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Welcome to the 15th episode of the Prophet Show 15, Our Quinceañera Cultural Appropriation of the worst kind.
A celebration of the passing from girlhood to womanhood in Latin cultures.
What else can we tell you about 15. Football is not a 15 minute increments.
Fifteen is also the emergency number designated in Pakistan. Good to know.
It's also plays a big role in rugby. And finally, the Hanbali Sunni Mahjoub states that the age of 15 of a solar or lunar calendar is when one stuck leaf, which is an obligation, a responsibility, begins and is the stage whereby one has his deeds recorded. In other words, when one starts living up to one's position in this world as a responsible human being, when you start being a man, I will be turning fifteen soon. It's the property show.
In today's episode, we speak with Jim Mackell, the co-founder of Square, to hear how Square fits into the payment sphere, his ideas regarding innovation or the innovation stack and why he thinks disruption needs to be disrupted.
Well, that's clever. What a turn of a phrase. Their disruption needs to be disrupted by the book now during office hours. We'll also cover volunteers potential IPO, where we think impact investing might be headed and advice to those looking to build their personal brand. The brand is you. The brand is you. Last session of my class is on branding yourself.
Anyways, let's rock this boat. Let's light this candle. Let's be all beer. No foam.
Today's news companies, including atwork area, the North Face and Patagonia, are seizing ad spend on Facebook to protest the platform's handling of misinformation and hate speech.
I heard they did that. I heard that. I heard that that friendly blue icon does that and that it's damaging the world at a greater scale than any organization in history. But I could be wrong. I'm not wrong here. This is part of a campaign led by top civil rights groups known as hashtag Stop Hate for profit, which began calling for advertisers to spend their marketing on Facebook in the month of July. On a similar note, the tech giants are expected to lose billions in ad revenue due to covid-19.
According to eMarketer, Google will lose about five percent in the US of their ad revs. But you're going to see just as vicious or more vicious a snap back.
The revenue line at Facebook and Google will look like what the president and CNBC are hoping happens with the economy, which it won't want to stop helicoptering all this money that we're borrowing from future generations. I hate crime against future generations is what we should be calling these bailouts. But I digress. Back to Google and Facebook. They will write back and they'll go from 60 cents on the dollar to 70. It's going to end. Their stocks reflect that, I think.
I believe their stocks have hit an all time high. I sold all my Facebook stock because I was it's just easier to me to go fully sanctimonious all the time now that I don't own shares in the company, but I expect it will continue to go up. So it costs the dog money to howl at the moon. It costs money anyways.
What's going to happen here? An unbelievably aggressive snap back Yelp announced in a blog post that it's introducing a new feature that tracks whether businesses are following social distancing guidelines. So Yelp, let me just give you some insight here. Some recon on the ground in Florida. Floridians just don't give a shit. They just don't give a shit. It's striking how lax people have been here. And I think that we need new messaging around masks. And unfortunately, it's become Democrat versus Republican.
I think the messaging around masks its rings true and positions in a different light is I think we have to position mass around citizenship and patriotism, that if you care about Americans who have served, if you care about Americans who have built this country, specifically the older generation, you're going to wear a mask. It's I've been talking a lot about this with so many companies and so many people, and I'm not an epidemiologist, but that's not going to stop me from playing one on TV and making predictions that I know nothing about.
But it strikes me or my bet is that we're going to, in fact, get at this from the other angle. And that is similar to the AIDS virus where there was always hard facts about a vaccine. But ultimately, the therapies are what really made the progress around this. I think the same thing is going to happen here, whether it's from Vestavia or learning or acquired learning around putting people on oxygen sooner rather than later. I think that we're going to come up with better therapies faster than we had expected.
And I think the vaccine is going to take longer even if we find a vaccine.
Just how do you distribute it to three hundred and fifty five million people efficiently? And how many people decide they don't want to be the first ones in line for a new vaccine? It's going to be very interesting. In other news, in other news, Harvard announced it was laying off some people. Carnegie Mellon is, in fact, doing the same thing. And Purdue announced they were closing their MBA program. And this is what I would call a little rain drop before the tsunami of disruption that's about to happen in September.
Come fall, people have a chance to step back and go, do I really want to pay fifty eight thousand dollars for my kid who's supposed to be in New Orleans experiencing alcohol discovery, finding his or her greatness? I think at the end of the day, that's what college is supposed to be. It's supposed to be an opportunity for you to find your greatness. And sometimes that means discovering what a shithead you are. Such a you can begin to zero in on your greatness by beginning to shed some of the irresponsible, low character behavior, i.e. youth, and then hold on to some of it, some of that craziness, some of that creativity, some of that.
Personality is such that you can develop the DNA, the base, the cement, the foundation such as you age, you can become more like yourself. I love that saying as we age, we become more like ourselves. Wouldn't we like to become more like our better selves? So I think college in that period is exceptionally important in the idea that people are going to be trying to do this from their parents basement is an entirely different proposition and it's understandable.
But here's the rub. The industry is experiencing the greatest disruption. I have one thing in common, and that is the consumption of the product involves standing or sitting shoulder to shoulder with other people, sports restaurants, movie theaters and education. And what of all those other industries are done? They have cut costs. They have reshaped they have made really hard decisions. How many universities have cut costs? Simple. The ones that have literally run out of money and have decided we are not only in the ninth inning, we're in the 11th inning, such as the MBA program at Purdue, and produce a decent brand.
I mean, that's decent certification, a good school, the boilermakers, a good engineering or a good technical chops.
And if their MBA program is shuddering, you're going to see just blood, blood in the water come September one.
And we are going through a series of just ridiculous, ridiculous. Some of the most thoughtful, responsible, empathetic people in the world end up in leadership at universities, but they're also in denial and they're constitutionally incapable of making decisions. It strikes me around adapting their business strategy to an environment that involves cost cutting. And they're going through a series of iterations around protocols that are just ridiculous. I think it's Georgetown has put out I don't know if it's Georgetown.
I think it's Georgetown. I don't know. I don't know has put out advice or a memo to returning students saying you get to pick for other people and that's your corn team. And they're going to ask that you not have any contact with people outside of those five people. So let me ask you this. What is the point of college?
One, find your greatness and to to become much better at not distancing. What's the point of college? You're there to not distance, for God's sakes.
I was president at UCLA and this is something that I'm sure will come back to haunt me. I was president of something called the Interfraternity Council, and basically my job was learning about these horrific incidences where a guy would get shitty drunk and fall asleep on the roof as Mr. Triniti and then roll off into the parking lot and the guy's picking up the trash would find him. And we have to call his parents and tell them that their son was in the hospital with a fractured skull.
My treasurer on the Interfraternity Council supposedly went to ask his girlfriend to marry him.
And then we don't know what the story is, but I came home and decided to hang himself and we're not sure what was involved there. But this is a what I'll call a time of exceptional alcohol abuse, exceptional I call emotional instability. But you're going through a lot at this point. And the notion that these kids are going to maintain any sort of protocols off campus is just absolutely delusional. So this is what will happen on campuses across America. They're going to realize about the middle of August that the vaccine is is not going to make its way to the eleven million kids who are supposed to show up sometime in September.
They're going to realize that in order to have any sort of reasonable protocols, they cover the myriad of unfortunate, unfortunate but possible scenarios here.
Your professor, I bet a third of our professors are over the age of 60. Professor, Week three sends out an email saying, I've contracted it, and then week five and a message goes out saying he's passed away. What does that do to the environment of the school? What happens when on a week someone reports they have symptoms and that following Monday, thirty of one hundred and fifty kids in that class are supposed to scatter to twenty five different countries around the world, which is what you have, an international strong international population at these universities.
And let's assume that the current bigoted, xenophobic administration doesn't allow foreign students into the country, which they may not. What happens to these universities? Financial health when they have twenty five percent of their students are international, but 50 percent of their cash flow is from students. What happens when your cash flow, 50 percent of your cash flow doesn't show up? So the enormous disruption in education is coming September one with institutions, a sector that is in consensual hallucination with their CFOs and their boards of advisors who have told them to come up with a narrative, a protocol, and absolutely Dacula strategies and plans, which are nothing but Latin for signal and a message to parents to send in your deposits because about a third of universities could be out of.
Business in 12 months or less, and while they still might have their campuses, they still might be taking applications. They're the walking dead and people are going to stop applying there for fear that, like Purdue MBAs after their first year, they're going to find out the MBA no longer exists.
It is going to be more interest, a more cultural appropriation. Stay with us.
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Welcome back. Here's our conversation with Jim McKelvy, the co-founder of Square and author of The Innovation Stack.
Jim, where does this podcast find you? St. Louis, Missouri, locked in my office.
I have never been to St. Louis, will circle back to St. Louis. But so, first off, just tell us I kind of know what Square is, but not really. Can you give us the headline news on what Square is and why it's different?
Square has two main product lines. The first is a payment system allows you to take credit cards and run your business so you could do loyalty programs and put an online store up and you get paid is the first half of the business.
And then we've got this thing called the cash app, and it's basically a bank in your pocket. It allows you to invest, it allows you to save, it allows you transfer money. It's super clean and it's open to everybody.
I think PayPal and all the different guys. And how are you able to carve out a nation, thrive the way, I mean, prosper and thrive the way of what was the secret sauce there?
What we didn't carve out a niche the way normal companies do that. So most companies start as like elbowing your way into a crowded elevator.
You know, they're just a bunch of people in there. You got to kind of jump in and make some room. We didn't do that.
We created our own market and the new might described that new market is a merchants who processed less than one hundred thousand dollars a year in volume.
So the small guy and when I think of Square, at least I think I think the plug in on the iPad so you can start taking credit cards right away. So you are there for how long? Like when did you decide to leave? Talk to us a little bit about being an entrepreneur.
And so I was there full time until my son was born. Yeah. Like twenty ten. And he was a great little kid, had a happy family and I was working fourteen hours a day and that just is not compatible. And it was also unreasonable for me as a founder to come into the office eight hours a day while the rest of the team is working almost double that. So it was like, OK, I'm stepping out. So I kept my seat on the board and I left.
But but you kind of got by that time, all the stuff that I was good at was already done. We had built what was basically square by the time I had left. And it was just a question of executing and I'm terrible at executing.
So we were hiring people to do the jobs that I was doing. And as soon as we'd hire them, they do it better than I would.
And I think that's sort of cements the point that entrepreneurship and greatness is in the agency of others. Right. That a great entrepreneur, there's a difference between having a practice and having a business. And you clearly know how to scale these things and no. One to step back and hand the reins to someone else. And I would I would argue oftentimes great ideas that don't scale. It's a function of in the beginning, you got to be all over everybody all the time.
At least that's how I am when I'm an entrepreneur. And then at some point, you have to find and recognize that this person is is really good and is going to do better. You just got to kind of get out of the way. You talk a lot about the innovation stack and the square's success was in part due to this notion of of an innovation start. Can you say more about what you mean by that and how we should think about it?
So the first is that invention and innovation is different than the thing that we always do, which is copying. OK, so in most cases, copying is the best way to solve a problem. If you find a problem that you need to solve, the first thing you should do is find somebody else. It solved it and just do what they did.
Like right now I'm sitting in a chair. Guess what? The chair is a solved problem. Now, there are different versions of the chair, but, you know, basically you got a surface seventeen, eighteen inches off the ground, you know, reclines at a three degree angle.
If it's rigid or tilts back. I mean, there are different ways to solve the chair problem, but most of them have been done.
Just adapt. Copying almost always works, except if humanity has never solved the problem before. And in that case, you're thrown into this weird, weird world which nobody ever discusses because we don't even have a word for it.
But now you're inventing. Now you're creating new and you don't get to copy. And all the tools that you learn, especially the stuff you learn in school, tends to not work that well, you don't get to have a checklist of, you know, step a step by step. See, that gives you the solution. And in that situation, you're then forced to do something that is hugely awkward for humans to do, and that is you have to create something new, you have to invent an invention.
At least the way I was sort of taught it was not the way I lived through it. At Square Invention is this messy, chaotic process where you do one thing and it doesn't work and you try something else and that works, but it causes to other problems. So now you've got to solve those two problems. And the second problem is illegal. And you got to get a law changed. The third problem causes your customers to revolt. So you got to switch.
I mean, if you end up with in squarest case, we did about 14 things that had never been done.
So even when I think about trying to take the intangible and distill it down to the tangible such that we can learn from it. I think that a lot of what you're talking about and a lot of my observations around companies that are adding tremendous stakeholder value kind of flies in the face of the basic premise of business school. Teaching or learning is heard one of the core principles, and that is Professor Pahala, University of Michigan talked about this notion of core competence and other than curiosity and a willingness to experiment and try stuff.
And not only that, but also the willingness to kill stuff when it's not working and you end up with a series of things, you end up with the App Store, great design, better marketing. I mean, just all sorts of shit. A better way to present new products in what feels like a fashion show. You end up with all these different innovations. And you're saying that the whole is greater than the sum of its parts, that this is not one thing that you can no longer defend something with just one great confidence idea asset.
It has to be an amalgam of head to toe salad for lack of a better term. Is that am I getting something there?
Yeah, yeah. It's a mass now. And I so wish that people would understand that invention. And creating something new is almost antithetical to most of what we have been taught to do.
Right. We're taught to copy and copying almost always works. And with a copy you can have an expert, you can consult an expert, or you can go to a seminar or a trade show. They'll teach you how to do it. Or you can have a credential that allows you to officially do this thing. That's totally cool, but that shouldn't be the limitation of human progress.
In other words, if everybody in the world said, I will only do stuff that has already been done, that we don't get any stuff new. And the problem is too many people that I know and I'm including myself in this disqualify themselves when they feel that burning ignorance, when they're like, I'm not an expert, so I shouldn't be doing this thing.
Well, I guess the answer is you're flying a plane. You're right. You should don't get in the cockpit and fly a plane unless you've been trained. But unfortunately, the Wright brothers who invented the airplane, one of them had to get into fly for the first time and he by definition, was unqualified, no human could be qualified to fly the first airplane. So I want a bunch of people to get off the sidelines and get in there and build stuff that hasn't been built before.
And it's going to feel really awkward.
Talk a little bit about you say disruption needs to be disrupted. What does that mean?
So we get called a disruptive company. Mm hmm. Squarest, called a disruptive company. And so I said, OK, well, what does that mean? And and I looked for the disruptions. I went like an academic would, and I said, OK, let us look for evidence of disruption. And there was none. Now, there was a little bit because before we entered the market, there was a bunch of price gouging. And that pretty much ended when Square publicized a two point seventy five percent rate.
But short of that, which may have driven a couple of little minor players out of business, like none of the majors felt like we didn't kill any companies. We didn't come in and conquer some market. What we did was we found effectively unoccupied territory and occupied it. And it was really not disruptive to anybody.
As a matter of fact, all the companies that we were supposedly competing with when we started, I mean, you can argue that PayPal, PayPal is a direct competitor. They kind of do the same thing. We did well, PayPal's 10 times the size they were when we started. They're doing fine. We're doing OK.
And I was like, well, why are we talking about disruption so much? And the answer is we're lazy. And we took Clay Christensen's work and he wrote this thing called Innovator's Dilemma, and he coined the term disruptive innovation.
That's what Christians call he called it disruptive innovation. But that's a mouthful. So people started saying disruption. Instead of that, they they left the innovation part. And then since a lot of people heard the word and didn't understand the background concepts, they thought, oh, well, the purpose of my hot new startup is to destroy what exists, which I think is a stupid way of viewing entrepreneurial activity. Like go what you should be doing with your energy is creating something new, build something that we don't have.
You don't have to disrupt anybody who's the most innovative company in payments outside of square Shopify Shava. That's interesting. Yeah, payments.
It's funny because most people don't think of them as payments, they think of them as fulfillment, but they say, all right, fair enough.
That they can stack you're talking about, right. Yeah.
I mean, to me the payment is is just a way into one value chain. Mm hmm. I mean, they're a bunch of companies that are interesting stuff. And payments, like the best payment experience is not the square payment experience. It's the uber payment experience. Right?
Yeah, because there is no payment. There's no experience. Get out. Yeah. Yeah. That's a really interesting thought. I agree with you around Shopify, so I want to talk a little bit. There is this notion that the migration into kind of super cities has been just unprecedented over the last 30 years. The New York City, London's to Hong Kong of the world, the Singapore, etc., and that all of this the flow of this river might be reversed and that we might see I don't come second tier cities, but smaller cities.
And it seems like St. Louis is set up really well because it has an outstanding university of all the we track universities and keep track of competitors. And I would say the two universities I hear more about than any other two universities are Carnegie Mellon because of some of the work they're doing. And also I keep hearing about WashU. The WashU has kind of gone from this almost like a pitcher, a Claremont, where anyone who knows what they knows anything about academia goes.
That's a great university too. It's becoming sort of a real iconic university and sort of starting to rival the other great schools in the South and the Midwest, the Dukes of the World, etc. And it feels like a great university with a strong engineering department, a city that's less expensive. It feels like St. Louis is set to boom.
And I imagine you're going to agree with this. Any thoughts? Give us your best pitch on St. Louis. You you could have to live anywhere. And you did live in super cities and now you're back in St. Louis. So what's the pitch for St. Louis?
Well, that's the first pitch, is that as someone who could afford to live anywhere now, I've chosen to live here. And and I wasn't even the one that made the call. It was my wife who Swedish. And she has no allegiance to any place in the United States. And she made the decision to move out here.
The thing that's awesome about St. Louis, it is a world class city in in many ways in the lifestyle. And then culturally, there are two things that we do really, really well. One is education and the other one is health care. And you don't really care about either unless you have kids, in which case you really care about education. Yeah.
And what we know, public schools, very public schools, public schools. My kid walks to a public school. Well, used to when it was one of it closed. But like the point is what I lived in California. There were great schools available.
They were very expensive private institutions that only it elite kids could get into. And I didn't want my child only experience. Rich kids as his peer group. So I agree, so I agree. And so if you want to have a normal, well-rounded but well-educated person, you can do here for free. I'm talking about public education. So that's thing one move to St. Louis lifestyles also. Second thing is health care. We've got one of the better health care systems in the nation right here, anchored by Washington University's medical school.
We didn't choke when covid hit. We have world class health care. Those two things matter culturally. The city's got a lot. But let's talk about the trend that you started this off with because you talked about super cities.
And to me, super cities, which are great places to visit.
They're also like they're very clubby.
OK, so what I mean by a club is that it's an elite institution, a city like San Francisco, where rent for a single person is three thousand dollars a month.
You've got to be pretty elite to be able to afford to live there. And if you're not of a certain stature, you don't get to play in that club. And one of the things that the covid-19 shutdown has taught us is that the clubs don't actually have to work.
I mean, you and I are not sitting in a room together.
We're electronically connected. I think what you're going to see is that now that we've broken some of these club bonds and I don't just mean super cities, I mean, you know, elite institutions, perhaps even elite educational institutions, you don't have to be in this geographically restricted area to contribute. And hopefully that will then let cities where lifestyle dominates to prosper.
Jim McKelvey, amongst other things, is a serial entrepreneur, inventor, philanthropist and glassblower in addition to being deputy chair of the St. Louis Federal Reserve. He joins us from St. Louis.
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OK, it's time for office hours as a reminder, we're here to answer your questions about the business world and how you can get ahead at work and in life. If you'd like to submit a question, please email a voice recording to office hours at Section four DOT. Number one.
Question one, Scott Peltier is rumored to be filing its IPO in the coming weeks with float's set to be available as soon as September. From a business perspective, how do you think the IPO will be received as a global citizen? Do you believe this company is a net positive or negative for society? Thank you. Thanks, Ryan.
So there's two things here. There's the IPO market and there's Palantir itself. And in the short term, you'd rather have a hot IPO market and a good company than a great company and a tepid, anemic IPO market. And I believe the IPO market is going to be wide hot and have predicted that the last half of 2020 will be exceptionally strong for this vintage of IPOs and putting my money where my mouth is. I'm trying to get in on some IPOs and find shares in the secondary market and companies that are supposedly going to go public sometime soon.
Why? Why? Because the people investing in these IPOs are the ones with the best relationships with the underwriters taking it public, which are typically institutional investors. And these individuals have more money or these institutions have more money than they did at the beginning of the year. We don't like to say this out loud, but the markets are up and people who have a net worth over 10 million dollars are worth more than they were post pandemic and pre pandemic.
OK, that makes sense. Income inequality on steroids, that's what we have. Everything's stressing for 10 years, even in a pandemic or because of the pandemic. So we have more demand or more cash on the sidelines. But I would imagine there are a lot of firms planning to go public that can anything in certain sectors, whether it's anything to do with hospitality or anything to do with the consumer world right now, like a an actual consumer product, anything to do with retail can't get out.
So you have entire swaths of the economy are prohibited from accessing the public markets, which means you have more demand, more cash on the sidelines and fewer companies getting out to the ones that will get out will experience a bunch of money trying to get through a crowded door and I think are going to experience incredible one in 30 day cops, if you will. And we're already seeing that so far. I think this kind of shift was a big on the first day.
We're going to see what happens to lemonade, the disruptor in the insurance space. I'm trying to find shares in that because I think lemonade has established a reputation as the disruptor in a sector that has billions of margin value. Again, just as the IPO market is probably more important than the the name itself, the industry you're trying to disrupt and how fat and happy and lazy and how many unearned gross margin dollars are in there is as or more important than the quality of the company itself.
And I think lemonade is both a good company with good management going after one of the few remaining blue whale carcasses ripe for disruption. But let's talk about Pelletiere in terms of whether or not I believe as a global citizen that they're good or bad for the world. The honest answer is, I don't know. This company is very kind of stealthy and I think that's on purpose. I think they enjoy positioning themselves as sort of the spy versus spy. It makes them seem smarter than they are.
And they're constantly talking about how they work with the CIA and how their company played a role in capturing or not capturing, hunting down, finding and putting a bullet in the eye of Osama bin Laden. By the way, I just fucking love the notion that Osama bin Laden's last moments, he registered the notion that we had found him. I remember on September the 12th, the 13th, I saw the second tower come down and I was walking around Union Square and this elderly couple came up and handed me this this flyer, and it was patterned like a missing dog flyer.
And it said, Have you seen me? And it was this picture of this handsome young man in his waiter's uniform. And he worked as a waiter at Windows of the World and the World Trade Center.
And his parents, I don't know if they were Polish or Czech, were wandering the streets of Manhattan, passing out flyers looking for their son. And I remember the woman looking up at me, the mother looking up at me. And when she made eye contact with me, I remember registering a moment after understanding what they were doing. She actually looked at me and she was hopeful that I might know where her son was. So I love the idea that we put a bullet in this motherfucker's eye and then showed him a lot more respect than his organization showed to any of us and gave him a burial with full rights.
A bit of a digression there, a bit of a digression. So I think Palant here, whether or not it's good for the world, there's a lot of strange shit here, supposedly critics of. They say, OK, they help put kids in cages or that working with the CIA, they shouldn't do that or they work with ICE. My viewpoint is that I want to see America and the government working with the best firms in the world. I've never understood the Amazon indigestion or the indigestion from Amazon employees about HSW or HWC having the government as a client.
I think the most noble client in the world is the US government and there are a lot of bad people out there. There are a lot of bad actors. And the notion that we're going to let the Chinese and the Russians and the Taliban and al Qaeda and ISIS have access to the best software in the world, but we're going to hamstring our own forces and our own government just makes absolutely no fucking sense to me. So I am all for the government patronising and being a customer of the best software companies in the most advanced software companies in the world.
Whether or not Palantir is that company, I don't know. I know that they're expecting to do about one and a half billion dollars in twenty one this year. They're at a billion, up from about seven hundred million and nineteen. So it's growing fast and know what the profitability is there.
But this is going to be a really interesting one. I think Peter Thiel has a reputation as being this genius, but uncomfortably, I don't know if the term is strange, but his proximity to Donald Trump, his political views, his unabashed endorsement of Facebook distinctive the bad behavior on the platform. It just there's this very uncomfortable weirdness around talent here right now and a little bit around Peter Thiel. I don't know if that's actually going to add to the allure, the IPO or hurt it.
But in general, in general, if I had to guess, this is going to do OK to good or I think this if you had access to this IPO, I don't know who's taking it public, I would say it's probably asymmetrically tilted to the upside because the market, I think, for IPOs is going to be really hot. And Palantir is considered a disruptive company with very, very smart backers.
This is Carolyn from San Francisco. I loved your last episode on Altruism and had a question around impact investing. I know venture capital has gotten hit with this recession or depression, and I believe impact investing will certainly be a hit as well. However, in the vein of altruism, I think that there is room for more investment thesis.
Is that a focus on social and planit good in some way?
Do you think this is a space that's going to grow, recover or maintain some stability during all this?
Do you think it is a good way of supporting companies that are trying to make a positive impact? But love your thoughts. Thanks.
Thanks very much, Carolyn. So when you decide to invest in funds where sustainability or impact investing as a criteria or the kind of their lead mission, I think that's wonderful. I'm glad there are funds to do that. I think you should expect to have lower returns. I think if you task a fund manager with investing your capital and you begin limiting the potential universe of Alpha and returns to companies that are behaving based on a predetermined set of criteria that such that they clear those hurdles for the manager and the ltds, that if you're reducing the population or the opportunities, that you should logically expect to have lower returns.
And there's this Hallmark cartoon that, oh, if we just focus on companies that are doing good, we'll get higher returns. That's bullshit. And the data doesn't bear that out. You know, tobacco companies have been incredible companies to invest in Facebook and Google, who arguably have been some of the two of the most damaging companies over the last 20 years have been extraordinary, extraordinary companies or stocks to as a matter of fact, show me a company.
I used to say, show me a company that's had more than 10 or 20 billion dollars in twenty four month period. I'll show you a company that's vertical has data, Benjamin Button effect IPOs. This sort of targeting are going through. I would add to that. Show me a company right now that is adding tens of billions of dollars and I'll reverse engineer it to one thing, and that is exploitation. We have moved from an innovation economy to an exploitation economy.
It is really disturbing. I think it's wonderful that people have decided to focus on impact investing and sustainable investing. You should expect lower returns. Next question.
Hey, Scott, this is Andrew Blue. I'm calling from New York City. I actually heard you speak at Stanford. You and Kyra. I was wondering, you talk a lot about how you should go on these social platforms to build your brand. And I was wondering what advice you would give to a student who maybe knows what sector they want to go into but aren't exactly sure what their brand is. Yes, thanks.
Thanks very much, Andrew. So the last session of my class is called The Brand is You and the first half is on how to brand yourself. And the second half. On kind of a summary of the algebra of happiness and equations I've tried to assemble that I think are best practices around the competence of being happy. So in terms of the brand, is you a key component of managing your own brand? Think about how many millions of people are in the business of marketing and really understand everything about Rubbermaid, the brand, really understand everything about Pepsi and the difference between Pepsi and Pepsi Lite and think about the brand from every dimension.
But how much time do these people spend thinking about managing their own brand strategically? And that is the impression other stakeholders have of you based on all the different ways you touch them. And it's a really, I think, productive analysis to go through. And one key component of that is similar to a consumer product that figures out what its medium is. If you're beer, you need a lot of awareness and people make very quick decisions around beer. So that's sort of a function of imagery that's best probably communicated to a target market.
Everybody loves beer specifically. All dudes love beer. So sports and TV and humor and top line imagery and then supported with shopper marketing, that is end caps showing a cardboard cutout of Tom Brady saying Pick a Bud Light for July 4th. Those are the mediums that work best for that. If you're in the business of movies, although this is changing dramatically and you need to get dramatic awareness fast, boom, boom, TV run a bunch of stuff across Modern Family in the messenger because we've got to raise awareness for millions three fast because it gets out of the gate strong or it just doesn't get period.
So the question is, what is your medium? And that is where do you thrive? And there are so many mediums to choose from in terms of your media mix. There's one on one is presenting to groups. There's going out with groups of people, there's texting, there's LinkedIn, there's Tic-Tac, Instagram, Twitter. There are just so many mediums. There's the written word. Here's one. Isn't that crazy? The written word. What is your medium?
I am good in front of large crowds. I'm a decent speaker and I kind of rise to the occasion and I become likeable and charming in front of large crowds. One on one, I managed to come across as insecure and aloof at the same time, which is no easy feat for the dog, right? No easy feat. It's like the dog that growls are you? And then we'll look you in the eye because it seems scared. It's just not a good look.
So start I would say pick three or four, start on it to spend some time, try and come up with some core associations around what are the features you want to wear, the associations you want to cement in the mind of your stakeholders in that sector and start experimenting on those various mediums, whether it's the written word and posting in medium. I mean, come on, there are so many mediums, including medium, and then see where you start to get a little traction, see what feels right when you try it on and then pick one of those mediums and go all in.
I decided in two thousand and seven, I think it was that I was going to get to one hundred thousand Twitter followers and that I was going to start producing one video a week on YouTube. And then at some point I would have a video that got viewed a million by a million people. I set those goals and said, I think I'm good on video and I have resources around me. Greatness is in the agency of others and I really enjoyed Twitter.
So I picked those two mediums and I, I set out goals, made investments, hired some people to help me with the video production, try to get better on Twitter, followed. A lot of people used to follow our strategy. But the bottom line is you are a brand. Part of being a brand is picking your media mix. Pick four or five mediums, experiment with them after deciding what are two or three core associations you want to reinforce over and over with the content you post on those mediums.
See which one or two just feel right after you try them on and then set aggressive, aggressive but doable goals and approach it like a project and own that medium Otik out and Andien it.
If you keep sending in your questions again, if you'd like to submit one, please email a voice recording to office hours at Section four dotcom.
Algebra of happiness, citizenship being a part of what is this incredible experiment known as America, it ends up that the most patriotic Americans are those who have invested the most soldiers, the ones who have sacrifice, who leave their families to go, put themselves in harm's way, tend to be the most patriotic. And the same is with your children. Why do you love them?
Why are you so I don't know what's the term parental or all in with your kids because you invest so much in them. A also instinct has something to do with it and hopefully they're not awful. But them look smelling and feeling like you and also the fact that you spend so much time dealing with these things that are awful, especially when they're really young, you become incredibly invested the way I think a soldier becomes invested in their country because of the incredible investment and sacrifice they make.
And I think about our citizenship. And I wonder if that because Americans haven't had to invest at least my generation on down, most of us, we're not called the war. Most of us army is all volunteer. Most of us have not had to pay high taxes, and most of us have not really felt a foreign threat. Most of us take, I think, a lot of our citizenship for granted or a lot of the rule of law.
We've never lived in a nation where corruption, although it feels like we're getting closer every day, but where corruption is a constant fear that people could show up and just take your private property away, that you had no recourse when people did things to you, harmed you or your family or stole from you. And I worry that we haven't been forced to make the same investments in our country that our ancestors have made and as a result, don't demonstrate the same level of citizenship.
And I think the way that's manifesting itself right now is in our countries pretty much refusal not across the board, but refusal in much of America to wear a mask. And it's just such a shame that it's become politicized because it really is just about citizenship. Again, not contracting covid is the fear here, although you do not want this, but passing it to someone vulnerable. And it seems like the easiest form of citizenship is that when you are not on your own, in your own house, on your own property, to put on a mask, my father, nine years old, a frogman for the Royal Navy, married and divorced four times, whereas a mask when he goes out for health reasons, but he is out every day because he wants to swim and he wants to walk on the beach.
And for all of our fathers, let's wear a mask. Also this week, I've been spending a lot of time thinking about the young man, Alex Kearns, who took his own life, threw himself in front of a train after mistakenly thinking he was down seven hundred fifty thousand dollars. After an alert, he received an update he received on his Robinhood app. And it strikes me that many of our companies now, at least the ones that have managed to aggregate tens of billions of dollars in a short period, all have one thing in common.
And that is on the other end of that app is someone being exploited, whether it's a worker who's making less than minimum wage as a quote unquote partner, which means driver with no health insurance, not subject to minimum wage protections, whether it's a young woman who is prone to self-harm because she not only doesn't get invited to a party, but has to see it play out in real time in her room, whether it's a young man who doesn't understand instruments and through gamification and colors and random rewards, is encouraged to play with financial nuclear bombs, instruments that he doesn't understand and gets in too deep, too fast using the same addictive qualities that Facebook and Twitter have deployed.
When did we become a country where, A, we don't have the citizenship or don't feel the need to wear masks and be wear our best and brightest, decide that the way they're going to aggregate wealth is to exploit other people. We have moved from citizenship to non citizenship and we've moved from the innovation economy to the exploitation economy. Our producers, our Caroline Chagrinned, Andrew Burrowes, if you like what you heard, please fellow download and subscribe. Thank you for listening.
We'll catch you next week with another episode of the property show from Section four in the Westwood One podcast network.