The Prof G Pod with Scott Galloway
Latin America’s IPO Market, How to Mentor Young Men, and Scott’s Stake in La Equidad Football Club
Wed, 29 Jan 2025
Scott discusses the lack of IPOs in Latin America, specifically the difference between cyclical and structural decline. He then gives advice on mentoring young men and wraps up by discussing his stake in a Colombian soccer team, La Equidad Football Club. Music: https://www.davidcuttermusic.com / @dcuttermusic Subscribe to No Mercy / No Malice Buy "The Algebra of Wealth," out now. Follow the podcast across socials @profgpod: Instagram Threads X Reddit Learn more about your ad choices. Visit podcastchoices.com/adchoices
Chapter 1: Why are there so few IPOs in Latin America?
I had the chance to work for a unicorn in the region. And ever since, I have wondered why we don't see many IPOs in Latin America. I truly believe that there are amazing companies led by talented entrepreneurs, but not many of them go public. What do you think this is the case? And what do you think could be improved to help more companies in the region to take that step? Thank you so much.
And thank you for choosing my question.
Anna from Mexico, I love your accent. And the IPO market. Since the pandemic, the IPO market in Latin America has really fluctuated. In 2021, the region raised about $19 billion, mostly due to Brazil, which accounted for about 85% of that capital. Mexico, in comparison, had only one IPO in 2021. So basically, the IPO market... in Mexico could best be described as kind of like dead.
Other than that, it's fine. By 2022 and 2023, IPO listings came to a complete halt in Brazil. In the first half of 2024, the entire Latin American and Caribbean region registered only four IPOs. Why? Essentially, it's the boring stuff. Interest rates. Rates in Brazil rose over seven points to nine and a quarter points. Similarly, interest rates in Mexico increased from 5.5% to 10.5% in the
Chapter 2: What factors are affecting the IPO market in Latin America?
The average policy rate in Latin America stood at 18.9%. Rising interest rates usually decrease investor confidence, which typically means an outflow of capital from equity markets into safer fixed-income investments.
In short, when you're getting paid a lot of money just to put your money in bonds or what feel like less volatile or safer investments, the bar to go public gets much higher and money flows out of equities and into fixed-income instruments. thereby creating a less hospitable market for IPOs.
Additionally, the rise of populist left-leaning governments in Latin America has deterred private investment in the region, resulting in a nearly flatline GDP per capita. I'm actually quite bullish on Mexico, I think for a few reasons. One, more political stability, I would argue, than the U.S. Two, proximity. As we try and divest away from China, one, because of
geopolitical tensions, but also just because of supply chain diversification. I was on the board of Chemical Urban Outfitters. We woke up one day in the middle of COVID, realized that a disproportionate 60-70% of our tops were being manufactured in a five-mile radius of Shenzhen, and basically all 550 of our stores couldn't get tops in time.
and said, okay, even if it costs us a little bit more, we need some supply chain diversification. Basically, up until COVID, supply chain was run for lowest cost, full stop. How do we eke out more and more costs?
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Chapter 3: How can I effectively mentor young men?
And it ended up we had absolutely no slack, meaning any interruption at all, and everything from your refrigerator to your garage door, they couldn't find parts, and the whole thing just kind of collapsed on itself. So essentially, the biggest threat to these companies is no longer consumer demand, which has been really strong for the last...
16-odd years, but supply chain interruptions where basically consumers can't get what they want. So there's this amazing or this incredible inspired effort towards supply chain heterogeneity and supply chain diversification, moving stuff out of China into Europe. into Vietnam, other Southeast Asian countries. And also the big beneficiary has been Mexico, which is now our largest trading partner.
Chapter 4: What are the challenges of mentoring without overstepping?
So I'm actually quite bullish on Mexico. IPOs in general seem to be in, are they in cyclical decline or structural decline? And that is It used to be if you wanted a company to be worth more than a few hundred million dollars, you had to access this deep pool of capital called the public markets. There just wasn't enough capital available in the private markets.
The biggest VC funds only had two or three hundred million dollar funds. So you went public to access these big pools of public capital. That's no longer the case. People have gone further downstream. And when they see opportunities, when they see the company accelerating in value, they want to squeeze more and more juice in the private markets as institutional investors. So they're like,
We don't need to go public. As a matter of fact, if the existing shareholders or employees want some liquidity, we can give it to them. We can do secondary offerings. We don't want the scrutiny, the regulation of the public markets. So we'll just stay private. And oftentimes the private markets are actually trading at a premium to the public markets. So what do you have?
Chapter 5: How important is a healthy father-son relationship?
The number of public companies has been reduced, I think, by two thirds over the last 30 or 40 years. One, it's harder to go public. Two, there's more regulation. Three, it's expensive. And four, mergers and acquisitions. have taken a lot of public companies off of the rolls. And finally, finally, being private is kind of equivalent or maybe even more ideal than going public.
Chapter 6: What strategies can help in mentoring young boys?
And typically, I think also what's hurt the public markets is by the time a company decides to go public, it's sort of the last stop on the full train. And that is, And Google, when they went public, enormous upside. Same with Meta. These companies still had enormous upside left. Now, most of the, again, the juice is being squeezed in the private markets.
So by the time it gets to the public markets, it's sort of like, well, we've run out of people in the private markets who will bid us up. Let's see if we can find stupid retail investors. And some of the public market IPOs have underperformed and has made a less hospitable position. But yes, the IPO market in Mexico is dead. I hope it comes back for all of us. Thanks for the question.
Question number two.
Hey Scott, this is Kevin from Colorado. Long time listener of the pod and want to tell you how much I appreciate your insights on helping young men. Although I'd still like to consider myself young, in 2025 I'm turning 40 and I'm increasingly feeling the responsibility to make a positive impact with the abundance of young men I interact with in my life.
I have three young boys, a younger brother, four younger brothers-in-law, and eight young nephews. Outside of my family, I own two businesses, each having many young male employees. And I'm also active in my church where I help mentor dozens of young men under 18. I'm finding it hard to get involved and help these boys that aren't my sons because I don't want to overstep my bounds.
My question, Scott, is this. with no shortage of opportunities, how do you recommend I be more proactive in helping mentor these young men, especially those I can see are struggling, without being overbearing or coming off as weird?
Boss, you're doing it. Raising good men, raising confident, loving, patriotic boys, that's kind of 90% of what you're supposed to be doing. In terms of helping other boys, I can't stand the gestalt in our society where we suspect men who want to get involved in other boys' lives.
I think that is one of the terrible things about our society that is largely the fault of the Catholic Church and Michael Jackson, which I will not go into. But your inclinations are the right ones. One, getting involved in groups, being a scout leader.
you know, teaching Sunday school, whatever it might be, but sharing some of that confidence, being a male role model in groups, also recognizing, or what I think is a great trick or not a trick, but I do this sometimes with my boys. One, my boys are 14 and 17.
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Chapter 7: What role does supply chain diversification play?
So no matter how wonderful or fat the vacation is, unless they're with other boys or other people their age, they're just not going to have a good time and they're going to get bored and angry and make our lives miserable. So I bring friends. And what I find is I try and find or encourage them to invite boys that may not have the opportunity for whatever to hang out or do the kind of things we do.
So I like to bring my boys friends with them. And I find you don't need to do that much. I think just seeing a healthy father-son relationship, seeing you trying to occasionally ask a few questions, them asking you a few questions, it's really powerful because the reality is, and this is sort of
I don't know, disappointing, hurtful as the dad, what you're going to find is with your sons, they withdraw a little bit or they're just less inclined. I have young men asking me for advice every goddamn day. My boys don't ask me for advice because they have this very healthy mindset instinct that says, I need to break away from the pride.
And in order to make that a little less painful, I start thinking my parents are idiots. And what's interesting is there's research that shows with teen boys, they're more apt to listen to their friends' fathers than their own fathers.
So what I would say is, in addition to just doing the good work you're doing, to get involved in groups where you might have an audience of more young men or young people that you can influence, whether it's a A church group or, as I said, the Boy Scouts or volunteer groups or coaching or sports leagues, if you really feel like you have that ability to connect with young men.
But also on a very basic level, when you do stuff with your boys, encourage them, ask them, or just invite other boys their age from your friends. Especially, I think it's doing God's work to kind of do a little bit of poking around and find out whether there's single mothers in your universe and say, hey, I'm taking my kids to the football game or I'm taking my kids.
to whatever it might be, to the beach, would John like to join us? And I think you're going to find a lot of single mothers are very open to their son spending more time in the company of men trying to lead a good life and around other boys. But thanks for the question. We have one quick break before our final question. Stay with us.
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Chapter 8: What is the future outlook for IPOs in Mexico?
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Hey, this is Peter Kafka, the host of Channels, a show about what happens when tech smashes into media. And this week I'm talking about Twitch. Not the thing my eye does when I don't get enough sleep, but the pioneering live streaming service that Amazon bought for a billion dollars back in 2014. Twitch is still a big deal in live streaming, but so are lots of other places.
So how is Twitch CEO Dan Clancy going to deal with that competition? And why exactly do I want to watch people talk live on the internet anyway? I asked Dan Clancy all about that and more on this week's channels from the Vox Media Podcast Network.
Welcome back. Question number three.
Hi, Scott. This is Marcela Terán from Miami. I am a Colombian immigrant. And just when I thought I couldn't love any of your content anymore, I find out you have bought a football team, not soccer, football. from my beloved country, Colombia. I was just curious what motivated you to join this group that is making the purchase. And if you have any plans to visit my country, I'm just so excited.
Thank you so much for all your wonderful content and keep up the good work. In another non-football note, just wanted to thank you for showing up vulnerable and emotional and loving and caring and also being a baller because I think that's your very own brand of healing the world and helping young men know that those two things can coexist. Bye, Scott. Thank you.
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