How Scott Galloway Turned $8M into $120M Through Investing

**Scott Galloway** (0:00)
I've invested in every piece of the stack. I've done mezzanine, I've done public company investing, growth stocks, hands down. The best asset class is distressed.

**Sam Parr** (0:20)
I heard you say something recently, and I think this happens to us, and it happens to you, I would have to imagine, you get pegged as just an influencer or a thought leader. In reality, you've built a lot of amazing companies, and you talked about something the other day, that you were with Michael Lewis, and at the end of the podcast, you guys barely mentioned this, and it was pretty astounding.
You told the story about how when FTX went bankrupt, you made some pretty amazing trade. Can you tell, Shaan and I, more about that story and what happened? You know what I'm talking about?

**Scott Galloway** (0:55)
Yeah, so I always like to counter it with how many times I fucked up. So I bought Netflix at 10 bucks a share, I'm sorry, at 12, and I sold it at 10, and now it's at 1,100. So I get it wrong all the time. I can't stand people who are constantly taking pictures of all their wins and post them on social, so I get it wrong all the time. This one I got right, and that is, I'm that guy who reads bankruptcy filings, and I read the FTX bankruptcy filing, and essentially they list all their assets. When you declare bankruptcy, your creditors come in and say, all right, we're going to take all the assets, we're going to sell all the furniture, sell all the companies, sell all the IP, whatever we can sell, and then we'll divide it up and give it pro rata to the creditors based on the claims they have. There was approximately $8 billion in claims against a bankrupt FTX, and I went through the list of assets, and one of the assets was they had said they'd made a $500 million investment in Anthropic.
And I thought, wow, I looked, when they made the investment for the life of me, I couldn't find the valuation. I assumed the valuation was at about $5 billion, so I thought they probably own about 10% of Anthropic. It was trading, I estimated it was worth around $40 billion, so I thought, okay, their stake in Anthropic is worth $0.50 on the dollar. In other words, creditors claim $8 billion in claims against the company, and I believe that stake in Anthropic was worth probably $4 billion. So I thought, okay, eventually the creditors are going to get $0.50 on the dollar just on the Anthropic shares. At the time I started, at that time, you could buy claims against the bankrupt FTX for $0.22. So I bought $10 million worth of claims for $2.2 million, and it's better to be lucky than good. Crypto took off, everything they had invested in went crazy, and it looks like we're going to get $0.60 on the dollar. So that was kind of an incredibly lucky, it was also a good trade, there was a little bit of skill in there, I did my homework, but that's worked out, that's worked out really well.

**Shaan Puri** (2:59)
That's not luck. Luck, there's a lot of things you can call luck. That one is not luck in the sense that, you're like, I was reading the bankruptcy claims, all right, that's action, not luck. And then you did the work to try to figure out like, okay, ballpark, what is this worth? But you just said it in passing, like, so I went and bought claims. Now, you know, I consider myself not a complete novice at the world of business and investing. Where do you even go to do that? I didn't, I would, that wasn't even on the table. It's more exotic than buying a stock or even buying crypto, like going and buying bankruptcy claims. How does one even do that? And then how do you have the confidence to say, all right, 10 million, because you didn't need to go, you didn't need to bet size that large.

**Scott Galloway** (3:37)
Right, so to be clear, I bought 10 million in claims, I purchased them for 2.2 million. So it wasn't easy. I typed in FTX bankruptcy claims and I found this guy named Thomas Brazell who's living in Italy and he was making a market in them. And Thomas had assembled a team that went, because when you buy a claim, you've got to make sure that the person who claims they own the claim actually owns it. Then you've got to do some diligence, then you've got to actually legally transfer the claim. You're sending money to a third party. I mean, there is risk here. So I contacted this guy who was doing making a market in it and I said, I have some capital I want to put to work here. I'll give you 10% of the upside if you go buy these claims. And so he would every 48 or 72 hours say, I found a basket or I found a claim of $383,000 and they want, you know, $90,000 for it. And I'd say, great. And I'd press, you know, yes. And he'd buy it and then transfer it into an account of mine. So yeah, it did take some real work.