Uber’s Potential Acquisition of Expedia, Why Is Europe Always Lagging Behind the US? and How to Outsource to Grow Your Company

Summary

The Prof G Pod with Scott Galloway: Episode Summary

Episode Title: Uber’s Potential Acquisition of Expedia, Why Is Europe Always Lagging Behind the US? and How to Outsource to Grow Your Company

In this episode of The Prof G Pod, hosted by Scott Galloway and produced by Vox Media Podcast Network, listeners delve into three pressing business topics: the rumors surrounding Uber’s potential acquisition of Expedia, the economic disparities between Europe and the United States, and strategies for outsourcing to scale a business. Scott provides his incisive analysis, blending business acumen with candid advice to entrepreneurs and professionals alike.

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1. Uber’s Potential Acquisition of Expedia

Timestamp: [02:25]

Scott opens the episode by addressing a listener’s query about the speculation that Uber might acquire Expedia, a move that would signal Uber’s continued diversification beyond its core ride-hailing services. Referencing a report from the Financial Times, Scott elaborates on the financial feasibility and strategic implications of such a deal.

Key Points:

• Diversification Strategy: Uber has been actively expanding into various sectors, including food delivery (e.g., Postmates acquisition for $2.7 billion), logistics (e.g., Transplace acquisition for $2.25 billion), and international markets (e.g., Careem acquisition for $3.1 billion). Acquiring Expedia, valued at approximately $20 billion, would be Uber’s largest acquisition to date.

• Synergy and Integration: Scott posits that Uber’s strength lies in its user interface and deep consumer trust. By integrating Expedia’s travel booking capabilities, Uber could create a comprehensive travel app powered by AI, offering users personalized travel arrangements seamlessly within a single platform.

• Financial Considerations: Uber’s market capitalization stands at $173 billion compared to Expedia’s $20 billion. An acquisition would likely entail a significant dilution of Uber’s shares (~15%) to finance the deal, considering Expedia’s stock has appreciated by 24% year-to-date.

Notable Quote:

“Most acquisitions don't work out well. And the most valuable company in the world, Apple, effectively does almost no acquisitions because they see their culture as being very important.”
— Scott Galloway [05:45]

Scott underscores the challenges inherent in large-scale acquisitions, noting that cultural integration and overpayment are common pitfalls. He contrasts Uber’s aggressive expansion with Apple’s more conservative approach, which favors internal development over external acquisitions to maintain cultural cohesion and control costs.

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2. Why Is Europe Always Lagging Behind the US?

Timestamp: [06:46]

In response to a thoughtful question from Barton in San Diego, Scott tackles the longstanding debate over why Europe’s economic growth has trailed behind that of the United States, despite Europeans often enjoying a higher quality of life.

Key Points:

• Economic Growth vs. Quality of Life: Scott acknowledges that while Europe may appear to have a more secure and higher quality of life for the average citizen, the overall economic growth metrics are significantly lower compared to the US.

• Disparity in Wealth Distribution: He highlights that the US economy's growth is disproportionately driven by the top 1%, with this demographic owning 90% of the economy. Indices like the Dow Jones and NASDAQ reflect the performance of this elite group, giving a skewed perception of broader economic health.

• Cultural and Structural Factors: Scott attributes the US’s economic dynamism to its ingrained optimism, risk-taking culture, abundant venture capital (US startups raise five times more VC funding per capita than in Europe), and a natural resource-rich environment. He contrasts this with Europe’s more cautious approach, lower investment in tech subsidies, and less aggressive entrepreneurial spirit.

• Educational and Institutional Advantages: The US boasts world-class educational institutions and infrastructure that support innovation and economic expansion. Europe, in Scott’s view, would need to significantly ramp up government support for tech companies and invest more in engineering and innovation to bridge the gap.

Notable Quote:

“One of the unhealthiest metrics we have out there is the Dow Jones of the Nasdaq because it gives you the impression that the economy is doing really well. Well, guess what? The top 1% are absolutely killing it.”
— Scott Galloway [07:15]

Scott emphasizes the selective nature of commonly used economic indicators, arguing that they fail to represent the broader population’s economic reality. He advocates for a more nuanced understanding of economic metrics to appreciate the disparities within the US economy.

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3. How to Outsource to Grow Your Company

Timestamp: [14:24]

The final segment addresses an anonymous caller’s struggle with outsourcing in his property management business. Balancing multiple jobs, property management, and family responsibilities has led to increased stress and hindered business growth.

Key Points:

• Mindset Shift: Scott encourages the caller to recognize his success, noting that managing multiple properties and working two jobs places him in the top 10% of men in terms of achievement. He advises embracing stress as a natural part of the entrepreneurial journey, especially during child-rearing years.

• Delegation and Team Building: Scott underscores the importance of building a reliable team. He suggests being generous with exceptional employees, offering incentives like profit-sharing to foster ownership mentality. This approach not only retains talent but also distributes the workload, reducing personal stress.

• Selective Hiring: He candidly advises that finding the right team members requires diligence. Not every hire will be a perfect fit, and it's crucial to let go of underperforming employees promptly to maintain a high-performing team.

• Ownership Culture: By involving employees in the company’s vision and success, they are more likely to take initiative and contribute meaningfully. Scott stresses that greatness in a business is achieved through the collective agency of its members.

Notable Quote:

“Greatness is in the agency of others. Focus on finding the right others and keeping them.”
— Scott Galloway [15:19]

Scott emphasizes that scaling a business is less about the founder’s sole efforts and more about assembling and nurturing a capable team. Delegation is not just a strategic move but a necessity for sustainable growth and reduced personal stress.

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Conclusion

In this episode, Scott Galloway provides a comprehensive analysis of Uber’s potential strategic moves, the economic dichotomy between Europe and the US, and practical advice on outsourcing for business growth. His insights blend macroeconomic perspectives with actionable entrepreneur guidance, making the episode valuable for business leaders, investors, and anyone interested in the dynamics of modern economics and corporate strategy.

Scott wraps up by reaffirming the importance of strategic thinking and adaptable leadership in navigating the complexities of today’s business landscape.

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Notable Takeaways:

• Strategic Acquisitions: While large-scale acquisitions like Uber potentially acquiring Expedia can offer significant diversification, they carry risks related to cultural integration and financial dilution.

• Economic Indicators: Traditional metrics may obscure underlying economic disparities, highlighting the need for more representative indicators to gauge true economic health.

• Entrepreneurial Growth: Successful scaling hinges on effective delegation, building a reliable team, and fostering an ownership culture among employees.

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Quotes with Attribution and Timestamps:

• Scott Galloway [05:45]: “Most acquisitions don't work out well. And the most valuable company in the world, Apple, effectively does almost no acquisitions because they see their culture as being very important.”

• Scott Galloway [07:15]: “One of the unhealthiest metrics we have out there is the Dow Jones of the Nasdaq because it gives you the impression that the economy is doing really well. Well, guess what? The top 1% are absolutely killing it.”

• Scott Galloway [15:19]: “Greatness is in the agency of others. Focus on finding the right others and keeping them.”

---

For more insights and in-depth discussions, listeners are encouraged to subscribe to The Prof G Pod on their preferred podcast platform and engage with future episodes for continued learning and business growth.

Transcript

[Current Podcast Host]

Support for this episode comes from the Current. The Current podcast is back with an exciting new season featuring marketing executives from the world's most influential brands. Tune in to hear what's driving conversation in the fast moving world of digital advertising with unique insights from brands as diverse as Hilton, Instacart, Moderna, Major League Soccer and more. And in this presidential election season, the Current explores when a national political advertiser like the National Republican Senatorial Committee and a major CPG brand like Hershey can learn from each other. Listen in and subscribe to the [e-mail] or wherever you get your podcasts.

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[Scott Galloway]

Support.

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[Scott Galloway]

This is the part of the show where we answer questions about business, big tech, entrepreneurship and whatever else is on your mind.

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[Scott Galloway]

Please email a voice recording toofficehoursroft media.com.

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Again, that's officehoursoft media.com so with that first question.

[Ryan]

Hey Prof. G. This is Ryan. I'm coming to you from Denver, Colorado. I have a question just regarding the recent rumors that surfaced about Uber's potential acquisition of Expedia. Would love to get your thoughts on just the financial feasibility of this deal. Thanks for all you do Prof. G. I'm a weekly listener of all the pods and love the content you put out. Keep doing what you're doing.

[Scott Galloway]

Ryan from Denver, Colorado. Thanks for the question and the kind words by the way. I think just Colorado should run America. I think they do a great job there. A It's spectacularly beautiful. I just bought a home In Colorado. Anyways, where am I going with this? All right, so the Financial Times reported that Uber recently explored the possibility of buying Expedia, the $20 billion travel booking giant. By the way, they have a fantastic new CEO. They do a great job. I actually use Expedia. I think they are incorporating AI in very subtle ways to kind of remember who I am when I show up at the site. And they know my economic weight class, kind of tells I stay out. They do a very good job and I like kind of the ui, if you will. Big picture. This would be Uber's largest acquisition to date and would further diversify the ride hailing company. In the past few years, Uber has expanded into other businesses including train and flight bookings, food delivery, logistics and advertising. Some of Uber's deals since it went public in 2019 include its expansion into food and beverage delivery via the acquisition of Postmates for I think it was about 2.7 billion and Drizly for 1.1 billion. I bet they overpaid for that thing. Drizzly, 1.1 billion, really. It also went into the freight and logistics business through a two and a quarter billion purchase of Transplace. Uber also purchased Careem, a Middle Eastern ride hailing business for $3.1 billion. Wow, that's serious shit. So this is essentially companies can either expand horizontally or vertically and that is they can go after similar businesses or they can try and find, basically offer more businesses to the same consumer. I kind of like the idea of one app that uses AI and I say, okay, so tonight I'm going home to London. I like the idea of hitting the app and using AI. It says, okay, when do you want to travel? Da da da, how many people? And it kind of does the whole thing. It says, all right, these are the flights we think you'd want to go, these are the hotels we think you'd want to stay at. By the way, we're going to is asking you a bunch of questions. Once you figure it out and say I want this use voice enabled AI. We're going to set up the Ubers, we're going to set up the right seat for you on the plane because we know your preference. There's going to be a travel app that just takes you off the table. And I also think that Uber has such an incredible. Uber's primary asset is it has user interface and custody of the consumer. Incredible trust with I don't know, I don't know what they have 100, 200 million people also I would absolutely be going shopping If I was Uber's head of corporate development, right now the Stock is up 56%, meaning they're kind of playing with the house's money. And Expedia's market cap just under 20 billion. They probably have to pay 25 or 30. Their stock is up 24% year to date, but Uber's market cap is 173 billion. So you're talking about what is potentially probably about a 15% dilution for them to have those assets and those additional consumers. I do think there'd be synergy there. More Uber towards Expedia than Expedia towards Uber. Also, Dara knows the company really well. What are the successful acquisitions? Well, first off, very few of them, only one in three acquisitions works or pays off. Why? Because it's kind of the lazy CEOs way to greater compensation. What do I mean by that? All behavior in a company can be reverse engineered to the compensation of the senior executives. And the way compensation works for CEO is the following. The compensation committee looks at the compensation of CEOs in that industry of companies that size. So there is an incentive to get bigger. Also, there's an incentive to diversify into other fields such that it smooths out your earnings. And everyone's looking for the transformational acquisition that's going to do for their company what Instagram did for Meta or what YouTube did for Alphabet. Right. A great acquisition can be transformational, but you almost always overpay because the assets you want are expensive and they want a premium. They can only sell once. And they almost always, generally speaking, overpay for the acquisition. So most acquisitions don't work out well. And the most valuable company in the world, Apple, effectively does almost no acquisitions because they see their culture as being very important. They don't want to overpay and they'd rather build stuff anyways. In this instance, I think it's a really interesting idea. I like it. The dog likes it. Question number two.

[Barton]

Hey Scott, this is Barton in San Diego. I'm a longtime listener and I always appreciate hearing your good faith, well thought out point of view, even when I disagree. Something you bring up a lot is how Europe has stagnated economically while the US enjoys growth over recent decades. For me, it seems like the growth is mostly on paper and mostly for the rich, while the average European enjoys, in practice a much higher and more secure quality of life. What am I missing here? And what do you think the US can do to ensure that security while maintaining growth?

[Scott Galloway]

Barton, that is a really thoughtful question. And also I Just want to acknowledge there's some truth to what you're saying because most of our stats look at economic growth in aggregate. Look at household income in aggregate. First off, let's acknowledge the US has been driven by the prosperity of the top 1%. And I think one of the unhealthiest metrics we have out there is the Dow Jones of the Nasdaq because it gives you the impression that the economy is doing really well. Well, guess what? One percent of the American populace owns 90% of the economy. So essentially the Dow Jones Industrial Average and the NASDAQ are metrics on how well the 1% is doing. And guess what, 71 new highs this year. So, okay, spoiler alert. The top 1% are absolutely killing it. But also the American public lets it happen because one of our superpowers is our optimism. And people believe there's a shot they're going to be in the 1%. So how would you categorize or how would you summarize the American economy? I still believe that America is the place that if you're talented and want to go, flat out, you just want to run so fucking hard, you want to leave it on the field. You're not working to live, you're living to work. You want to be economically secure. You really want to go after influence, power and economic security. America is absolutely the best place. Things just go slower in Europe. Average incomes in Europe lag 27% behind the US with wages that are 37% lower. If you took out London, out of the UK essentially the household income is lower than it is in our poorest state in the U.S. mississippi. Between 2010 and 2023, the U.S. saw its GDP grow by 34% while the EU managed only 21%. So a lot of people say, what's the difference between Europe and the us? I mean, it's a few things. On a very base DNA level. The US is everyone who decided to leave and Europe is everyone that decided to stay. Think about that. The people who left. And by the way, they're selfish. My mom left two siblings that were still in an orphanage. Both her parents were gone. That was a selfish move. But she came to America and off a secretary's salary. My mom lived and died as secretary. But we as an upper lower middle class family, I think we had better lives than the majority of our family that stayed in the uk. Now why is that risk taking? Infrastructure, natural resources, incredible education, institutions, geographically blessed with friendly Canada to the north and harmless Mexico to the south. More oil reserve, you know, we're the largest energy producer in the world, largest shale, largest coal. I mean we're just so blessed we're one of the largest agricultural producers in the world that we produce the brightest minds. And not only that, the brightest minds in the world all have one thing in common, they want to come to the us so we're just blessed with a ton of attributes. And back to risk aggressiveness. One of the stats I love is that there are dramatically more per capita entrepreneurs in the US coming out of college. But even more importantly, we have the capital to fund their dreams. For every startup in Europe Europe there's 1 million in venture capital raised. For every startup in the US there's 5 million in venture capital. So we have five times the risk capital Anyways. Long winded way of saying I'm not entirely sure but I think it's about risk aggressiveness. It's about capital and some of the natural blessings we have. And if Europe wanted to inspire growth, they would need to have government subsidies to tech companies and also a bigger investment in a world class engineering educational institutions. Thanks for the question. We have one quick break before our final question. Stay with us.

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[Scott Galloway]

Welcome back. Question number three hi Scott, I'm in.

[Anonymous Caller]

My mid-30s, married and have a two year old. I managed three properties while working two jobs growing up. My parents always did everything themselves to save money, so I've had a hard time outsourcing tasks to contractors. Even though I know hiring help would make things easier, I tend to focus on money. I save doing it myself, which ends up taking more time and adding stress. It's becoming harder to manage, especially with the two jobs and caring for my toddler. I want to scale up and start investing in commercial properties, but the amount of work I already have is holding me back. Do you have any advice on how I can change My mindset to be more comfortable with the outsourcing so I can grow my business.

[Scott Galloway]

So anonymous, first off, you're a young man with who's raising a kid and you own real estate. This puts you in the top 10% of men in terms of your success. You're already building a future for yourself, for your family. So the first is, yeah, you're stressed out, but just be clear, don't be hard on yourself. You're doing really well. And if you are feeling stressed and occasionally sort of overwhelmed, that's kind of where you should be. The arc of happiness, where you have the Y axis is happiness and the X axis is age. It looks like a smile. And that a 0 to 25 is beer prom, you know, making out, it's a lot of fun. Star Wars 25 to 45 is what I call the shit gets real part of your life. It's hard economic stress. Kids are stressful. I mean, I know it's supposed to be all like fun and hallmark moments and things to make TikTok. It's not generally speaking, when people have kids, they're less happy, they're happier over the long term, but during the child rearing years it is stressful. So look in terms of how you develop a mindset around growth, what I have found, I mean it's a double edged sword because you kind of want to be all over everything. I think that's, that's the attribute of a founder and an owner. But at the same time, if you're fortunate enough to find someone good, a good property manager, someone who comes to work for you as an intern and they're good, this is what you gotta do, you gotta be generous with that person and make it near impossible for them to leave. Why? Because greatness, right? And a more boring word for that is scale. Greatness and scale is in the agency of others. And my kind of core competence is storytelling. But my superpower is the ability to attract and retain really talented people. And by the way, that's not just paying everyone more. If someone isn't working out, you gotta get rid of them. You're a small company, you don't have time to find the right role for them. I am pretty harsh that way. To get to the first 10 or 20 super people, it takes me 30 to 50. And it's not fun, it's not aspirational, it's not pleasant. But it's handheld combat in the beginning. But when you find someone really good, you got to sit them down and you gotta say this is Our plan, we're gonna buy commercial property here, we're gonna build this asset and I'm gonna give you, you know, 1, 2, 3% of the profits, whatever it is. Give them ownership. You want them to act like owners. And the only way to make them act like owners is to make them owners. And that is say, I have my shit together. This is my plan. This is how we're going to raise capital. Buy commercial properties is the opportunity. And this is why you are going to participate in our success. You'll, you should be able to recognize those people and to let go and to not be all over them. So give them some slack. But the key to any type of scale, the key to you not being totally stressed out. And by the way, you're going to be stressed out. Owners have to be all over almost everyone almost all of the time. Greatness is in the agency of others. Focus on finding the right others and keeping them. That's all for this episode. If you'd like to submit a question, please email a voice recording to officehoursoptymedia.com Again, that's officehoursoptymedia. This episode was produced by Jennifer Sanchez and Caroline Shagren and Drew Burrows is our technical director. Thank you for listening to the Profg Pod from the Vox Media Podcast Network. Please follow our Profg Markets pod wherever you get your pods for new episodes every Monday and Thursday.

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