The Prof G Pod with Scott Galloway
00:19:55 · David Senra
This is when he first launched, and you could see the result, which is your... You... The dirt comes into the canister. So the dirt is hidden in in his competitors. Now I say, oh, I know it's working because I... Look at all this dirt that's coming in. It's in this canister. So I think he has the the the best framework for this. It's like you have to... There's no point in an existing market to just be the tenth or twelfth or fourteenth player. You know? All the profits, all the revenue, you know, power laws rule everything around us. It's gonna be dominated by the by the first, the second, or the third best company. So you don't... And he even says like, you don't even have to be better. His his happened to be different and better, but you can build a business just by being different. So that would... I think that's the way that he would answer that question.
00:20:39 · Scott Galloway
[00:20:39] S1: Yeah. I think that so total addressable market competitive dynamics. To a certain extent, think those are questions better left to capital and VCs. I think as an entrepreneur, your challenge is to find something you think you're really good at. And that is, you know, JCPenney's and Sears seemed dominant when Walmart was started. It didn't it didn't make a lot. It wasn't like you looked at a whiteboard and said, oh, I'm gonna open a low cost retailer that has supply chain competence in small towns that aren't being served by department stores. I think you probably decided I have these skills around this. I think as an entrepreneur, you wanna say, what am I really good at? Because even in industries that are dominated by big incumbents, the great thing about big incumbents is they have a tendency to overpay for anyone that seems like a threat. You don't have to go public and be Google. You just might wanna be a company that Google acquires. So I would more focus as an entrepreneur. I mean, if you say I want to start a search engine, you may want to check-in with some people around can you raise the kind of capital to start a search engine? But Walmart comes in, okay, retail's And then Amazon comes in, Amazon's over. No, especially retail, whether it was Lululemon or Sephora carved out incredible niches because they brought something, and like you said, the word used is differentiated. I think the challenge as an entrepreneur is what can I do that is just really different? I looked at this clothing brand called something Aces, or it's just this weird motorcycle brand, but they charge like $2,500 for a hoodie. And they charge, you know, 4,000 for a pair of jeans. And I look at this shit and I go, this makes no fucking sense for me. But these people had a vision for something entirely different. And they're obviously very good at it, and genius designers and merchants, and they built something worth tens if not hundreds of millions of dollars. So I'd be, you know, trying... An entrepreneur who's trying to assess is being led to a business based on the total addressable market in the white space, no. What are you amazing at? Like, what can you do better? What do you think you could do better than any... Are you truly artisanal and just are passionate about candle making? Do you have a vision for a different type of stationary?
00:22:57 · Scott Galloway
Do you think you understand technology and health care? So I think as an entrepreneur, let capital... And and have a series of advisers that can tell you when you're being a little bit, I wanna build nuclear submarines. Alright. Okay. Maybe that... Maybe we wanna think this through. But in general, I think the question for for employees zero one and two is, what could we do that we would do that we just... We'd be amazing at, that it would be hard for anyone to replicate? That right out of the gates, people would be really into our product because we can build something truly differentiated, as opposed to trying to pick a sector and then go into that where you just build a good product. Like what are what were you born to make, so to speak? Any closing thoughts before we move on?
00:23:44 · David Senra
[00:23:44] S2: I I agree with your point wholeheartedly. This idea is like, I'm gonna put it on a whiteboard. I'm gonna be like, oh, this is the the the TAM. Use... Sam Walton is a perfect example. Obviously, he he gave away the equity to his kids before it was valuable. But if, let's say, you know, all the wealth came from one person, which was him, if it was concentrated in one person today, it'd be it'd be like... I think the market cap was something like the family... Walton family wall to be something like $500,000,000,000. And he had one little store for... He had a... This was retail. This wasn't even discount retailing, which is what he got into with Walmart. He had one store for the first five years. He was just obsessed with retail. He actually... You you mentioned JCPenney and Sears. Sam Walton actually worked at JCPenney. He met the founder of JCPenney. He... The founder of JCPenney was a mentor of sorts for Sam Walton. And so what he learned by... He's like, hey. I really like retailing. I think I'm really, really good at retailing. And then he just stuck in that for the next fifty to sixty years, so much so that the the best opportunity of his life came twenty five years into his career, which was Walmart. He was in retail for, you know, two decades before he started his first Walmart. And I think you just nailed the... It ties to the differentiation point. It's because he's like, hey, discount retailing seems to be the future. I should get into this. What are the existing players? And at that time, Kmart was the biggest one. And so Kmart was doing these discount retailers, but they were in huge metropolises, huge cities. Sam's like, well, I don't have any money. I'm underfunded, and I don't know anything about big cities. I don't want to compete head on to to with Kmart. Why don't I try discount retailing out in these little towns of 6,000 people, of 2,000 people, of 10,000 people? And he writes in his autobiography, he goes, turns out there was way more business in these little towns than we could have ever predicted. So much of this stuff is not predictable. You can't sketch it out into a formula, you know, on day one. You just have to pick something. Think your advice is great. What do you like to do? What are you good at? And just stay in the game long enough to get lucky.
00:25:33 · Scott Galloway, S3, David Senra
[00:25:33] S1: We'll be right back after a quick break. Ad[00:25:41] S3: This episode is brought to you by Google Chrome. You think you know a browser, but Gemini in Chrome, that's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50 page restoration block or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses, setup required, compatibility, and availability varies 18 plus. [00:26:08] S1: Welcome back. Question number four comes from a x n r zero on Instagram. How do you decide when it's the right time to sell a company or a business? I have some thoughts here. Go ahead, David. [00:26:20] S2: I think you should go first because you sold businesses.
00:26:24 · Scott Galloway
[00:26:24] S1: Simply put, do not trust your emotions. As a matter of fact, go the opposite. On when to sell or not sell, go the opposite way. Cause this is what happens as an entrepreneur. Oh my gosh, business is awesome. Let's hold on and ride this out. Of course we're not gonna sell. Things are just jamming right now. Oh wait, things are wobbly. Our... The the economy looks wobbly. Our business is wobbly. I got some key people who are threatening to leave. Oh god. We should sell. The opposite. Acquirers are smart. When you're jamming and it's so bright outside, you gotta wear shades, that's... If you get an inbound offer, that's when you hire a banker. Now having said this, I've sold companies for hundreds of millions. I've never scaled a company to billions. Because once a company is really jamming and I get an offer, I start thinking about selling. Because I think it is hard to get... There's infant mortality, but also there's a lot of death among adolescents. And I was always... I had a huge fear of being the guy who built a company with a 100 or $200,000,000 in an effort to go to 1,000,000,000, gave it all back. That's my biggest fear, or one of my bigger fears. So what do you do, or what I've done? When things are jamming, that's when you take the calls. Because acquirers are smart. And when they come in and do diligence and see, oh my gosh, the revenues are up 50% this year, and no one has left in a year, they have almost perfect retention, and their clients love them, and their profitability is reaching scale, that's when you sell. Because whereas when things are shaky, the acquirer figures it out really fast. And your emotions are your enemy. You wanna hold on and keep on trucking when the business is good? I believe that's actually the best time to sell. And then when things aren't great, you've gotta hunker down, make hard choices, work your ass off, and right size the company. But that is not the time to sell because selling is an enormous distraction. And when the company isn't doing well, if you're distracted through a sales process and you don't have capital, it can end up being the walking pneumonia that takes the business down. Because if you don't get sold, you were distracted, the business was hurting to begin with, and you can you can really, if you will, fall into a bit of a downward spiral. So in sum, don't trust your emotions.