Scott Galloway walks through his entrepreneurial history — e-commerce companies, Red Envelope’s bankruptcy, and finally selling L2 for $158M — and reflects on how he’s built real wealth through investing rather than operating businesses. Sam opens up about his own $20M exit at 31, and both admit they still feel financially insecure despite their wealth. Shaan is the odd one out — he’s emotionally healthy about money.
Speakers: Scott Galloway (guest, NYU professor and entrepreneur), Sam Parr (host), Shaan Puri (host)
Scott’s Entrepreneurial History [00:00:00]
Scott: I started an e-commerce company. I wanted to be the Walmart of pet supplies. I put a million bucks of my own money in. I sold it for like a million and a half, so I made some money — not a lot. I invested — or I started another e-commerce company. I started a travel site, sold that for a little bit of money. Then I started a company called Red Envelope, which went public on the NASDAQ in 2002.
Because I was young and dumb, I kept investing. I got in a war with the board, did a proxy fight, took over the board, and put more of my money in. Then 2008 came. There was a UPS strike and a software malfunction at the warehouse where we sent 10,000 gifts to the wrong addresses over the holidays. Then a Wells Fargo analyst — who was like 14 — decided the credit crisis was coming and pulled our line. My stock went from seven bucks a share to zero in about 11 days. The company declared chapter 11, and I lost pretty much everything.
Financial Anxiety and the Tipping Point [00:02:00]
Sam: Do you remember the inflection point where you felt financially secure? Not bulletproof — but where you thought, “Okay, this feels different”?
Scott: I still haven’t hit that point. I’m still very anxious about money.
I like to be very open about money, because I think that not talking about money is basically a decorum promoted by the incumbents and the wealthy — so you don’t understand how much money wealthy people have. It keeps poor and middle-class people under the illusion that they should be paying 45% taxes while wealthy people are paying 17%. I think it’s important to be transparent. I talk about how much money I’ve lost on investments, how much I’ve gained, my tax rates — all of it.
I’m not obsessed with money, but I think about it all the time. I’m trying to get a lot more. I’m giving it away. Five years ago I decided I was going to give away every dollar I made in current income, because I wanted to start catching up to the non-philanthropic Scott from the first 45 years of his life.
But I’m still trying to make a ton of money. I still feel financially very insecure. I still worry about a recession becoming a depression — and I’m the guy who’s lost it all a couple times. I sleep with one eye open.
The Numbers: How Scott Built (and Lost) His Wealth [00:04:30]
Scott: I sold my first company for $28 million. By the time I split it with my partner and paid taxes, I ended up with a few million dollars. Red Envelope — a few million there. But I always seemed to find a way to lose it.
I was able to start again because I never had debt. I’ve always lived below my means.
The big win was selling L2. I thought, “Wow, I can buy a plane” — that was not in reach before. That was the one where all the moons aligned.
Sam: What did it sell for?
Scott: $200 or $300 million?
Sam: No — it sold for $158 million. But we’d only done one round of venture capital, so the common shareholders — I was the largest equity owner. Between me and the top six employees, we probably owned 70% of it. That was a lot of money for me. I’d never had that kind of capital before.
And then getting to invest that in the middle of a bull market — we sold in 2017 — I’ve actually made more money investing than I have from my businesses. The ability to create an army of capital, even if it’s only $50 or $100 a month — put it in a tax-deferred or tax-efficient vehicle, diversify it, and let time take over. That’s where I’ve built real wealth.
Sam’s Exit and the Scarcity Mindset [00:07:30]
Scott: This doesn’t quite apply to Shaan, because Shaan is not worried about money at all. He’s got what I call good emotional health. His parents did him well. But Sam — I sold my company two or three years ago and made a fair bit. Now you go.
Sam: I’m naked here.
Shaan: What did you make? Yeah, let’s go, Sam.
Scott: He’s hesitant. He’s worried about people listening.
Sam: At the end of the process, I walked away with about $20 million. And I was 31 or 32.
Scott: You should be extraordinary. Unless you really screw up, you should be much wealthier than I am by my age. To get that kind of capital at that age and let it compound —
Sam: I still feel the same, though. I felt awesome for a minute and then I felt shitty. When I see world events — whatever happens every six months — I’m like, the world’s going to end. I do an 80/20 index funds and bonds. Shaan makes fun of me.
Shaan: That’s exactly what you should be doing right now.
Sam: And then I own HubSpot stock and Airbnb stock. That’s basically my portfolio. Shaan makes fun of me — he’s like, “How are you still feeling insecure?” I’m like, dude, I’m broken. It doesn’t matter how much therapy I go to. I have a scarcity mindset and I’m broken.
Scott: I’m the same way. When you talk about being worth $100 million-plus and not feeling secure — Shaan is like, “Man up.” And I have the same thing. I can’t. I’m weak.