Unfiltered lessons for business and life

SCOTT GALLOWAY: Everybody interviewed everybody, and we liked each other, and we had fun. Couldn’t pull this off now, but we used to all take company trips. No spouses allowed. Consumption of alcohol encouraged.

JEFF BERMAN: It’s a pretty good guess you recognize that voice. That’s business professor, best-selling author, and prolific podcaster Scott Galloway. He’s reminiscing about how he built company culture early in his career.

GALLOWAY: I had read this study when I was younger, saying the number one source of retention in any company is if the person has a friend. If they have friends at the company. If they get that dopa hit when they walk off the elevator and they see friends.

BERMAN: This week on Masters of Scale, we’ve asked Scott Galloway to answer your questions. Think of him as the slightly acerbic, sharp-witted friend at the office who is not shy about giving advice. It’s a bit of a different episode for us — a great hang with Scott’s typically unfiltered takes. We think you’re going to enjoy this one.

BERMAN: I’m Jeff Berman, your host.

Scott Galloway is the creator of a popular newsletter and podcasts, under the brand Prof G Media. He’s also a business school professor at NYU and the author of best-selling books about our economy and culture.

Scott agreed to tackle a wide range of topics with us, most of them inspired by questions from you. We’re getting into issues like when CEOs should speak out on politics, AI disruption, and building company culture.

First, we wanted to hear about Scott’s approach to scale in his own life and work.

BERMAN: Scott, welcome to Masters of Scale.

GALLOWAY: Oh, thanks for having me, Jeff.

Copy LinkHow Scott Galloway scales his ideas

BERMAN: You’ve done an extraordinary job scaling the distribution of your ideas, your worldview. What has worked best for you on that front, and what can our audience take from that as they try to extend the reach and influence that they have?

GALLOWAY: People consistently come up to me and say, “I just think the amount of content you push out is remarkable. You must work 80 hours a week.” I’m fundamentally a lazy person. I work 30 to 40 hours a week. I’m really outstanding at doing nothing.

What I’m pretty good at — so my core competence — is storytelling. My superpower, though, is attracting and retaining talented people. I have 14 people at Prof G Media. So if you want to scale your content, you’ve got to focus on what part of this content am I really good at, and then hopefully you have the resources to hire talented people to kind of build it out. That’s the most obvious thing, and some people don’t have those resources. I’m blessed. But if you find people who are good, you want to hold on to them — give them a vested interest in ownership in your success.

From a qualitative standpoint — and then I’ll talk about channels — I’m in a very blessed position, and that is I have people who love me unconditionally and have economic security, which gives me license to say pretty much whatever the f*** I want.

BERMAN: Not that we have a problem with Scott’s f-bombs, but we don’t quite have that same license here. We have to bleep those f-bombs, mostly to avoid being blocked by podcasting apps in certain parts of the world. Anyway, on with Scott.

GALLOWAY: Your willingness to be kind of unfiltered, I think over the long term draws people in. So, when I write my newsletter — I have a newsletter that goes out to half a million people every Friday — I write as if only my sons are going to read it. I want them to understand the world, and I want them to understand me a little bit better in an entirely unfiltered, raw way. And I’m very vulnerable. I talk about things like sex. I talk about my strained relationship with my father. I’m a 59-year-old man that hasn’t gotten over the death of his mother 20 years ago. I talk about stuff in a very kind of open, raw way.

And from a marketing standpoint, the space I’m trying to fill, or the opportunity I saw, is that straight white men don’t talk about their emotions. And people, usually in my business, are so busy kissing the ass of someone who they want to invest in their next round or whatever that they don’t say, “This company’s stupid, and the CEO’s done a terrible job.” So, if you can be really kind of — I hate the word authentic — but if you can be a bit raw and unfiltered, I’m profane and vulgar. It turns off people. It turns off advertising. But I think people appreciate it, and it’s authentic. I’m generally a profane and vulgar person. It’s not an act.

So I would say try and be, if you’re in a position of having some economic security — and most young people don’t — but if you do, and people love you unconditionally, you have an obligation to speak in an unfiltered manner. And then in terms of channel strategy, I always said, “How do I get in front of the emerging medium?” Trying to be as unafraid around content as possible, I think that really resonates with people in a world where they feel as if media and content are so starched and so biased. And then I personally am trying to occupy this space of men my age who don’t really open up or don’t talk a lot about their failures or their successes or their joys or their upsets in a really honest way.

Copy LinkShould business leaders speak out politically?

BERMAN: Yeah, and thank you for doing that. I mean, there’s precious little of that being role-modeled by business leaders. On the political side of it, to the extent there ever was a neutral — and I’d argue there never was neutral — there’s certainly no more neutral. And we know, historically, in countries that have faced threats to their democracy, business leaders are the last bulwark. They’re the last line of defense, and yet there remains this extraordinary fear about speaking out. Go back to Michael Jordan, “Republicans buy sneakers too.”

What do you say to business leaders who are struggling with when to take that public position, or even internally with their team, when to say something about an issue that is going to inflame passions on one side or the other, if not both?

GALLOWAY: So, I’ve been on the board of seven public companies, I think 17 or 18 private companies, and generally speaking, I tell them not to. And that is, for the most part, like if you’re Ben & Jerry’s or Hobby Lobby or whatever, and part of your identity — or you’re REI — is a political position, fine. But for the most part, I think the American corporation is meant to be a platform to help people garner economic security for them and their families. And I feel like the tech sector got a little out over its skis, in that CEOs started virtue signaling and trying to appeal to their younger employees by emoting and articulating these fairly progressive values that sometimes are disingenuous. And that is, when push really came to shove, they weren’t just honest.

I like a CEO who says, “I’m here to make money and create shareholder value that you’ll share in, and we’re going to be good citizens. We’re going to be ethical people. We’re going to be respectful of one another, but we don’t have to take a political stand on everything, and I don’t need to weigh in on George Floyd as the CEO of a company just because it happened.” And I like kind of the rap of trying to, unless it’s part of your identity, stay out of it.

At the same time, I think government and citizens make the mistake of believing that we’ve personified companies. Companies are for-profit; they are so good at making money. U.S. corporations make more money in a year than whatever 150 of the 190 nations in the world make in a decade. They’re so good at making money, they shouldn’t be trusted to do anything else. Unfortunately, they’ve done a great job of personifying themselves, and we believe them. We believe that they’re actually trying to connect the world and make the world a better place. No, they’re not. They’re trying to increase the value of their shares, such that the CEO can exercise his or her options and buy their second Gulfstream. That is their entire focus.

To believe anything else is just naive. For 99% of CEOs, my suggestion would be just avoid it at all costs and say, “We’re going to try and create economic security for you and your family, such that on weekends, whatever you want to do politically, recreationally — if you want to be a DJ or you want to go to a Save the Whales rally — that’s your business, and we respect your viewpoint. But that’s not why we’re here.”

Copy LinkWhen scale becomes detrimental to society

BERMAN: Masters of Scale focuses on the positive lens of scale, on how to get there — you know, the entrepreneurial journey to make it happen. But there’s a concern that we don’t talk enough about when a company’s influence goes beyond what’s healthy for society or for even the business itself long term. You talk a lot about the quasi-monopolists that companies in our universe are, and that they’re great investments. I’m curious — at what point, or how, do you think that scale is actually bad for society?

GALLOWAY: That’s a thoughtful question. Societies, basically economies, kind of go through a similar cycle, and that is, there’s a group of talented, hardworking, and lucky people that garner a disproportionate amount of wealth. They tend to become exceptionally influential on government and policies, and they encourage policymakers to create policies that further enrich them — not that they don’t love their country. But do away with the import tax on my input, whatever it is, right? Give me favorable tax status. Tax corporations at the lowest rate since 1939, which is where we are in the U.S. And then income inequality skyrockets, and the bottom 99% at some point decide the fastest way to double their income is to either kill or get rid of the 1%, and we have a revolution and we start over.

The same could be said for companies. That is, companies scale, and in this environment, with network effects and access to capital being such a weapon, that once you get to a certain point — if you have relationships with 93% of the global corporate workforce, you know Microsoft, if you have 90% of the search market, Google, if you have two-thirds share of all social media globally like Meta — can anyone catch up? Then you have so much power and so much wealth, and you have a government that, with Citizens United, can take your money. Do you just end up with companies that are sort of impossible to topple, impossible to disrupt, distinct of the product quality?

I think that happens, and the reason why we have such a proud legacy of antitrust until like the last 30 years is that there are few breakups we look back on and think that we screwed up. When we broke up the AT&T into the Baby Bells, all seven of those companies were more valuable than the original AT&T on their own within about a decade. Things like fiber, analytics, cell, and broadband were all lying fallow in Bell Labs because AT&T didn’t want to disrupt itself.

So, yeah, these companies get so big, and the reason that antitrust has been sort of asleep for 20 or 30 years is, one, because these companies have weaponized or taken advantage of the fact that money can just wash over government to any great extent than it ever has. I think too big to fail, or whatever the term you want to use — concentration of power — I think the best thing we could do for inflation would be a series of breaking up everything from Big Chicken and Big Pharma to Big Tech. So, yeah, I think these companies get too big, and whether it’s Teddy Roosevelt and trust-busting, breaking up the aluminum companies, oil companies — I think we have a proud legacy of antitrust that we’ve sort of shelved, and I think we’re paying the price for it.

BERMAN: Well, and often these companies are getting fined, and the fines are just a rounding error when you’re talking about trillion-dollar companies paying a billion-dollar fine. So, Lina Khan has come in with a different perspective on how to approach this and has been demonized for it. Although I saw that this morning, even Bill Gurley was praising her for how she’s approaching some of the gaming of the pharmaceutical world. What’s the answer?

GALLOWAY: I mean, okay, so on a macro level, I think you empower Lina Khan and Jonathan Kanter, and we need new laws — or not new laws, but maybe apply the Brandeisian test, where it’s more of a market-channel power. We need to start breaking up companies, and there’s evidence that that’s already happening. Because, quite frankly, the worm has turned. Consumers hear stories about several houses on the block where their daughters are self-cutting, and they think, “Why is Instagram even allowed for a 14-year-old girl? It’s impossible to opt-out.” I’m sophisticated with technology, and I’ve tried to figure out parental controls. Shouldn’t it be the other way around? Shouldn’t it be really difficult to figure out a way for Instagram to be on my 14-year-old’s phone?

So, I think consumers are just fed up, and the consumer support has stiffened the backbone of regulators, legislators, and lawmakers. Despite the fact that they’ve had 40 hearings on child safety and social media and passed zero laws, it does feel as if we’re on the precipice. The decision to break up — or the decision that Google was found guilty of monopoly maintenance — I think people are getting a little bit sick of thinking that Apple is totally, I don’t know, in no way complicit with this when it would be pretty easy for them to age-gate all of their devices.

Companies are starting to feel it, dealing with these companies. They just feel as if, “Okay, they’re starching all the margin out of the ecosystem here.” Even in the marketplace, when you have seven companies responsible for a quarter of the market gains, it means 493 of the S&P are actually just not doing that well. So, these guys are feeling it, parents are feeling it, and what can we do about it? I think the most immediate thing is antitrust, and then I would remove Section 230 for all algorithmically elevated content. I just don’t understand why these companies wouldn’t be held to the same standards as old media.

News Corp paid a $750 million fine for circulating misinformation around Dominion voting machines. That was a dumpster fire compared to the nuclear mushroom cloud that was on Meta. They’re off scot-free. So, I would remove Section 230 for all algorithmically elevated content. Additional regulation and more aggressive antitrust would probably be where I would start.

BERMAN: We wanted to share with Scott some questions from our Masters of Scale community on a wide variety of issues. Not only is Scott game to tackle pretty much any question and any area of business or life, but we also thought lobbing a set of wildcards his way would make this more entertaining for him and for you.

Copy LinkAssessing company culture from the board level

BERMAN: You referenced the dozens of board seats you’ve held. Sally, from our audience, wanted to know: As a board member, Scott, how do you assess whether a company has a strong company culture, whether it has a healthy company culture? Is it something you even care about and are trying to figure out? And is it a forward-looking financial indicator for you when you’re sitting on a board?

GALLOWAY: Yeah. But generally, it’s hard for the board because the board doesn’t spend that much time in the company, and everything about the company is filtered through the CEO. When you terminate a CEO — I’m going through this right now on my boards — you find out all this stuff about the CEO because all of a sudden you’re forced to speak to the people below that person. And generally, when you deal with the CEO of a public company, you’re generally dealing with the rush chairman or the rush chairwoman. That is, the most popular person in his or her fraternity or sorority. They become very good friends with the board because the board’s in charge of their compensation, and they edit and manicure kind of the messaging that the board gets.

I demand, or I ask of every board member that at least two or three of his or her reports — or other people in the company — come in and present something because we just want to get to know these people. Generally speaking, the way a board — kind of the board gets very few indications of culture. They can go through GlassDoor. But generally, the way we evaluate culture is through a shareholder lens, quite frankly, which is retention. That is, you should have 8% to 12% turnover a year. If you have a lot more than that, something’s wrong with the culture or the compensation. We don’t know how much. We don’t know. We don’t know how in the dark we are.

It’s also difficult because if you start talking to too many people in the company, it makes the CEO insecure, and you want to respect their ability to get things done. So, it’s difficult. I would say that for bigger public companies, you have more of an idea because there’s more liquidity around messaging and employees bubbling up. I know more of it. I feel like I’m better at building a culture as a CEO than I am — and I’ve never built a big company — than I am at observing or assessing a culture from a board level. Boards basically are there for two things: they’re there to hire and fire the guy or gal running the company, and they’re there to decide if and when to sell the company. That’s about it. And maybe make sure the chairman of the audit committee is smart enough to know if there’s fraud. Other than that, we’re just kind of heckling from the cheap seats.

It’s the CEO that makes most of these decisions. For the board to start making comments about culture — what’s right and what’s wrong with it — I don’t know. I would say if you’re really, really having issues with the culture and they bubble up to the board level, that means you should have fired the CEO about six months ago.

What I try and do as a CEO, when I used to run all-hands meetings, especially in small companies, is try and imprint values from the beginning. I used to start off every all-hands with, “I’m Scott Galloway. I’m the CEO of Prophet Brand Strategy. We are about a passion for brand, attention to detail, and camaraderie.” Couldn’t pull this off now, but we used to all take company trips. No spouses allowed. Consumption of alcohol encouraged. I mean, all this stuff that makes HR people go crazy now.

I had read this study when I was younger, saying the number one source of retention in any company is if the person has a friend. If they have friends at the company. If they get that dopa hit when they walk off the elevator and they see friends. So, I thought, “Let’s encourage that.” I do that now with Prof G Media, which is 14 people. I tell them, “Anytime four of you are together, you have my credit card.” And I’m not exaggerating, Jeff — they’ve sent pictures to me from Tulum: “We all got on a plane today and went to Tulum.” It’s like a Tuesday. And I’ve said this to them — any four of them together at any time, I don’t care what they’re doing, they’ve got my credit card.

So, I feel better about my ability to create a culture than I do assessing it from a board level. Jeff, have you served on many boards?

BERMAN: Yeah. And I mean, I served on the board of Buddy Media, which was founded by our mutual friends Mike and Cass Lazerow. They did an exceptional job managing the board, in part by answering the questions before they got asked. They were proactive in messaging to the board, and they came up with their own metrics for managing culture. And to your point, if half of a board’s job is to decide when to hire or fire a CEO, to be proactively messaging, “Things are good,” or “Hey, things aren’t great, but here’s what we’re doing to fix what isn’t working.”

GALLOWAY: Yeah, look, the best CEOs are the ones that say, “This is what I’m worried about.” They signal problems. I find boards don’t mind bad news. What they hate is surprises.

BERMAN: Surprises, yeah.

GALLOWAY: “Okay, you’ve had a problem with our operations in China for nine months, and how long have you known about this?” Or, “There are 17 lawsuits all around discrimination, and the chief legal counsel is now forcing you to tell us about this.” I mean, so I’ve always said a good CEO over-communicates during bad times and under-communicates in good times.

I’ve always tried to practice that. As a CEO, I always say to people, “If you don’t hear from me, it means you’re doing really well. When you’re in my office a lot, it means something’s wrong.” I think good CEOs, especially during bad times, over-communicate with the board: “We have a problem here. I’m going to look into it. This is what’s going on. This is my plan. This is how we’re going to try and fix it here. But you should know, this quarter, we’re probably going to have issues in terms of earnings.”

I think good CEOs tend to under-promise and over-deliver, and they’re very transparent and also willing to make mistakes. It’s interesting to go to all-hands and just look at the body language of everyone. I love going to all-hands meetings and saying, “Hey, I’d love to come on all-hands sometime,” and I just think it’s really interesting to see — you can just see the body language in the room of how people are reacting to what they’re saying.

But it’s so important now because there’s so much transparency, and young people are so mobile now. They change careers so quickly. The biggest structural change from COVID is probably remote work, and it’s especially acute in the U.S. Seventy to ninety percent of office space is leased in Europe, and it’s like 40 to 60 percent in the U.S. Trying to create a culture without everyone in the same place at the same time is especially challenging. I think that’s probably the biggest challenge facing these guys right now — how to maintain and cement a culture.

And by the way, it’s not all sunshine and daisies. I mean, the culture at Morgan Stanley when I started there — the first real job I ever had — was “We own your time. You have no life. You’re going to be emotionally and mentally taxed, physically unfit, and you’re going to make more money than your parents did by the time you’re 28. Do you want that?” I mean, if you don’t want it, if you want balance, if you want to be a DJ, and you want to get into great shape, and you want to work out and make sure you’re home for family time and dinner — go somewhere else. That’s a culture. Some people want that.

Then I worked very closely with Levi Strauss & Company. They would give everyone summer Fridays to spend time with their kids. “Oh, you’re coaching Little League? We’re going to give you another four hours a week.” It was a very maternal culture. So, I think there are all sorts of cultures that work. As long as you’re just kind of clear, and you can articulate not only who would do well at this company but who it’s not for.

BERMAN: Still ahead, Scott weighs in on AI in the job market, how technology could change voting in America, and more.

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Copy LinkHow Scott approaches talent retention

Welcome back to Masters of Scale. You can find this interview and more on the Masters of Scale YouTube channel. Up next, I asked Scott how he approaches talent retention in his own company.

GALLOWAY: I want to be the most influential thought leader in the history of business, and I want to create a ton of economic value. I want to create economic security. I want to get wealthier. Maybe I’m too much virtue signaling, but a close second, I want to create economic security for people I work with.

When I was younger I wanted to pay people less than market such that I could give shareholder value, give them options, and we’d all get rich. Now, I want to overcompensate people because I don’t want to take outside capital. My goal is to pay people somewhere between 30% and 80% more than they would get in the market. That’s one of my goals.

I got the idea from Netflix. They said they wanted to be the best-compensated employees in that deck, and I thought, “That’s so unusual, to purposely say we want to overpay people.” I thought, “I like that. I’m going to try and do the same thing.”

But I think just being very straight and very honest about what your objectives are. Because if you’re the founder-CEO of a company, your objectives are going to bubble up no matter what. You get to make these decisions, and then imprinting that DNA very early in the company so people — it’s like conceiving a child — the company is going to look, smell, and feel like you. That’s why it’s so rewarding and so disappointing. Because next to having children, it’s the thing you care most about. If you’re a driven person, my companies before my kids were literally my children. They looked, smelled, and felt like me. They disappointed me. They enthralled me, and I was up late at night, worried about them every night.

Copy LinkLeveraging AI in everyday life and business

BERMAN: As we sit here in the fall of 2024, I think legally we’re not allowed to have a business podcast without talking about AI. So, a couple of AI questions. One from Shelley, who emailed us asking us to ask you, “Aside from upskilling with AI, what should white-collar workers be doing to change their approach to both their jobs and the job market?”

GALLOWAY: I use AI a lot, and what I’ve said is AI is not going to take your job. Someone who understands AI is going to take your job. So, I’ve used AI for every component of my job, and I find it can’t replace anything. When I first started playing with AI, I thought, “Oh, I just got a seven-figure book deal to write a book called The Algebra of Masculinity. I want to write the first chapter and the last chapter, and I want the middle 10 chapters written by AI with really thoughtful prompts.” And it is what it is. It comes back very anodyne. It comes back like a GPU wrote it. It’s just not going to work.

But I can type in, “Give me 10 rites of passage from boyhood to manhood across different cultures,” and seven of them I knew, but three of them I didn’t. Then I’ll do a deep dive on the three. Or it can produce a board deck for me to present to a board of a company I’m running, but after I do the deck, I can feed it into AI and say, “Pretend you’re a Tier-1 VC who is a bit of a hard-ass and is very focused on shareholder value through technical innovation. What are likely the questions I’m going to get from this person?” And you upload.

So, I think the way I use AI is a thought partner. It doesn’t replace anything I do; it’s just a thought partner. What I would say is just start using it, and your own mind will start figuring out ways you can incorporate it. You’re the warrior. This is a weapon, but you’re the warrior. So, you just want to become masterful with this weapon, and you want to make sure you don’t show up on horseback when everyone else is in Panzer tanks.

But I don’t have any blinding insight around what components of your job it’s going — people should let it write stupid or fairly innocuous emails, but don’t get too used to it because it does write like a computer. I would say try to take 15, 30, 60 minutes a day, even if it’s spending time with your kids to try and time sneaker drops — which I’m doing with my 14-year-old — using AI. Just get competent with it.

BERMAN: My 14-year-old and I planned a spring ski trip by asking AI to compare the last 10 years of weather data to last year and project where we were likely to have the best skiing conditions in the western half of the United States. I love that personal example, and it worked out great. And I love the example of doing it with your kids, getting them comfortable with the tools when their schools are largely banning the use of them.

Copy LinkWhy healthcare is poised to be disrupted by AI

Scott, the other AI question we wanted to ask came in from an audience member named Julie on LinkedIn, who is curious about your take on AI and an agentic future for the business of marketing — the challenges and opportunities of using AI agents when it comes to brands. Curious for your take on that.

GALLOWAY: I think that AI — the biggest impact AI will have around industries and I guess this has to do with chatbots is going to be in healthcare. When I think about my litmus test for evaluating how disruptable an industry is, I look at its price increases relative to inflation and whether there’s been the underlying innovation to support that increase. The two sectors I see are most disruptable by those metrics are healthcare and education.

Healthcare is 17% of our GDP. A mother whose child suffers from diabetes spends five months of her life managing that child’s healthcare. And it strikes me that AI and chatbots should be able to help her navigate the health insurance, the referrals, the prescriptions, the delivery of the medicine, if and when she should actually go to the doctor, you know — home glucose monitoring, all that stuff. Give her back two, three, four months of her life.

I don’t think AI is going to reduce healthcare costs. I think what it’s going to do is give people back time, which I think is probably even more valuable.

Copy LinkHow to increase voting in the U.S

BERMAN: Noah Kagan, an entrepreneur from Austin, wanted to know, as we sit here — you and I are talking, I believe, 43 days out from the election, and roughly half of eligible Americans are not going to vote in this election. How do you think about leveraging technology to get more Americans both to register to vote and actually to cast a ballot?

GALLOWAY: Well, it’s easy: put it on phones. Bradley Tusk wrote an entire book on this — voting on phones. But it’s not going to happen because it would benefit Democrats because when the number of people voting goes up, it’s good for Democratic candidates. When the number of people voting goes down, it’s good for Republicans because old people, who tend to be more Republican, tend to be very good at voting.

So, there are too many people who would just find reasons for why voter fraud, or whatever it is. But if you wanted to get 80 – 90% of people voting, just make it easy and have Apple design an interface. Put it on Spotify or whatever, and elevate it every day in people’s algorithms: “Want to vote? Just click here for yes.” And so make it more accessible.

At the same time, though, it’s natural selection. Are the 50% who aren’t voting — should they not vote? I find it so weird that the media is constantly talking about undecided voters. The media and candidates, as a general cardinal rule, never say anything negative about voters. To say you’re an undecided voter at this point is, in my opinion, saying, “I’m a village idiot.” If at this point you haven’t figured out enough to make up a decision between these two, whatever way you’re going, I just don’t get it.

What? Do you drink gasoline for breakfast? Like, who on earth is still undecided? I just can’t figure — it’s so close, they’re so close. I can’t figure. It’s so close for me. Come again? So, this undecided — I just think it’s hilarious. I don’t know if these people want attention or if they’re pretending to be more thoughtful than they are. I don’t know. I can’t understand. I just can’t imagine, at this point, anyone’s still an undecided voter.

I think the majority of people are like me. In my 20s, I wasn’t obsessed with politics. I didn’t think about it until the week before the election, and sometimes I voted and sometimes I didn’t — if it was convenient for me.

BERMAN: Yeah, and I’ve got Bradley’s book teed up to read, so great recommendation. He’s a creative thinker.

GALLOWAY: There you go.

Copy LinkResponding to an entrepreneurial dillema

BERMAN: Last question from an audience member, and I’m conscious that this may be a hard one to answer with the amount of information they offer, but I think it’s an important one.

David emailed and said, “I own a fifth-generation business. We’re well established and respected, we’re over 100 years old,” and he’s been running it for the last 10 years. He’s been trying to grow it organically through acquisition, broadening services, but they’ve plateaued and even regressed. There’s a lot of long-standing workflow, institutional norms, etc., that are making it very hard for them to break through, and at times he just wants to replace most of the team and restructure the entire company. But he’s concerned about doing that in a company this old with this many loyal employees.

I know you probably have 100 questions before you could give him specific advice, but what steps do you think David should be taking to figure out what to do with his company at this point?

GALLOWAY: It’s so situational because it could be a group of employees who are very good at what they do, and market dynamics are bigger than individual performance. It might be in an industry where there are just headwinds, and there’s very little they can do about it other than potentially cut costs. He might have a bad culture with his group of employees that have become — where he just needs new people who are overpriced and not very good.

What I would suggest is someone like this needs a kitchen cabinet or a really talented board of directors who have a vested interest in their success but are, quite frankly, a little bit rapacious. They’re just going to look at the numbers — look at the growth projections, look at the value of the company — and are going to have enough experience to know: Your compensation costs are out of line, your vendor relationships are not strong, you’re too reliant on a small number of consumers, you’re in an industry that sucks. We need to either figure out a way to cut costs or raise the capital to try and invest in growth categories in your industry.

It’s just so hard to read the label from inside the bottle. One of the big mistakes I made as a young entrepreneur was feeling that leadership was me figuring it all out — that I needed to understand everything, that I needed to portray this image that I knew it all and was making the right decision. Once I made a decision, I was more interested in convincing other people that I was right than actually being right.

Where my companies did much better, as I matured as a manager, is when I brought in people who just had a lot more experience than me or could look at the company dispassionately and say, “You’ve spent too much money here. This isn’t working. Kill the product. Kill the thing. It’s just not working.” Or, “Yeah, you’re not investing enough in technology, it’s pretty clear,” or “You’re under-compensating your people in this space,” or “Why don’t you have any salespeople?” Or, “We’re in for a rough ride. You need to cut costs, and I’ll help you figure that out, but there’s just no getting around this.” It’s just very hard to do that in isolation, without external voices.

What I would suggest is you need a board of people who are emotionally or financially invested in the success of the company but have enough distance from it to say, “Boss, you’re the problem.” Eventually, you get a bad king — you need to bring in a professional CEO, right? You know, William Lauder around Estée Lauder, and the family said, “Okay, we need to bring in an outsider.” With a family-run business, I think it’s especially important that you have a kitchen cabinet or a board of directors or advisors that can give you no-mercy, no-malice advice.

Copy LinkBook recommendations from Scott

BERMAN: Great. Last question, Scott. You talked about being open and vulnerable, especially as a white man in this world. Is there something that you’ve read that has inspired you to rethink your life or to talk more openly about what’s going on and the real stuff?

GALLOWAY: There were some seminal books growing up. I read The Winds of War — I thought about World War II and The Diary of Anne Frank, and it was the first time I had any sort of connection to my Jewish faith. But the author that really kind of made me just feel much better about the world was John Irving. He wrote these books about such strange people, and it’s like, “Wow, I’m not as messed up in the head as I thought I was. Everyone’s weird.” It gave me, as a young man — I was so insecure about my attractiveness, I was so insecure about sex, I was so insecure about how weird my family was. Then you read about a home for unwed mothers that provides abortions, or you read about a guy whose life changes because he’s hit by a baseball, and this man who has his ear bitten off by a dog and his mother gets assassinated — like, “Wow, I’m not as weird as I thought.” You know, I should have done this. I feel like I should have written him a letter saying, “You’ve made me just feel more comfortable in my own skin, recognizing my skin is no less or more strange than anybody else’s.”

BERMAN: Perfect place to wrap. Thank you, Scott. Appreciate you being on.

GALLOWAY: Thank you, Jeff.

BERMAN: There’s a reason Scott is one of the most popular hosts and guests in America. You may not always agree with him, but Scott’s unvarnished and deeply researched takes help us expand our own ways of seeing the world. He’s a unique and prolific voice in the business media ecosystem, and you can find his shows, The Prof G Pod and Pivot, wherever you listen to podcasts.

I’m Jeff Berman, thank you for listening.