Ted Audio Collective.
HBR presents. Hi everyone, you're listening to After Hours.
I'm Youngmi, and I'm here with my buddies, Felix and me here.
So this is a very special episode of After Hours.
You might have noticed that it's a little longer than usual, and the reason for that is we are doing a bonus segment at the end of today's regular segment about Felix and me.
Here's your book. Which is out.
It's very good. It's out.
It's no longer on pre -order.
It's out. It's out.
And so we have to talk about it.
And so we're going to keep me here for a little bit longer at the end of this taping.
Just ask you a few questions about the book, which we've both read and loved so much.
That is fantastic. So we'll do that.
And then the one other sort of piece of housekeeping that we should do before we get into this week is, so we have been thinking about doing a mailbag episode.
Yes. We want to hear your questions.
So we've been getting quite a few questions about just lots of different things.
And so we've been thinking about spending an episode just answering listener questions.
If we can. If we can.
Most questions are great.
It hasn't stopped us from before Felix.
We're quite challenged.
We might be as clueless as you are, but yes.
Yes. So if you have a question, send it along, and we'll just pull some of them.
It'll be fun. Yeah.
The more fun questions out of the mailbag, and then we'll go from there.
As for this week, one of the things that many listeners have asked us to talk about is the Disney Plus announcement.
And then we hear you came in tonight with something you really wanted to talk about.
Yeah. So I was just really intrigued by, obviously, this moving event which happened with the Notre Dame fire, but then also this somewhat of a backlash over the donations that were designed as well.
So I wanted to talk about the Notre Dame experience.
Yeah. So many interesting threads there.
Okay. So Disney last week came out with its long -awaited announcement regarding its new streaming service.
And I'm dying to know what you guys think.
Is this thing a Netflix killer, or is this thing going to be a huge money pit?
So I'll get started on this.
I actually thought it was quite exciting.
So we're not a Disney family, and we've not a huge Disney family.
You're not a Disney family.
No one watches. You have three young girls.
Yeah, we've been actually trying to – we've kind of been policing them away from it.
But you have your girls reading The New Yorker.
It's more like some combination of Enid Blighten and Harry Potter.
Anyway, so we're not exactly a Disney family, but I will say the kind of bundle of content that they're able to pull together and the attractiveness of that content I think is really compelling.
And so my first reaction was, I think they're going to be able to pull it off, and they're going to be able to pull it off well.
Second reaction was, pricing was interesting.
Yeah, so I totally agree.
So $6 .99 a month and $70 a year.
And that, you know, first off, I think that said to me, I think there's a ceiling on what Netflix can do on price increases.
That's the first thing I thought.
Most people, by the way, pay $13, $14, the most common price bucket for Netflix is $13, $14.
So even if it's on a Netflix killer per se, it just really puts, I think, a ceiling on where Netflix can go with pricing.
And then the third thing I thought was, how is this all going to evolve?
Now we're going to have these various bundling services, and I'm confused.
Are we all going to end up paying like five subscription services?
Because I don't want that.
And so I'm trying to think about how this evolves, not just Apple Plus, but Netflix, Hulu, Disney.
How does it all shake out?
So my basic reaction is very promising.
I don't think it's a money pit.
They obviously have such a fantastic library.
It's not a money pit in the same way Netflix is going to struggle with that problem.
I think it's bad news for Netflix.
The big question for me is, where does this go?
Like you, I was really surprised about the pricing.
If I had to guess, I would have thought, you know, maybe a little less than $10.
I was definitely surprised that it's as inexpensive as it is.
And I think in some ways, I had a little bit the opposite reaction of what you said, Pierre.
I thought, oh, this really shows the power of Netflix.
You basically have to give away your stuff in order to be in the running.
And some of the financial numbers I thought were striking.
So they predict they're going to lose money for the next five years.
So the size of the audience needs to be anywhere between 60 and 90 million subscribers in order to break even, in order to make a profit, just for reasons of comparison.
Netflix now is at 140 million.
Even if you're Disney and even if you have fabulous content, you have to be really big to make this work financially.
And so I think that says something about just like the fabulous position that Netflix is in.
So I agree with your point on it limits how much they can charge, but I think this is a race now for who's going to be number two, who's going to be number three, who's going to be number four.
And Disney will play somewhere there.
But Netflix is just, you know, an order of magnitude ahead of everyone else.
I want to disagree about this on Netflix, which is I think this is a testament to the fact that Netflix occupied a space by itself for so long without great content and it accrued a large audience.
But now you have people with real content coming along.
I mean, this to me signals the vulnerability of Netflix.
Oh, but real content.
Think about it. Disney is so tiny compared to Netflix.
But think about the library.
What do you say, Jung?
So let's take these things piece by piece, right?
The pricing piece to me was fascinating because it's low enough that it can be additive.
Yes, it's an additive price.
In other words, they're not saying we need you to get rid of your Netflix.
The second thing related to price is that there are 35 million households in the U .S.
with children. There is not a household well, other than your house.
We found the one. That's not going to sign up for this.
And that's just in the U .S.
Disney is a global brand, right?
And so the 69 million he's talking about are easy, right?
Seem very doable. The second thing is their content is so unique in the following sense.
They don't have the ocean of content that Netflix has.
But they have some of the most magnetic, well -known IP brands in the world.
And the rewatchability factor of this content is huge.
In the creative industries, one of the most challenging things is that 20 % of the content you produce ends up generating 80 % of the revenue.
But you just don't know which 20%.
Disney, the ratio is very different.
They can dial up demand by just conjuring up a new Star Wars series, by conjuring up a new Marvel character.
But I do agree with you that I don't think they view this as necessarily needing to be a Netflix killer.
It doesn't have to be.
At that price point, you can easily carry two subscriptions.
And maybe CBS might suffer from it, right?
Because if you have Netflix and you have Disney and then the question is, one more, maybe Hulu, maybe not.
The one other thing I want to say is that the distinction between the business models, I think, is really important.
Netflix is this firehose of content.
Disney is not a firehose.
They're a flywheel.
In other words, the output in one part of the business becomes input to another part of the business.
So when they gen up a new Star Wars something or a new Marvel something or a new Pixar something, that energizes their amusement parks, that energizes their books, their merchandise.
They really have this incredible flywheel.
And if you look at how Disney makes money, it's a really diversified business.
Everything from their cruise ships to their amusement parks and so on.
In fact, original content is smallish, right?
But this is all the more reason to think.
I think it is a Netflix killer though, right?
If they ever release content exclusively to that service, I mean, that is going to be really amazing.
They're going to have the power to get people to sign up in the millions if they release content exclusively on their service.
But here's why I would push back.
They serve such different needs.
So going to see this week, The Avengers, that serves a particular entertainment need.
Netflix, if you like true crime, like sometimes I turn on Netflix, honestly, I feel like it's just true crime.
It's unbelievable. But apparently, there's a huge audience for it.
It's kind of like when you go to an old -fashioned bookstore and there's that never ending turn of romance novels in that section.
And you think, who's buying that stuff?
Or you go to the cooking section and there's an endless turn of cooking books in the bookstore and you're thinking, who's buying that stuff?
Netflix is the video equivalent of all of these subgenres where they are producing them with such quantity and there are people who are just sucking them up.
But I think that's an artifact of them being the only player for so long.
I mean, I think there's a lot of people who are taking that stuff just because it happens to be what's served to them.
But you need scale in order to be able to produce that at those quantities.
Yeah. I just think once all these players come in, and maybe this is this other part of my question, which is what happens to all these services?
What happens to Hulu and CBS and Disney and Apple Plus TV?
One of the really interesting parts about the Amansment is that they've talked about bundling already.
And so the former bundling that they're thinking about is, so there's going to be the new Disney Plus, there's going to be Hulu, and there's going to be ESPN.
There's two reasons why I find this very interesting.
If you had asked me before the Disney and Amansment, I would have imagined the future is everything entertainment on the one side.
And then sort of the old, separate world is basically news and sports.
Sports is really the only way you get people to watch television.
And so that has much more staying power.
And then news is an entirely different business that doesn't really belong.
And so if they bundle sports with ESPN into sort of create this package of entertainment plus sports, that'll be super interesting to see what that does to, I think, the television business.
And so part of why I was fascinated by the way you explained it, young me, about how the flywheel is an advantage for them.
Generally speaking in media, I think the flywheel has been a disadvantage, right?
So if you're Disney, someone in the Disney Plus franchise is going to come up with a really amazing story.
And then we think, oh my God, but is it going to cannibalize people who watch ABC and so on?
So it's, I think these tensions are super hard to deal with.
And I think one of the benefits of the Netflixes and the Amazons is that they don't have these tensions because they're born digital and that's all they think about.
Except that one of the things I find impressive about this particular announcement is that it reveals that Bob Iger is willing to make some really hard tradeoffs.
So, for example, one of the hard tradeoffs they've had to make is they're pulling their content from Netflix.
And by the way, licensing content, it's like an ATM.
It's like crack cocaine.
It really is. It's essentially 100 % gross margin.
There's no capital requirements.
It's the easiest money you can make in a business.
So for them to not only say we're going to pour billions of dollars into building this streaming service, but we're going to turn this bigot off on one of these other sources of revenue, that's so impressive to me because what that means is that they are willing to make hard tradeoffs.
So I expect going forward, as you see them beginning to confront these additional tradeoffs that you mentioned, I would anticipate that they are going to continue to make hard tradeoffs.
I think the hard choice that's coming on this, right, is sports, Felix.
Because if they really take the power of their sports and they shift it all to the online service, that is going to hurt their TV business and those fees they're getting.
Because those are serious dollars and they're getting it from the cable networks.
So to your point, Felix, will they be able to make the hard choices?
I think if they use the sports and they bundle it effectively, my God, just imagine, right?
Imagine Disney and ESPN.
And if they had some kind of a news service alongside that, wow, that is really, that is a really, really powerful bundle.
But I want to know where we end up in 10 years.
Are we going to have multiple, what does the world look like in 10 years?
It'll be super interesting to see, say, HBO GO, once Game of Thrones is done with.
Like, how many people will cancel?
This is something that we just don't know much about.
Is there real loyalty?
And that's at 15 bucks.
I mean, this kind of takes us full circle back to Disney's library of content.
I mean, you mentioned Game of Thrones, and how susceptible HBO's business right now is to that one particular piece of content.
In the case of Disney, they have the Marvel franchise.
They have the Star Wars franchise.
They have the entire Pixar library.
They just acquired FoxSS, so you add onto Fox, you know, which means the entire Simpsons catalog.
Walking Dead. So Disney had the number one highest grossing movie, 2015, 2016, 2017, 2018, and almost certainly 2019, which leads me to my final question, which is, are you going to see Avengers?
Of course we have to see it.
Oh yeah, I'll see it.
You're going to succeed?
I'll see it. Even I am going to see it.
And even though when I see it, I drive my family crazy because I don't know what the hell is going on.
Me neither. I don't know what's going on.
I'm just like, wait, what does the Infinity Stone do?
I'm so confused all the time.
The big question is always, do you wait for it on the plane?
That's my big question.
Well, because I'm like...
But it's fun to watch it in the thing.
But you know it's going to be like in a month, it's going to be on a plane.
But the screen is so tiny, though.
I can live with it.
Well, we'll see. I'll let you know.
Ok me here. We have our resident European in -house to ask about developments from Europe.
Indeed, of which there are many.
But the one I wanted to focus on is this the Notre Dame fire, which really captivated the world.
And really, you know, two questions.
Why was it so captivating?
And second, there was this aftermath of it, which was that a number of billionaires stepped up and said they were going to be donating hundreds of millions of dollars.
That in turn engendered a backlash.
And I wanted to get your thoughts about that as well.
So first, why was it so captivating where the whole world all of a sudden just turned together at one thing?
And then the second is, what did you make of that set of events that followed?
Which is, people start generously writing checks and then people look at them and say, well, why aren't you writing checks for the poor?
Or why aren't you paying your taxes?
Or whatever it is. So maybe we'll do the first part first, which is, why was that such a captivating moment?
I think it's a building that captures people's imaginations.
Everyone who's ever been to Paris knows what it looks like.
And I think even more importantly, even if you have never been in Paris, and maybe you have no intention of ever going, part of the imagination, what it's like to be in that city has to do with Notre Dame.
Yeah. And so I was not surprised that they captured people's imagination as much as they did.
And then I think the backlash to the willingness to help out, in a sense, is also very predictable.
I think the classic example is Tom Schelling, the Nobel Prize winner.
He had this remark about, you know, once a child falls into a well, we're willing to spend everything we have in order to save the child.
If you ask people about programs to make wells safer, no one's going to spend the dime.
And that's of course exactly the story of Notre Dame.
The building was rotting from inside out.
And they were unable to get the financial support to fix the building.
The moment the child is in the well, the moment the building is on fire, you get this very emotional, but in some sense irrational response that you want to help out.
You do everything you possibly can to save the child or save the cathedral.
And of course, the rational view then is, why didn't we spend a fraction of what it costs now to make the building safer?
Youngmee, what did you make of the event when it happened?
Yeah. I mean, starting with your first point, Felix, there are very few buildings in the world.
You can count them on one or two hands that the entire world recognizes.
I mean, the Empire State Building, maybe the Taj Mahal, maybe Westminster Abbey.
There are very few buildings that we look at and think that that building matters.
It means something bigger than the building itself.
And so that was one of them.
There's so many interesting threads here.
It used to be the case that when a wealthy billionaire stepped in to help out, that billionaire could position himself or herself as being this great patron and could use that philanthropy to create this semblance of civic responsibility and social commitment.
And clearly those times are gone.
Those times are really gone.
And instead that act now, we actually are deeply offended by this notion that we're supposed to be grateful.
But this is so interesting.
Can I just, on this, Youngmee, it's so interesting to me, right?
Because the puzzle then is philanthropists obviously do many great things.
They are attracted by, in part, the notoriety that's associated with that.
And now that notoriety is actually coming back to bite them, right?
And so this is also true in the Sackler case and these other cases as well.
There's actually a genuine kind of problem here in the sense that what if philanthropists start to recede into the background and feel like, well, wait a second, why am I writing checks if I'm not even being appreciated for what those checks do?
I was surprised by this even in the context of, I recently, in my tax law course, taught charitable contributions.
And man, the students were so cynical about giving tax deductions for contributions.
And these people just want, they're just kind of consuming their ego.
But you know, I do think this has been thrust into the conversation.
Have you guys read a non -Gared Artist's new book, Winners Take All?
It's actually a really fascinating book.
I would recommend it simply because it's so provocative.
It's a scathing indictment of the global billionaire class.
One of the arguments that he makes in the book is that philanthropy has actually become this noxious phenomenon because it enables billionaires to create the semblance of social responsibility and civic commitment, when in fact those same billionaires are completely unwilling to do anything that might dismantle
the structures that enable and protect their status.
And so it's a way for them to create the semblance of being good without actually undoing or dismantling any pieces of the larger ecosystem that enable them to maintain their elite status.
And I think the broader context for this particular backlash, of course, is the Gilles -Jean movement in France, which, Felix, maybe you can expand upon a little bit.
First by, did I even pronounce that correctly?
I thought it was spectacular.
Was it? I debated saying yellow vests, and then I thought, you know what?
I went for yellow jacket.
I was going to. Felix, educate us.
So this was a movement in response to an original plan to raise gas taxes in France in the context of climate change.
And then, you know, after the first protests, the French government backed down, but the movement persisted.
And there is, I think, that global sense that many people are left out of wealth creation, as we know it, in 2019.
And shouldn't the government do many, many things?
But the part that I find very interesting was, of course, part of the backlash against billionaire giving has to do with we don't feel great how they made the money in the first place.
And if we don't feel great about how you make your money, we don't feel so great about, you know, you're choosing to spend it in a socially more or less responsible way.
And this is the Gyarados point, I think, in part, is, you know, in a way, part of the reason why the billionaire giving was so poorly received is because simultaneous with that, they're viewed as being people who don't contribute to the state and don't pay taxes.
And so ultimately, what this point, I think, the Gyarados is making is, well, wait a second.
We democratically could determine our agenda through the state and have it be funded by tax dollars, or we can let people who have dollars privately decide, oh, I like this project over here.
And so there's something that seems wrong about that, which is it's simultaneously saying I want to contribute to the state.
I want to be viewed as a giver, but on my terms.
Yeah. So, I mean, you teach tax law.
Yeah. What fraction of overall tax revenues come from the top 1 %?
Oh, it's an enormous fraction.
Yeah, but that's not the question, though.
Can we live in a world where the billionaires pay even more taxes?
Yes, absolutely. But are the 1 %?
Are they essentially paying for the government services that we have today?
Yes. But the perception remains.
And the perception is absolutely important.
And if you get back to your original point, which was that Notre Dame was decaying from the inside for years and years and years.
This is a public good.
And France couldn't find it in their budget to do the renovations.
And if you think about, not just in France, but in other – think about in the US, think about our public infrastructure in the US, which is – if anyone from Asia ever – people from China visit – or from Korea or any other country visit the US, they think what's wrong with – What happened?
What happened? Why is your infrastructure falling apart?
Yeah. And the reason is when our governments start to get squeezed, the one thing that ends up losing out in the funding is just the renovation of these public goods.
But I think there is a little bit of a conundrum here, which is it is true that the one percent pays a large share.
It is also true in a large chunk of the West, austerity has pulled back public spending.
And it is true in the United States.
Tax revenues are down relative to our spending levels.
So, I think there is a sense in which people – and obviously, just to state the obvious – people have a tremendous appetite for more taxing of the rich.
The issue is that in these progressive movements now, we see these splits.
And it's in us versus them logic.
And actually, I thought in a way, that was one of the pieces of the significance of Notre Dame, which I think we missed on, which is to me, what was wonderful about it was it felt like there was a moment of collective emotion in one direction before it got torn apart.
It was the sense of collective loss.
And I felt like that was actually one of the beautiful things about that moment was everybody was feeling something common, which is something that we feel so infrequently.
And unfortunately, it's about loss.
But it was at least a sense of common humanity for like the first time in a long time that I can remember.
That was actually the only kind of slivers of hope that came out of that to me.
Do you think that's more what we end up seeing in the public square?
That actually, most people feel it's terrible that something as beautiful as this particular cathedral got destroyed.
And then politicians, activists come in, and they recreate the dialogue that they seem to create around every event.
Nothing is ever sort of untouched by the larger conversation around the distribution of wealth.
I don't know if you were to write the story of this particular saga.
It would go, this cathedral burns down.
The entire nation weeps.
This is in the context of a nation that has been racked in this raging debate about inequality.
And every weekend, streets are closed down because of the protests.
This is a context in which this cathedral comes down.
So then Macron gets up there and he says, well, we need to restore this thing.
We're going to struggle to find the funds, so we might need your help, he says, to the public.
But we're going to try to figure out a way to restore this thing.
And then the richest families in France step in and say, well, we will write a really big check.
And then you get this backlash.
It's not as if this wasn't somewhat predictable.
Don't you think that seemed like a tone -deaf kind of move?
In that context? Tone -deaf by Macron?
No, tone -deaf by these billionaire families.
Imagine if the Washington Monument, the Lincoln Memorial, the Smithsonian got somehow destroyed.
Our entire nation was weeping.
And then Bezos and Warren Buffett and these guys came in and said, we got this.
We're going to pay for this.
Think about the reaction for the American public right now in the context of an election campaign which is consumed with questions of inequality.
That would be tone -deaf, don't you think?
I don't know. My sense is that the rich families who stepped in in France, their true feelings were feelings of this is part of the patrimony and we are saving an important part of what is France.
But it could be well -meaning and tone -deaf at the same time, right?
I mean, I don't think it wasn't well -meaning.
I think it was well -meaning, but it can be well -meaning and tone -deaf.
So say you are one of these rich families.
Should you give $50 ,000?
Or would that be worse?
Well, I don't know.
What if you gave anonymously and Macron said, well, we've already got anonymous donations of a billion dollars.
As opposed to getting in front of the camera and saying, I got this.
I'm writing this huge check.
I'm going to save this thing.
You know what I'm saying?
Yeah, that's interesting.
If anonymous donations had started to pour in, I think it would have been a very different story.
I think this is what the larger significance of this to me is, or has come to mean to me is that the not -for -profit sector, in some sense, is going to be collateral damage of the populist movement because they are so reliant and so dependent on very, very wealthy people that their ability to tap into
those funds in a way that does not anger, their underlying constituents, I think is going to get really, really hard.
And that's what I saw in my class.
I think that's what this Geordas book is about.
Think about the stuff we've seen recently, right?
I mean, the not -for -profit sector is now in the crosshairs of a lot of people as not being legitimate in the way that it was just even 10 years ago.
And to me, that is a little bit of a revolution.
OK, it's time for pegs.
So this week, what you got?
So I have a recommendation for a website.
It's not a new website.
It's either .com. And I think they are a wonderful example of the use of maps.
So they have all the things you would expect from a website that is focused on food and restaurants, but then they organize it in a geographic way where you look at the map.
Because I think, at least for me, choosing where to eat almost has a little to do with, oh, what do I feel like?
But then also, what's close?
What's far? Am I in the mood to drive somewhere?
And it's just like once you have that map, it is so much better.
And then what's beautiful is you tip on the map or whatever you're interested in, and it moves you to the right kind of review.
From a UX experience, it's just really wonderful.
In a recent episode, you made the startling revelation that you'd never order food in.
That's right, yes. So maybe this imparts, why this is really important.
So it's really important for you to be able to locate restaurants near you.
But then that car that you keep that you don't use, you could drive to go there.
There we go. I love that website too.
They have like the 38 hot restaurants in a city.
Yes, yes. And you can go, it's really fantastic.
The seasonal update.
Me here, what about you?
So I have a recent book by Emily Oster, who's an economist at Brown University.
It's called Cribsheet, a data -driven guide to better, more relaxed parenting from birth to preschool.
So she is a spectacular scholar, but she's written this popular book about all the kind of parenting tips that don't survive scrutiny of rigorous research.
And then she provides like really good tips for parenting that are based on something more like social science.
So her general thrust is, first off, all these choices that you think are like fraught with meaning are not, like it's all going to be okay.
So the undertone of the book is, don't worry about it.
But then she's, you know, she takes these topics for everything from like, what does breastfeeding do to like, you know, should you teach your kids multiple languages, to post pregnancy issues.
And she just does it in this wonderful, calm, easy, nice way, filled with research.
And it's really fantastic.
But it's also the undertone of the book is so nice because it's not like, oh my God, you have to fret over all this stuff.
But what's the best tip you got?
Oh gosh, you know, I felt almost like it was late for me because the book has just come out.
And I'm like, Emily, you could have written this book like, you know, eight years ago when I could have used it more.
But I think it's, I don't know if there was anything specific as much as it was just this general thrust of like, don't worry about it.
Because that's been my feeling after all this, right?
Which has actually none of this stuff matters terribly much.
But you're so consumed with anxiety at the time, or you can be so consumed with anxiety at the time that you think these decisions matter.
And so she's really good at undercutting that idea.
Okay. Okay, so my recommendation this week is a viewing suggestion.
It's a big week for viewing.
So we mentioned the Avengers coming out, but most importantly, we are coming up on what looks like the big battle in Game of Thrones this weekend.
Oh my God, so exciting.
Oh my God. It's upon us.
Snooz -o -rama. And by the way, episode two was, did you week?
Master fall. Yeah. Oh my God.
So good. Serb -rian.
Oh my God. The nighting of the, oh my God.
Is this going to become the Game of Thrones podcast?
So my viewing suggestion is, so I watched episode one, and then you wait a week and you watch episode two.
And it's really hard to get an hour's worth of Game of Thrones and then wait an entire week before.
I know. It's so hard when the episode ends because you're just, you're bereft.
So what I did after watching the first episode of this season is I went back to season one, episode one, and I watched it.
And then after I watched episode two of this season, I went back to season one, episode two, and I watched it.
And I got to tell you, it's a fascinating thing to watch it this way.
How much you moved?
How much these characters have evolved.
Yeah. And you remember all of these details from that very first season.
But in addition, you notice all of these linkages and these connections that the showrunners have made in constructing this last season, that you, I don't think I would have noticed if I hadn't been doing this.
But hear your facial expression.
Can I just tell you what I was reminded of?
I made a recommendation of Better Call Saul and Breaking Bad, and you guys were like, oh, it's so dark, and I don't watch that kind of stuff.
Too violent. And now you guys are pitching Game of Thrones.
Like, just because it's not like some methods in New Mexico.
So two episodes, not a single person has died.
Yeah, but Felix, they've set us up for them all to die in the next episode.
They're all going to die.
I mean, that was really interesting.
Like, what do you do if you think there's a reasonable chance that you're not going to be alive the next day?
What do you do? And I thought that was like...
That whole episode was that.
And the other thing was just seeing all of these characters that you have become so invested in, together in the same room.
And it was... I'm here.
I can't... I'm sorry.
I'm staying strong.
I'm staying strong.
Okay, good. Good for you.
Well, those are our recommendations.
We usually sign off now, but we're not signing off.
So people stay tuned because we have a bonus segment coming up where we collar Mihir and ask him about his new book.
Okay. It was so good.
It was so good. What was your favorite moment when they knighted her?
That was the moment.
But also when Daenerys puts the hand...
Oh, and then she...
She touches it and then she pulls it off.
And then she pulls it off.
She pulls it away. That was...
I am bitter because you guys were like, breaking bad.
Betacal's all too dark.
It's so violent. And now he's relaxed.
So we were fortunate enough to get an advanced copy of Mihir's new book.
Yes, yeah. And I gotta tell you, the most disappointing thing about it was when I turned to the dedication page, expecting to see my name.
In fact, it's your girls.
And my wife. Yeah, indeed.
I'm sorry. You know, now, upon second thought, what was I thinking?
You need to prioritize the people in your life in here.
I agree. I agree. I agree.
But no, congratulations again.
Thank you. Thank you.
It's a great feeling.
So tell us a little bit about the target audience and then the big themes that you had in mind.
Sure. You know, I think it's funny because whenever a publisher, they want you to have a target audience, you know, and they want it to be sharply defined.
And I always would tell my publisher, it's for everybody.
And they were like, that's the wrong answer to me here.
And like as a business school professor, I should know there's a better answer than it's for everybody.
But you know, I think what the book arose out of was my sense that people of all stripes, but certainly executives who are rising in their careers, but even people within finance, struggle with the basic intuitions of finance greatly.
And they find it often very intimidating, and they find it very inaccessible.
So the idea in the book is to provide all those big ideas of finance in a very accessible, but rigorous way with lots of real -life case studies.
So light on equations, but heavy on real -world applications.
Light on technical details, but heavy on the intuitions for why things like buybacks happen, or how you should do valuation, or why capital markets work in the way they do, both to demystify finance, but also to just liberate people and feel like they can get into this world, which seems so inaccessible
to them now. One of the most impressive things about the book to me was the tone.
You just nailed it.
Going back to something you said earlier, I do think that for so many executives, the little secret they have deep, deep down inside is that they're super insecure about their understanding of financial fundamentals.
And this book is in some ways a primer, but what makes it feel not like a primer is the fact that first of all, the tone is so lively and it's so grounded in real -life examples.
It's a book about business, and you're talking about Apple and Netflix, and you're bringing in what's happening in the world around us and bringing these concepts to life, but you're also in the process of that illuminating the messiness of finance.
I think a lot of students of finance think it's this algorithmic thing, and I just need to learn the algorithms and then I know finance.
And what's so illuminating about the book is that there are ideas that are contentious, different philosophies, managers go about it in very different ways, and as a result, you see finance being executed in all of its messiness and glory.
It's really quite something to read.
Oh, that's great. That's very kind.
I mean, I think one example of that in a way is there's a chapter about cash, because people in finance are obsessed with cash, right?
And rather than talk about it in, like, here's the recipe for this or here's the recipe for that, I kind of talk about different definitions of cash, because actually people mean many different things when they say cash.
It's not even clear what they mean.
And then when you actually go to companies, like I use Amazon and Netflix to talk about cash, they look really, really different depending on the measure of economic returns that you use, and that's why Netflix is so controversial and that's why Amazon is so controversial.
But it's also, at the end of that whole discussion, it's not as if one company is good and one company is bad or one measure is good and one measure is bad.
It's a little more textured, I hope, you know, which is, yeah, you see that both of these things are going to tell you different things and you kind of have to make sense.
And, you know, in a way we'll meet in 10 years and figure out what was right.
But at a minimum, what you should get is a frame to think about the world.
How much were you inspired by how you teach this stuff?
I got to say, chapter one is so fascinating.
So you start out chapter one and you have, how many?
I guess 13? 14, yeah.
14 companies, and you just have all of their balance sheets lined up, except you don't see the names of the companies.
They're just called ABC, D &E, and then separately, you provide a list of the companies.
Yeah. And the entire chapter is, can you look at these balance sheets and figure out which balance sheet belongs to which company?
And there are no absolute numbers on that.
Right. Everything is in percentages, so you can't tell from the size of the company.
And you lead the reader through a demystification process, essentially, of how do you begin to just pick apart that balance sheet and look for clues and then begin to match them up against the company.
Yeah. And I was thinking about that episode we taped where you described how you love Games Magazine.
Yes. It's a big game.
You describe it as a game, right?
Yeah, it is a game.
But I have to tell you, when I read that, I thought, I want to teach this chapter.
Like, I want to walk into a classroom with these 14 balance sheets.
Is that the inspiration?
Yeah, I know. Very much the book, in some ways, comes out of my last 10 years of teaching executives.
And then I built an online course.
And I really wanted to consolidate the way I was teaching that in this book.
And that exercise is one I often begin with, both because it's super fun.
But honestly, also, it looks really bad when you start.
Like, there's just a whole mess of numbers.
And it looks like, what the heck am I going to be able to do to get through this thing?
And then you work your way through it and you build a whole bunch of confidence in that process and a whole bunch of intuitions.
And frankly, the confidence is as important as the intuitions.
It's just a fantastic exercise to get people engaged and not in a way of like, oh, it's going to be easy.
It's actually hard to be frank.
It's like a hard exercise, actually.
But it's doable. And everyone can feel like a champion at the end of it, which I think is really what's important.
I really wanted it to be I want people to love finance, right?
I mean, like, you want people to love your topics, right?
And there's a lot to love.
It's just often dressed up in a very unlovable way.
So the idea was to get it dressed up in a lovable way, as much as possible.
Can I ask you about, and you must have seen this many, many times because you taught finance for such a long time.
So I'm reading this book, and all of a sudden, I'm seeing like, oh, my God, my company, we're doing something that isn't really quite right.
Whenever we talk about which company to buy, which one is expensive, which one's not expensive, we're just looking at multiples.
Now I'm reading this book, and I'm like, multiples maybe not the best way.
What advice would you have?
How you make the kinds of things that you learn from the book, how do you make it productive back in your company where you have sometimes these longstanding traditions, how things get done, and the kinds of metrics that we pay attention to often tied to compensation, so super hard to change?
The first thing is just to make it a conversation.
It's about opening up the conversation around them and saying, well, wait a second, what are we implicitly assuming when we do that?
What kind of mistakes will we make?
Why, by the way, for the last five acquisitions have we had this problem?
That's the kind of conversation you want to start.
And part of it is I think what I try to do in the book is analogize it to your life, right?
So in the multiples case, you can buy a home by looking at price per square foot, and that's totally fine.
People do it. It's going to be problematic, and there's going to be a better way.
So just like in housing, it can work in your company.
Because people think when some private equity person talks about buying a company at eight times eBITDA, that's no more fancy than like you saying, you know, honey, did you see that condo sold for $500 a square foot down the street, the same level of sophistication.
And so you don't want to think one is more privileged than the other, because it's all really underneath it the same.
Okay, the book is called How Finance Works.
Everybody needs to go out and buy this book.
That was really kind.
It's out. It's out.
It's out. So everybody buy the book.
Thanks for here. Thank you.
