Rent freezes are just ridiculously hit

up your ass. Make no sense. Failed econ

one. State sponsored food lines, which

is what state sponsored grocery stores.

If there's one business we should leave

to the private sector, it should be

grocery. Is it a shitty low margin

business? And the idea that the person

from the DMV is going to oversee what

produce you have to choose from makes

absolutely no sense.

In today's office hours, we discuss my

take on New York City's new mayor, key

person risk as an employee, and whether

boarding school is worth it. Question

number one, I have not seen or heard

these questions. Question number one

comes from F. Sharpman on Reddit. They

say, "As a co-host of Raging Moderates,

what do you really think of a new mayor?

Both in terms of changing the economics

of NYC and as a potential model for

Democrats to learn from both emulating

and avoiding." Okay. some data on what

Mani the mayor has done so far. I'm a

Florida resident, so I'm speaking to

this as an outsider, if you will, is

probably his biggest policy win so far.

Mani partnered with Governor Hokll to

launch free child care for 2-year-olds.

I think that's wonderful. When I was a

resident of New York, something that

made me feel much better about the

incremental 13% taxes we were paying

while we were here, my three-year-old

four-year-old son at the time was speech

delayed. And story ends well, by the

way, just got into early decision to the

college of his choice. So obviously he's

he's thriving, but he wasn't speaking.

Totally freaked out. Lovely young woman

showed up twice a week and had him do a

series of things to try and motivate him

to start speaking again. And she was so

skilled and so smart and it was

sponsored by the state. Didn't cost us

anything. And I thought this must make

people feel so good about government.

There are some things the government can

do much better than the private sector.

And the Republicans love of the private

sector oftenimes makes a lot of economic

sense. I think most things should be

done by the private sector, but it goes

too far. And really what they're doing

is just cosplaying a love for lower

taxes and small government because rich

people can have their own government,

their own healthcare, their own

transportation, their own private

security, their own schools. He's also

issued an executive order to improve

conditions in homeless shelters and city

jails and move to end solitary

confinement at Rikers, enforcing a 2024

law banning it. This is a tough one, but

the worst thing you can do to a human

being or any mammal is to put them

alone. Put your dog alone and see what

happens. So I like that. initiated a $4

million pilot program for modular public

restrooms to improve access to

sanitation citywide. Okay, fine. 4

million bucks. See if it works. Launched

task forces to accelerate affordable

housing development and cut bureaucratic

delays. I love the idea of cutting

bureaucratic delays. I'll come back to

that. Publicly reaffirm New York

sanctuary city policies, which defines

his stance towards federal authority and

immigration enforcement. I don't quite

frankly know how I feel about sanctuary

cities. I think we should just have a

sane immigration policy that embraces

immigration but embraces legal

immigration. And I think if we had if we

did a half-ass decent job of

immigration, we wouldn't need sanctuary

cities. And that is you're empathetic

and you're thoughtful and recognize that

the ultimate secret sauce is getting the

best and brightest from around the

world, but it needs to be legal

immigration and that a lot of people

wait in line for years on end and go

through the right, you know, process and

cost to be here legally. I do. At the

same time, the Republicans turned and

Democrats turned a blind eye to it after

the last 40 years because the 20 or 30

million odd undocumented workers, by the

way, they're documented up the ass. They

have phone contracts, social security

cards, Netflix, driver's license. Why?

Because we want to make sure we can

document them to make money from them.

But we just don't want to go through the

process of admitting that we had the

most flexible and profitable labor force

in history called the American

undocumented worker where they would

melt into the country to pick our crops

and wipe grandma's ass and serve you

your Cobb salad for a fraction of the

cost that it would cost because domestic

workers don't want to roof. I renovate

houses all the time and I can tell you

no domestic worker wants to work outside

any longer and you think well it's

putting pressure on wages. No, you just

can't find domestic workers who will do

it quite frankly. Anyways, back to

housing. I think his ideas on housing

are pretty [ __ ] up. And that is if you

want to solve the housing crisis in

Austin rents have plummeted. Why?

Because they got rid of nimiism and they

replaced it with yimism. And it's little

tweaks. So for example, there used to be

a regulation that for every apartment

you had to have a parking space. It is

really expensive and difficult to build

parking. You have to go subterranean,

which is expensive, or you have to buy

more land. They got rid of that.

Effectively, what housing represents in

America is this [ __ ] awful,

unamerican rejectionism and lvmhing of

our society where once I have a degree

from an elite university, I want to pull

up the drawbridge and applaud the dean

and the basic ideology of making it

harder and harder to get in. When I

applied to UCLA, 74% admissions rate.

This year, 9%. Most alumni like that

because it makes their degree more

valuable. When people buy a home, all of

a sudden they become very concerned with

traffic and show up to local review

board meetings. Taking housing permits

out of the hands of bureaucrats, and I

say that affectionately, and putting it

into the hands of homeowners is one of

the worst things to happen to young

Americans. And what we've seen is an

acceleration in housing prices and an

acceleration in the cost of college

degrees. one, the best means of

establishing economic security, a sense

of family, and also the certification

you need to continue or to to thrive in

a capitalist society. And we've decided

to LVMH the whole [ __ ] thing. And

we've decided at universities that we're

no longer public servants for Chanel

bags and the same thing as infected

housing in Minneapolis. So what do you

do? You pass Yimi laws and you provide

tax credits to developers that make it

economically feasible for them to

develop. It's not a demand problem in

New York that is killing people and

creating a one-bedroom that cost $5,500

and creating only three classes of

people that live in New York, either

tech bros, finance bros or parents whose

kids are putting them through New York.

It's the fact that there isn't enough

supply. So you provide in addition to

regulation around yimism, you weaponize

the private development infrastructure

with tax credits that encourage a

massive amount of development. Rent

freezes are just ridiculously hit up

your ass. Make no sense. Failed econ

one. State sponsored food lines, which

is what state sponsored grocery stores.

If there's one business we should leave

to the private sector, it should be

grocery. Is it a shitty low margin

business? And the idea that the person

from the DMV is going to oversee what

produce you have to choose from makes

absolutely no sense. In some mi, there's

a lot Democrats can take away from him.

He was on message. He's young. Ran an

amazing campaign. weaponized social

media, stayed on message around

affordability and I thought he kind of

won the election in one moment. I was

watching the debate and I think the

moment the mom don kind of got wind in

his sales that took him to victory was

when he said uh when they were all asked

where would you go? What would be your

first place you would travel to after

being mayor and they all put on their

virtue signaling and said okay I would

go to uh Israel or Ukraine and he'd said

I'd go to Brooklyn or I'd go to Harlem.

I'm the mayor of the city. That was

absolutely the right thing to say. I

also think some people who immediately

want to call him or just think the worst

of him need to try and give him a

chance. Give him a shot. Be supportive

of him. So, I'm trying I'm purposely

trying hard not to [ __ ] post him.

Anyways, great city. I think this city,

whether he's good or bad, is going to

survive him. I think New York's in a

[ __ ] golden age right now. Anyways,

thanks for the question. Support for

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>> Question number two.

>> Hi, Professor Galloway. This is Tom from

London.

I recently left a very well- paid career

in marketing because I was bored out of

my mind and decided to join a tiny fivep

person consulting firm. The work is

incredible. The clients are global and

I'm more motivated than I've been in

years. My one anxiety is this. The

founder, my boss, is a once in a

generation hyperarism leader. He is the

product. If he got sick or decided to

walk away, I'm pretty sure the business

and therefore my job would disappear

overnight.

I see some parallels with ProfG Media.

So my question is, how do you think

about legacy and key person risk from an

employes point of view? And what

conversations should smart employees be

having to protect their future? Finally,

if we ever meet at Lore of the Land,

first pint's on me. Thanks.

>> L of the Land. This is a great pub

started by Guy Richie. Love the pub.

Happy to meet you there. Almost all

small firms have key man risk or key

woman risk. That's the nature of any

small firm, specifically a services firm

who controls or has relationships. I had

key I've had key man risk or key scout

risk at every firm I've started. At

Profit, my brand strategy firm, I was

the person that owned the relationships

with our biggest clients. At Red

Envelope, I raised all the money, at

least initially. At L2, I was better at

it. As I got older, I realized that the

key to scale is pretty simple, and that

is the team of the best players wins.

And I talked to a lot of founders of

services companies, and they'll say to

me, and I'm bragging now, Scott, you've

been able to scale your firm and sell

these things for a lot of money, and

we're having trouble doing that. And I

say, well, okay, show me your cap table.

And they say, what do you mean? I'm

like, your cap table? Who owns your

firm? I'm like, well, I own 100% of it.

I'm like, okay, that's the [ __ ]

problem. The best employees are the ones

that act like owners. That's how you

scale a company is you bring in a series

of owners. You think about the company

non-stop. And the only way to get people

to act like owners is to make them

owners. And that is by the time I sold

L2, I owned 40% and venture capitalists

and employees own the other 60. At

profit, I own 30% and venture

capitalists and my co-founder and

employees own the other 70. At PropG

Media, as of last year, I didn't think

this company was going to have

enterprise value because of the things

you're talking about. And then as of

last year, the company is like quite

frankly scaling and my Greek glands are

going. I'm like maybe there's enterprise

value here. So I've started giving away

equity. If you're in a small company,

there's just no you're just going to

have key man or key woman risk. And the

key is does that person they don't have

to be nice. You don't have to have

friendship with them. But you have to

believe that they have a vested interest

in your success. And the easiest means

of evaluating that is that are they

giving you ownership that vests over

four years? Are they giving you equity?

Like just don't talk to me if you're a

service owner. You don't understand why

you can't attract good people when you

want to own 100% of the firm. Yeah. No

[ __ ] [ __ ] People People don't People

aren't born just to make you awesome and

rich. Anyways, I would just have a

transparent conversation. I don't think

there's a lot you can do. One, do you

think this person is going to stick

around? Do you think this person

demonstrates excellence? Do you have

upside relative to this person? So,

you're taking risks, but in a small

company, you're just going to have to

endure that key person risk. The

question is, are you being compensated

for that risk? because typically the

upside is greater. But from a founder

standpoint, the way you diversify away

from yourself. I I think about this

every day is new products, outstanding

people who kind of carry the ball. By

the time I sold L2, we had several

people including uh people who now work

at this company at Propy Media who were

handling clients, handling revenue lines

distinct of me without me. And one of

the keys to we got a multiple of eight

times revenues when we sold L2. And one

of the keys to that was I showed them my

calendar and went through twothirds of

our members. We called it membership

instead of consulting to get recurring

revenue to get a higher multiple. But

twothirds of our quoteunquote members

had not seen from or met with me in the

last year. And that's how we convince

them. But how do you do that? You just

hire amazing people. That's the key to

scaling beyond key key person risk. And

again, you're taking more risk than at a

big company, but you also should be

getting compensated in the form of an

equity grant. Thanks for the question.

We'll be right back after a quick break.

Support for today's show comes from

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Welcome back. Our final question is from

Beina 007 on Reddit. They say, "How did

you decide to send your kids to boarding

school? What are the pros, cons? We are

at that decision point and would

appreciate the advice. That's a great

question. It was sort of sold to me by

my son and his mom. I was not a fan of

it and quite frankly I hold some uh

resentment and regret around the

decision because I just wasn't ready to

lose my boy. And at 14 he was gone. He

was sold to me that he'd be home on

weekends. He's home Saturday afternoon

cuz he plays football Saturday morning.

And even when I didn't see him, I liked

knowing that he was upstairs. But here's

the thing, being a good dad is it's not

about you. And he's independent. And

from the moment he saw these boarding

schools, he just fell in love and wanted

to do it. And generally speaking, almost

everybody I know who went to boarding

school loved it. So I think it's good

for the kids. I think sometimes it's

hard on the parents. Although I do think

some parents just outsource parenting to

boarding schools. I personally, to be

honest, was hard on me. It's been great

for him. I mean, the boarding school he

goes to has something called the Wall of

Honor, and it's got 53 names of it, and

it's carved into marble all these names

who died in World Wars one and two. He's

basically living in a fraternity with 30

other guys, and his friends are great

kids. The quality of the education is

amazing. They're on their own. They got

to start managing their own [ __ ] and

making their own bed or not, getting up

on their own. I just think if you have

an independent kid who wants to go to

boarding school, you take a tour. I

think that it's just such a personal

decision. I don't have a checklist for

who should go to boarding school and who

shouldn't. And obviously, this is a

question of privilege because a lot of

people don't have the money to go to

boarding school. I would have been it

wasn't an option for me. I would have

benefited hugely from the character and

camaraderie of a boarding school. The

pros is that they are pros developing

young men and women. They're good

boarding schools. That's what they're in

the business of. Full stop. They're just

very good at what they do and they have

the resources to educate these kids in a

rigorous fashion and give them character

and give them just amount of the right

amount of fun and when they have to turn

in their phones and when they don't. The

cons are are really really simple. Your

kids out of the house before you want. I

mean, there's no getting around it.

That's the con, you know, all caps is

you lose your daughter or your son

sooner than you were expecting. Or at

least I did. I think most kids, if I

look at my son's friends, are really

high character kids who've really

benefited from the experience and have

had a a great experience. You know, I

suggest you just talk about it

thoughtfully with the kid. Does is the

kid up for it? Does he or she want to do

it? Go spend some time at the school and

just make a decision as a family. I I

don't want to propose an algorithm that

gets you to a yes or a no. I think this

stuff is so personal. I did coach a

friend of mine whose kid was at boarding

school and was miserable. I'm like,

okay, the first 30 days, yeah, it

wouldn't kind of be weird if they were

miserable or homesick. But if you're 3,

four, 6 months into this thing and the

kid is miserable, then it's a doover.

You put them somewhere else or bring

them back home and this is what they did

and now the kids's thriving at a local

school. I think that parents have a

pretty good sense for this if you're

really engaged in your kid, especially

mothers. Yeah, that's sexist. I'll stick

to it. I think mothers are more

intuitive about how their kids are doing

than dads usually. On the whole, it's

been a positive experience for us. It's

been in the short term a negative

experience for yours truly, but my son

is thriving and developing into a lovely

young man. So, I guess it's a hands down

it's a net positive. Sorry, I can't be

more specific here. Thanks for the

question. That's all for this episode.

If you'd like to submit a question,

please email a voice recording to office

hours.com.

That's office hours.com.

Or if you prefer to ask on Reddit, just

post your question on the Scott Gallery

subreddit and we just might feature it

in an upcoming episode.