The Prof G Pod with Scott Galloway
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.
00:28:50 · Scott Galloway, David Senra
When the business is jamming, that's the time to sell or consider a transaction versus when the when the business isn't doing that well. Thoughts, David? [00:28:59] S2: So I would say the... To the degree that... I mean, there's obviously a ton of entrepreneurs that listen to both my podcasts all over the world. To the degree that I have any influence on this, I'm kind of like anti start scale sell. Yep. I think pod... I think podcasting is my life's work. I've been doing it for over ten years. The first five and a half years I was doing it, no one even listened at all. Mhmm. People are always like, oh, if you love what you do, you know, they [00:29:22] S1: The money will follow. [00:29:24] S2: Well, I was I was gonna say something else. It's just like, well, if if you love what you do, you do for free. It's like, No. I paid to podcast. [00:29:31] S1: Yeah. It cost you money. Well, that's being an entrepreneur. You write a check at the end of the month.
00:29:35 · David Senra
[00:29:35] S2: Yes. My savings went down every month. And I was like, no. I I I just believe I'll figure out the business model, you know, and things will turn around. It took me five and a half years to do that. So what I would say is like there's countless examples of people selling and they're very happy. It sounds like in your example, know, obviously, I think you'd fall into that category. I would offer some other... Like, one of the greatest autobiographies I ever read was the guy that that started Trader Joe's. And the book is called, I think, Becoming Trader Joe. And he loved Trader Joe's. Like, he built a cult following. It was his life's work. I think in the seventies, things got really shaky. The interest rates were high. There was the the oil crisis, and he decided in, like, kind of like a... In a panic to sell Trader Joe's. So 90% of the book is him developing Trader Joe's, loving it, you know, being completely obsessed. Then the last 10% is after he sells. He starts to live like another three or four decades. He's like, yeah. I did some consulting. I invested in real estate, wrote some angel checks. And then the very last page, he goes, I have to tell you something. Have to be honest with you. I regret selling... You know, essentially, he was the biggest regret of his life. I had to live with that, you know, for multiple decades. And he goes, thanks for listening, and he signs off. I think his name is Joe Coulombe or something like that. Book comes out, dies the next week. And the reason I bring up that book is I think that that book is actually a service to future generations of entrepreneurs because a lot of people say, yeah. But you got all this money. Yeah. He was just like... But the money wasn't what I was going after. He was just like, I had a business that I love. So I think you have to ask yourself, one, like, why are doing what you're doing? If it's economic security, then, start, scale, sale is a hell of a good path to wealth generation. But if you if you think this is your best idea in your life's work, I would say never sell. There's Ted Turner's autobiography when he sells his media company. He can't understand after he, you know, gets a bunch of money, gets billions of dollars, why they're not listening to his ideas and then eventually kick him out of the company. And they're like, yeah. That's what the money's for.