There's always going to be a selection

set. There's always going to be a velvet

rope around the hottest places, [music]

whether it's through pricing,

membership, or some sort of face control

outside. That's just the species. We're

competitive. We always want to upgrade.

[music] And so creating a natural

barrier to signal exclusivity creates

aspirational value and scarcity. It's

just a good business model. I worry

where do young people who aren't working

for a hedge fund or Google, where do

they go to meet? In today's office

hours, we discuss what really motivates

people, the US Canada innovation gap and

the growing role of exclusivity in

everyday life. Question number one, I

have not seen these questions. Our first

question comes from Reddit. Jackie on

Hudson says, [music]

"Hi, Prof. I'm writing to you about the

subject of motivation. As a mom of two

boys myself, I find that they are

surrounded by lots of distractions. Do

you think that desire is hardwired or

can be learned? I know not growing up

with a lot of money has been a huge

motivator for you. Is there common

ground that you see in many of your

young hires? I don't mean to abdicate

responsibility or rationalize them being

lazy, but uh I didn't get my [ __ ]

together until I was 25 and I had a

health scare in my family. Basically, my

mom got sick and was very motivating for

me. And what do you know? Science says

that the prefrontal cortex, the gason or

the co of the brain for a man doesn't

catch up to a woman's until the age of

25. What did help me was guard rails one

I had things that forced me to get out

of the house. So in college I could have

easily just smoked pot and listen tom

and Lloyd Cole and the commotions and

the English beat which are awesome which

are awesome and stayed in my fraternity

room or just occasionally gone on campus

but I joined crew and having to get up

at 4:45 in the morning and having to

push myself that hard and having the

guardrails of a varsity sport was really

helpful for me. getting a job where I

had to go into an office at Morgan

Stanley. I had to put on a tie. I had to

think, well, do I really want to have a

third drink when I got to get up

tomorrow at O Dark 100 and commute

downtown with a tie on and also having a

boss and having that intense

environment. I think you want to put

yourself in intense challenging

environments as a young man and I they

have to make that decision. You can prod

them, but that was really helpful. And

then going out with friends, being

social, and having a romantic

relationship was really important for

me. And not only was hugely beneficial

for me to have someone who who just

liked me a lot. I didn't have that

confidence until I had I think I don't

know, I had some of it for my mom, but

it was just very nice to have a

girlfriend. And also, she put guard

rails in place for me. You know, stop

smoking so much potter, I'm going to

stop having sex with you, which was very

motivating. What can I tell you?

Routine.

Get them out of the house. Ask them to

limit their screen time. Uh get them

involved or ask them to get involved in

as many things that gets them out of the

house. I don't care if it's a church

group, a nonprofit, volunteering,

for God's sakes, a job. Got to make some

money. If you're living at home, you got

to pay some rent. I don't care if it's

being a task rabbiter or you know ride

hailing. You got to make some money. And

I also find trying to emphasize fitness

for mental health. And also, I mean, the

reason why women are attracted to men

with muscles and are in shape is not

that they're attracted to big pecs. It's

just they're they're attracted to

competence and people who clearly can

commit to something and show some

discipline. I don't know if you have any

leverage over your boys. If they're

living with you and they're cashing your

checks, you have some leverage. You have

to pay rent. You need to get a job. But

I think structure for a young man is

super important. Specifically guard

rails and also their success is going to

be inversely correlated to the amount of

time they spend indoors. Trying to

encourage them to be out as much with

friends as much meeting people. So what

worked for me, sports, a job in office.

I think remote work is a [ __ ]

disaster for young men, friends,

relationships, and also just uh

incorporating exercise into my life. But

I think trying to prod them or help them

across those dimensions can be helpful.

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Question number two. Hi, Scott. I'm

Betty from Edmonton, Canada. At the

Toronto Pivot Live [clears throat]

event, Scott said that innovation

basically stops the Canadian border. My

daughter, who now lives in the US,

argues that Canada's stronger social

safety net kills ambition and makes

people less hungry to innovate. My

question is, how would you strengthen

the US social safety net without

dampening the country's innovation

engine or ambitious culture? And second,

do you think the US could adopt any

parts of Canada's safety net without

losing what makes its economy dynamic in

the first place?

>> Okay, so just some data. The US and

Canada spend about the same share of

their economies and social programs, but

they do it they spend it very

differently. Canada mostly uses uh

public benefits. The US leans heavily on

private ones like employer health

insurance and pensions. On average, a

family gets about $21,000 a year in

support from Canadian provinces compared

with about $12,000 a year from US state

programs. When it comes to startups, the

US massively outperforms Canada in

scale. Canada needs about 55% more

investment to produce a single big

startup success. And over the last

decade, US venture capital exits total

2.6 trillion compared to just get this

56 billion. So about 40 or 50 times the

outcomes of uh startups uh in the US and

the US produced more than 4,000 exits

over 10 million. Canada had fewer than

200. The trade-off is in security versus

upside. Canada offers a stronger safety

net that isn't tied to having a job. In

the US, healthcare and benefits are

often tied to work. So losing a job or a

startup can mean losing coverage, too.

America has more upside and Canada

delivers more protection in some. We're

more of winners and losers here. My

father used to say affectionately that

America is a terrible place to be

stupid. The safety net here is basically

a cement ground with spikes on it, but

your upside is kind of unlimited.

There's some other things at play. I

think I mean this is a multi-dimensional

issue. So think about who came to the

US. There were people trying to escape

religious persecution and they kept

heading west and you know might have to

eat their niece or nephew along the way

and that they got bogged down in the

Rockies and then what do you know the

most innovative companies and the

biggest exits in history are all on the

west coast and so we have just a

risk-taking DNA where people start crazy

[ __ ] that sometimes ends up being crazy

genius and because of the outcomes here

it creates a virtuous upward spiral

where there's just a tremendous amount

of risk capital that's drawn to the US

in the US there's $5 million

for every startup and in Europe there's

1 million so there's just more capital

here people are more willing to take

risks which goes to your kind of

societal dynamic and that is for example

in Germany biggest economy in Europe not

that innovative at least on the startup

scene specifically you can come out you

can get start getting some vocational

training in your senior year in high

school in Germany and go to work for a

middle what it's called a midsize

company in manufacturing make60 to

80,000 euros maybe your partner is a

nurse

make €120,000€140

and you can go to a beer garden that

also has a trampoline park and get a

reasonably priced apartment and have a

nice life. So the downside, you can have

a reasonably nice life, middle class

life on not a lot of money in Germany,

at least it was that way a few years

ago. I don't know if they've been

impacted by the same rampant inflation

we have around education and housing.

What that does is it creates a bit of a

disincentive around taking big risks. So

there's definitely a downside to a

social safety net and a lifestyle where

you don't need to take these risks.

Whereas in the US, everybody thinks,

okay, if I start the next big company, I

might in fact be on a boat with hot

models and be speaking to Andrew Ross

Orcin at the Dealbook Conference and be

doing ketamine with, you know, the

wealthiest man in the world. Whatever it

is, the upside here is just so huge that

people and the downside is so [ __ ]

ugly. And every day, 210 times a day,

you're notified by someone vomiting

their faux wealth on your phone. So, it

creates a lot of motivation. I also

think it creates a great deal of

anxiety. I'm not sure we should have the

same social safety net as Europe or the

US where people are somewhat doing

trade-offs around should I work, should

I not work. Universal childcare in my

opinion should be also a national

program because you can do it at scale,

deliver more efficiently, more

effectively and also draw more women

into the workforce or more domestic

partners or both both the husband and

the wife [music] or the husband and the

husband. There's my land acknowledgement

into the workforce. Uh because Americans

work. I think that's one of the reasons

why we're so successful as work is kind

of central to our brand even though only

160 million of 350 million Americans

actually work.

That was a lot. So, how do we relieve

some of the anxiety while not removing

the incentives? But I don't want this to

be a Hallmark channel. We do believe in

winners and losers here. And I I'm

actually a fan of not having the same

level of social safety net that

disincentivizes work as they have uh

sometimes in Europe and in Canada. At

the same time though, I don't think a

cancer diagnosis should mean that you're

about to go bankrupt. We'll be right

back after a quick break. Support for

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Welcome back. Our final question is from

Clay Davis on Reddit. They say, "What do

you think about the effects of private

clubs and the longtail effects of a

community having gathering places for

people of different economic means?"

That's a good question. Private me.

Okay, so just some data here. Demand for

private clubs is rising. About 60% of

clubs say they grew membership in 2022

and 2023. For example, Soho House with

over 180,000 members across 40 plus

locations. They've stopped admitting new

members in LA, New York, and London

because they're simply too crowded. And

now they're going private in a $2.7

billion deal after going public in 2021.

Which is interesting because the hard

part about this business model is it's

based on not scaling. It's based on

keeping it small. The membership clubs

should not go public because implicit in

going public is the notion that you're

going to continue to grow. Now, they

could argue they're going to grow

geographically, but the whole point of a

members club is that you want to get

into clubs that you shouldn't get into

and that everyone there is more

interesting, richer, or hotter than you.

That's the whole point of a members

club. Even so, the money is real. The

private club market hit about 32 billion

in 2024 and is on track to reach 59

billion in 2033, roughly 7% annual

growth, outpacing most of the

hospitality industry. So, I love this

conversation cuz I'm obsessed with these

things cuz I'm a what's the term?

Douchebag. I like to go somewhere where

I know I can get a reservation, where I

can get in, where the crowd is curated.

If that sounds obnoxious, yeah, but [ __ ]

it. I've worked really hard. What does

it mean? Look, it's capitalism and as

people heard or they want to divide into

little tribes. They want to find their

people. It starts in high school, then

it goes on to college. Basically,

basically, you know, life is just high

school with like different apparel in

different price points. So, this is

going to happen. It started in the UK,

these members clubs. It's moved to the

US. Look, they're going to happen. So,

to say you don't like it, well, you

don't like capitalism. Um, I do there is

a part of it that bothers me in the

sense that I worry where do young people

who aren't working for a hedge fund or

Google where do they go to meet when the

most quote unquote attractive or

fortunate or people with rich parents

get to go to these super cool places and

then the other 90% just don't have

access. And when I was in New York for

the first time when I was a younger man,

I remember going down to like the shark

club with our friends. We'd like plan a

strategy for how we were going to walk

up and what we were wearing cuz it was

face control which is obnoxious. But you

could potentially get in even if you

weren't they didn't have members clubs.

It was just you tried to get into these

clubs or you waited in line, try to

catch eye contact with the door man. And

there's a certain amount of skill and a

certain amount of and by the way a lot

of times I wouldn't get in, you know,

have you seen me? Anyways, but in a way

that was a little bit even more

egalitarian even the face control.

There's always going to be a selection

set. There's always going to be a velvet

rope around the hottest places, whether

it's through pricing, membership, or

some sort of face control outside.

That's just the species. We're

competitive. We always want to upgrade.

And so creating a natural barrier to

signal exclusivity creates aspirational

value and scarcity. It's just a good

business model. I've been approached

about starting members clubs. I'm not

interested in starting a members club. I

would consider starting a bar that was

relatively inexpensive where people

could just go and have a good time and

have good music and it was reasonably

priced cuz I think we need more third

places for people. And I was actually

thinking of investing in a company

called Putt Shack that also has these I

think they're called Wave Gardens

because I think we need more third

places for people to go with their

families or friends that are outside of

the home. A third place is technically a

place you don't work, you don't sleep.

So yeah, the fact that everything's

being sequestered behind a velvet rope

and young people have even fewer places

to meet if they're not killing it or

don't have wealthy parents, it bothers

me. So I what could we do about it? I

don't know. Maybe tax credit for third

places that aren't they're open to

everybody. So I think this is a problem

and it it trickles all the way down to

our social life, specifically these

clubs. So what do I think we should do?

Quite frankly, I think there should be a

new classification of I don't know what

you call it, private or like a new

douchebag tax. If you're a membership at

Shaar Go, you fly a private plane,

you're in private school, you pay a VAT

tax and that money gets reinvested in

education and third places for the

bottom 99 in that community. And that's

a progressive tax. I just wouldn't have

a problem with that. And I think you

could figure out the type of

establishment that qualifies for that

tax and then on the other side give tax

credits or exemptions to public schools

to third places that don't have any sort

of exclusionary element to them. [music]

So what's the answer here? Let's tax the

super rich and the places they go at a

progressive rate and then let's reinvest

in our public infrastructure such that

it's so [ __ ] good that more and more

of us have the same experience and

[music]

we're all invested in this experiment

called America. That's all for this

episode. If you'd like to submit a

question, please email a voice recording

to office hours.com. Again, that's

office hours.com. Or if you prefer to

ask on Reddit, just post your question

on Scott Galloway subreddit and we

[music] just might feature it in an

upcoming episode.