TED Audio Collective HBR presents Hi everyone!
You're listening to After Hours.
I'm Yang Ming. I'm Mi here.
And I'm Felix. And I want to start out by saying thank you to both of you guys.
So, this past week we all taught together.
Yes, this program for undergrads.
Yes! And I had so much fun.
It was great. We should maybe say for our listeners, Harvard Business School doesn't have an undergraduate program.
And this was extra special, different, because we taught a group of college students who we normally don't have on our campus.
Yeah, it was wonderful.
Wonderful to have them in our classroom.
It was fantastic. Thanks for inviting us.
Oh, absolutely. It was fun to share a classroom together.
So we're gonna have fun tonight.
We have two really fun topics, I think.
So Felix - I brought a topic, yes.
So, I would like to talk about alcohol.
Let's talk about alcohol.
Did you bring along drinks?
Yeah, I was mostly talking, I'm afraid.
And I wanted to talk about Super Bowl advertising, and in particular, political advertising during the Super Bowl.
Sound good? Oh, okay.
Interesting. That sounds great.
Let's do it. So I have a confession to make.
When you, young me, when you first asked me what I like to be part of something called after hours, I imagined comfortable chairs, chimney in the background, the three of us sipping on martinis.
And now, I should say, the reality is actually quite a bit different.
We're in this pretty naked room, and there is no drop of alcohol inside, which, you know, I don't know.
It's called after hours, after all.
But what's special about today is, today, we have at least two good reasons to talk about alcohol.
The first one is, it's January, and dry January, for some reason, has now become a real thing.
At this point in time, about 20 % of Americans say that they drink no alcohol whatsoever during January.
And then the second reason to talk about alcohol is that this very day is a very special day.
Today, exactly 100 years ago, prohibition started.
Wow. Really? It's an amazing coincidence, but it's exactly 100 years ago.
So let's talk about alcohol.
Okay. To set the stage, consumption of alcohol in many countries has gone down over the last couple of years.
And then you have really interesting shifts in the pattern of consumption.
So for instance, beer is in a secular decline, wine had a disappointing year.
Last year, in particular, if you look at specific demographics, so binge drinking young people, that's dramatically done.
So there is something in the air about alcohol consumption.
Like what does that say?
That seemingly out of the blue, we now have a trend that runs counter to, you know, not actually what your doctor would recommend you, what your doctor basically would recommend you is do everything in moderation.
And that's not what we get.
What we get is like a completely dry January.
So what's your sense?
What's going on here?
What does that mean?
You know, I do think there are times when people kind of, you know, they've been on vacation, I've drank a little bit too much.
And so they use total abstinence as a way to almost reset their bodies.
I mean, I see my husband doing this, you know, if we come back from vacation, he kind of does a reset.
And so I do think we treat our bodies now like instruments, like a piece of technology.
And so there are times when you hear people say, oh, I'm going to do a juice cleanse or something.
And I think dry January feels a bit like that to me.
I do wonder if the second thing that's happening, especially amongst young people, is about marijuana and the increasing acceptance of marijuana and legality of marijuana as an alternative to whatever social function alcohol was playing.
And then I think, you know, in a way, the puzzle is why don't we have a more active anti -alcohol movement?
I mean, the really, really hard thing about alcohol is, you know, excess use is really problematic.
Moderate use actually might be good.
And frankly, it's been rooted in the human condition.
We've been doing it since ancient civilization forever.
And so the puzzle of alcohol is how do we think about something which has been with us forever, actually has maybe some moderate benefits.
But then once you tilt into excess use is really, really problematic.
Exactly to your point, Mihir, outside drunk driving, outside drinking on driving, it is remarkable to me that there's no conversation.
The earlier prohibition movements were always a mix of practical health concerns and also a moral dimension.
And the moral conversation has completely gone away.
You know, I think I'd like to see more activity in this space because right now, if you're anti -alcohol, it's easy to come across as a scold, you know, as a moralizing scold.
Yeah, yes. Like, oh, don't be a party pooper.
Yeah. But I'm starting to rethink that.
I'm starting to think, wait a second.
What is it that's so special about alcohol, you know, that we shouldn't be a scold about?
What's your view, young me?
So Felix introduced the topic by pointing out that binge drinking among young people has declined.
That's right. If I think about the pockets of overconsumption that I worry the most about, that is one of them.
It's not the only one, but one of the major ones.
But here's my skepticism about coming down too hard on this.
I just see an overwhelming amount of consumption that happens in this space that is not only harmless, but has some health benefits if done responsibly, and I think probably has some social benefits as well.
Well, I guess that's the question, though, young me.
And I don't know what the facts are, but I think underneath what you just said is the presumption that a large fraction of consumption of alcohol is basically casual and in control.
That's true for me and you and Felix maybe, but I mean, I don't know if that's, I'm sorry.
What do you mean maybe?
I actually don't know in aggregate if that's true.
And I think across certain types of alcohol, I doubt it's true.
So this is where it gets interesting, right?
Because if you look at the segments within the alcohol category that are doing best.
It's hard for me to imagine that what you're getting is people with real drinking problems accelerating that growth.
So for example, if you look at wine, the subcategories with the most momentum, it's things like sparkling wines, like Prosecco and Kava.
If you look at more traditional spirits like vodka, all of the action is in flavored vodkas, infused vodkas.
If you look at where the growth is in new niche subcategories, it's in things like Mezcal and infused tequila.
If you look at beer, beer like Bud Light, Coors Light, it's all on the decline.
Meanwhile, there are hundreds of really refined craft beers and that subcategory is doing really well.
So if you look at where the growth in the category is coming from and where the momentum in the category is, it's a fashion category.
And not to mention, of course, all the seltzers and the ready -to -drink stuff that is really exploding.
White Claw. But just to be clear, like flavored vodka and Mezcal and tequila, I mean, let me ask you a hard question, which is not a fair question, but if I told you all the growth in vaping was flavored vaping, would that make you feel better about it?
Or like why is it that flavored vodka is okay and Mezcal is okay?
So I should layer one more thing, the fastest growth in the category is coming at the higher price points.
And I think if you are a problem drinker, you're probably not opting for the more expensive brands.
And so the fastest -growing Mezcal brands are the more expensive Mezcal brands.
The fastest -growing vodka brands are the ones that have a little bit of a price premium.
Diageo paid a billion dollars for George Clooney's tequila brand Casamigos.
And so now every celebrity under the sun is pushing an alcohol brand at a price premium.
It's like the Ryan Reynolds, Channing Tatum, Matthew McConaughey.
There's so much activity happening at this more elevated level that it's hard for me to map that activity onto the segment of the population that we worry about having a really serious drinking problem.
One sense in which it's different is when you think not so much about the flavor and price point conversation, which I think is reactive to the crumbling of the core markets, if you think about the movement towards non -alcoholic drinks or drinks that have very low alcohol content, you see a lot of activity.
It's actually sort of funny.
Heineken, when they introduced their Zero Zero beer, they used Dry January to introduce it.
So Dry January became a marketing opportunity to introduce a product that didn't have alcohol.
Diageo bought Seedlip, the non -alcoholic spirits company.
Inbef now says by 2025, about 25 % of their sales will come from non -alcoholic beer.
But what's different is companies are laggards.
They're not creating the fashion.
For one reason or another, they see where consumers are going.
They see that consumers are looking for more opportunities to have interesting, delightful drinks that don't contain a lot of alcohol.
And the action is basically in small brands who see these trends, who respond quickly, and then they sell themselves at sometimes amazing markups to the big producers.
Why is this? You would think the big houses, they should be leading this movement.
They shouldn't be laggards.
The interesting thing about alcohol is that it's not a product so much as it is an ingredient.
So when you buy vodka, on the one hand it's a product, but on the other hand it's an ingredient.
You're going to do something with it.
So what you have is you have hundreds and thousands of experiments going on simultaneously around the world as people are buying spirits and doing lots and lots of different things with it.
And I think if you're operating in a context where consumers are always going to be experimenting anyway with anything you give them, it sort of makes sense to me that rather than try to predict, you can sort of sit back and see what trends take hold organically, and then you can follow up.
It seems to me like on the lack of innovation, it feels to me almost like classic incumbents who generate massive amounts of cash out of these older brands, and innovation is just really hard in the sense of I have distribution and I have shelf space, I don't want to give it up given the primacy of my
brands. And so we end up finding a lot of innovation coming out of smaller places and then just buying it.
With the advent of fast fashion, there is a period of time where every fashion brand out there had to make a decision about whether or not they were going to move to a faster operating cycle.
And there were some brands that were able to do it really well and then some brands that know we've always made three -piece suits, so we're going to continue to make three -piece suits.
And for the brands that did try to transform themselves to have a more accelerated operating cycle, it's a non -trivial decision because you change your internal competencies when you do so.
I sort of feel like when you look at the alcohol industry, you see the same kind of breakdown.
A good example is even looking at a company like Diageo, it took them a while to even get to the point where they were beginning to offer flavored vodkas.
And then once they did, they started to develop the muscle, so then the operating cycles got a little bit shorter, new product introduction cycles got a little bit shorter, and now a lot of those companies are able to make new product introductions in a much more accelerated fashion.
But it took a while, it probably took 15 years to begin to develop that competency.
I think, if you young me, if you kind of think about fashion, I think about food.
And I think what Felix is onto is this idea of maybe there's just a lot of entry like there is in the restaurant business.
There are entrepreneurs who go into these and then they end up being a lot of inefficient entry and that causes the chaos.
I mean, inefficient is maybe a harsh word because it's a lifestyle, you love it if you think about the beer category where you have all these tiny, tiny producers, or I think even more because it's so easy to make in the gin category which explodes now.
A lot of that experimentation I think is as much hobby and personal satisfaction.
It's just a step up from mixing your own drink.
Now you're mixing a bathtub full of gin and some flavor.
Hopefully not in the bathtub.
Well, yes, you probably don't want to know.
It would be my guess.
So do you participate in Dry January?
You know, frankly, completely accidentally I ended up coming back from vacation and practicing kind of a Dry January and I have to say I really kind of enjoyed it.
It made me feel a little healthier, it made me feel a little more energetic and so it's all together, it's been an accidental experiment for me but an entirely enjoyable one.
How about you, young me?
Do I participate in Dry January?
Or any other extended period of abstinence?
No. I've never really had the motivation unless you guys...
Is this just a cover?
This is a big intervention.
I'm just going to say.
This is an intervention.
Exactly. We're making you think about your lifestyle.
Can you tell? Yes. Okay, this next topic was motivated by two things.
Number one, the Super Bowl is upon us.
And two candidates in particular, Trump and Bloomberg, have each spent 10 million dollars for 60 seconds worth of advertising.
So let me preface this entire conversation by saying that on this podcast, we don't talk about politics explicitly that much.
We talk about policy more than we talk about politics, right?
Yes, but for this particular topic I thought it'd be interesting to think of this intersection of advertising and political messaging in the context of this really big national sporting event.
And so my first question is, so much of the action in political advertising now happens online, on Facebook and Google primarily, so would you even advise any political candidate to spend money on a Super Bowl ad?
Is it even worth it anymore?
What do you guys think?
Obviously, it's hard to make the calculation, but I wouldn't be surprised if it's much less expensive than you actually think.
It's not just that you buy the Super Bowl ad, it's also that even leading up to the Super Bowl, everybody talks about who's going to have which ad, there's so much attention.
And then even following the Super Bowl ad, there's this big national conversation around which ads were great, which ones are not so good.
So if you factor in all the spillovers from making that investment, I think the prices, which of course seem very high, the prices are in fact maybe not so much out of range.
I think I'm with you Felix, which is my instinct about this is it's not as expensive as it seems.
They're talking about $10 million for a minute spot.
And in the context of what Bloomberg has pledged to spend on his campaign, that's relatively small, and all the ancillary benefits of it, it'll trickle into social media, it'll trickle into all the other channels.
So it actually, if anything, honestly, it feels relatively cheap.
In fact, you could argue that there are fewer and fewer opportunities to speak to a mass market because we have all become so tribal in our consumption of social media.
And because we are all exposed to such highly differentiated messages now, to get in front of a real cross section of America, I think that's a pretty rare opportunity.
So I think I agree with both of you.
So then my next question is let's take three candidates.
So I want to take Bloomberg and Trump, but I also want to throw in a third candidate who is positioning herself a little bit differently.
And that would be Elizabeth Warren for the purposes of example.
If you had to advise each one of them on how to use the 60 seconds, what would you tell them?
Let's start with Bloomberg.
What would you do if you had to give Bloomberg advice on what to do with 60 seconds?
I think you want to do two things if you're Bloomberg.
One, you want to do an introduction.
You want to kind of lay the landscape for how somebody should think about Mike Bloomberg, which is entrepreneur, citizen, philanthropist, what he got accomplished as mayor of New York.
And then I think you want to end with provocation of a very specific type, which is I think you want to jab at Trump.
You want to hit him somewhere about his wealth relative to Mike.
And so I would do a 45 second spot, which is telling the story of Mike.
And then you end with like a really nice sarcastic jab at Trump about his wealth.
Hold on. So this guy is already being attacked for being a billionaire and you're saying he should take a 60 seconds and use his closing message.
Absolutely. To say not only am I a billionaire, but I'm a much, much richer billionaire than our current president.
Here's the thing. You're not talking to the left.
You're talking into the middle.
And I think for a whole chunk of people, that's appealing.
And then Trump treats you like the opponent, which is what Mike needs right now.
He needs to be treated like the opponent because he's coming in as an outsider.
Felix, what about you?
My ad has a little girl watching television and the president is on television and it's the worst version of the president.
He insults people. He lies.
And then the camera cuts to a boy who's a little older and you see him looking at Twitter.
And again, same finding.
You see like the president tweeting, making fun of people, disrespecting people, just to all these things that are, I think in many people's eyes completely inconsistent with the office of the president.
And then you cut to Bloomberg and the message is basically, let's bring some decency back.
And the reason why I thought about the ad this way is I think one of the fundamental decisions you have to make is are you running for yourself or are you running against the other guy?
And Bloomberg has 6 % support at this point in time and the people who know him don't like him particularly.
And so I think it would be far more effective for him to run against Trump.
And I think it's powerful in a moral context when you think about what am I teaching my kids with my vote?
Am I saying that's okay, that someone behaves the way the current president behaves?
I like it. Interesting.
That is interesting.
All right, Yang Li.
So I think most people outside New York only know one thing about him in that he's a billionaire.
So this is a chance for him to not only introduce himself, but to humanize himself.
I think most people don't know he was born in a middle class family.
I think most people don't know that he built his company from scratch.
I think a lot of people would be surprised to learn how much he's invested in combating climate change.
I think people would be really surprised to know his efforts around gun control and how passionate he is about that.
One of his negatives is that he is utterly lacking in charisma.
And as you put it, Felix is not likeable.
His absence in the debate probably helps him.
But the best case scenario is that people are kind of, they're having their snacks and they look up and they say, huh, I didn't know that about Bloomberg, girl.
I had no idea what he's done for women's health, for example.
I think that's a really, really good scenario.
That's great. What about Trump?
If someone tied you down and said, you must advise Trump.
I think you want to just bang on the economy all for one entire minute and take credit for everything, which of course is absurd.
But I think that's what you want to do.
And just say, look at this record.
Look at the stock market.
Look at this unemployment rate.
Look at everything.
It's like data and it's the economy, the economy, the economy, and you just don't stop.
And you don't talk about any kind of persecution because of an impeachment.
You don't talk about any of that stuff.
You just bang, bang, bang on the economy.
It's your strongest card and you play your strongest card.
And I think that's what his strongest card is.
What about you, Felix?
I would start the commercial with showing the explosion of General Soleimani's car when they blew up the Iranian general.
I would then follow with an image how the Chinese signed the trade deal and then cut to make America great again.
And that's exactly what we promised.
That's exactly what we have done.
We fought successfully against the enemies of America.
The other superpower that seems to steal the American show is now weak and on its knees and then cut very much similar to what Mihir was just saying.
Then cut to working Americans, the person on the construction side, someone at a checkout counter, and what has all that manifestation of American strengths done?
It's produced the best economy.
And since it's Trump, he's probably going to say since ever, but just the economic success has been really amazing.
I'm right with both of you guys.
And so in order to avoid being redundant, I'll just add that I think the tone of it it's one of the rare opportunities he has because he's not doing this live to actually produce something that looks and feels presidential.
That's a great point.
You know, people range in this country.
They range across a spectrum of alarm when it comes to Trump.
So there are people who are super alarmed by him, but there are also people who are anti -Trump, but they are less alarmed in part because they're really pleased with how much their 401k has gone up in the past year.
Yeah. And although they would never vote for Trump, it's possible that even though they're anti -Trump, they'll just decide to stay home.
And I think if he can reassure people that look, the world hasn't completely come apart and look at how well your 401k has done, and look at how your wages have gone up, that even people who are anti -Trump will say, eh, whatever, I'll put up with another four years of this person.
And you know, what's interesting, you see this in the data.
So historically, there's always this pretty tight correlation between consumer sentiment and support for the president.
And now in the last data that was released, you see that consumer sentiment is through the roof, but there's almost no correlation left with the approval of the president.
And so there's this interesting disconnect between how people feel about the economy and what I find particularly interesting, what you said.
I never thought about, maybe that means you're not going to go vote.
Which of course will probably help him.
Oh, absolutely. In an election determined by turnout.
So this is all making me very uneasy.
So what do you think about Warren?
How would you do Warren?
I think her issue in particular is because the positions are so far away from what we have today that there is this nagging concern, can any of these big plans really be done?
And so I would start out the commercial showing a federal employee who says that he now gets much better returns on his retirement account because of the smart savings act, which was introduced by Elizabeth Warren.
I would then cut to someone who was cheated by Wells Fargo and was then saved because the consumer financial protection bureau, which Elizabeth Warren helped create, I would hope to do two or three things with that.
One is to show there is a history of accomplishments, the few instances where she's really created something that made a difference.
I would really emphasize that.
That's really interesting.
I guess I would have gone a different direction Felix, because my thought was that she's kind of perceived as a policy wonk, right?
And so actually what we need to do for her is humanize her.
And of course some of what has happened in the public space is pure misogyny, but we need to put some kind of storyline together.
And she has an amazing storyline about her life.
She has an amazing story.
Yeah. A personal story.
And so I would be super personal with Warren and not be wonky because she's won the wonky battle, I would be speaking to the middle and kind of positioning her better as the Democrat who can beat Trump, which means you have to kind of establish her bona fides as a human being with a really incredible
life story. And I would have pushed that, but I think the battle for the middle, she has already lost.
She is the person who will take away your health insurance.
Like Trump is going to be there on stage with her and he's going to say, and you will take private health insurance.
70 million Americans will lose their insurance in a warm presidency.
And I don't think you can overcome that.
What do you, what do you think young me?
Although I think Felix might be right in the sense that she might have lost the middle.
I think if she doesn't try to win it back, she's not going to win.
The Democratic Party is a party of heterogeneity.
I mean, that's what makes it complicated.
The Republican Party is more homogeneous.
Just if you look at the numbers, that's what it looks like.
And the Democratic Party is the party of heterogeneity.
And so you have lots and lots of different interests represented in the Democratic Party.
And if she can't get a critical mass across that heterogeneity, she's not going to win.
By the way, you know what I think the boss move is?
I think the boss move is I think all of the top candidates for the Democratic nomination should together by 60 seconds and should come up with an ad that is completely unexpected and they don't let it leak.
And you're sitting at home and suddenly you see this ad and it's got all of them and they're all saying, look, you're going to see us debate over the next few months.
But at the end of the day, whoever amongst us comes out on top, we are going to support and we want you to support too.
And making the pitch.
This is a once in a lifetime election.
The stakes like really like really make the case for the stakes for the election.
I think that would be great.
Powerful, very powerful.
Okay, great. We'll have to wait and see, I guess, but in the meantime, given that I know that neither one of you is a particularly big sports fan, maybe you should watch part of the Super Bowl.
I will watch the Super Bowl.
I'm a big sports fan.
I love the sports. Oh, you mean there's sports in between the ads?
There's sports. There'll be some sports.
How disappointing. Okay.
Pics. I have a really interesting pic for you guys.
So both Google and Facebook, they both have websites where in the interest of transparency, they give you a whole bunch of data on who's advertising on their platform, how much, where, what kind.
And so it is a fascinating, fascinating thing to go to these websites and see what the different candidates are doing.
Google calls their site the Google transparency report and Facebook calls it their ad library report.
And just to give you a little example, you can obviously see how much money Donald Trump is spending on advertising.
You can also see how much money Bloomberg and Tom Steyer are spending on advertising, but what's even more interesting is if you go inside just as an example, Amy Klobuchar, she's running 261 different ads right now.
Trump, Trump is running 25 ,000 ads.
Wow. That's just one piece of data.
There's so much data, but it really gives you a sense of the relentlessness of the effort, but also all of the different variations of advertising that these guys are putting forth.
And so you can go down a rabbit hole and take a look at it.
So that's my recommendation.
That's super interesting.
I also have a recommendation that's related to politics and choosing candidates, ProPublica, the nonprofit journalist pool.
They put together a website they call head to head.
And what it allows you to do is you can choose any of the senators or any of the members of the House of Representatives and you can compare their voting records.
So for instance, if you compare Elizabeth Warren and Amy Klobuchar, you will see that when the question came up, should you be allowed to use DNA to speed up say pre -trial release?
Elizabeth Warren was against it and Amy Klobuchar voted in favor of the stipulation.
And as you look across their voting records, you get a picture of who they are and how they think about things.
That is actually quite different from sort of the poster image that you get when you listen to their speeches or when you read about them.
Even in that particular example you gave, I would have predicted the reverse for Klobuchar and Warren on that particular vote.
The only caveat is sometimes if you don't know the details of the legislation, they might vote because they don't like some sub part of it.
But still, you get some sense of legislative identity where you see differences that you don't see on the stage.
Huh, interesting. ProPublica probably deserves a general shout out too.
Yes, absolutely. Yeah, they're doing great work.
So I have a very non -political recommendation, which is so when I travel, I do not use any cellular service.
And so I just basically rely on WiFi.
That's amazing. So you're without internet for hours and hours.
I just rely on WiFi.
No, but what about when you're out and about and this is across the world.
Yeah, I use WiFi, I hop on networks wherever I can.
So the only place that that becomes a problem is...
Actually, it's great strategy.
I love it, but the only place it falls down is on maps.
And so they don't advertise this very much, but Google has offline maps that are fantastic.
And so my recommendation is whenever you land up in a city, immediately get offline maps on your Google maps, and then you basically are free to run around the city and do whatever you want.
So I have found that to be incredibly effective.
But just to be clear, these are offline, but they're on your phone.
Do they do the turn by turn directions and all that stuff?
Yeah, no, it's really fantastic.
How does it know where you are if you're not on cellular service?
Because you always have a GPS.
You always have GPS.
That's one of the scary things is you always have GPS.
Yeah. No, it is fantastic.
And that's the only time I miss cellular is this kind of wandering around and not being able to find stuff.
But once you get offline maps, you're set.
No wonder you're so slow at responding to my messages.
I was going to say, this makes so much sense.
I'll send you a text and then I'll send you another one, no response.
And then an hour later I'll get a flurry of responses.
There you go. I'm like, oh, OK.
I thought it was selective avoidance or something.
That makes sense. OK, well, that's it for tonight.
Thanks, everyone, for listening.
This is After Hours in the HBR Podcast Network.
