And I actually didn't write a son named Laszlo, which I now realize was a huge mistake.