The Prof G Pod with Scott Galloway
00:35:12 · Scott Galloway
And at some point, people want to recognize value from that equity, whether it's through some sort of secondary sale or something like that. So for me an exit is key, or a potential exit, is key to my ability to continue to grow a company because, you know, at Prof G Media, we have several podcasts that don't involve me much. And the only way we keep a Jess Harlov or my partner, Catherine Dillon, or Ed Elson, or our producers engaged is I give them large equity awards. And unless a transaction is a possibility, and it was a realistic possibility, I think I'm gonna lose them to someone else. I haven't... So for me, it's part of the business strategy is a liquidity event or a transaction is key to the compensation metrics for maintaining the best employees who want the life I have right now. Right? Whenever I run into... And I wanna I wanna get your take on this. I get a lot of calls from other small business owners in the services business, consulting firms, PR firms. And they sit down with me, and they go... And I'm not being humbled by her. They say, I admire your ability to sell and scale, and I'm having trouble creating an enterprise value. And I say, let me see your cap table. And then they act like I'm asking them to take off their clothes. I'm like, what's your cap table? And when they pause, I go, let me guess. You and one other partner own the entire firm. And they're like, yeah, but we're generous with these young employees, and they learn a lot. I'm like, boss, you're flying private. You don't think your employees maybe want one day their own home and see the whole... Your home in the Hamptons? The thing that stunts these small businesses at letter d, if they have product market fit and all that, is the owners are under the impression that the the the mid and lower level employees don't wanna be rich too. Yeah. They do. They don't wanna just make good livings. They wanna be you. They they wanna have equity. They wanna know that they might get outsized compensation. And this plague or this virus that infects a lot of really talented entrepreneurs is, I'm the business. They should feel fortunate to be here. They make good money. No. No. No. No. No. They wanna own two, 3% of this company. They want you to sell it for a shit ton of money, and then they wanna buy their own fucking house and watermill.
00:37:31 · Scott Galloway
And I find a lot of companies get stuck because the founders are under the impression that they're Jesus and everyone is acolytes that should be following them. Show me a cap table, and I'll show you the value system of the founders. Any thoughts, David?
00:37:47 · David Senra
[00:37:47] S2: I'm kind of obsessed with family businesses. So I think like the apex of entrepreneurship. I I mentioned James Dyson, you know. Yeah. He tried to to sell equity. He'd like... In his company, no... Like, no one... No investors would give him any money. No angels helped him. I mean, he had to put up, you know, his house for collateral. He could have been homeless. He had to literally get... Go into debt to build it. And then I have a friend of mine who, you know, is managing very large pools of capital and buys family businesses. And, you know, used to be a needle mover, used to be like a $500,000,000 business, and now he's got to buy, you know, billions. And he told me because he knows I'm obsessed with James Dyson's story. I've done, like, I don't know, like five podcasts on James Dyson's books, and then I actually had him... James on my other show. And so I talked to him about this. But he put a flyer out to to Dyson, you know, saying, you know... He he estimates that if if Dyson would ever sell, and, again, he's the only shareholder, that the business would go somewhere between 60 to $80,000,000,000. And so he put a flyer out. Hey, James. You know, we'd be interested in in, you know, acquiring your company. And he said... He paraphrased the response, which was, fuck you. This is a family heirloom. So James' point, which is like, already have more money than I have ever needed. I don't... I'm not doing it for money. He's literally obsessed with design and and and engineering and working in, you know, building physical things. But I spend a lot of time with, like, family businesses. And some of these businesses people have never even heard of. Many cases, the family owns a 100% of it. You know, they're essentially cash machines. They might manufacture a boring part that is key to some, you know, specific industry. You've never heard of them, but they've... Family's been pulling out 350,000,000 a year in dividends or something like that. I think working backwards from all this is just like... Just depends on... All the questions that we've been answering today is just like, really, the starting point is for person asking the question, person listening, it's like, you gotta know who you are and, like, what is important to you. You know?
00:39:39 · David Senra, Scott Galloway
I think me and you, Scott, come at things very differently where you're like, I'm worried about enterprise value. I wanna start... I wanna... Like, I like selling companies. Sometimes I start them from doing that. Mine is more of like just I'm I'm weirdly... I can't even know why I'm obsessed with podcasts the way I am. I just am. And so therefore, I want to prevent anything stopping me from doing that. I I think like there is no right or wrong answer. It's just like first, like, figure out who you are and like what's important to you. There's people that make a ton of money by owning tiny percentage of their company and giving it to a bunch of their employees. There's some that make a ton of money by owning a 100%, and there's everything in between that. So I think the right answer is just like dependent on the actual person. [00:40:21] S1: All right. Let's leave it there, David. David Senra is a researcher and historian best known as the creator and host of The Founders Podcast, where he reads and analyzes biographies of history's greatest entrepreneurs. David really enjoyed that. Thanks for joining us. [00:40:35] S2: Thank you so much, Scott. [00:40:38] S1: This episode was produced by Jennifer Sanchez, Laura Janier, and Asher Schwartz. Our editor is Brad Williams, Cami Reek is our social producer, Jubaros is our technical director, and Catherine Dillon is our executive producer. Thanks for listening to the Prof G Pod from Prof G Media.
00:40:38 · Scott Galloway, David Senra
[00:40:38] S1: This episode was produced by Jennifer Sanchez, Laura Janier, and Asher Schwartz. Our editor is Brad Williams, Cami Reek is our social producer, Jubaros is our technical director, and Catherine Dillon is our executive producer. Thanks for listening to the Prof G Pod from Prof G Media. [00:40:59] S2: Your sausage mcmuffin with egg didn't change. Your receipt did. The sausage mcmuffin with egg extra value meal includes a hash brown and a small coffee for just $5. Only at McDonald's for a limited time. Pricing participation may vary. Promotion pricing may be lower than meal pricing.