Is This Really a Thing?

Are the Excel Championships just another bit of content for ESPN? Could it keep the Pac 12 alive? More importantly, is it an eSport and can we gamble on it? Listen in!   Featured Guests Andrew Grigolyunovich – Founder and CEO of the Financial Modeling World Cup David Clayton Brown, Ph.D. – Associate Professor of Finance at the Eller College of Business at the University of Arizona “Mr. Excel” Bill Jelen – Excel Expert, Consultant, Author & Play-by-Play Announcer Adrien Bouchet, Ph.D. – Richard & Helen DeVos Foundation Endowed Chair; Eminent Scholar of the DeVos Sport Business Management Program at UCF Sean Dennis, Ph.D. – Assistant Professor, Kenneth G. Dixon School of Accounting at UCF   Episode Transcription Announcer from the movie “Dodgeball: A True Underdog Story”: Live from Las Vegas, It’s the Las Vegas International Dodge Ball Open here on ESPN 8: The Ocho, bringing you the finest in seldom scene sports from around the globe since 1999. If it’s almost a sport, we’ve got it here. Paul Jarley: But I have to admit I did not see this coming. This show is all about separating hype from fundamental change. I’m Paul Jarley, Dean of the College of Business here at UCF. I’ve got lots of questions. To get answers, I’m talking to people with interesting insights into the future of business. Have you ever wondered, is this really a thing? Onto our show. Paul Jarley: While, it most certainly isn’t “Dodgeball,” and we aren’t breaking down Average Joe’s, we are talking about the Excel Championships that just aired on ESPN, and will be heading to Las Vegas in December. Are the Excel Championships even close to an eSport? I really need help understanding why Excel is on ESPN. To form an opinion on this, I’ve assembled the following panel of experts. Andrew Grigolyunovich is the Founder and CEO of the Financial Modeling World Cup and joins us all the way from Latvia. David Clayton Brown is an Associate Professor of Finance at the Eller College of Business at the University of Arizona. Bill Jelen goes by the moniker Mr. Excel. He has authored several books on Excel and is the competition’s play-by-play guy. Adrian Bouchet is the DeVos Endowed Chair of Sports Management and Chair of the Sports Business Management Program here in the College of Business. Finally, Sean Dennis is an Associate Professor in our Dixon School of Accounting. Listen in. Paul Jarley: So one of the very first podcasts I did was on eSports and the premise of it was whether eSports was going to be a thing or not. I came down on the side that I thought it was going to be a big thing that I thought it wouldn’t just be a big thing in the professional ranks, that it would be a big thing in the college ranks as well. And one of the reasons I thought that that would be true is it would be a way for universities to promote a group of geeky students with a unique offering, but I have to admit, I did not see this coming. When I saw the ESPN promotion on The Ocho for this event, I thought, wow, this is one I just wouldn’t have imagined. I’m going to start with David and Andrew here. Where did the idea for these kinds of competitions come from? Andrew? Andrew Grigolyunovich: It all started, I think that was back in 2012, the first competition of a similar kind that was called ModelOff that was created by two guys in Australia and they were doing that on an annual basis and that was devoted to financial modeling. That was called the Financial Modeling World Championship. They had a name brand named ModelOff. I was one of the players, David was one of the players there. We were good players, we made it to the finals a couple of times and in 2016 we were among the top 16 players in London. So the difference between what you saw on ESPN, first of all, that was annual, not regular. Second, it was more player oriented, less show oriented. That was basically targeting finance professionals, giving them very interesting cases to solve, but there was not too much value for spectators. When they sold this to new owners back in 2019 and the competition discontinued by 2020. So I saw an opportunity to create the Financial Modeling World Cup and that was the tournament for professionals from the very beginning. We were aiming to increase the production value and also increase the spectator value there. We’ve tried a couple of formats. Some of these initially were not too successful, but eventually that has evolved into the format you actually saw on ESPN and that’s how Excel eSports was born. I think the first game we could probably get it to back to 2021 and meanwhile David continued to play in his ideas about the student tournaments because he’s a professor. We are more like professionals and David, maybe you can tell more about that aspect. David Clayton Brown: My whole entry into this was 2014. I started here at the University of Arizona as a professor and I started teaching financial modeling and I wanted a way for my students to get a little bit more than what we had in class, get some M&A models, some private equity type models as well, and I found ModelOff was a great place to do that. You got these professional models, professional modelers were completing them and it gave the students a chance to see what they were doing. They also provided answers, which was great for student learning. You could try the challenge, you’re going to struggle through it, which is fine, but then you’re going to learn from it afterward. And I had a few students that really engaged with this. They would finish in the rankings at least for this, for the ModelOff competitions. And then in 2016 I took my hand at it and made it to the finals with Andrew. We got to meet for the first time and then like he said, in 2019, things changed hands with ModelOff started to wrap up and at that point I initiated a conversation with the ModelOff team like, Hey, can we start a college version of this? We start working on it, the pandemic hits, it kind of derails everything, but then I actually was able to get tenure. To me that gives me kind of a license to create value in the world and I see this as a huge source of value. We see industry people saying students need more Excel, they need it sooner, so how do we deliver it to them? At U of A, we’ve started to do more courses earlier in the curriculum, but broadly we just want to get more Excel opportunities to students. This is a hard thing for professors to bring to the classroom, so we’re hoping this is a way to make it easy for professors to give their students a little something extra to do to get their feet wet and then the students that are really interested are going to run with it because of this format Andrew’s developed. Paul Jarley: So where did most of the contestants come from, Andrew? Andrew Grigolyunovich: Basically, investment banking, audits, financial consulting. If we talk about finance people, we have actuaries, we have engineers maybe a little bit less than we would hope for. We have a couple of mathematicians. The reason is that our company name is the Financial Modeling World Cup. The word financial might be a little bit encouraging for finance professionals, a little bit less encouraging for other professionals. Paul Jarley: Where do the problems come from? Do companies submit problems for you all? Andrew Grigolyunovich: You know what, that’s a very special discipline in writing those types of cases. If a company comes with a problem, it could be the case. We’ll have actually a real life company initiated problem in September, but again, these have to be adapted to a format that’s solvable within thirty minutes or maybe an hour. So we try to see some real life problem. The whole tournament that’s been studied by my company, which is doing financial consulting and financial modeling consulting, quite often what we do, we just look into some interesting real life examples, the real life models we were doing and create some generic case out of that. Initially most of the cases were written by myself, especially in the first season. And then after a while, the players have started to contribute their cases. So right now, it’s also probably two thirds, maybe even more. That’s contributed by the community and the other is being written internally at the Financial Modeling World Cup. Paul Jarley: One last question and I’ll jump to David. Andrew, do you use it to identify talent for people who you want to hire into your company? Have you ever hired anyone who won the competition? Andrew Grigolyunovich: Actually, yes. We’ve hired two guys from a team who were doing the student competition last year. David Clayton Brown: Yeah, for our cases I’d say it’s a mix because we actually want students to get an idea of what real life work is, and a lot of that has been more finance oriented so far just because that’s where my connections are, but we want to expand that even more as we go. For example, we’re actually talking to a professor across the university here that studies bee populations. And so building cases that relate to things people study, I think is a real good way to engage the students and it doesn’t just have to be in the business school. And that’s why we’re starting to look across campus for more of these collaborations, to bring interesting data problems to the students and then teach them some Excel skills along the way and have fun competing. Paul Jarley: Has it developed into a student club yet? David? Is there a registered student organization on campus? David Clayton Brown: So I started the financial modeling club a couple of years ago, kind of an offshoot of that that focuses on this competition. I actually for the first time later today, will be teaching an Excel eSports class here at the University of Arizona. Basically, I’m training them on what the recent case competitions have been. I pick a recent Excel eSports case that has been part of the pro competition and let’s break it down, let’s work through, let’s talk about different ways to approach it and how to get as fast as possible. I think two or three other universities at least have these Excel clubs. So I see this growing. Hopefully the MECC creates some momentum behind it. Paul Jarley: How did ESPN get involved in this? Are they that desperate for programming? What’s going on? Andrew Grigolyunovich: I think that’s an interesting niche they could be looking into because imagine the potential interest from potential market there. Hundreds of millions of people around the world use Excel, right? This is definitely something that could evolve into something very, very, very big. It’s not just the competition, we use the word competition, but essentially that’s a very nice, interesting, fun way to train. And as soon as people realize that that’s going to be a massive increase in the number of followers and number of participants, there’s a huge market I see there and a huge growth. For ESPN, it turned out that we were actually acquainted with the right person there by Microsoft. The story was that they had some contacts there. They are one of the sponsors for our competition, very much interested in their product being used in these very unusual ways, so to say, that’s how it started. So basically we were producing these Excel eSport games that were shown on our YouTube channel, but that was the right content for them and that’s where they were showing our world championship in 2021, the All-Star game, 2021, ’23 as well, and that’s how it started. So once in a while, that’s a nice content for them. We’re not able to move basketball or American football yet from the prime time. There is a long way to go at this point. Adrian Bouchet: If you want ESPN to take it to the next level. The question nowadays is can you gamble on it? Can I place a wager on a certain Excel team? And is Las Vegas iterested? That seems to be the future. Andrew Grigolyunovich: There is some interest, there is some initial, let’s say, work on that. We might see that after some time. Paul Jarley: One of my original reactions was that ESPN might be the wrong place to host the competition, in the sense that your viewers, and I’m going to engage in overgeneralizing here, but my hunch was that your prime consumers or watchers may not be people who really watch ESPN that much. What do you think? Have they helped you guys promote this, do you think or not? Andrew Grigolyunovich: They definitely have helped to promote just the fact that Excel is on ESPN already made a lot of news across the world. That’s probably one of the reasons we’re meeting today. Paul Jarley: Right? Yeah. Andrew Grigolyunovich: Whether other channels could be more suitable? There might be. Essentially, even internally, we’re discussing, it could be also positioned or very easily transformed into some sort of like a quiz show or very similar to a quiz show. And that’s basically a content for less sport channels, like more general TV channels with general audience. It could be, we will be reviewing these. At this point, there is no exclusive contract or something. So we definitely have options there to look for other ways to promote. But yes, initially ESPN helped a lot, very thankful to them. Hopefully they liked us to be there as part of The Ocho. Paul Jarley: Do you have any sense of what viewership is like? Andrew Grigolyunovich: We do have some ratings. What we can share is that our viewership on YouTube for the last year’s All-Star Battle, it’s 800,000 views and of these, I think probably half a million was within a couple of days after ESPN has shown the game. So the interest is there, that’s for sure. Paul Jarley: Bill, you had the lofty title of Mr. Excel and as I understand it, you’re the play-by-play guy for this. So how did you get this gig? Bill Jelen: It goes all the way back to the first live event in 2012. I was invited to come and be a judge and I was very happy. I always say I was smart enough to be a judge and not to be one of the competitors because although I teach Excel and I know a lot about Excel, the people who reach the finals are just incredibly good at Excel and to watch them work live, I was there the first three years, 2012, ’13 and ’14 in New York City. It was just surreal to see how fast everyone was and I knew I was in the right spot as a judge instead of trying to compete because the people that are using Excel 50, 60, 70 hours a week are incredibly fast Excel. I’m very happy to be a judge and I was very happy when they invited me back to do some of the play by play for the FMWC before the two ESPN shows, it was on ESPN 3, three sets of two hours that were on ESPN 3. So there was good history there being on those networks. Paul Jarley: So what’s your day job Bill? Bill Jelen: I write books about Microsoft Excel, and before that I worked in accounting and finance using Excel 40, 50, 60 hours a week and I’m good at Excel, but I’m not finals good at Excel. Paul Jarley: So how do you approach the play by play? Bill Jelen: We get the case a few days before the competition and it’s really important to try and work through that case and there’s maybe seven stages that you’re trying to earn points for, so you have to actually go through and try and solve those. So I know how I solved it and I recognize that there’s other ways that other people might solve it. So then as you’re watching people start to dive in, you’ll be able to see their screen and say, “Oh, look at this. They’re doing something completely different than I did.” And ideally, say there’s 15 questions in section one. If you get the logic for the first one, if you did the logic correct, you’ll get all of those points at once. So 15 times five points, let’s say. So if you see someone get 75 points, oh, they just solved section one, but if they get less than that, then that means that there’s a logic error there and they’re not catching some cases and that problem will then snowball. So it’s just kind of interesting to see who gets the complete section done, which section they’re working on and the leaderboard changing they have. Then we go take a look at that particular. Paul Jarley: So Bill, what do you think makes a great Excel competitor? Bill Jelen: Being able to multitask. One of my favorite competitors is someone who looks at the seven problems and tries to figure out a general function that will be useful in sections five, six and seven. So they’re solving case one, but not just solving case one. They’re trying to create an overall model and an approach that will work through those deep cases out of a thousand points. Maybe people want to get to 540 points, but the difference at the end is going to be the people who get up into the 200 point sections. Paul Jarley: So Bill, I think you’ve probably seen David compete a couple of times. Can you break down his skills? What are his strengths and weaknesses? Bill Jelen:In all of the that I’ve been in, David does not make it to the final three or four. I know he is very good. Paul Jarley: I’m trying to help him out. Bill Jelen: Some people that I remember from 2013, Michael Jarman. Michael Jarman was incredible back in 2013, but Michael’s been promoted and he’s the manager’s, manager’s manager and I don’t think he’s using Excel 80 hours a week anymore. And so you’ll see Michael in a competition and fall out pretty quick. And now Michael has moved on to be a judge and write cases, so it sounds trite, but it is a young person’s game. The people who are actually using Excel just continuously, they would never be at a computer without Excel turned on. Those are the people who are going to. David Clayton Brown: I think there are three big areas that makes a good Excel competitor. So the first one is just raw horsepower. How smart are you at solving puzzles? So that’s a very general skillset. Two is Excel, how much Excel, do you know? How practiced are you in it? Are you doing it 60 hours a week or are you doing it a few hours here and there? How deep is your knowledge of the functions, the tricks? I mean they just announced Python in Excel, so do you have that tool set ready to go? I think the third area that’s going to become increasingly important kind of in this new world of ChatGPT and prebuilt tools is just how prepared you, how much research have you done into past cases? How many LAMBDAs have you built ahead of time? That way when you see something and you’re like, “Oh, that’s like what I saw three seasons ago in this case,” and I can pull that out in 10 seconds rather than having to model it, which might take you two or three minutes now, you’ve really just saved valuable time. My strength, I think, is number one is I just have good horsepower. I just don’t have enough time to practice Excel and to build those tools. Although that’s partly why I want to coach and why I’m teaching my students is it is what keeps me engaged, otherwise I just can’t devote the time to it. So it’s kind of my mechanism to keep myself in and try to stay relevant on the professional side. Paul Jarley: And what makes for a good competition? Is it the puzzle? Is it the complexity? What makes for a good competition? Bill Jelen: You definitely want one where people are getting up into levels five, six and seven, but not solving it too fast if the whole thing gets solved. If someone gets their thousand points in half the time, then it wasn’t hard enough, but if you get down to only two minutes left and they’re only on section two, then it was way too hard. So you’re looking for at least a few of the competitors to get deep into section five, six and seven where they’re trying to get close to that thousand points and kind of neck and neck, those are the ones that I think are the most interesting. Paul Jarley: Well, I think you’ve had an innovation in the competition in that people drop out if they’re not quick enough. Bill Jelen:Bill Jelen: Right, yeah, this time, every five minutes, the lowest scores were knocked out. It actually helps trying to talk about eight people and give time to everyone makes it tough. So having those people drop out makes it easier for us to talk about the people who are left. Paul Jarley: Go ahead David. David Clayton Brown: Yeah, one thing I’d add is a good competition is also one that’s relatable for the audience. A lot of times these are not necessarily financial model cases, but they’re games that we all know like rock, paper, scissors, or when you asked about how do these cases come from, some of my cases come from playing little board games with my daughters. Kids’ games are a great way to adapt into this. People understand them and so then when you watch it, you have a conceptual framework for how I would solve this, and then you’re just kind of in awe at how the competitors are solving it way faster than you could imagine. Paul Jarley: Adrian, what’s the definition of an eSport? Adrian Bouchet: It seems to be like all electronic games try to be an eSport, but I reached out to a former colleague of mine when I worked for Major League Baseball who now works for Red Bull and he oversees Red Bull’s eSports division, which is pretty prominent, and he said that it comes down to three things. Number one, what he called playability. It’s got to be fun to play. Number two, it’s got to be a compelling viewing experience, and number three, it has to have support of either the developer or the publisher, which in this case I guess would be Microsoft. And it certainly seems like, I mean there’s already the ecosystem built, so that’s what he said that takes to become a successful eSport and it has to have a good mix of all three of those components. Paul Jarley: So there are really famous eSport athletes. I know the South Koreans in particular are dominant in a number of eSports. Have any of the competitors in these competitions gone on to be influencers or do they have fan clubs? Andrew Grigolyunovich: We definitely do have stars of the competition. We definitely have people who are admired by the field, by the industry, by those people who are engaging with Excel eSports. I wouldn’t say they are influencers, but they definitely use this as their marketing too because for most of them they are consultants. They are doing financial modeling consulting or other types of consulting, and that’s a great added value for them in the eyes of their clients. I believe they can make much more there rather than through let’s say influence revenue, which is especially tough if you just starting. Adrian Bouchet: So I would ask that question a little bit differently. I would say has Microsoft allowed you to leverage their ecosystem for sponsorship purposes? What companies have sponsored the Excel championship? I mean because if you have ESPN and you have Microsoft, those are two pretty big brands, have they allowed you to sort of leverage their market share to go out and get other companies interested in sponsoring either the competition or the athletes that take part in it? Andrew Grigolyunovich: We do have other companies sponsoring the events for Excel eSports at this point. There are companies like SoftwareOne, software license retailer. Order.co, a procurement company, like very creative in terms of thinking of different events next to us and basically there are lots of other companies coming with inquiries there. It’s not really prohibited or something like that. Basically, the more sponsorships we’re able to get, the better is the value we can provide and the higher the prize money. David Clayton Brown: A lot of our sponsors are coming from employers that are interested in our students. The students that are engaging in the collegiate challenge are ones that are typically driven. They want to solve puzzles. It really is about critical thinking and developing those skills alongside Excel, and those are two things all employers seem to want right now. We have a couple sponsors that are basically trying to tap into that network of students, make them aware like, “Hey, we’ve got jobs that leverage these skills, come talk to us.” Paul Jarley: I’m going to turn to Sean, Sean’s in our accounting department. Sean, are there any accounting firms that are doing kind of quasi competitions to identify talent? I mean, this goes all the way back to Google, right? With some open source things they do and challenges to identify really high end talent? Sean Dennis: Not that I’m aware of. I did look into this a little bit at the big four and I couldn’t find anything specific to Excel. I could easily see this becoming part of a summer leadership program. Paul Jarley: Yeah, Andrew, I could see you reaching out to them. There might be some interest there. Sean Dennis: I think this is more than just a resume builder for firms that this is a way for students to signal, put their money where their mouth is, look, I love this stuff. While not everybody that goes to work for an accounting firm needs to be an eSport level expert at Excel. They do need some and they’re always looking for students to bring in new tricks. And I’ll be honest with you, I considered myself pretty proficient in Excel, but when I’ve watched these competitions on ESPN, I understand that the game that they’re trying to play and it’s kind of cool, Bill does a great job of announcing it and generating interest, but I have no idea what kinds of functions they’re using behind the scenes and firms would love to get their hands on students who know those types of functions. Paul Jarley: Yeah, that’s my sense of it as well, Sean. David Clayton Brown: So much has been changing in Excel the last few years that it really is an amazing way to learn. Just trying these challenges and then watching the live stream with Bill where you get to see what the competitors are doing or a number of competitors post YouTube videos and walk through how they did it. I personally have learned so much by doing that, that it’s just hard to find otherwise. So to me, this is one of the best ways to train and to develop those modern skills in Excel. Bill Jelen: I’ll echo that. The post-competition walkthrough where they’ll turn on the clock and in 30 minutes solve the problem, and it’s not the same as the competition, because in the competition, you just saw the case five minutes ago. To watch someone actually go through and explain step by step by step, and for me, maybe in my 30 minute I got halfway through or something like that, but just to see, oh, that was brilliant. I never considered that or seeing the tools that they’re using. I know a lot about Excel, but I learned from those walkthroughs every time. David Clayton Brown: And there’s a small slice of people that post speed runs where they’ll take this case that in 30 minutes no one was able to finish, and they show you a way that they just did it in two and a half minutes. It’s kind of mind blowing the care that they put into it and the creative tricks they come up with to make that happen. Paul Jarley: I’m also surprised some accounting firms, Sean, aren’t using miniature versions of that as part of their selection process. Sean Dennis: I think it’s probably coming. I know internally when students land at firms, there are incentives for them to learn and develop new tools within, maybe not Excel, but Alteryx, Tableau, Power BI, those types of tools. Paul Jarley: What do you think students should learn from these competitions? Sean Dennis: I think firms have been emphasizing Excel for a while. Teachers emphasize it all the time. Students are kind of bombarded with messages about how important Excel is. And for those students who really like Excel, I think shows them that, “Hey, if you like what you’re seeing, like what you’re doing, there’s more out there.” I know I work with a lot of students in office hours. I’ll show them some cute tricks that I’ve learned through the years, but at the end of the day, until this comes along, there’s really not much more you can do with it, not much further to go. And this gives students who want to this extra way to keep going and for lack of a better word, pursue their passion. A lot of accountants really geek out on this stuff and this gives people an outlet for it. Andrew Grigolyunovich: What do people learn? Imagine you have hundreds of millions of people across the world working in Excel every day. This is something where you can show them what’s the best available, what do the stars do, how do they work? When you’re playing basketball, you’re watching Michael Jordan, LeBron James, other players, you see how they do and you try to replicate that. If you’re playing soccer, you’re watching Messi or Christiano Ronaldo and you go to your playgrounds and play other kids similar like that. Here, it’s more or less the same, but this is the way for people who are working Excel every day to see what the pros do and get some tricks from there. And it’s much easier for them to learn these tricks and apply to their job rather than for a kid to learn dribbling like LeBron or shooting like Stephen Curry. And that’s really the reason that would drive viewership, and this is what’s going to make this huge, in my opinion. Bill Jelen: Let me talk about relatability. I played baseball, I played basketball, and now as an adult, the number of hours that I get paid to play baseball and basketball is zero. You have 300 million people who are getting paid 48 hours a week to play Excel and then to see Excel on ESPN. I mean all of a sudden there’s a lot of people who are saying, oh, wait, I could do this. I should enter this. I’m using Excel 40 hours a week. I think there’s a huge opportunity there of getting more people to enter the competitions that lead to the ESPN finals just because there’s a good chance that you’re good enough at Excel at your company. Every company has those stars who are the Excel people. I think the competition on ESPN will encourage more of those people to answer in the future. Paul Jarley: Final question, 10 years from now, are Excel competition still going to be on ESPN? Will they be rivaling other eSports? Sean Dennis: When I watched the competition, I loved it. One of the thoughts I had is that I didn’t really know what I was watching. I didn’t understand what was going on behind the scenes in Excel, and I think for this to get to the next level, they’ll have to continue to evolve. I think the evolution of going from a tournament down to a survival of the fittest where you kick somebody out every five minutes, I think that’s a good evolution. I think the more that this starts to appeal to the masses, the stronger the chances are that it stays on ESPN. Adrian Bouchet: You look at the sports that survive on ESPN, they’re the sports that have a sort of an ecosystem, right? I always tell my class, we didn’t just follow Michael Jordan when he got to the Bulls. We knew who he was at college. Nowadays we even know who these players are at high school. So my question would be, can you make Excel relevant at the high school level so people follow it kind of up through the value chain? But I would say yes, as ESPN gets more segmented and certainly there’s only so many SECs and NFLs and MBAs they have to have programming. So I would say, sure. Paul Jarley: Live content is king these days. Bill, what do you think? Bill Jelen: I think there’ll be some competition somewhere, whether it’ll be on ESPN or not. I’ve had a long running joke for 20 years that someday Excel would be in the Olympics. This half hour gig on ESPN is just the first step to that. I think eventually, whether it is just on, just on ESPN The Ocho, that’s the day of seldom scene sports. We’re up against Corgi racing and other kind of things that … Paul Jarley: Wet stair climbing. Bill Jelen: Yeah, slippery stair climbing, which makes primetime. For me, the first year we were at a 4 a.m. slot in New York and then got moved up to a 7:00 a.m. slot, which is a huge increase because the people who were using Excel 40 hours a week are getting ready for work. I thought that 7 a.m. spot was really good. So I think it’ll evolve. I would love to see Excel not just on The Ocho, but just, “Hey, here’s an Excel competition once a month or whatever.” That would be amazing. David Clayton Brown: I think we’re going to have collegiate competitions. The Collegiate National Championship, World Championship are going to be where the big airtime comes in. Last year we had Ohio State was the team that won here, and one of their students held up a sign that says, “Michigan fans use Google Sheets.” We’re going to see more good rivalries like that building up. Hopefully we see college competitions, schools scrimmaging each other. Maybe even we have the PAC 12 can survive through Excel eSports perhaps in the future. Paul Jarley: Andrew, you’ve probably thought the most about the future of this. What do you think? Andrew Grigolyunovich: My vision is that there are crowds cheering in events where we’ll have Las Vegas finals in personal finals prize money of millions dollars to the winners just like it should be so that it drives the players so that the players will be able to live off the prize money and live off the tournaments. I mean the main stars of the competition. It’s going to be huge and it’s going to be on ESPN and hopefully not on The Ocho. Paul Jarley: It’s my podcast, so I get to go last. I am all in on the student competition version of this event. Gamification is a thing in education. It’s a great way to motivate learning, feature student skills and give the top contestants the kind of bragging rights that can land them great jobs. It can also bring visibility to the school. I’m so in that we’re going to join David’s competition and win it. Is Excel in eSport? I don’t think so. Using Adrian’s three criteria, a fair number of geeks probably see it as easy to play and the organizers have the support of Microsoft. But as Sean noted, I don’t think it passes the compelling viewing test. I wasn’t really sure what I was watching and how contestants were winning. That said, the pandemic gave the Excel competition its first window on ESPN and the Hollywood Strike provides another opportunity for Excel competitions to improve their watchability and earn a place on network tv. After all, the E and ESPN stands for entertainment. My staff tells me pickleball is going to be the next big thing, not Excel competitions. But I wouldn’t be surprised if Excel finds a home on the financial channel or some other similar niche business oriented network complete with betting odds. So what’s your take? Check us out online and share your thoughts at business.ucf.edu/podcast. You can also find extended interviews with our guests and notes from the show. Special thanks to my new producer, Brent Meske, and the whole team at the Office of Outreach and Engagement here at the UCF College of Business. And thank you for listening. Until next time, charge on.   Listen to all episodes of “Is This Really a Thing?” at business.ucf.edu/podcast.

Reality TV, strikes and cyborgs, OH MY! Hollywood may be heading toward AI-generated content, and we all may already be living in a cyborg state … so was this episode AI-generated? This is part two of a two-part episode. Be sure to go back and listen to Part 1: Will the Hollywood Strike be an […] The post Part 2: Will AI Depopulate Hollywood? appeared first on College of Business.

More reality TV? AI-generated “South Park” episodes? Is this where Hollywood is heading thanks to the latest writer and actor strike? We find out from UCF experts how, and why, the strike will be resolved and how AI will play into plans moving forward. This is part one of a two-part episode.   On July 14, 2023, members of the Hollywood actors’ union, SAG-AFTRA, stood with screenwriters, forming a picket line outside Amazon Studios in Los Angeles, California. This marked the commencement of an actors’ strike. SAG-AFTRA joined forces with the Writers Guild of America workers, who had been engaged in a determined strike against the Hollywood studios for three months. This joint walkout, a rare occurrence not witnessed since 1960, underscores the magnitude of the situation. The collaboration between SAG-AFTRA and WGA intensifies the impact of the strike, with the potential to bring Hollywood productions to a complete standstill.   Featured Guests David Luna, Ph.D. – UCF College of Business Robin Cowie – Phygital Experience Creator & Feature Filmmaker Cassandra “Cassi” Willard, J.D. – Instructor, Department of Management, UCF College of Business & Program Director, Blackstone LaunchPad at UCF Ray Eddy, Ph.D – Lecturer, Integrated Business, UCF College of Business   Episode Transcription SAG-AFTRA President Fran Drescher in a press conference July 13, 2023: The entire business model has been changed by streaming, digital, AI. This is a moment of history that is a moment of truth. If we don’t stand tall right now, we are all going to be in trouble. We are all going to be in jeopardy of being replaced by machines. You cannot change the business model as much as it has changed and not expect the contract to change too. We are labor and we stand tall and we demand respect. Paul Jarley: Oh my, this is going to get really complicated. In the meantime, prepare for a new round of reality TV. This show is all about separating hype from fundamental change. I’m Paul Jarley, Dean of the College of Business here at UCF. I’ve got lots of questions, to get answers, I’m talking to people with interesting insights into the future of business. Have you ever wondered, is this really a thing? On to our show. The writers and actors haven’t been out on strike together since 1960. Then, it was partly about how television was impacting the film industry and getting residual income for writers and actors from movies that were then being shown on TV. The business model was changing and labor wanted its share. Screen Actors Guild President Fran Drescher’s comments at the start of this podcast note that technology is changing the business model again with streaming services, digital media and AI among the main drivers. This is a very complicated situation, so complicated, that we couldn’t fit it into our usual 25-to-30 minute podcast. So we decided to split it into two parts. Today we will tackle the basics of the strike and how and when we see it being resolved. The second part, we’ll do a much deeper dive into AI and Hollywood and how that is likely to change the industry going forward, especially for writers and actors. Essentially, we want to answer the question, will anybody be left in Hollywood in 10 years?   As always, to shed light on these topics, I’ve assembled a group of UCF experts. Cassandra Willard is an instructor and Program Director at our Blackstone Launchpad and a practicing attorney with extensive experience in entertainment law. Ray Eddy is a lecturer in our Integrated Business program with an interest in understanding consumer experiences. Ray is not just an academic, he has worked as a stuntman, started his own production company and written, directed and starred in several performances. If you’ve been to Walt Disney World in the last several years, you may have seen Ray playing Indiana Jones, in Indiana Jones: Epic Stunt Spectacular. David Luna is a professor in our Marketing department. He is currently working on several projects studying human machine interactions in the context of chatbots, intelligent agents and AI generally. And last but not least is Robin Cowie. Rob is a graduate of our motion picture technology program. He’s a little hard to summarize, having worked in a variety of positions in the industry, from EA Sports, to Nickelodeon, to the Golf Channel, to the Dr. Phillips Center for Performing Arts. Today, he is President and CTO of Promising People, a company that provides training and placement for people who have been incarcerated. But you probably know Robin best from his work as co-producer on “The Blair Witch Project.” Listen in. So there’s two things I know about technology in all my years being Dean. One of them is the marketing is always, always ahead of the reality. What the technology can actually do is usually some significantly paired down version from what the marketing people are telling you that it will do. At the same time, I also know that resisting technology is futile. We can go all the way back to the Luddites in their attempt to get rid of mechanized levers back at the beginning of the Industrial Revolution and how that worked out for them. I’d like to start by grounding us in the present, and I’m going to rely on Robin and David for doing this. So I want to get some sense about what AI can actually, really do today. David. Can AI create an entire movie script, one that would lead to a successful movie? David Luna: I think it is helpful to think about different genres and the fact that AI may be better at some genres than other genres. For example, if you’re talking about superhero movies, maybe an AI could write a script that it takes a franchise and and sort of perpetuates it in a fairly cheap way. But, but then when you’re talking about character-driven dramas as a different genre, maybe that, it would be a little more tricky. And what we are seeing in some of these attempts to have say, ChatGPT, write a script, is that oftentimes it does write a script. It may or may not be an interesting script. But one of the flaws that it generally has is that characters sort of contradict themselves. When a consumer observes another person, they infer certain character traits, so you form a mental image of what the other person is like, and then that character acts in a manner that it contradicts their personality then there’s a problem. And that’s what it seems to be happening with some of these scripts. On the creative side, altogether, what I would think, it seems like a partnership between an AI and a creative would work best with the creative supervising the AI’s work. It’s sort of an iterative process directing the AI, which is doing the more menial writing work in the, in the right direction and to make sure that everything is consistent and interesting. Paul Jarley: Thank you, David. So Rob, you represent production here. So could the studios release and entirely AI-created movie today? Is that technically possible for them to do? Robin Cowie: No, I think at this very moment in time, given the state of AI, no, it is not possible to do a completely AI-generated movie. There’s a lot of technical reasons that I can list out for why that’s the case. The most recent, and then when we say recent, this is literally last week, is that there’s an organization called Fable, who have released a series called “The Simulation.” These are a series of basically a parody of “South Park” episodes and they are complete “South Park” episodes with voice and, and everything like that. And that’s probably the most extensive we’ve seen so far, but in this exact point in time to release a feature film, no, not possible right now. Paul Jarley: So I know both the writer strike and the actor strike is about more than just AI, right? There’s been pretty significant changes to those business models, particularly with streaming services that have left I think both the writers and the actors feeling a little bit like they’re on the short end of the stick, particularly when it comes to residuals. Listening to union leaders, I sort of get this impression: We kind of missed on how damaging streaming services would be to our income, we ain’t going to miss it over AI, because if we do we’re all going to be broke. Cassi, what do you think? Cassandra Willard: One of my absolute favorite quotes from one of our former leaders of the entertainment, art and sports section of Florida Bar, he always used to holler at folks that you have to understand it’s called show business because without the business you have no show. And every single time you have an iteration of a different union strike, when you have the guilds raise their hand up, they’re looking to a large extent to safeguard the business side of the industry. Because without the business you’re going to see the entire house of cards collapse. So we need to sort out, and we’re being more proactive, and you see this in each iteration of going through and looking at this, but had we gone through and looked five years ago, pre-pandemic, we weren’t sitting around thinking about AI technology being a big push. We were more concerned about the digital side of things. And now AI rapidly becoming household information, it seems like over just the past few months. Now this is a bigger focus that our greater community is looking to, but our greater community is also looking to support the entertainment industry. We’re seeing great box office numbers, we’re seeing a lot of pushes, but we have to respect those in the industry to make sure that our market does continue and push forward as well. Robin Cowie: Yeah, I love, I really like what you’re saying about business because to me I think that’s the heart of this and I think one of the great complexities here is that technology companies really own Hollywood now and that we live in the attention economy and not the actual revenue economy. So as somebody who literally went through a lawsuit to get a better accounting done because there were days of, still are days of, creative accounting, I’m very familiar with, you know, being sensitive to that. But the argument that they’re putting from the streaming side is that basically this doesn’t make money. The only one who’s making money is Netflix. We spent all of this money in our streaming service and none of them are making money. We’ll open our books to you and we’ll show you. It doesn’t make money. Streaming itself doesn’t make money, therefore we can’t pay more residuals. But the reality is, it does make money. If you’re Apple and people are using all your Apple tools and people are using your hardware and you’ve got their attention, it does make money if you are these bigger tech conglomerates. So what’s really happened is that the monetization model has changed. And so you’ve got a labor union on one side saying, hey, we want to measure this by old residuals. The studio complexes, they killed Blockbuster on purpose because they were losing a huge amount of money to Blockbuster. It was very expensive. Now the days of secondary, tertiary, international markets that’s gone away. One of the reasons why Netflix is leading this in the entertainment field is that they use their technology and win global faster than anyone else. So all I’m saying is it is about the business, the SAG and the Writer’s Guild is all about the business. The problem is you’ve got two different business models that they’re arguing over. Paul Jarley: Well, let’s talk to Cassie about real people who have some legal rights and what those legal rights are. Is there anything that prevents a writer or an actor from entering into an agreement with someone to license their writing style or movie rights in perpetuity? Can they do that now? Cassandra Willard: So one of the interesting things to always consider when you’re looking at any form of contract in the entertainment industry is your contracts are going to be based on negotiation between the parties and any restrictions that would exist existing in our laws right now, or any other encumbrances from unions or guilds or anything of that nature. Now it’s interesting to see the evolution because I’ve been practicing for over 20 years now, and I first started practicing and studying intellectual property under that dark cloud of those file sharing platforms that we’re supposed to ruin the music industry forever and a day. And it’s part of the reason why a decade ago, a member of Congress out and they wanted some details for me about what my thoughts would be on AI as far as ruining employment as a whole. They were researching an article about how AI was just going to completely implode and the robots would take over kind of theory. And ultimately there’s an element of humanity that you’re hearing this common thread that’s always going to exist. And it’s been fascinating for me over especially the past couple of years as some of my clients have pivoted. If they’re doing creative works, they’re linking into AI. If they’re traveling and they need a co-writer, if they’re brainstorming and they need some other ideas, they’re basically using AI as kind of like a group project. But the other thing that’s a deep, deep pull is the fact that these different platforms, these different AI groups that we have that exist, these entities are in a constant push and pull, just like the discussion we’re having right now, as far as who owns what, how it can be mobilized, how it can be exploited, how we can lay claim. Because these different platforms are trying to discern where the intellectual property exists. And as a faculty member, as an educator, we see this from the academic dishonesty, the plagiarism, we see this push and pull as far as originality is concerned.   Our industry is dealing in the same space. We need to figure out if this content is being created by a machine, is it a machine creating it as a work made for hire for a corporation? Since you have humans putting input into it, do these humans still lay claim in this space? So we have to look to see what we can bring to the table and negotiate. And we also have to think long-term because especially when we’re looking at our guild strikes that are going on right now, if you look at the history of these guild striking in the past, a good bit of what triggered these guild striking in the past was technology. It was not negotiating to add certain physical distribution elements to monetize, or not negotiating for certain digital elements to monetize. It’s part of the reason why we add all forms of media now known or here and after discovered, and we expand on the language over time because we’re not running around passing, you know, a Betamax or a VHS tape around a dormitory as the thing that’s going to make us go belly up for infringement. We have so much more mobility in this space. So when we’re now looking at machine-created content, we now need to think, how do we go through and wrap our arms around this so individuals have these rights? And part of it is the content creation that they would own otherwise is the content that they’re creating, truly intellectual property that exist to these individuals or these things that are being created as a work made for hire, at which point they just float up to the parent company that’s paying that check and the intellectual property is outside of their wingspan. But then again, we have to look at the platform that’s serving as kind of the co-writer to see if that co-writer space holds intellectual property rights as well. When it comes to the likeness rights, very similar format. And in the likeness rights side, we’ve had a lot of different actors lay claim to the right of likeness, especially when it comes to subsidiary rights, sales of merchandise, approval of merchandise, things of that nature. You know, weighing in the mention of Tom Hanks as an actor, building a line into the contract with a right to review and approve that approval won’t be, you know, withheld inappropriately, but being able to look at it to make sure that it reflects that right of likeness. So I think you’re going to see some more robust negotiations in this space. You’ll see some more strategy in this space as well. Paul Jarley: Help me to understand though, Cassi, the contours of where the collective bargaining agreement ends and individual negotiation could take place. If I’m Tom Hanks, could I enter into an agreement with Paramount Pictures to give them my likeness in perpetuity for x hundred million dollars if that’s what I wanted to do? Cassandra Willard: You’re going to have restrictions in that space due to our statutes. So our laws are going to put restrictions as far as length of contracts and to other elements that will come into play. We also want to look at just the base level of being competitive in the market to be able to mobilize yourself for future rights. Signing on to some sort of long-term exclusive agreement. You want to make sure you have some fluidity to be able to move on to different projects, into different productions, work in different realms in this space. Paul Jarley: All right, you’re being very lawyerly with me. So how does it end? How does the strike end? Robin Cowie: I think in tears and unfortunately in in tears specifically for the writers, I think they will lose against AI because if you look at all the tech companies, the number of AI engineers in a tech company that make up a tech is actually a very small fraction. But the amount of investment that’s going into AI right now is converse. So there’s no way that they’re going to step away from any of these initiatives and AI, you’re going to lose that battle. You’re just going to lose that battle. On the streaming side, I do think that actors and writers will get some give. And I do think that clarity and accountability for streaming services, that’s the best upside in my opinion for the writers and the actors. Paul Jarley: You agree, Cassi? Cassandra Willard: I think it’s going to be a robust debate for sure, to say the very least. And I do agree with Rob, kind of looking at those different rights. You still are going to have elements of human equity that are going to come into play, but ultimately we also have to look at the longevity in those survival of the industry as a whole. So that’s one element to also consider as the days tick by, that’s going to start to impact the industry as a whole too. And we’ve seen, you know, reality television was born to a large extent out of strike. Paul Jarley: Oh no. Is there room for another round of reality TV? Or might AI-generated Southpark episodes be better? Cassi? Cassandra Willard: That’s the other concern. You’re creating a vacuum of content and talent. So that’s the other element of part of any negotiation are elements of timing and scarcity. So that becomes a space as well. But this is a really unique time in the life of creativity and content because if you defer to AI, you can possibly buy yourself some gap filler if you don’t want to go the reality route, which that’s not something we’ve really seen in previous iterations. Paul Jarley: Rob? Robin Cowie: I will say that understanding human behavior and doing more and more customized content is really going to be there. Look, I’m a big believer in synthesis. I mean, I think we’re all basically cyborgs and I think we’re going to become more and more cyborgs. And it won’t be an uncomfortable cyborg state. It’ll be so intricate to us that we just won’t even realize how much it is that way. And it’s bad because, you know, we’ve seen what the echo chamber of TikTok is like, you know, what the echo chamber of social media is like, and basically we give, you know, we tend to serve up to people more of what they love, and can we do that synthetically with computers? You betcha. You know? So I think as humans, we have to really invest in confronting that, educating people, and instilling a love of humans. Paul Jarley: Ray, I’m going to have you represent all actors here. What do you want your union to do in this situation? Ray Eddy: Uh, yeah. Paul Jarley: No pressure. Ray Eddy: No pressure. Yes, I speak for everyone, exactly. In terms of, you know, acting and stunts as well, you know, they overlap a lot. I think the crucial thing we’re going to look for here is just that it won’t be just farmed out and there’s no need for anyone, any live performers ever again in the future. I think just having some language in there that, you know, we understand that if you need 10,000 extras, we get it, but we need to maintain a human creativity, the human voice, the human passion spirit that goes into artistic creation and eliminating that would be detrimental to the form of art itself. Paul Jarley: It’s my podcast, so I get to go last. I learned a few things today. First, for the time being, everybody still needs everybody here. Producers still can’t make a totally viable product without creative people. The actors may be in a bit of a better position than the writers, but the industry still needs them both. Second, while streaming services are part of the value chain that makes money for their owners, and those owners, the tech companies, will want to continue to make money, strikes don’t make money. So while there are some very serious long run implications to all this stuff, we live life in the short run and there lies the basis for a deal. I see it going like this, history will repeat itself just like in 1960s and the groups will agree to provide the writers and actors greater residuals for streaming on productions that go to market probably after a certain date. Just like in the 1960 strike where the actors gave up residuals on old stuff to get revenue on new stuff. This way everybody understands those new rules. As Rob notes, there are some accounting issues to deal with here, but ultimately it will come down to revenue sharing in some manner. The world kind of lost its mind when ChatGPT 3 was released. It threatens a whole class of work that nobody saw coming, but it, like any technology has limitations. It will be a while before all this shakes out and we know what works and what doesn’t. So in the short run, we’re going to want some people to experiment with the safety harnesses on. That means, limitations on how AI can be used and perhaps how much content can be AI-generated. It also means getting some better data on how consumers will react to all of this stuff, what they will buy and what they won’t. How long that learning takes and how quickly the technology changes is a bit uncertain. AI seems to be getting exponentially better quicker. Humans who produce and consume AI-generated material may take more time to adapt. My guess is that the agreement will be a short one, just a couple years long, and that everybody will be back dealing with these issues again pretty soon. Also, keep in mind that not all of this is likely to be settled at the bargaining table. Issues of intellectual property and the consequences of industry restructuring may end up being dealt with in Washington and the courts. If one thing is certain, the lawyers most certainly will get paid. That’s the short run story in my view. Our next episode, we’ll take a deeper dive into AI and Hollywood and perhaps give you a few insights into the long run. So what’s your take? Check us out online and share your thoughts at business.ucf.edu/podcast. You can also find extended interviews with our guests and notes from the show. Special thanks to my new producer, Brent Meske, and the whole team at the Office of Outreach and Engagement here at the UCF College of Business. And thank you for listening. Until next time, charge on.   Listen to all episodes of “Is This Really a Thing?” at business.ucf.edu/podcast.

As the name explains, The Invitational is the UCF College of Business’ invite-only career fair, designed to connect top business students with employers and college partners seeking to fill internships within their organization. In this episode, Paul Jarley speaks with employers and recruiters to learn the best tactics to help you find your dream job.   Featured Guests Amanda Valiente – Eli Lilly Mateo Perez – Enterprise Rent-A-Car Brittney Brown – City Furniture Dylan D’Orazio – Gartner   Episode Transcription Episode transcription coming soon! Listen to all episodes of “Is This Really a Thing?” at business.ucf.edu/podcast.

A media darling of sorts, UCF economist Sean Snaith’s presentations across Central Florida tend to be an 80/20 mix of economic forecasting and comedy sketches. But the Director of the UCF Institute for Economic Forecasting means business – his forecasts have been named one of the nation’s most accurate. This episode takes a “behind-the-scenes” look at Snaith’s forecasting methods while exploring his thoughts on the state of the Florida economy in 2020.   Featured Guests Sean Snaith – Director, UCF Institute for Economic Forecasting Erika Hodges – Director, Communications & Marketing, UCF College of Business Jessica Dourney – Assistant Director, Outreach & Engagement, UCF College of Business Episode Highlights 1:48 – Paul Jarley introduces Sean Snaith 2:37 – What the Florida economy is going through 3:28 – Commentary from the “Mean Girls” 4:14 – Florida’s housing market 07:04 – Sean Snaith: “King of the Nerds” 11:09 – Growth by industry in Florida 15:06 – Job and population growth in the state 17:01 – Questions from the audience 21:30 – Paul Jarley’s final thoughts   Episode Transcription Paul Jarley:                         Sean Snaith is central Florida’s favorite economic forecaster. Sean has been named one of the nation’s most accurate forecasters by Bloomberg News and as appeared on pretty much every media outlet from the Wall Street Journal to the BBC. But he has some very strange hobbies. Sean Snaith:                       If you’ve heard me speak over the years, you know I have an affinity for SkyMall. Paul Jarley:                         You remember SkyMall, It’s the defunct inflight shopping catalog that survives on the internet. Well, Sean, he might just be their biggest fan. Sean Snaith:                       The Dean called it a fetish, I think, last year, which, that sounds a little dirty. Paul Jarley:                         He’s also a bit of a diva who dreams of becoming a viral internet sensation? Sean Snaith:                       So, everybody can’t be a social influencer though. I mean, I think that’s where they all want to be. I do too. Quite frankly, I’ve got 1300 on Twitter. I don’t know what I can offer to them, but. Paul Jarley:                         And he hates being handled, especially by the college’s so called mean girls. Sean Snaith:                       There’s a group of, largely women, in the college of business and there’ll be shaking you down for money here at the end of the event, but I like to refer to them collectively as the mean girls and they sort of followed me since middle school and they make fun of my clothing and my glasses and things like that. Speaker 3:                           I don’t know if you’ve seen his PowerPoint slides, but we think they date back to the mid 1980s. Paul Jarley:                         Is Sean Snaith really worth all this trouble? Are those forecasts right? Or do those mean girls have a point? Speaker 4:                           That is so fetch. Speaker 5:                           Gretchen, stop trying to make fetch happen. It’s not going to happen. Paul Jarley:                         This issue is all about separating hype from fundamental change. I’m Paul Jarley, Dean of the College of Business here at UCF, I’ve got lots of questions. To get answers, I’m talking to people with interesting insights into the future of business. Have you ever wondered, is this really a thing? Onto our show. Paul Jarley:                         This podcast is a condensed version of a talk Sean gave at our recent Dean Speaker Series, where he provided his economic forecast for both the US and Florida economies. Since Sean had already weighed in on the US economy as part of our podcast on whether the 2020 recession is really a thing, we focused today’s show on his predictions for the Florida economy. We’re calling this the mean girl edition because I’ve given the team the opportunity to take you behind the scenes and play some of Sean’s comments into context. Listen in. Sean Snaith:                       No, no wohoos. Nope. Well thank you for coming out. I see a lot of familiar faces, all members of the greater Orlando masochist club apparently. But welcome back and happy new year. I appreciate you getting up early to listen to my nonsense here for a little while. But we just released our Florida Metro forecast and I sort of recounted my youth, growing up, literally, physically, I was always kind of tall and in order to get tall you have to grow. Sometimes that occurred in big spurts and it caused me a great pain in my knees. Right? Like I would get these lumps and it just hurt because of the growth plates or whatever. I’m not a real doctor, but the condition is called Osgood Schlatter disease. So I think what Florida is going through right now is an economic version of Osgood Schlatter, growing pains. Our two achy knees are the housing market and our transportation infrastructure and they’re not unrelated. Paul Jarley:                         We begin our mean girl commentary with Jess and Erika. They work with Sean on a regular basis and they’ve got some stories to tell about our favorite economist. Jessica Dourney:              His wardrobe is either, I woke up, I’m going to speak at a presentation dressed to the nines with a suit and tie, or it’s Birkenstocks on with socks, cargo shorts and an old tee shirt from North Dakota where he’s from. Or where he lived. Erika Hodges:                    He likes a good crowd. To his credit he definitely, he draws a pretty good crowd on his own. But yeah, he is aware of how many people are in the room, and he asks about that often. Jessica Dourney:              Well, he’s also been called the silver fox before. Paul Jarley:                         Jess and Erika are two of the original college of business mean girls. Back to the presentation. Sean Snaith:                       So the housing market, things are going great in the sense that prices continue to rise at a pace more than twice overall inflation. You can see sales here above where they were at the height of the housing bubble. Median prices continue to rise. They’re higher than they were at the height of the housing bubble. So this is a pretty, pretty solid housing market. Sales continue to rise year over year. Prices, you can see, statewide up almost 4% year over year. Again, is this another housing bubble? I get this question and we’ve probably addressed it the past three years and I’m going to give you the same answer. No, it’s not a housing bubble this time around. I mean I know Florida, man you can’t put it past them to do it to themself again. Sean Snaith:                       But a 3.6 months of inventory, and I don’t know if my colleagues in the real estate school would agree with me, but I think six to nine months depends when you talk to, of inventory, is a balanced housing market. So anything less than that, six months of inventory is what the realtors in the room would call a sellers market, to what the economics professors would call a shortage. In markets where there’s a shortage, what happens to price? Yeah, that’s right. You didn’t know there was a quiz there was. The bigger the shorters, the faster prices rise. So if you look around the state at different metropolitan areas, Tampa’s a good example, their inventories under three months, and they have some of the fastest price appreciation in the state. So there is a real shortage in the housing market. Sean Snaith:                       The other thing that’s absent this time around that was there in 2004/05/06 that really fed the beast, if you will, is easy money. You cannot just walk in and get a mortgage the way you could in 2005 without a job, without assets, without anything. So in absence of that easy finance and in light of the fact that we do have a real shortage, the price appreciation that we’re observing to me is not something that’s alarming. It’s just a sign of an absence of supply. Sean Snaith:                       Here in Orlando, it’s even worse. 2.6 months of inventory. Population growth remains very strong. Economic growth, job growth, all very strong in Orlando. It is one of the fastest growing job markets in the country, certainly in the fastest in the state of Florida. That continues to put upward pressure on prices. This low inventory. We have an influx of population. We saw from Puerto Rico, the wake of fiscal economic crisis compounded by Hurricane Maria, and now they had an earthquake. Geez, I don’t know how Puerto Rico got God mad, but some something’s not right. But I wouldn’t be surprised to see another influx, in the wake of this latest natural disaster. Paul Jarley:                         Jess and Erika, there’s some of Sean’s toughest critics, but it’s all in good fun and they try not to hurt his overly sensitive feelings. Jessica Dourney:              When we had the AUBER conference, we went to Medieval Times and he was actually knighted and was known as the homecoming King of the Nerds. So the nickname has stuck, King of the Nerds! Paul Jarley:                         Most economists, by the way, well they don’t really have feelings, but Sean, back to the presentation. Sean Snaith:                       All this population into the area, it continues to put pressure on the housing market. So affordable housing is one of the major challenges that we face right now. It’s not unrelated to transportation. How did we get so far behind the curve? Well, builders in 2013/2014, and again in 2015/2016, sort of plateaued when it came to housing starts, and you could see that in the bars. There’s this kind of a flattening out for a year or so and then they picked up again. But during that entire time period, the demand for housing continued to grow robustly. From 2012 on, Florida was outpacing the national economy in terms of GDP growth, in terms of job growth, population growth. Of course in the state we’re back close to that a thousand new Floridians a day, and that all feeds demand for housing and those are the underpinnings of it. But supply just didn’t keep up. Sean Snaith:                       So now we’re behind the curve, still playing catch up. Ultimately it’s when that supply gets to the market that’ll help alleviate, and dampen some of that price appreciation. Statewide, as I said, population growth is solid. I mean if you had a coin on one side it was population growth, the flip side of that coin would be economic growth. More people in a region means more economic activity it’s just by default. Sean Snaith:                       This river of a thousand Floridians a day has three tributaries, right? You’ve got domestic migration to the state, whether it’s retirees moving down to the villages or Margaritaville or whatever, jimmy Buffett’s new retirement. That kind of makes me sad in a way, that Jimmy Buffett’s in the retirement village business, right? I don’t know. And migrants coming to the state for job opportunities, right? So we’ve got that domestic migration, we talked about migration from outside the US, whether it’s from Puerto Rico or for international locations. Florida continues to be a magnet for South and Central American migrants. Then lastly, birth rates exceed the death rate in Florida now. So we’re making Floridians faster than we’re losing them. So all that feeds into continued economic growth, really, for the foreseeable future. Paul Jarley:                         You might be wondering how Sean has time to process all that economic data. Well. He’s got an army of students working for him. Speaker 8:                           Hi, I’m a non-identified student researcher under Dr. Snaith at the Institute for Economic Forecasting. Paul Jarley:                         Only one was willing to go on the microphone. Speaker 8:                           Researching under Dr. Snaith has been a great experience. It’s quite sophisticated, really. The most important thing I’ve learned from Dr. Snaith is when in doubt, use the magic eight ball. Paul Jarley:                         Magic eight ball or not. Sean’s economic forecasts seem to be pretty accurate. More on that later. Sean Snaith:                       Unemployment in the state is even lower than it is nationally. You know the last time we got unemployment rates this low in Florida was at the height of the housing bubble, right? This unsustainable sort of crazy phenomenon that was going on, drove unemployment down to 3.3%, now there’s not really anything crazy and unsustainable. We just have a strong economy pretty much across the board and it is a driven the strength in the state’s labor market. State GDP continues to grow faster than what is the case for the United States and we’re forecasting that that will continue here in Florida. Payroll employment, solid growth. Florida’s not quite growing twice as fast in terms of jobs as the national economy, but it’s close to double the national rate of job growth. Sean Snaith:                       So again, this is a really pan sector in the economy. This is not an unsustainable bubble as was the case of 2005 and six, this is just a really strong economy that we have. I’ll quickly go through some of the sectors here. The construction sector, that’s one of our fastest growing sectors, it’ll continue to be going forward. All you have to do is look out the windows to see evidence of it here in central Florida billions of dollars of infrastructure projects, billions of dollars of private investment projects I mean, it’s hard to find a major road anywhere in this area that doesn’t have some construction going on right now. So couple that with the housing market, and the construction sector remains quite strong. Professional business services. This is the fastest growing sector right now in Florida’s economy. Most of you probably fall into this particular sector, architects, accountants, white collar jobs, high skilled, high paid jobs, and they’re growing rapidly. Sean Snaith:                       Leisure, hospitality. I mean tourism is just, it’s been pretty remarkable. It was the first sector to start to grow again after the great recession ended back in 2010. People during the financial crisis, the great recession, “Hey dad got laid off and his 401k fell 50%, what are you going to do now? I’m going to go to Disney World.” No you’re not, those trips get postponed in those situations. That kind of leisure spending is a low hanging fruit when households are tightening their belt. Sean Snaith:                       But once the economy stabilized in 2010 and things started to turn around, the recession ended, the tourism picked back up and hiring in that sector took off. It’s remained robust really ever since. This is in the face of a lot of headwinds, right? We’ve had hurricanes, we’ve had Zika, we’ve had red tide. We’ve had all kinds of things that, that should have taken a little wind out of tourism sales. But that has not been the case, and this will continue to be a cornerstone to the state, and certainly our region’s economy. Sean Snaith:                       Financial activities. We’re finally seeing in forecasting some job growth in this sector. I was on for a long time, the Dodd-Frank soapbox, kind of rant and raving about that. Now it’s just mostly the kids that are on my lawn that bothers me. But what we’re seeing and this administration is addressing the regulatory environment in a way that hasn’t been done for a really long time. So the first year of the administration we saw 22 deregulatory acts for every one regulatory. Year two that ratio was 13 to one, year three it looks like it’s about 20 to one, including addressing some of the issues with, with Dodd-Frank. Sean Snaith:                       I mean a regulation that large and that complex always, always brings with an unintended consequences. So the impact, for example, on small community banks have this increase in compliance costs. I just don’t think was part of the thinking back when this law was put together. I mean, I think it was put together, I don’t want to point fingers, play politics with it. It was put together in a time of fear and uncertainty and we had gone through this horrible crisis that nobody wanted to see repeat. So at the time when you’re doing something out of fear and all that emotion, anything that contributed to this crisis, “We’re going to come up with a new Bureau and a new rule and a new regulation and we’re going to stop it.” Sean Snaith:                       Next thing you’ve got a 2,600 page law, that still isn’t fully implemented by the way, signed into law in 2010. But now that’s being addressed, the financial sector, I think, is going to start to see some growth. Over the past 10 years, I believe, there’s only been three new banks in the entire State of Florida. That’s a problem in a market economy. You need new entrants into every sector to drive competition, to drive innovation. But I think regulation kind of choked some of that off. Sean Snaith:                       So looking forward, over the next three years here, average job growth, you could see professional business services, construction, hospitality, health services, I think will continue to grow. I mean, we’ve got an aging population. As I said, you need a doctor for every body part when you get older. So the demand for health services is going to continue to grow in Florida. Paying for it, we still haven’t figured that out yet, but I thought the Affordable Care Act was a solution. But now we’re saying that’s not it. So I don’t know what the answer is exactly. But the demand is going to drive job growth in that sector going forward. Sean Snaith:                       Looking across the 12 metros that we currently forecast, you could see that Orlando has very solid population growth. Lakeland is booming. I don’t know if you’ve been to Lakeland lately. I know, I know. It’s not all just Lego buildings. There’s actual big cranes and real buildings going up because Lakeland in position between Orlando and Tampa and they’re really going to benefit from the growth in those two Metro areas, and currently are. Job growth, you could see, well above what the state is producing we’re forecasting for Orlando. I mean this is a really good economy. Sean Snaith:                       I don’t want to jinx it, but I mean it’s hard to find a flaw. I mean other than our achy knees of transportation and housing, the rest of the checkup, the bill of health is pretty, pretty good. I wish I could get the same from my physician. So looking here at our Florida County Metro area you could see growth even faster than what we’re forecasting for the state, much stronger and really across sectors. I think this is likely to continue. I think there’s enough momentum here in central Florida barring some sort of black swan event to carry us for several more years of pretty solid growth. With that I’ll happily take some questions or go back and sit in my office. Yes. Speaker 9:                           So you listed leisure and hospitality as a growing sector. I don’t know if you read Orlando Says No, but they had a nice little segment series called Laborland, which kind of went into affordable housing and many who work at the parks and leisure can’t afford to stay in homes. You saw Universal Orlando pledge $100 million affordable housing, at the same time receiving some money from the county to build roads, which is probably not related to each other at all. But the question becomes, is affordable housing a significant block to the growth that you’re talking? Because if I can’t afford to live where I’m going to work, then I can’t work properly. Sean Snaith:                       Right. I mean, I think it’s a bump in the road. I don’t think it’s necessarily a road block, but it is something that that needs to be addressed. Now Disney has announced a move into the $15 minimum wage, I think Universal’s done the same. I don’t necessarily believe they’re doing that out of the goodness of their theme park hearts. I think this is a strategic move to make sure they have the workforce in place to satisfy an increasingly larger customer demand. Sean Snaith:                       But the transportation, I mean we have to, first of all, you need affordable housing. Typically to get affordable housing. Right? If you look around the country at major metros as they’ve grown, where do you live in DC if you want affordable housing? Georgetown? No, you go out to West Virginia. Well how do you get from West Virginia to your job at the Veterans Affairs Department? You take a train, you take the metro, you take something. So we’re piecing it together, right? We’ve got SunRail, we’ve got Brightline. I think public transportation in central Florida really needs to be addressed, and have a source of dedicated funding so we can get those people who might have to come in from Lakeland to Universal or Disney. Sean Snaith:                       If you look at surveys of consumer expenditures for the lowest 50% of US households, the two largest components of spending are housing and transportation. So those two things can really, I think, improve the plight of folks in Laborland, as that story called it. Yes. Speaker 10:                         Could you talk a little bit about the upcoming election? Sean Snaith:                       Oh boy. Speaker 10:                         Or is that next meeting? Sean Snaith:                       I don’t know. What’s college is political science in? Maybe we should get those suckers. Yeah, I’ll talk about it. Sure. My speaking career here, it’s been about 20 years now, I started doing this- Sean Snaith:                       I’m going to go out with a bang. You might want to videotape this and you could tweet it, and I’ll be fired before lunch. Speaker 10:                         You know I’m not the only one that wanted to ask. Sean Snaith:                       Yeah, of course. But no. So I mean, in my speaking career you never really know your audience. I mean, I kind of know some of you, but I mean you don’t, so you stay away from politics, you stay away from sex, you stay away from religion. Right? Some people are Democrats, there’s all kinds of perversions in the world. See actually, it depends where I’m speaking. I change the party, right? So when I’m in Kansas I say Democrats, when I’m in California, I say Republicans, it gets the same laugh. Sean Snaith:                       No. My feeling on this, I think incumbency is a big benefit. I think that the economy is particularly strong and unless something really goes off the rails, I would be surprised if the president was not reelected. But who knows? I mean, I sure surely didn’t predict he was going to get elected the first time around. So we’ll see. I mean I think politics has really changed dramatically. It used to be right, it’s the economy stupid. That was it. I’m not so sure. But if it’s the economy then I think he’s in a pretty good place. Speaker 11:                         Well, thank you Sean. Sean Snaith:                       Yeah. Appreciate it. Paul Jarley:                         The mean girls have a point. Sean is high maintenance, but in my world, like many others, notoriety has its privileges. Sean has been named one of the nation’s most accurate forecasters by Bloomberg News, and has appeared on pretty much every media outlet from the Wall Street Journal to the BBC. Who cares if it’s because of a magic eight ball? Whatever method he’s using, it appears to be… “fetch.” Paul Jarley:                         Sean’s ego doesn’t need inflating, but let’s hope he’s right about the Florida economy in 2020. If so, the roaring ’20s will be off to a good start, and my May graduates, well they’ll have plenty of job offers. What do you think? Check us out online and share your thoughts at business.ucf.edu/podcast. You can also find extended interviews with our guests and notes from the show. Special thanks to my producer, Josh Miranda, and the whole team at the Office of Outreach and Engagement here at the UCF College of Business, and thank you for listening. Until next time, charge on. Listen to all episodes of “Is This Really a Thing?” at business.ucf.edu/podcast.

In the midst of the longest economic recovery in American history, the big question is when the next recession will hit. With unemployment reaching record lows, job growth skyrocketing and consumer confidence at an all-time high, some economists see no end in sight for the expansion that began in 2009. On the other hand, manufacturing is at a 10-year low while the U.S.-China trade war continues. Can the U.S. really avoid a recession in 2020? Or is the bubble about to pop?   Featured Guests Glenn Hubbard ’79 – Economist; Chairman of the Board, MetLife Inc. Sean Snaith – Director, UCF Institute for Economic Forecasting John Solow – Kenneth White and James Xander Professor in Economics, UCF College of Business Sami Alpanda – Associate Professor, Economics, UCF College of Business Episode Highlights 0:48 – What’s most likely to cause a recession? 2:38 – Where the U.S. economy currently stands 4:29 – Thoughts from a microeconomist 6:20 – How consumers play into today’s economy 9:06 – The role of political tension in the economy 11:18 – Paul Jarley’s final thoughts   Episode Transcription Transcription coming soon! Listen to all episodes of “Is This Really a Thing?” at business.ucf.edu/podcast.

A lot of people don’t really like change. But can they be coached or managed through the change process to understand and truly appreciate its benefits in the workplace? Guest host Thad Seymour, Interim President of UCF, introduces a panel of staff members from Addition Financial to discuss their recent re-brand initiative and what they learned from undergoing a massive, company-wide change.   Featured Guests Thad Seymour, Ph.D. – Interim President, University of Central Florida Jordan George – Head of Leadership & Talent Development, Addition Financial Christina Lehman – Marketing Manager, Addition Financial Kerby Pickens – Manager of Leadership & Talent Development, Addition Financial Episode Highlights 0:39 – Introduction from UCF Interim President Thad Seymour, Ph.D. 2:26 – The difficulty of change within an organization 8:22 – How to implement change 16:27 – What makes people resistant to change? 19:34 – “How Stella Saved the Farm” 29:20 – Common mistakes to avoid as a leader 40:27 – Addition Financial’s experience with change 46:36 – Thad Seymour’s final thoughts   Episode Transcription Jordan George:                 We’re really excited to dive into this topic around changed management. Something that I know that you have overseen a lot in your time at UCF and certainly we’re experiencing a lot internally right now with the name change from CFE to Addition Financial. Getting ready for an acquisition in the next couple of months here. So as we think about change and how disruptive it can be, why is effective change management so difficult? Paul Jarley:                         Well, the short answer is people don’t like change. It’s uncomfortable for them. But if you drill down into it, I think it comes down to a few things. If your change is very fundamental, a lot of people came to the organization, they were attracted to it maybe because of a specific mission or set of values or culture that you have. And if they see that change is threatening those things, they can have a very emotional reaction to that. People care deeply about those things. And they feel like they fit in an organization. And if they think that change threatens their fit with the organization, that can be a pretty traumatic experience for them. Paul Jarley:                         Secondly, organizations develop compensation systems and other kinds of reward systems that are in place to encourage the kinds of behaviors and outcomes that they want. And people know whether they’re winning or losing under those systems. Or perhaps they’ve come to be comfortable with wherever they are kind of in the hierarchy of that system. And if those initially proposed change is going to threaten that they get pretty nervous about that. That’s their livelihood, at one level, and that can be very disconcerting. Another real problem here is generally in a change process, the costs of the change are borne first by people. They’re really well known and they’re at a minimum irritating and maximum kind of threatening to their security. The benefits are all about the future. And those are kind of fuzzy and they’re kind of unknown. Paul Jarley:                         So unless you have a change that’s being motivated by something that’s really compelling and urgent and threatens the entire organization, and it’s just going to force a change, people tend to focus on the cost side of the change, rather than the benefit side of the change. If you’re a leader in the organization, the hardest thing I think it is for a leader to do is to get people to see a future they have yet to experience. That’s really, really difficult for people. And if they don’t see that future experience as something that’s going to benefit them personally, they’re going to resist it. Jordan George:                 I like what you said about, we receive the cost of the change before we receive the benefits of the change up front. There’s that initial reaction of seeing what this is taking away or how this is going to make my life more difficult, or how I’m going to have to adjust, even if ultimately the outcome down the road is really going to be a positive one. I remember we went through that a couple of years ago, we went through our core system conversion and everybody who was here then just let out of collective sigh. But it was a really stressful time for a lot of people who had been here for a while, because you’re basically taking the core system that everybody operates on day in and day out, and changing it up. So your day to day is changing, even though the new system was radically better. There were a lot of people who were just really hesitant to let them go. Paul Jarley:                         Absolutely. I think that happens a great deal. And no leader comes into it to announce a change initiative and says, “We’re going to work less now.” Jordan George:                 I’ve yet to hear Kevin Miller say that. Paul Jarley:                         That’s just not how that works. Jordan George:                 Yeah, right. So Christina, you came in at a time when Dean Jarley was talking about how the culture shift changes and how people as they come into the organization may be attracted to one thing, then that’s changing. And that seems a little threatening. But you’ve come into the organization at a time when we were already changing. You came in right at the height of our brand redesign. So what was that like for you? Christina Lehman:           I did. I just started six months ago. So I started here as CFE but entrenched in the middle of this rebrand. I’m not only learning about CFE and me, but then I’m also in the process of who’s Addition Financial and what does that mean for us as an organization because I’m learning two organizations at the same time. But there’s so many people, so many team members in our organization that have been here for so many years. So I can’t even imagine how that change must have been for them. And I think something that makes it easier is just trust. And Kevin Miller is really big on communication, and communicating, and speaking about the change, and he’s wrote so many emails and so many week and x about this, and I think that really helps the growth and understanding of why we did it. Paul Jarley:                         Well, that’s that’s absolutely true. The first part of any change process is to explain to people why you’re doing it. And honestly, you have to explain that to them until you’re sick of hearing yourself explain that to them. And then you should explain it to them some more. Christina Lehman:           Yes. Paul Jarley:                         That’s just about how that is. The why is really important. And the deeper the kind of change that you’re going to make, the more compelling the why needs to be right. It’s one thing to say we’re going to change how we’re doing certain things. And people might be uncomfortable like that, like with your IT system. At least they knew that the old system might have been terrible, but they understood the rules of engagement with the old system. And now you’re changing the rules of engagement, that’s going to cause some friction. But that’s a very different thing than coming in and to people, “We’re not going to be something different than we were before.” Kerby Pickens:                  And so, Dean Jarley, change can be seen as something disruptive or something scary. So how do we implement successful change? Paul Jarley:                         Well, it’s a long process to be quite honest about it. And it’s one that’s fraught with a lot of difficulty, but explaining that need for change is kind of the first step. What’s the compelling reason for the change? And sometimes that coincides with a leadership change. Frankly, that happens a lot. And it can happen for two different kinds of reasons. Sometimes the board will identify a need and understand that they needed a different leader from the kind of leader that they had before in order to implement that kind of change. And it’s not uncommon in that situation for that leader to come from the outside. Sometimes they come from the inside. But it’s almost certainly the case that the new person is the opposite to the last person. I was the opposite of my predecessor and I’ve known Kevin and Joel a little bit. Yeah, not the same guy. We can all agree. They’re just not the same person. I know I interact with both of them very differently. Right. Paul Jarley:                         If you come from the inside, you said something really important a minute or so ago. People kind of know who you are and there tends to be more of a trust factor associated with that. When you’re a leader and you come in from the outside nobody trusts you. Christina Lehman:           Yep. Jordan George:                 Christina goes, “Yep.” Paul Jarley:                         Well, that was my situation. So one of the things in that situation that you have to do is you have to borrow somebody else’s trust. And the way that you do that, once you’ve got your idea for change and why it’s important, and you can articulate what that is, you have to get your top leadership team kind of aligned on. So you need to hash out any concerns that you have before you’re going to take that public. If you’re coming in from the outside, you should do an assessment of who on your leadership team people do trust. Because you know what, as soon as you say something, they’re going to go right to that person. Jordan George:                 Yeah, that’s a great point. Paul Jarley:                         And a lot of times they’ll run to that person because they want to test whether or not they can say something to me as the leader in that situation. So if that person isn’t on board, that’s a real problem. But even more generally, inconsistency is a killer. For those of you who are parents, how many times does a kid try to split mom and dad? Jordan George:                 Yep. Kerby Pickens:                  Yep. Paul Jarley:                         You’re going to have that exact same dynamic here. That doesn’t mean everybody’s going to agree on every detail. That’s not going to happen. And you want to be really careful here because people have a tendency to tell the leader what they think the leader wants to hear and that’s a really bad situation to be in. So you kind of have to have that sweet spot where everybody understands what the goals are, and the need for change, but can be kind of flexible on how you get there. So how do you build a culture, whether it’s within a team within an organization, where people tell the leader the truth, instead of what the leader wants to hear. Paul Jarley:                         I know you mentioned trust and trust is a big component of that. Obviously, before you get to that trust, it’s going to be really difficult for people to come up and be honest with you. But as you move through that process as a new leader coming in, and maybe Christina, you’ve experienced some of this and you want to weigh in on it, or Kerby. How do we, within our teams move beyond people telling us what we want to hear or what they think we want to hear, to really being honest with us and giving us the feedback that we need in order to make the team and the organization better? You want to reward honesty, not punish it. That’s kind of the short answer to that. Paul Jarley:                         You can also sometimes identify by talking to your people who sort of more prone to do that anyway. If you can find out who they are putting them in public forums, or if they’re willing to do that and let others see how you react to that. That’s not a bad thing. Jordan George:                 All right. That’s the opposite side of the coming in and borrow someone else’s trust, and then find your most vocal person and let them be the mouthpiece for the rest of the team that may be too afraid to say. Kerby Pickens:                  But I just had an interesting point come through the chat. It’s someone asked, “But when does that sort of truth telling become where maybe you are detracting from a team or you’re starting to turn into maybe not being a team player.” And I did that in sort of air quotes. I think maybe that’s a fine line. Paul Jarley:                         Well, that will depend on your leader a bit, but I guess I would characterize it this way. Every organization should have things that are not negotiable. If you do not sign on to those things, you just shouldn’t be here. And those tend to be the values of the organization. Generally speaking, sometimes there’s some key behaviors associated with those values too, but we can argue all day about how to get there. That’s an entirely different matter. And that’s the line I’ve always kind of used when I’m managing up and I’ve been managing down. Kerby Pickens:                  I think that’s a really important point because we’ve kind of mentioned leaders in the scenario, but we’re not talking about maybe leaders of people, but everyone, you are a leader of yourself, of your daily work. And so, managing up is the term where you maybe see a need and using your influence in a way that is maybe outside of what you have jurisdiction over. Jordan George:                 Yeah, absolutely. Paul Jarley:                         Well, because every organization has key influencers in them. There’s two kinds of authority, there’s formal authority, and then there’s informal authority. And during any change process, it would be a huge mistake not to understand where the sources of informal authority are, and making sure that you’re in touch with those processes. That’s really, really key. Jordan George:                 That was one of those things that I learned the hard way very early on in my career, was the value of those informal influencers. So if you’re listening to this today, and you’re saying well, I’m not a manager, I’m not a formal leader in the organization, I don’t really think this change management stuff really has a lot to do with me. Really evaluate the role that you have culturally on your team or within your branch within your department. A lot of you that have been here for quite a while, we’ve got more than a third of our organization that have been here 10 years or more, several people that have been here 25, 30, 35 years, think about the role that you play in swaying the opinion of those around you. And if your immediate reaction is to be critical to something others are looking to you to see what you’re going to do. You may be not indirectly influencing them on that. And likewise, if you’re really passionate and supportive of something, the same is going to be true there. Paul Jarley:                         So a really good example of that are administrative assistants because administrative assistants know everyone, everyone interacts with them. They have really diverse network. And so yes, they can have a lot of influence on what people think. Jordan George:                 Oh, yeah, no one gets to Kevin without going through Jeniffer. We know that- Paul Jarley:                         Her name is Tina in my organization. Christina Lehman:           So what might make people resistant to this change, or any change? Paul Jarley:                         Well, I think there are a few things that come to mind. And these are very closely related I think. Change generates uncertainty. People hate uncertainty. They really, really hate it. And that uncertainty can come in a few different ways, really. They may be uncertain about the role as the role evolves, and they’re not really sure what to do. They may feel that they’re ill equipped for the tasks ahead and usually in that situation, a combination of training and clear instructions from supervisors is really, really kind of key. Sometimes people have nagging concerns about whether the plan will work or not. If they don’t see quick results, for example, they might start to doubt the plan. So it’s really, really important in any change process for the leader to have a few very simple measures that everybody agrees, will show what you’re winning or losing. They don’t have to be perfect measures because no measure is ever perfect. Paul Jarley:                         And again, this is more of an emotional response than it is an intellectual one. So if you can find just two or three measures, I wouldn’t say more than three, that everybody agrees is an indication of whether you’re winning or losing and you can use that data to show people where you are in that process. That’s really important. I think milestones can be really important to the extent that the leader can say things like, “We’re going to engage in this process. And when we get to A, then we’re going to do B. And when we get done with B, we’re going to do C, I’ll give you an example. Paul Jarley:                         When I first came to UCF, I fired a department chair and I shut down their PhD program. Those are two of the most disruptive things you can do to a group of people. I brought them all together, and I said, “We are going to engage in an external search for a chair, we are going to get that done in seven months. When we have that new chair, that new chair is going to sit down with all of you and create a new plan to make your PhD program more effective than it is now. We’re going to go out and hire two more senior faculty over that next year. And then we’re going to reopen your PhD program.” We did every one of those things on schedule and on time. Jordan George:                 Just laying out a clear framework for them to know what the expectation was moving forward. And I think what you did there too, was you gave them a little bit of a sense of when normalcy would return, maybe not in the same way, because obviously, there were some things you needed to change, but you let them know clearly when they were going to get back to that world that they were so used to. Paul Jarley:                         So another one. Sometimes the change process requires you to bring in people who are really different than the people that you have. So one of my favorite books of all time is called How Stella Saved the Firm. And How Stella Saved the Firm is a book written by two Harvard faculty members as a children’s book. And it takes you through the innovation and change process. And so, the farm is run by animals, short story. The farm is run by animals and the long time owner of the farm is sick. And his daughter becomes the head of the farm. And she recognizes pretty early that the farm in financial trouble. And it has being run by a project manager who has been there a very long time and has sort of set in his ways. Paul Jarley:                         And so ultimately she asked for suggestions from the employees. Stella is a donkey and Stella had been on vacation in South America, and she met alpacas. And she knew a little something about the luxury fair market. So the daughter brings in alpacas, well, nobody likes the alpacas. They’re kind of smelly. They stand in the fields by themselves, no one will eat with them. Long story short, the alpacas saved the farm. By integrating people who are really different too at a very different thought process can be really fun. Kerby Pickens:                  When I think talking to people resistant to change with our brand change and Christina you kind of deal with this externally, our members who are saying, “CFU is was just fine.” Christina Lehman:           Yes, I help run our social media and about a week after our change, there was a lot of resistance. And I think going back to your story about Stella Saves the Farm, is the comfort zone. And the comfort zone is such a dangerous place. It’s a comfortable place, and it’s a nurturing place. But it’s a dangerous place because if you’re in your comfort zone, you’re not taking any risk, calculated risks. So that’s a scary place to be and that’s when change doesn’t happen. So in your example, they were in their little comfort zone, they’ve been doing the same thing for 20 years, and then this person comes in and wants to disrupt it. And it’s very hard to get out of that comfort zone. Jordan George:                 But once you get out of the comfort zone, that’s when the growth occurs, that’s when you’re stretched and pushed and challenged a little bit. Christina Lehman:           Well, the comfort zone leads to mediocrity. Jordan George:                 Yeah, exactly. Christina Lehman:           It’s essentially what it does. Jordan George:                 Its complacency. It’s just, “I’m very comfortable in my cocoon here. I think I’ll stay a while.” But it’s a fine line between… I had a professor that described it as there’s really three phases, in the comfort zone, there’s discomfort, and then there’s alarm and you don’t want people in alarm. Or at least not for very long Paul Jarley:                         Yeah, that’s right. Jordan George:                 So discomfort is a good place to be because that that causes you to stretch some muscles that might have been under-used in the past and help you grow and change and evolve. But once you get into alarm, that’s when people start to panic, they start to worry about things like, “Will I continue to have a job? Will I be as good as I was in the past? Will somebody else come in and surpass me or replace me?” That’s not a place that we want to have people operate within at least not for a long time. Paul Jarley:                         I agree with that. The term I like, I borrowed it from somebody, is positive restlessness. That’s [crosstalk 00:21:50]. Jordan George:                 Oh, I love that. Yeah, that’s a good one. I love that. Christina Lehman:           I feel like, going back to our members, they felt just like Kerby was saying, “But I like the old CFE,” or they thought, “Oh, they got bought out. This Addition Financial, what’s that? I don’t know who that is.” We actually had to come out and say, “Same great credit union. We’re the same people, same values. We’re just a different name and we’ve done it three other times.” And exactly what you were saying about explain and explain again and explain again, every time I talked to a member online or on Facebook or Will can attest to this. You explain it to them, they’re like, “Oh, you’re not abandoning teachers. Oh, you’re not.” All these things that they speculated in their head we had to explain it again and again, but the explanation calm their fears and brought them to the other side. Kerby Pickens:                  I think that’s important like letting people vent and giving them that opportunity. Jordan George:                 Putting people on your couch is one of the things that I spend a lot of my time doing. We’re all counselors in some capacity. Paul Jarley:                         Exactly. Jordan George:                 Have seat tell me how you are feeling right now. Paul Jarley:                         That’s so true. Jordan George:                 Yeah. Well, I agree, and I had heard similar stories from the folks in the branches in the contact center, there are just some people who are never going to be happy with change, even positive change, no matter how many times you explain it to them. But I think that’s a very, very, very small minority of people. And we saw that with this change, like you were saying, Christina, once we were able to explain it to them, and they understood the why, and they understood that we weren’t taking away anything, this is only going to make things better for them. It’s only going to improve the number of people that we can serve, how we can serve them, the types of products and services that we can provide. Jordan George:                 It was a much easier thing, but I know someone out there will be able to echo this in their own experience with their family. My own mother was upset that we changed our name. And I remember I was out to dinner with her a couple of weeks before, and I said, “Yeah, we’re getting ready for this brand branch. It’s really exciting. We’ve got a lot going on right now.” And she was like, “Yeah, I don’t really like it.” And I said, “Well, what don’t you like about it?” She goes, “Oh, no, I just really liked CFE,” I said, “Do you know what it even stands for?” She had no idea. But she knew that she liked it. And I heard that, bringing this back to UCF, with the Arena. I know there were some kids who go, “Addition Financial Arena? I don’t like that.” Paul Jarley:                         “We’re going to win fewer games now.” Jordan George:                 Yeah. [crosstalk 00:24:34] name the stadium. Paul Jarley:                         Yeah. Jordan George:                 But I was thinking to myself, I understand not everyone’s going to like the name. But was it really better or was CFE Arena really any better? At least you know what this stands for, we can be proud of that. But it is it’s an adjustment period. And particularly around the name, we talked about how you think about all the big organizations today that people know as household names. And you look and you analyze their names. Walmart, Apple, Google, Starbucks. What do those mean? What do those names… If someone just Starbucks, that’s really the one that’s… It’s what you make of it, I think. And so going back to your point, it’s how we communicate these things. It’s the influencers, it’s the buy in, it’s understanding that the changes are what we make of them and if we go in with that negative mindset of well, this is only going to hurt me, only seen those immediate costs, and not recognizing the potential long term benefit, I think we’re doing ourselves and our members a disservice. Paul Jarley:                         I think one place we really missed in our change process going forward, looking back on it, and I still don’t have this completely worked out. Excuse me. Making sure you’re incorporating something into your orientation program for new employees is really important because they’re going to get set into the middle of this and you might think that they come kind of baggage free. And in one way that’s true. But they’re going to immediately be inserted into a conversation that you haven’t prepared them for. And you might want to think through how you do that. Christina Lehman:           That’s a good point. Jordan George:                 We saw a lot of that, especially during the name changes, people were coming in because we were really hiring then- Paul Jarley:                         “I thought I applied to CFE?” Jordan George:                 Yeah, right. Right. We were hiring… Kerby Pickens:                  People were throwing away their credit cards and they were like, “I don’t know who [crosstalk 00:26:44] handle it.” Jordan George:                 Yeah, “I have no idea.” Kerby Pickens:                  “I’ve been hacked.” Jordan George:                 Yeah, “I never applied for this card.” Yeah, it was interesting, because we did have some hiring managers that had preempted the discussion with the folks that they brought on board and said, “Hey, we’re going to be changing our name. This is coming, just FYI.” And we had others that didn’t. And that was very clear in orientation when we would start talking about Addition Financial, and you’d see two or three confused looks, sideways glances, “Am I in the wrong…” It’s like going to the wrong class on the first day of school. “Am I in the right room right now? Am I in the right place?” And that was before we changed any of our signage or anything. So it was interesting. That’s a great point. Jordan George:                 I think when you look at all the different educational channels that as organizations we have to reach people and the different ways that we can do that, the different times in their employee lifecycle that we can do that, that new hire orientation is a really critical piece, because that’s really setting the foundation for their expectations moving forward. Paul Jarley:                         Well, I think too, because the leadership team and the communications team generally, you’re living and breathing this change process every day. So it’s like the most relevant thing in your life. But for a lot of your people in the field, frankly, that isn’t true. And it only becomes salient when they run up against something that’s changed that they don’t like. And then suddenly the light bulb goes on and they think, “Well, why are we doing this?” And as hard as that can be, that’s when you need to have the answer for them. The fact that you told them before, it doesn’t really matter. Kerby Pickens:                  So are there any common mistakes that we should look to avoid as leaders or even just as someone trying to influence change? Paul Jarley:                         I think so. I actually think the biggest failure that most organizations have is they don’t recognize from the outset, that not everything is going to go well. There’s a famous quote, attributed to a number of different generals, [inaudible 00:28:51] is one of them, who was fond of saying, “The battle plan never survives contact with the enemy.” Now Mike Tyson said everybody’s got a plan until you get punched in the mouth. Yes, that’s true. Jordan George:                 Yes. Paul Jarley:                         So you want to go into it, kind of understanding that not everything is going to go well. And I think if you fail, that’s sort of three risks in one for you. So I honestly think it’s your biggest risk. If you go into it, particularly if the leader goes into it, thinking that they’re a genius, and have an ironclad plan, that’s just going to work well, honest assessments of progress will not occur. They will not. Because the leader is essentially telling you, they don’t really want honest assessments of progress. Things are perfectly fine from the way he sees it. Secondly, it’s going to lead to a lack of resilience among people. As soon as things get hard, they’re going to want to quit. Paul Jarley:                         This is related to the third thing, you’re going to miss opportunities to learn and pivot. And some amount of pivoting always has to occur. So you want to think about those sorts of things up front. Now, you’re never going to be able to come up with a document that says, “Here’s all of the ways things can go off the rails.” Christina Lehman:           That’d be great, you don’t have that? Paul Jarley:                         Well, back to my introduction. I have 8,500 students. If there are cracks there, they are like water, they’re going to find those cracks, wherever they are. And so, it isn’t that you’re going to be able to do all of that up front, but you will reduce the scope of the number of times you’re surprised. And you can start to think through at least what your options are because the place you’re most likely to make the worst decision is when you think you’re in that crisis situation, because of something you didn’t anticipate. That’s a really bad spot to be. In those spots, generally people don’t see all of the alternatives that they have in front of them, and rarely pick the best ones. Paul Jarley:                         So if you have a good system in place, I think a lot of times people think communication is about the leader standing up and explaining the why over and over again, and that’s important. But the other side of communication, is making sure that the person up front is actually listening to what people are telling them as part of that process, And not dismissing them, but understanding that those are real issues that somehow you got to get out in front of. Christina Lehman:           I found that really great quote that I think would fit well there. It says, “I’m not going to tell you it’s easy. But I’m going to tell you it’s worth it. So join me.” And the leader needs to lead by example. And I think if they’re transparent, and they say, “This isn’t going to be easy, but together, we’re better together. Trust me, trust my team. Let’s do this.” And I think the culture here, which is so wonderful, that I didn’t experience in the past, is that we all fail forward. It’s okay, we’re going to make mistakes. Let’s learn from those mistakes and then let’s move forward. So we don’t have those critical [inaudible 00:32:41] that we’re not prepared for. We can always come back reflect and let’s keep going. That’s also scary. I don’t like making mistakes. Fear almost, is crippling to me. Jordan George:                 It’s paralyzing for some people. Christina Lehman:           Like, feeling is crippling to me. So that’s a huge thing to have that trust in an organization. It’s like, “Okay, I’m going to tell a member this.” So I hope that what I’m saying someone’s going to back me up, because I’m putting my faith in what they told me. Jordan George:                 Yeah. Paul Jarley:                         Well, and that’s my understanding, your culture is really important. Christina Lehman:           Mm-hmm (affirmative). Paul Jarley:                         There are written rules and regulations, but the culture is about how the organization and the people in it really respond. Christina Lehman:           Yes. Paul Jarley:                         And what’s really important to them and what’s not really important to them. I remember being at a round table one day where someone said, “Culture eats strategies’ lunch.” That’s true. The second mistake that most people make is they don’t understand how the change is going to interact with the culture that they have, not the culture that they want. That’s a different thing. Any experienced leader worries the most about their culture. It’s the single most important thing. Jordan George:                 Yeah, absolutely. Kerby Pickens:                  And I think though, talking about how our cultural interacts with some of our strategies or things that we have coming down the pipeline, our enterprise board is a great tool for that, that forecasting, that planning of looking at, “Oh, goodness, here’s a big system change coming up within the next quarter. How have I prepared my people? Have I been communicating along the way, so it’s not two weeks before we go live and all of a sudden, Hey, everybody, the system we all know and love while we’re switching in a week. So get ready.” But really, as a leader, looking at that enterprise board and seeing how do these projects, how do these things that are happening interact with my area, and are going to impact my people’s day to day and planning for that. And setting people up for success ahead of time, instead of waiting for maybe that one email to say, “Okay, it’s in two weeks. Starts in a week.” Jordan George:                 I think that’s part of any large organization. There’s so many things going on that it’s easy to get pigeonholed into just thinking about what your next day or week is going to look like and not understanding the broader perspective. And the enterprise board has a great way that we try to overcome that through communication. I know that our team and several other teams have done the same thing have adopted a version of that, where we do a weekly stand up meeting, 15, 20 minutes every Monday morning, which is just a quick update on all of our projects. So not something long and drawn out and protracted because I know it’s difficult to get entire teams together and you don’t want to sit down at the table, lets go around the table for two hours talking about updates, but just a quick 15, 20 minutes so that everyone knows what’s going on and his understanding of the other priorities. Christina Lehman:           Well, you know what that provides? Is accountability. Jordan George:                 Well, you know what, Christina? It’s like you read my mind because I saw the last bullet on the slide up here and I wanted to talk to the Dean about that, that lack of accountability. Because I think we see that sometimes within the organization, that is a huge killer to productivity, to trust, to the positive culture that I think leaders are trying to build. How do you overcome that lack of accountability at an individual or team level? Paul Jarley:                         Well, ultimately it comes down to people being willing to make difficult choices when they have to make them. Jordan George:                 Yep, I agree. Paul Jarley:                         Those are never fun. Jordan George:                 Nope. Paul Jarley:                         Never ever, ever [crosstalk 00:36:38]. Jordan George:                 Yeah, speaking from experience. Paul Jarley:                         Although sometimes I will tell you this, though. I have been in situations, too more often than not, that you have a person who’s underperforming or perhaps doesn’t fit. They know that. Jordan George:                 Well, I think we’re doing a disservice not just to ourselves, but to the team, to the organization, and to that individual to allow them to continue to struggle in an environment that’s not right for them. Paul Jarley:                         Well, yeah, there’s a few steps there too. The first one is fair notice and I think it’s the most important one. I don’t ever want to be in a situation where someone can come to me who were terminated. And they say to me, “I did not know I was having a problem.” Jordan George:                 Absolutely. Yeah. Paul Jarley:                         And frankly, there have been some situations where that was true. So, regular, honest performance evaluations, followed up by things like needs for changes in behavior or training or those sorts of things, if it’s going to get to termination, you want that to be the last step in a process where you’re at least convinced that you’ve done what you’ve could to make that person successful. But also I think you’ll find any change process, particularly the more fundamental it is, some people will opt out, you should expect some turnover. That’s going to happen in a process like this. And honestly, that’s not a bad thing. I mean, you want to understand why that turnover is occurring. But if the turnover is this is an organization that’s changed, and I’m no longer committed to the goals or values of that organization, yes, then you should move on. Jordan George:                 Yeah, I always say we spend too much time at work to be miserable. Paul Jarley:                         Oh, absolutely. Jordan George:                 So if we as individuals are not feeling fulfilled and valued and aligned with where the organization is going, then don’t stay there. Paul Jarley:                         Incredibly miserable place to be. Jordan George:                 Yeah, right. And that’s not the kind of place that you want to go. I mean, I know that not everyone’s going to look forward to Monday mornings, and I’m realistic about that, but at the same time, you shouldn’t be dreading it either. You shouldn’t be just, “Urgh, I can’t do it. I can’t get out of bed today, I can’t go in it.” We need to be more honest about those types of things because that’s a that’s a difficult conversation to have is helping people recognize when this is no longer the right fit, which is after taking all the other steps that you talked about. Having a deeper understanding, having discussions to understand what’s going on, making sure that the communication is clear so that people can make an informed decision about what’s right for them and for their family and further their stage in life. Paul Jarley:                         Treating everybody like they’re an adult sometimes goes a long way. Jordan George:                 Yeah, imagine that. I wanted to touch on one of the things that you had up here that I really liked. So that second to last bullet point. And I’ll admit, I think this is an area I won’t say for the organization but that certainly I wish I had done a better job with right after the brand change, which was, and Christina, and Kerby, and Valerie, everyone else in the room that was here knows what a tremendous undertaking that was. Even just replacing the signage, there were like 6000 signs or so. John Thomas told me at one point. Updating all the materials, just every time there was a policy, a procedure, a job aid, a reference, a training course. And that’s just one piece of it, but everyone within the organization really was stretched especially the months immediately leading up to that brand change and immediately following because of the member reaction Jordan George:                 One thing that I wish I had done differently was take a little bit more time to celebrate what a tremendous win that was for us and for the organization instead of so quickly moving on to, “All right, that’s done on to the next thing.” That’s kind of the pace that we move at, but it’s so important to recognize those things. Paul Jarley:                         So I have a chief excitement officer. That’s part of her role. Those of you who are laughing know who she is. But no, I think it’s a mistake not to do that. Again, it doesn’t need to be a parade. No, I’m not suggesting that. But, a little appreciation goes a long way. I think we overlooked at some times, particularly, I think early in the change process, highlighting the early adopters and holding them up as role models for the kind of people that you want to have in your organization, can really help out. But I do want to go to the one you skipped over. Jordan George:                 Yeah. Paul Jarley:                         Okay. And that’s the failure to align reward structures with your new [inaudible 00:41:50]. Jordan George:                 Sure. Paul Jarley:                         So, the most famous article in human resource management was written by a general and it was called Rewarding A While Hoping for B. And he asked two simple questions. How did soldiers get to go home from World War Two? Anybody know? Well, the answer was when we won the war. How did soldiers get to go home from Vietnam? When they had accumulated enough points to rotate back to the States. Which of those two wars did we win? His point being in Vietnam, we were hoping for victory, but we were awarded survival. Jordan George:                 Yeah. Paul Jarley:                         That’s what we got. And that’s a very dramatic example obviously. Jordan George:                 Yeah, I know. I like that. It’s good. Paul Jarley:                         But all organizations do this all the time. So if you’re going to go through a change process, it’s really important that you review your reward structures and I’m just not talking about compensation. There are all kinds of reward structure. And to ask the question, are these still the things that we want to reward? Are there new things we want to reward and how are we going to do that? Because your reward structures are the most powerful thing that you have, people respond to incentives. So you should think really carefully about what your incentives are because you’re going to get them. Jordan George:                 I think a really good point is not just thinking about that as compensation. We so often do, we think of it as some sort of bonus or sales commission or something like that. It’s not just about the compensation. It can be how we reward people with time off or the flexibility. Christina Lehman:           Or not even that, like what’s wrong with… One of my favorite things I receive are handwritten letters. I just want to feel seen. I want to feel that somebody saw that I did something that bettered the organization. And because I wasn’t feeling that way, I came here. So good people you want to stay in your organization will leave if they do not feel valued, or they see other people being rewarded for their bad behavior. Jordan George:                 Oh, that’s the worst. Paul Jarley:                         Different people want different things sometimes. Before I came to Orlando, I was in Las Vegas. I’ve been staying at UNLV for five years. My assistant at you and UNLV had a list of seven names on them, of which she could not schedule an appointment with more than two of them on the same day with me. And these were all high achievers. They were not problem employees at all. But their need for recognition and affirmation could be emotionally exhausting. Literally, I couldn’t do more than two. What was so striking about that is for most faculty, they’re the opposite. The last thing they want to do is see the Dean. So if I want to make their day a good day, I just don’t talk to them. Jordan George:                 Just stay away. Paul Jarley:                         But for these seven people, they wanted me to know in excruciating detail, what it was they were doing, and they wanted affirmation from me, even though at times I would have to tell them an hour and 35 minutes in, “I really love you and what you’re doing, but I’m not going to remember any of these details. And when somebody calls me and asks me about them, I’ll call you. Honestly, that’s what I’ll do.” But no, I think that’s really important, is understanding people work for different reasons. They really do. I mean, everybody got to eat, I’m quite sure. But yeah, understanding people and kind of how they work and what they really respond to, yeah, that’s an important part. Jordan George:                 Well, and you can have a job at a lot of places. Paul Jarley:                         Yes. Jordan George:                 You talked about, everyone’s got to eat, well you can choose where you get your paycheck to put food on your table. Paul Jarley:                         Absolutely. Jordan George:                 There’s lots of options, we have to do more than just provide a paycheck for people. And I think understanding as a leader, what your team values as individuals is really critical, even as fellow team members understanding how your peer is on the team, like to be rewarded and recognized because again, it could just be something as simple as saying, “Hey, thanks. I really appreciate what you did today,” or a handwritten note. I know so many people when you walk around this building, and I know it happens out in the branches as well have little trinkets and things that they’ve collected over the years that they’ve received from people, received from members, that from a monetary sense have no value. Jordan George:                 But from a pride and respect and kind of as a reflection of the things that they’ve done and accomplished and how they have helped somebody else, have a measurable value that they keep out in displayed that somebody has given them just because it’s a reminder that they made a difference, to Christina’s point, that they were seeing that they were valued and that they were appreciated for what they did. So even understanding that not just from the leader’s perspective, but as an individual on a team, and how you might be able to do some of that for those around you. Paul Jarley:                         It’s impossible to have a shared set of goals and objectives if people don’t know and understand each other. Jordan George:                 Yeah, I love it. Awesome. Well thank you Dean Jarley so much for being here. Thank you Christina, Valerie, and of course as always, Kerby it’s great to have you here. Kerby Pickens:                  Thank you, Jordan. Paul Jarley:                         And thanks to Addition for being such a great partner. Jordan George:                 Thank you. Thank you.   Listen to all episodes of “Is This Really a Thing?” at business.ucf.edu/podcast.

With new technology comes new ways to shop online and find a good deal, but retailers also have new tools at their disposal to charge customers higher prices. “Retail guru” Anand Krishnamoorthy discusses how retailers exploit consumers’ lack of knowledge to charge higher prices and how shoppers can beat retailers at their own game this holiday season (and on Black Friday).   Featured Guests Anand Krishnamoorthy – Associate Professor of Marketing, UCF College of Business Episode Highlights 1:10 – Opaque Selling 4:11 – Examples of opaque selling in the marketplace 10:59 – The truth about “list prices” 14:25 – The shopping experience and its influence 19:51 – Price matching 27:52 – The New York Times: Charging more for less? 35:13 – Variable ticket pricing 39:33 – Paul Jarley’s final thoughts   Episode Transcription Anand Krishnamoorthy:               This is something that many of us on the State side may not be familiar with. Eurowings is a German low cost flyer that doesn’t even tell you what your destination will be, before you pay up. You will not know where you’re flying to until you pay up. Paul Jarley:                         Here’s a tip for value conscious holiday shoppers everywhere. You probably don’t want to buy two tickets on that airline. This show is all about separating hype from fundamental change. I’m Paul Jarley, Dean of the College of Business here at UCF. I’ve got lots of questions. To get answers, I’m talking to people with interesting insights into the future of business. Have you ever wondered, “Is this really a thing?” Onto our show. Paul Jarley:                         Everybody knows that person who will go to great lengths to get a deal, but is a deal ever really a deal? We’re bringing back our retail guru, Anand Krishnamoorthyorthy to explain to you that a deal, well, probably isn’t really a thing. With pricing games, there’s always a loser and Anand explains, that’s usually you, listen in. Anand Krishnamoorthy:               What I’ll do today is talk about three broad topics in pricing games. The first of which is what we refer to as opaque selling, where product attributes are hidden. Then we’ll talk about where pricing cues are hidden. We’ll start off with something that firms do a lot of, which is cost plus pricing. Some of you are familiar with this term, at least you’ve used it in the past, which is, you figured out your cost, tack on a markup, and then figure out your price based on that. Anand Krishnamoorthy:               Many firms practices, but if you ask them, they will not admit to it because it’s a decidedly unsophisticated way to price. So why is it a problem? Let’s start one, you’re pricing based on things that consumers have no idea about. Consumers usually don’t know what a firm’s costs are. Even if they knew, why would you care? Why would a firm’s production process of manufacturing plant factor into how much you’d be willing to pay? Anand Krishnamoorthy:               As a way of maybe channeling venture payroll’s book, it’s because costs don’t care about consumer feelings. Costs are based off of things that consumers don’t care about at all. It is consumers wanting benefits, consumers wanting other attributes, et cetera, rather than costs. Anand Krishnamoorthy:               To put it another way, if I’m inefficient, and I work for you and I take three days to do a job that you expect done in one, would you pay me three times as much? No. Then why would you expect firms to pay for consumers in terms of costs? Consumers do not want to compensate firms for their ineptitude, why would you expect cost to drive pricing? Anand Krishnamoorthy:               So then perhaps better ways to price would be, price based on consumer benefits. That is, figuring out what consumers want, price based off of that. Consumers would want that, ideally. The problem is, consumer benefits are very hard to figure out. In fact, many a time, consumers themselves have to be educated before they can learn the benefits of using products. If it’s hard for one consumer, it’s even harder for so many different types of consumers who want so many different things in products. So then perhaps, the right way to price should be based on what a consumer is willing to pay. Anand Krishnamoorthy:               Problem is, you can’t sell everything at an auction. So short of that, how do you figure out what each consumer is willing to pay? And as an example here to the second point, let’s say I know that the people on the left side of the room are willing to pay $50 for something. The people on the right side are willing to pay $70 for something. If I were to charge $50, all of you will buy. But the people on the right have gotten a price cut of $20 when they did not need one. If I charge the price for the people on the right, none of you on the left will buy. Anand Krishnamoorthy:               So the idea is to figure out what we can do so that everybody buys, but at different prices based on different tokens of attributes. That is what we refer to as, price discrimination or differential pricing. Understanding what consumer preferences are like and charging different prices based on their willingness to pay. Anand Krishnamoorthy:               All right. So three topics I’ll take up here. The first of which is opaque selling. Many of you have experienced this. So a couple of examples to lead you through that. Opaque selling is where some product attributes are hidden from consumers. A common example is Hotwire with its Hot Rate hotel. You see that a number of choices are revealed to you, but, which hotel you’ll be staying at, is not revealed to you. You know the price you’ll be paying you per night. You don’t know, which hotel you’ll be staying at. Anand Krishnamoorthy:               This is something that many of us on the State side may not be familiar with. Eurowings is a German low cost flyer that doesn’t even tell you what your destination will be, before you pay up. So you pay up and then you’ll figure out where that destination might be. Just so you know, it flies too many cities in Europe. It’s not just one or two cities. It’s flies to 50 cities in Europe, but you will not know. Their blind booking is where you will not know where you’re flying to until you pay up. Anand Krishnamoorthy:               This is not just in airlines. It’s also common with service providers or hotels themselves. And you’ve seen many cases where bed type may not be guaranteed, or the type of room may not be guaranteed, with a rental car it’d be manager’s choice where the manager decides what kind of a car to provide and so on. Anand Krishnamoorthy:               Anybody know what this is? So this is a case where what you get in the bag can be one of six different SpongeBob Minifigures. Squidward, different Spongebobs, well Mr. Krabs, what have you. The idea being, you will not know what is in the bag until you pay up and rip up the bag. It’s called a blind bag. You will not know what is in there. It could be one of any six of these. It’s not easy to figure out because these are all common small Lego blocks. You can’t feel and figure out what’s in there. Anand Krishnamoorthy:               But if you have a kid, you know that the kid is not going to be happy with any one of these. The kid wants just one of these, perhaps the Squidward, or squiliam, what have you. So then the point is, how does one deal with this? Because are you going to buy hundreds and play the odds? Because they themselves tell you that some of these are ultra rare, mega rare and all that. So it’s next, and your kid wants that, that’s for sure. So how then do you play the game? That is what we call opaque selling, where product attributes are hidden from consumers. Only after you purchase, will you find out what you get in the product. Anand Krishnamoorthy:               Usually, it works for what we call deal seekers. That is, if you don’t have strong preferences, that is, if you don’t care about the type of hotel you’ll be staying at, you only care about the price per night, or you only care about free breakfast, et cetera. When you don’t have strong preferences, that’s perhaps when this works. It enables firms to price discriminate. We’ll talk about that a lot in some time. Anand Krishnamoorthy:               What are the challenges for consumers and for firms? For consumers, the biggest challenge is one, the satisfaction that is, invariably you buy something that you don’t like after the fact. So let’s say for on Priceline you book a flight and then you find out that it has two layovers in God knows where. So the point is then there’s a lot of dissatisfaction. You don’t get what you had hoped for. Usually, in all of these cases, there is no refund or return. So if you’re unhappy with it, you cannot return the product. Consumers don’t like that kind of uncertainty. Anand Krishnamoorthy:               For the firm, a lot of pricing is predicated on product differentiation. That is knowing that one kind of offering is better than another so that it can direct consumers to different types of offerings. Here, since the product is opaque, it’s not differentiated. Anand Krishnamoorthy:               How can we make it work? There are three broad ways how we can make it work. One is, you ask consumers what they want. When it comes to a flight, you ask consumers, “Are you willing to have two or more connections, layovers,” et cetera. So when you do that, consumers reveal what they want or perhaps what they don’t want and then dissatisfaction tends to be lower, and the firm can price accordingly. If the firm knows what consumer preferences are, perhaps pricing can be easier. Anand Krishnamoorthy:               The other point, which you’ve seen a lot in our hotels and airlines is one of revealing some information, which is, when you go try to book a flight, you will innovatively see a line that says, “Only five seats left at this price,” or, “Only two hotel rooms left at that price.” What that does is it creates a scarcity mindset in the consumer. “So if I don’t buy now, perhaps I will not have anything tomorrow.” So that drives firm demand. Anand Krishnamoorthy:               And finally, add on pricing or what we call option based pricing. Blind booking from Eurowings does this, which is, if you absolutely don’t want a layover and say Hamburg, then you can rule that out as an option. So if you have options that you absolutely do not want, you can rule that out for a fee. All right? So you pay a premium to be able to rule out some options. And for those consumers who want clarity in what they’re getting, the firm can leverage off of that. Anand Krishnamoorthy:               This is something that you probably have observed on, I think, this is Priceline where you don’t know, which hotel you’ll be getting. It tells you that it will be one of maybe six brands. You’re also told where on the map these hotels will be located. It will be one of these three. You’re told that it’s one of these, you will not know, which. So then, if you’re smart, if you’re good with Google maps, for example, you could maybe spend 10 minutes and figure out what exactly these are. You will still not know, which one it is exactly, but you’ll be able to figure out which of these three they are. All right. Anand Krishnamoorthy:               Where does that work? It works usually when consumer preferences are all over the map. For example, some of you want rating, you care about the hotel rating. The brand isn’t important. Some others are loyal to a brand. You care only about that. Some others care about free parking, free breakfast, et cetera. When consumer preferences are all over the map, then you see different levels of opacity, because firms can capture more value. Anand Krishnamoorthy:               Opacity varies with time. Usually you see all of these opaque selling strategies, not three months in advance, not six months in advance, one week before things materialize. Because what usually happens is firms are under pressure to get rid of the present mentoree. If a hotel does not rent out a room on that date, there’s no revenue. If a seat goes empty on a flight, there is no revenue, when inventory is perishable and that deadline approaches, that is when firm can leverage this kind of opacity. Anand Krishnamoorthy:               And finally, as we have hit on multiple times, not everybody can find out more about what’s going on with opaque products. On the map, for example, if you have no clue where about Boston, perhaps you will not know where these three hotels are, then it doesn’t matter at all that the firm is revealing those three hotels. If you’re good with maps and locations, et cetera, perhaps it benefits you. Then it is the uninformed consumers who tend to pay up more than those that are informed. Anand Krishnamoorthy:               This is something that I want to hit on because this is work I’ve done that talks about when product attributes are well known, but prices are hidden from consumers. I’ll give you a few examples here. This is a TV from Amazon. So what it says up there is, “To see our price, add the item to cart.” You might think, “Well, adding the item to cart is just one button that I click there.” Not so much, because when you do this on Amazon, you’re forced to sign up for an account. Well, you might say that I’ve been a prime member since when Abraham Lincoln was president. So that’s it. Anand Krishnamoorthy:               But the point is, is this something that only works with Amazon? No. Every retailer under the sun does this, which is, add the item to cart before price can be displayed. It’s clearly a cost for consumers to figure out what the prices are. Once you do this sign in and login, you’ll find that the price of that TV is about $1,097. Now, let’s go to Crutchfield, a well known audio video retailer. The price is the same. It’s prominently displayed on the website. There is no adding to cart shenanigans. Anand Krishnamoorthy:               Likewise, with B&H, another popular photography and audio video website, the price is prominently displayed. Dell, has an even lower price that is displayed, not hidden. Why are different retailers hiding prices from consumers and some retailers not? So perhaps the argument is cost based. That is, if I were to hide prices, perhaps it’s less costly for me to advertise prices. Not the case, because in most of these cases online, how much effort and costs that’s putting a price there really take? Instead of putting this long texts that says, “Add the item to cart to find out the price,” just put a number in there. It should be much less expensive to do. So cost is not what is driving it. Anand Krishnamoorthy:               This is something that really bothers us as researchers, which is usually the retailers that hide prices happen to be low price retailers who should be jumping up and down telling consumers about what their prices are. If you he low prices, tell consumers about it so that consumers can then buy at those low prices. Why are these retailers hiding prices? The most common reason for that is manufacturer gaming. That is manufacturers do not want retailers to advertise a price that is lower than a threshold because it reveals bad product quality, for example. It denotes a negative connotation. Anand Krishnamoorthy:               So keep in mind, this is not the price being charged. Manufacturers cannot mandate that you charge a particular price, that’s illegal. What they’re doing here is they are forcing that a retailer not advertise a price lower than that MAP, not the price being charged. That’s not what we observe in our research. We find that in some cases that the hidden price is actually higher than the prices at other retailers. It’s not a lower price that’s being hidden. That’s one thing. Anand Krishnamoorthy:               Two, as we signed the examples, the same price is being hidden by some retailers, but reveal by others. So retailers appear to be playing games in terms of whether to show the price or hide the price. So there may be something else going on here. So I want to talk about one aspect here, which all of you are familiar with, which is what we define as a retail service. That is retailers don’t want to just sell products to you. They also want to provide service. What does the service entail? Anand Krishnamoorthy:               In the case of brick and mortar stores, it’s having tons of product on the shelf, on the floor, for you to look at. That’s expensive to do. It’s there for a reason because if you want to buy a TV, there is no way you’re going to buy a TV without having looked at the picture quality, audio system, and so on. So it’s not just the case that it only happens in brick and mortar stores. Even online, you know that some websites have dedicated chat agents who are well trained in product support and so on. It’s not just a thing that happens online or offline. Anand Krishnamoorthy:               Anybody heard the term showrooming? You’ve experienced this, I’m sure, but it’s not something as a term you’re familiar with. So let’s define that for you. Showrooming is what we refer to as the free riding of service. That is, you go to a store, Best Buy, most frequently, you experience the product, you talk to the blue shirts to know all about what the product is about, get ideas, and then fire up your smartphone, buy the product from Amazon or some of the low price redone. That’s what is our showrooming. Anand Krishnamoorthy:               In fact, I remember reading a quote from an analyst way back when a stock analyst was covering Best Buy stock that said, he would be having an awesome conversation with his clients, and the minute he would utter the words Best Buy, they will look at their watches and say, “I got to go, time’s up.” Because they thought Best Buy was going to go out of the market in no time. Amazon was eating its lunch. Best buy has been able to survive. Why? We’ll look at in some time. Anand Krishnamoorthy:               But Best Buy faced a significant problem with showrooming, which is, all of us go to Best Buy to experience the product, whether it’s a phone, a computer, audio system, TV and then we shop around. It’s very easy to do with the phones these days and then Best Buy loses a ton of business that way. Anand Krishnamoorthy:               But again, like I said, showrooming is not something that only happens in physical stores. Even online. Some websites spend a lot of effort and money having dedicated support staff that can answer questions before we buy. Some don’t. Okay. So you can do the same thing there. Go to a high end website, get information, and then fall back to a lower type website. Anand Krishnamoorthy:               Why should prices be hidden at all? In general, you would never expect prices to be hidden, because what happens when you hide prices, you have to encounter additional effort in order to find out the price before you buy, because there is no way you’re buying without knowing the price. So consumers incur effort when a price is hidden. What does that do to demand? If prices are hidden, consumers have to work harder to find out price. Anytime you make consumers work harder for something, they will tend to pay less because they’ve incurred additional effort. Anand Krishnamoorthy:               Consumers look at the entire utility, in terms of how much effort they spent searching for the product, how much effort they have to spend getting to your store, how much effort they have to spend checking out, and the price paid. So as long as you force consumers to put more effort into searching for price, the actual price they’ll be willing to pay will be lower. Okay, so keep that in mind. Demand will go down. Anand Krishnamoorthy:               So then, how should things work if one retailer hides price and the other does not? What usually happens is that price competition is less of an issue. Now, what happens is if you hide prices, your prices have to be lower. If someone else reveals prices, those prices have to be higher. So naturally, prices are dispersed so that price competition is lower, works to the benefit of one of the retailers. Which retailer is that? Usually the one that does not force you to put in more effort. Is that a good thing? It depends on who is hiding prices. Anand Krishnamoorthy:               So should a high service retailer, should somebody like Best Buy be hiding prices? Let’s understand what happens when prices are hidden. You know that when you hide prices, the price charge should be actually lower. Does it help? Because best buy is in the business, not just of pricing, but in providing service as well. If you know that your margins are lower, you will put in less effort in terms of service. Your blue shirts will not care as much. When services lower, what happens? You get hurt because your prices are lower. The other retailer can now not free rate as much because you are not putting in enough service effort to begin with. Both of you tend to get hurt. Anand Krishnamoorthy:               Let’s look at the opposite side. Should a low service retailer be hiding prices? What happens when a low service retailer hide prices, the other retailer actually reveals its price. So then the higher price charge and the retailer helps because now higher price, higher margins, you tend to provide more service. Your blue shirts are probably compensated higher, let’s say on commission, or they see more of an incentive. What happens with that result? Both of them benefit. You get higher margins because your prices are higher. There is more free riding benefit because more people will go talk to the blue shirts and move to the other retailer. So both retailers tend to benefit from this. Anand Krishnamoorthy:               It’s actually counter-intuitive because, low prices should actually be revealed because consumers tend to shop more on low prices. But it’s the opposite that we find, which is, these low prices are the ones that should be hidden, not reveal. And why does this work? Because of the showrooming benefits. Anand Krishnamoorthy:               What is the most common response to showrooming? What did Best Buy do to respond to this? Anybody? You’ve all shopped … Yes. Price matching, right? So that is the obvious response at showrooming, that is, if you feel that price is the only reason consumers are jumping ship, take that out of the equation. Match prices, focus on other aspects. Anand Krishnamoorthy:               Should higher service firms, should Best Buy be spending all this effort trying to price match and lower prices? Usually, when you look at work on price delegation, for example, you would never want to let a low priced, low service retailer take leadership of pricing, bad idea. In the case of Best Buy, now you’re providing at high service, you’re training your sales staff, you’re doing all that, you’re encountering so much in terms of expenses, and now you’re charging low prices? The math doesn’t compute, right? So your costs are higher, your prices are lower, how has Best Buy done this? Anand Krishnamoorthy:               If you look carefully at what Best Buy has done, one of the easiest ways this can work is, cost-cutting. If your product costs are higher on this side, bring those costs down. What Best Buy noticed is the biggest wastage in terms of expense for Best Buy is, things getting dropped in the warehouses, TVs tend to fall, break and so on, radios waste is there. Put your blue shirts to greater use, not just upselling and things of that nature. Anand Krishnamoorthy:               But more importantly, Best Buy has benefited from two things that other retailers tend not to benefit from. One, consumers have to walk into your store. The products you sell are such that they have to be experienced before purchase. There is no way you’re buying a TV unless you walk in and look at what kind of image is on the TV, the sound system and so on. The biggest problem for retailers is bringing people in. Best Buy has an easier time with it because all its products have to be experienced before purchase. Anand Krishnamoorthy:               And then Best Buy has had the good fortune of seeing all its direct competitors go up in flames. Circuit City, no more. RadioShack, barely in existence. CompUSA, gone. Tiger Direct. So Best Buy, by some good fortune has had all its competitors go away. So this is not the answer to all your showrooming wars. It has worked for Best Buy because it’s in a business where competition has disappeared in and of itself. Something that does not usually happen in many other instances. Anand Krishnamoorthy:               The last point I want to talk about, which is hidden pricing cues. Let me tell you what list prices then we’ll look at whether that is really true. Most of you, when I tell you the term list price, you think it’s MSRP, right? Manufacturer’s Suggested Retail Price. In fact, all the retailers make it a point to tell us that as well. But is it? Let’s look at this example here from a TV on Amazon. I want you to understand that this kind of work doesn’t just apply to TVs, doesn’t just apply to Amazon. It’s just a good illustration of what goes on. Any retailer, any consumer durable works just as well. Anand Krishnamoorthy:               So if you look carefully, you see that the price being charged at about $698 the list prices $900. Let’s now go to Newegg, another popular retailer, same price almost. What is the list price there? Speaker 3:                           1,300. Anand Krishnamoorthy:               $1,300. How can the list price of an item be so different or two different retailers? Then you go to Samsung, the manufacturer of the TV, there is not even a mention of list price. There’s only one price listed there. So why are retailers playing games with list price when it’s such an important piece of information? Why is list price important? Because it’s the one of the prices that consumers make purchase decisions on. When you look at why you want to buy, one of the biggest arguments is, “How much of a sale there is on the item.” That’s why it’s important. Anand Krishnamoorthy:               So what is the list price? It’s usually one of the three measures of central tendency from grade school math. Which is, it’s the most common price, which is the mode. It could be the median price, the 50% price, or it could be the average price. Turns out, it is none of these. All right. So in practice, none of this is what the list price is. Most of the prices on Amazon are higher than the prices of the same items are competing retailers. So then the bottom line is, nobody has a clue, not even the retailer, about how this list price should be determined. Anand Krishnamoorthy:               Why is that important? Because having a list price drives demand in a number of ways. The higher the list price, the more of a deal you think you’re getting, the more likely you are to buy. List price signals quality. The higher the price of something, you inherently believe that it’s of higher quality, you tend to buy it more. The feeling of getting a deal. One of the biggest reasons for prices to come down is consumers searching. When you see that the gap is high, you know you’re getting a deal, hence you limit your search. Anand Krishnamoorthy:               For a retailer, putting in a fake list price cost next to nothing. You can play games with list price, that probably benefit your sales, but it’s not very expensive to do at all. In fact, we have research that is shown that fake list prices are nearly as effective as genuine list prices. That is, if you put in a wrong … Fake list price, it actually benefits your demand just as much. How much it benefits clearly depends on, how knowledgeable you are as a consumer. We’ll talk about that in a minute or so. Anand Krishnamoorthy:               I want you to carefully look at these examples and tell me whether this helps you make a purchase decision. So in terms of this providing a pricing cue, this TV here is 17% off of list. Something that you might look at when you want to buy. This TV here is 50% off of list. This is a whopping 11 cents off of list, all right. This here is something we observed a lot on Amazon these days, which is, there is no list price at all. How then are you going to know whether you’re playing a deal here? Probably not. This is what has happened on Amazon. If the next time you shop on Amazon, take a closer look. For many of these items, you will not find the list price mentioned. For the majority of items, Amazon has taken away list prices, probably driven by these lawsuits. Anand Krishnamoorthy:               That is, there are so many lawsuits that take retailers to task, California has done that, Canada has done that, which is they believe that these list prices provide no benefit. It only inflates the bill consumers are getting when no sales happen at those prices. In fact, they found that on JC Penny, for example, that the California took apart, all of the list prices were such that not even one sale had happened at those prices. How then is it even a list price? Anand Krishnamoorthy:               But the problem for consumers is, how then are they going to know they’re getting a deal? Absent a pricing cue to compare against, how do you know you’re going to be getting a deal? Are list prices credible? If I tell you that this is 90% off list, does that mean much to you? Some consumers may think it’s a great deal. Others might think you’re just playing games. Who sells for 90% off of list? So again, it depends on how informed you are as a consumer. Anand Krishnamoorthy:               And finally, in the case of Amazon, when might not having this prices actually help? If you are neck deep in an ecosystem, for example, if you’re a prime shopper and the shopped at Amazon, anyway, if you have a ton of Alexa devices at home and the TV you’re buying, is Alexa enabled. So if you are neck deep in an ecosystem, this kind of a gaming really will not hurt you. Anand Krishnamoorthy:               Who might get hurt from this? What will non-prime members do? The ones who lack information, for example, absent of lists price, where might you go? I want you to pay some attention to the New York Times pricing. This is the pricing from a few years ago, but the New York Times first launched its digital offering. So just to explain the pricing here, these are the prices for the d’etre version, that’s the paper version, and these are the prices for the digital or online version. Anand Krishnamoorthy:               So you could get just the New York Times with a phone option for 375, with a tablet for five and digital, all of it for 875 or you could get the paper versions here. Not that … First, let’s understand why pricing is so different, because when you use your phone to read the news, it’s what we call a lean forward experience. That is, you have to put in more effort. It’s not as comfortable. Hence, lower priced. Tablet is more of a lean back experience like approximating reading the newspaper, hence slightly priced higher. Anand Krishnamoorthy:               If you buy any of this, you get all of this for free. That’s how it was … So in other words, if you get any of these, you’ll get all of this for free. So you will then have to be a special breed of stupid, to do this when you can do this and get all of this for free. This is the New York Times, the nation’s most popular newspaper. Only in 2018, did it finally turn the corner and start making money. You wonder why? Because of issues like these. Anand Krishnamoorthy:               But keep in mind, what does this pricing help you do? We are at the point of pricing cues. Although this price be dominated by that, you’re all told in survey design, in questionnaire design. If you have a dominated alternative, take it out, it biases consumers. Does it bias consumers here? What happens is consumers look at this and think this is a better deal. So even consumers that were here, might upgrade to that option. Anand Krishnamoorthy:               So although these prices are biased in some manner, they actually help consumers make up their mind and go to a lower priced option. In the Times case, that is not a smart idea because what you’re doing is you’re essentially moving consumers from a digital option, where cost to serve are so much lower, because in the newspaper business, what is your biggest cost? Speaker 4:                           Printing. Anand Krishnamoorthy:               Printing, right? Production costs are almost half of your revenues. So why would you then move consumers from a low cost visual option to a high cost print option, not a smart movement in the case. Anand Krishnamoorthy:               More generally though, how can news even be priced? If you have a hurricane approaching, if you have a school shooting, these are covered in pretty much the same manner at different places. So news is more or less a commodity. But is it though? Anand Krishnamoorthy:               So I usually like to give the example of the precedent and this is going to play down the middle. All right? So it’s not going to lean left or right. Speaker 5:                           [inaudible 00:30:40]. Anand Krishnamoorthy:               So let’s say President Trump were to walk into the rose garden and look at the sky and say, “Hey, the sky is blue.” One half of the news media, the fair and balanced network will tell you, “Hey, you know what? The sky is bluer than it’s ever been. In fact, when that guy with the funny name was president, the sky wasn’t even blue most of the time.” All right. So that’s one side. What are the liberal media tell you? “You know who else thinks the sky is blue? The Russians, pollution.” So the point is, even something that used to be a commodity, isn’t that anymore. How then should it affect pricing? Anand Krishnamoorthy:               So we always tend to think of price discrimination. That is consumers having different preferences. Even moderates, even Republicans used to read the New York Times, not because of the opinion page, but because of the Sunday crossword, our cooking, what have you. But that is gone these days. If you are a particular kind, if you’re right of center you like they will never sniff the New York Times. In that case, is price discrimination even relevant? Perhaps not. Anand Krishnamoorthy:               I’ll end with the what we usually see as the elephant in the room when we talk about pricing transparency, which is drug pricing. The Trump White House put out a proposal, I think a few months ago. This is very recent, this summer where the proposal was, “If you are a pharmaceutical firm and you’re advertising your drug accompanying that ad should be the list price of that drug.” Much like everything else the White House has tasked, this is also in the courts. It is not going anywhere anytime soon. Anand Krishnamoorthy:               However, let’s see whether this proposal actually helps. How are drug prices set? Do consumers know that? There are layers and layers of middlemen that negotiate to arrive at drug pricing? Consumers have no clue how drug prices are set. So having a list price may not necessarily help them. Anand Krishnamoorthy:               How does the list price of a drug effect what anybody in this room pays for the drug? Nearly everybody has insurance of some kind, a discount plan even if not insurance. So then the list price really doesn’t affect how much you pay. More troubling, try to buy prescription drugs when there is a problem. It’s not like they’re looking to party when you are shopping around for a drug. Who in his right mind actually shops looking for a deal on prescription drugs, right? Anand Krishnamoorthy:               The list price argument works when you’re looking for a deal of some kind. That is the last thing consumers of the silk are trying to do. So if you rule out all obvious explanations, there’s only one explanation that still remains, which is, it is, political. It has nothing to do with what we know in terms of pricing. Election 2020 is nearing. If you ask consumers to list their four most popular enemies, what would they be? Used car salesman, drug manufacturers, insurance providers, big firms, big corporations. So it’s very easy to pick on any of them and make them an enemy. Anand Krishnamoorthy:               Here you’re picking on drug makers to make them the enemy. And the goal is that, if you force these drug makers to put their list prices in an ad, perhaps they’ll be ashamed of the prices they are charging to save lives. That is the goal here. But the point is … Any pharma executives or people in the room? No, right? So let me speak my mind here. Anand Krishnamoorthy:               If big pharma can be shamed into lowering drug prices, that would have happened 30, 40, 50 years ago. The reason drug prices are not going any lower is because, these people cannot be shamed into doing anything. All right. So the point is putting list prices on your ad does next to nothing other than just achieving the political goal. Let’s say you’ve spent all this time and you’ve not listened to much of what I had to say, and you’re thinking, “How best do I apply what we know here in terms of … To your context?” Anand Krishnamoorthy:               First, let’s understand the sad part, which is, when you put on your manager’s hat, you are going to come with a pricing scheme that flies in the face of what your consumers want to do. Consumers and firms can never see eye to eye on pricing. All right, so that’s the challenge. So then, broadly speaking, pricing should hit on four aspects that mean different things to different people in different contexts to different firms. I’ll elaborate that in some time. Anand Krishnamoorthy:               So let’s consider a simple example as we go through this exercise. Let’s say we are considering ticket pricing for the summer Olympics because of winter Olympics, I have no idea about. So the summer Olympics, you know that when it comes to the Olympics, there are many aspects that are different. Not all sports are created equal. There are some sports that are significantly more popular, track and field, the opening and closing ceremonies, gymnastics, swimming, come to mind. Some are much more popular. People will be willing to pay higher prices for those than others. Anand Krishnamoorthy:               As with any sporting event or concert, some seats, courtside seats are much better than nosebleeds, for example. Some stages of these events are so much more interesting than others. Everybody wants to watch the finals, the hits, not so much. How then can you use these different aspects to drive a pricing? Let’s understand what these four terms here mean. Anand Krishnamoorthy:               When you talk about pricing being fair in this context, at least, we are talking about the price that you pay for a given level of quality, that is, what are you willing to pay for this port versus that, and consumers have that in mind as well. There’ll be no fair consumer that tells you, “I want the best for next to nothing.” Consumers are willing to consider quality when it comes to pricing. Anand Krishnamoorthy:               But when it comes to tickets and things like we deal with in this area here, hospitality, allocation is just as important. That is if you have limited seating, you want to ensure that all consumers have at least some shot at getting into the event. Prices have to be affordable. What does that mean? Clearly, it depends on different offerings that you have in mind. So not everybody would be willing to pay the same for a given kind of offering. This is extremely important. That is, you don’t want to put out an offering that nobody cares about and charge less money and call it affordable. Anand Krishnamoorthy:               I’ll give you a couple of examples here. Way back, centuries ago when the railroads began operating, some genius came up with, “Hey, let’s have first-class coaches and third-class coaches.” But then when they thought about it, they had no idea how to differentiate these two, because there were no amenities to speak off their differentiators. So one idea was, “Let’s chop the roof of the first class coaches. So make the third class coaches travel without a roof on their heads.” Again, subject to all kinds of weather problems. Anand Krishnamoorthy:               That is not what we are talking about here when we talk about different offerings. That is, in other words, there is a reason today automakers have backup cameras standard, not just in luxury automobiles, but automobiles across the board. Why? Because you don’t play games with safety in an effort to differentiate on products. So again, this has to be offerings that people care about, not just offerings that nobody cares about. Anand Krishnamoorthy:               When it comes to simple pricing, what did we talk about? You shouldn’t have a math degree to figure out whether it’s a deal. So if you look at a theory alone, it’ll tell you that how hundreds of different types of pricing, where you can clearly break different consumers. It doesn’t work very well. It confuses consumers. So what you would rather do is take away some of this in an effort to keep it simple, clear the confusion. Anand Krishnamoorthy:               And finally, how can pricing be transparent? Let’s look at that issues here. One, price has to be known. More importantly, how you allocate tickets, for example, needs to be clear to everybody. All right. So that’s the second part. And then there’s a reason the Superbowl, the masters, all of them have lotteries for some tickets. It is because of this fairness principle in terms of pricing being transparent. That is, even if you do not receive a ticket to something that’s high demand, you should know someone else who did. You should be able to read about someone in the news getting the tickets, a layman, for example. Anand Krishnamoorthy:               So that is the reason that we have these four principles, that is it can apply differently in different cases for you, but broadly speaking, you have to hit on four of these aspects when it comes to pricing. Believing that leaving some money on the table to eliminate customer confusion may actually be to your benefit. Anand Krishnamoorthy:               Thank you for being here. Thank you. Paul Jarley:                         The internet has allowed companies to learn about consumer preferences in ways that just wasn’t possible a few years ago. Back in the day, price-sensitive shoppers revealed themselves by clipping coupons and waiting for the January white sales or the blue light special. Today, companies can offer you a plane ticket without telling you the destination or a hotel room without telling you the hotel. You can get a deal if you don’t care about where you’re going or where you’re staying, and the seller can generate revenue from excess inventory. Paul Jarley:                         The internet also gives consumers access to many more choices today on where to buy a product. If you’re a price sensitive consumer, you can search many sites and price compare. You can also go check out the product in the store and then buy it online from someone else. Both sides have more opportunity to learn more and game the other side. In this sense, price games are most certainly a thing. Paul Jarley:                         Whenever you’re playing a game, the side that does their homework and has superior information, well, they usually win. The real question is whether you’re willing to take the time to make sure you’re getting the bargain you’re looking for. Rest assured, the retailer, well, they’ve done their homework. What do you think? Paul Jarley:                         Check us out online and share your thoughts at business.ucf.edu/podcast. You can also find extended interviews with our guests and notes from the show. Special thanks to my producer, Josh Miranda, and the whole team at the office of outreach and engagement here at the UCF College of Business. And thank you for listening. Until next time, charge on.   Listen to all episodes of “Is This Really a Thing?” at business.ucf.edu/podcast.

Presidential candidates on both sides of the aisle point to a host of different factors for the state of the U.S. economy. With an economic recession on the way, renowned economist Glenn Hubbard joins UCF Business faculty John Solow, Sami Alpanda and Paul Jarley to discuss the hot topic of income inequality and when we can expect the current expansion to hit a wall. Is a recession really on our doorstep?   Featured Guests Glenn Hubbard ’79 – Economist; Chairman of the Board, MetLife Inc. John Solow – Kenneth White and James Xander Professor in Economics, UCF College of Business Sami Alpanda – Associate Professor, Economics, UCF College of Business Episode Highlights 1:02 – Guest introductions 3:02 – Rising income inequality 7:24 -Technical disruption in the workplace 15:54 – Politcal response to a changing economy 21:00 – Trade wars 25:35 – Rising healthcare and pharmaceutical costs 29:46 – President Trump, politicians on the economy 33:41 – Questions from the audience 40:48 – Paul Jarley’s final thoughts   Episode Transcription Paul Jarley:                         The economy is a thing. The national election is a thing. But, the stuff politicians talk about on the way to Election Day? Well, those aren’t always things. We’ve assembled a panel of experts. Listen up, people. Paul Jarley:                         This year was all about separating hype from fundamental change. I’m Paul Jarley, dean of the College of Business here at UCF. I’ve got lots of questions. To get answers, I’m talking to people with interesting insights into the future of business. Have you ever wondered, is this really a thing? On to our show. Paul Jarley:                         This podcast comes from an event where we were celebrating Glen Hubbard, and his gift to endow a professorship in economics. Listen in. Paul Jarley:                         I didn’t want to resist the huge opportunity I had today to get together a panel to talk a little bit about the relationship between the economy and the political election that’s coming up. So we’re going to talk a little bit about whether a number of things are sort of a thing, or not in as non-political a way as we can here. Paul Jarley:                         I have three panelists with me today to help me understand some things. Most of you know Glenn Hubbard. What you may not know is Glenn Hubbard is a graduate of our economics department at UCF. He studied here. He is currently the chairman of the board of MetLife and is the former dean of the Columbia Business School. He is still a professor there, and I like to joke with Glenn, after you’re a dean, the comment that you always make is you get to go back to be part of the problem, right, and then, the part of solution, and he’s enjoying that a great deal. Glenn Hubbard:               Totally. Totally. Paul Jarley:                         Right now. Paul Jarley:                         Next to Glenn is John Solow. John is new to the college this year. He spent many years at Iowa. In fact, John and I were assistant professors together many, many years ago. And, he sits in the White, Xander endowed Professorship in Economics that Glenn and Glenn’s wife, Constance, has funded. Glenn Hubbard:               [inaudible 00:02:01]. Paul Jarley:                         And, it’s not named after them. It’s named after the two faculty members, who were most influential to Glenn while he was here becoming an economist. That’s really awesome, and we’re really glad to have John with us today. Paul Jarley:                         My last guest is Sami Alpanda. Sami is an associate professor in the Department of Economics and spent four years? Sami Alpanda:                   [inaudible 00:02:22] there? Yes. Paul Jarley:                         Four years at the central Bank of Canada. So I thought he would also bring kind of a really interesting perspective to what we’re going to talk about today. Paul Jarley:                         And at the end we’ll give you a little time to ask questions. I hope I ask some things that are on your mind, but if not, we’ll give you a little bit of an opportunity to do that. Paul Jarley:                         I’ve been watching the news, like all of you, and some of the debates and the things that are being brought up. So I’m going to do a little bit of a lightning round with the panel, where I’m going to bring up a particular issue that the politicians have been talking about. And I’m not so interested here in getting a political take on the issue. That’s not what I’m about. Instead, what I’d like that panel to talk about a little bit is, how important is this issue to the economy in the short-term, and the long-term. Paul Jarley:                         Let’s start out with rising income inequality, particularly at the top. Is it a concern from an economy standpoint? Is it not a concern? What do you think? Glenn Hubbard:               To me, the concern in inequality is the bottom, not the top. So I’m extremely worried about the earnings prospects of millions of Americans, who don’t seem to be participating in an economy dominated increasingly by technological change, and globalization. I’m less worried about how many billionaires there are. The only reason that one would be worried about how many billionaires there are is, if you think there somehow monopolizing the political process. You told me there was one billionaire on the stage the other night at the Democratic Party debate, I don’t think he’s the most influential. So I’m more worried about the poor than I am the rich. Paul Jarley:                         John? John Solow:                       I think it’s a long-term problem. I agree with Glenn that I’m more concerned about, so what economists call absolute poverty, is the ability of the poor people to have a standard of living that they can … They can support a family, and they can enjoy, rather than the disparity. If everyone were richer so poor people could afford the necessities of life, that would be a good thing, even if there were rich people, people who are richer than that. John Solow:                       I am concerned about the ability of the very wealthy and the very organized to influence policy. The impact of money on the political process, I think that is causing problems. I think, we’ve just seen a lot of it, and you can argue on both sides of the political spectrum, but there seems to be an awful lot of what we just think of as corruption, wealthy people using the political system to increase their incomes, not to do what’s best for the country as a whole. John Solow:                       Yes, there’s only one billionaire, that we’re aware of, running during the debates, and there’s obviously a billionaire already running on the other side, but that’s not where I think the problem is. It’s not so much that they hold the offices, but that they pull the strings behind the scenes. Paul Jarley:                         Sami? Sami Alpanda:                   I do agree that, in principle, there shouldn’t be a worry that we have more billionaires, or anything like that, but as long as the pie is growing at an enough pace, and that, that pie is being evenly, or at all levels, that growth is being shared. But currently, that’s not the situation. So at the very top, at least in the last 30, 35 years, there has been an increase in the income share of the top 1%, from about 10% to 20% of total income. Sami Alpanda:                   Now, most of this reflects capital income, especially entrepreneurial income, dividend income, but … And for the top 0.1%, actually, I think the income share of the 0.1% has increased from about 4% to 9%. So this type of economic gains are not being shared, especially in the middle-income categories, and that … In the long run, this is going to be worrisome because it will have political implications. It’s already started to have political implications. Paul Jarley:                         Sure. Sami Alpanda:                   And that is a worry. Paul Jarley:                         Go ahead. Glenn Hubbard:               I think these things are all really important. I think your question’s probably one of the biggest long-run questions for our country. I don’t think we live in a world where the system is depriving people of gains from productivity, whoever those people are. I think, we have a lot of Americans, who do not have a marginal product that would lead to the wages that John is describing. Glenn Hubbard:               If we want to fix that, and I think it’s critical that we do, we have to use social insurance programs more aggressively than we’re doing today, and we have to decide on our nation’s priorities, is that what we want to do? We’re running a government that’s, principally, about old-age entitlements, things like that, and should we be investing more in working Americans. I think, we should. I think, it’s a huge question. Glenn Hubbard:               Who pays for that is a separate question. It could be the rich. It could be somebody else. But prioritizing those programs, I think, is critical. Paul Jarley:                         Because here’s what I worry about. I graduate 2,000 students a year from the College of Business, and I’m trying to prepare them for a future where data says to me, there going to have maybe two, or three careers. And we’ve seen, and I think, we’ll continue to see a lot of technological disruption of a lot of those careers, and perhaps, a lot of structural unemployment. Biggest risk, you think? Glenn Hubbard:               I think, it’s a very big risk, and I think that there are two familiar ways to deal with it, and our country has done both in the past. One would be a sort of battering ram approach on opportunity, and I think there about Lincoln era policy. People associated the president with the Civil War, obviously, but remember the Transcontinental Railroad, the Homestead Act, the land-grant colleges, Lincoln had a almost maniacal focus on opportunity. The other in American softening of capitalism has been more Rooseveltian. It’s social insurance programs that keep everybody in the boat. Glenn Hubbard:               We know how to do this, and we need to. The structural unemployment is real, but our labor market policies were designed in an era where you lost your job for a temporary period of time, then you came back to the same job, like a layoff, or a strike. That is not the world we live in. Paul Jarley:                         Because when they perfect those autonomous trucks driving, I’m going to drive [crosstalk 00:08:48] a job, so that … Glenn Hubbard:               Well, yeah. When the president said he was worried about Mexican truck drivers, I said, I was worried about no truck drivers. I think, that’s really the issue. Paul Jarley:                         Yeah. John, what do you think? John Solow:                       The question of automation in technology has been with us for a long time. About 55 years ago, President Johnson had a commission on automation and the economy. I still have a copy of that report. My father was one of the members of the commission. It was headed by Howard Bowman, who was the president of Indiana University at one point, and the people wanted included Edwin Land of Polaroid, and Thomas Watson of IBM. So these were serious people. John Solow:                       This issue’s been around for a long time, and yet, we still have very, very low unemployment rates. I’m more concerned about, and I think Glenn probably is, too, about the wages. I think, what we’re talking about is the wages of the people, whose jobs are replaced by technology. John Solow:                       Technology is complimentary to people like us. This is a tool that we get to use that makes us much more productive, but there are people for whom it is a substitute, and those people, who are losing their jobs, and yeah, I think its r- … We always talk about how education is the way to solve this problem. Exactly as Glenn said, there are people who don’t have much productivity, and we need to figure out ways to solve that. It’s not just, “Well, I need money so I can survive,” but what skills can we develop in you, where you can do something to help us. John Solow:                       I’m not trying to blame the poor, but I do think that part of the game is finding ways to make less-skilled people more productive. I just came from the Midwest, where rural America is struggling very badly. The world has just changed dramatically. These little towns that used to support an agricultural community, and everyone knew everyone, and kids could ride their bikes after school on the streets, and idyllic ’50s, that is just going away. The world is changing, and we have to figure out some way, either for those people to, not so much the people, who live there now, but their kids, and their grandkids to do something different. They can’t look back to the way, and say, “I want it to be the way it was in 1955.” That’s just not going to happen. Paul Jarley:                         Sami? Sami Alpanda:                   Well, the unemployment rate is at a all-time low, 3.5%, so jobs are being created, but where are they being created? They are being created at the very high end, so high-income jobs are on the rise. So there’s a lot of job growth there, and there’s, also, a lot of job growth in the bottom end, but a lot of middle-income jobs are being hollowed out, essentially, most through a technological change, to some degree by trade, and off-shore. Sami Alpanda:                   So this is an ongoing problem. This problem is, probably, not going to go away. If anything, it’s probably going to become more severe, so machine learning and artificial intelligence is with us. I’m not sure if self-driving trucks are around the corner. I think, we’ve been a little bit too optimistic about that, probably. Paul Jarley:                         Marketing’s ahead of the reality there? Sami Alpanda:                   I think that’s, probably, the case. We probably will need to wait another two, three decades, perhaps, for that to happen, and it’s not clear whether it’s going to happen as we envisage that it would happen. Sami Alpanda:                   But, nevertheless, you see this type of automation even in the high-skill jobs now. A lot of finance jobs are being automated, and even healthcare jobs, so basically, machines diagnose, or making diagnoses, or reading X-rays on their own, and doing a better job from humans at that. Sami Alpanda:                   I think, this is with us, and I agree with the panel that we’ll need to find remedies at some point, in terms of redistribution of some sort of the gains from all this type of technological advancements. Paul Jarley:                         Is there a country in the world, currently, that we can use as an example there? Americans like to think that they’re exceptional, and different, and need different solutions, but is anybody doing that right? Or ahead of that game? Glenn Hubbard:               Well, Germany has for years had apprenticeship programs and training programs. To many Americans, they all look unusual because they are tracking children from quite a young age and to jobs, something we would, or wouldn’t want to do socially, but I think the U.S. could learn a lot from its own past, too. We used to have very strong vocational education in the country. We have outstanding institutions in community colleges that are doing a lot of the training that’s needed by local business, but are woefully underfunded. There’s just lots of things we could be learning from. John Solow:                       So long as it’s a matter of choice, I don’t have a problem with that, all right. I remember being a schoolboy in England at the age of 10 for one year, and they have this exam called the eleven-plus, and if you do well on it, you get to go to the high school that leads you to college, and if you don’t, you get on the high school that leads you to baking. And I was petrified, as a 10-year-old, that if I screw up this exam, that’s my life. John Solow:                       Of course, I was an American. I didn’t even have to take it. My mother had explained to me that, “Oh, it’s not for you,” but my classmates had this sense that at some age we’re going to track you, and part of what makes America a great place is this notion that you can be whatever you want to be, if you’re capable of doing it. You’ve got to do it. You can’t just say, “I’d love to be the starting shortstop for the Boston Red Sox, but I can’t hit as well as Xander Bogaerts. Or even a bad shortstop. John Solow:                       But I think, we would like … I think, it is important that people have opportunities. But what I do worry about, well, it’s sounding the same, which is the middle is hollowing out. David Autor at MIT has done a bunch of work on this, and where the jobs seem to be being lost are in the middle, not the low end. We have lots of low-end, low-paying jobs, and we have good high-paying jobs, but the middle is hollowing out. And I think that, that’s very tough. But it used to be that you could move up the ladder, and now the leap goes from burger flipper to coder, or junior Wall Street executive, and that’s a huge leap. Paul Jarley:                         Sami? Sami Alpanda:                   The worry is that, as these trends are happening to the middle class, there is a lot more pressure to, perhaps, limit immigration because the immigrants- Paul Jarley:                         That’s my next point. Sami Alpanda:                   The immigrants [crosstalk 00:16:07]- Paul Jarley:                         But you’re not required to talk about it. Yeah, immigration is next. Sami Alpanda:                   Or it’s about trade, so we should, essentially, close down our borders to trade, or not allow off-shoring. So that’s sort of the worry. So, if you want to get … I mean, there aren’t calls yet to sort of destroy the robots, but maybe, that might be the next thing, if actually robots take over. Paul Jarley:                         That didn’t work out for the Luddites, too well. Sami Alpanda:                   [crosstalk 00:16:33]. Exactly. Paul Jarley:                         Yeah. Sami Alpanda:                   So I mean, obviously, all these things are a net positive for the economy. We don’t, actually, want to get rid of either automation, or immigration, or trade, but if we still want to keep them and make this politically feasible, then we would need to find the solution as to how we keep the middle class, or the former middle class happy. Sami Alpanda:                   We have to, perhaps, ensure them in some way, or it could be income, for example, in terms of healthcare, or educating … promising to educate their kids for the better jobs in the future. That’s not something we do, necessarily, a very good job, especially in poorer neighborhoods. I mean, rich neighborhoods have pretty good schools, but not necessarily poor neighborhoods. Sami Alpanda:                   So we have to find, ultimately, a solution to that. Paul Jarley:                         So what about immigration? How big of an impact is it on the economy in your estimation? Is this something we should be worrying about from a macroeconomic standpoint, whether we’ve limited, or- Sami Alpanda:                   So I s- Paul Jarley:                         … let it be open? Sami Alpanda:                   Well- Paul Jarley:                         I mean, from a … Go ahead. Yeah. We’ll come back this way. Sami Alpanda:                   I think, the literature is pretty clear on this that immigration has been a net positive, both high-skilled immigration, especially high-skilled immigration, but also, low-skilled immigration, too. I mean, it has pushed production possibilities, and also, productivity. Sami Alpanda:                   Now, a lot of the low-end jobs, actually, have been filled by foreign-born workers in the U.S., and ultimately, that has increased the welfare of native-born people, but there has been some wage impact. So there is some in the picture that looks at the wage of high school dropouts in particular, and there has been some negative wage impact in that particular part of the labor market. Sami Alpanda:                   But again, this is to say, immigration of both kinds have been a net positive for the economy. Paul Jarley:                         John? John Solow:                       This is not a literature that I follow, so I’m going to defer to the person, who knows something about the literature, but everything that I’ve heard, read or heard, says pretty much the same thing. I mean, remember, we’re now down to, even the legal immigration, a limit of 18,000 people in a country of 300 million, right? This seems like … This is as close to zero as you can get. I find … I don’t think that this is an economic problem, but I think it’s a social problem. It points to a darker side of our society. Glenn Hubbard:               I completely agree with that. We have two immigration stories, and they’ve already been well told. One is about a high-skilled, one low-skilled. High-skilled, half of the students I have at Columbia in the business school are not Americans, and I would love it, if they all wanted to work in my country, and could. Not because I’m a nice guy, but because I’m fundamentally selfish. They’ll add to our productivity, and frankly, we should want all foreign-born grad students, maybe, maybe not lawyers, but everybody out here- Paul Jarley:                         Well, I agree with you. Glenn Hubbard:               … who hadn’t … Apologies if there’s … We should work these people. Glenn Hubbard:               So low-end, there is an issue. There will be legitimate disagreement. The studies are, actually, mixed about the effects on the wages of native-born Americans, but if we care about this, we have to treat it as a social issue. I think, that’s absolutely right. Glenn Hubbard:               Our country isn’t going to have as bright a future, if we restrict immigration. We know that, and everything points that way, but we can’t just blithely say that as economists. We have to address the concerns of people, who feel left behind. They’re being told by some forces to point the finger at immigrants and the other, but instead, we need to help them. And if we don’t do that, the immigration discussion will get worse, and worse, and worse. Glenn Hubbard:               I recommend to everybody a book one of my teachers at another institution wrote, Ben Friedman, called The Moral Consequences of Economic Growth. Societies that are growing, and well distribute their gains are more placid societies, where you see racism, bigotry, anti-Semitism. That usually comes about in struggling, slow-growth societies. We don’t want to be that. Paul Jarley:                         Lack of hope is a bad thing. Glenn Hubbard:               It is. Paul Jarley:                         Really bad thing. Paul Jarley:                         You touched on this a little bit, Glenn, but the next one on the list, of course is trade wars. Talk about that a little bit and the impact it’s having. Glenn Hubbard:               Well, it’s interesting because I, actually, would start off by giving the president a little bit of credit. China has been a bad actor in the global trading system for a long time. As one of the people, who tried to push President Bush toward WTO accession for China, I always thought, and I think other people thought that China would ineluctably reform because it would see it in its own interests. That is wrong. China’s still massively subsidizing credit, [inaudible 00:21:37], so the real question about whether China should be in the WTO, as it’s currently structured. Glenn Hubbard:               Having said that, everything we’re doing in the trade wars is, from an economic perspective, bizarrely wrong. Why wouldn’t you unite your friends against the common enemy, rather than picking fights with everybody at the same time. If there’s any hope for WTO action in China, it would have to be multilateral. So right diagnosis, but the treatment seems odd. Paul Jarley:                         John? John Solow:                       I think, Adam Smith is rolling in his grave at a very fast [inaudible 00:22:15]. So I absolutely agree. Yeah. China has misbehaved in a lot of ways, but I do think that the focus … We were not going to get to political, I hope, but I don’t think our president understands trade. I think, he’s focused on two things. He’s focused on bilateral trade balances. So what we sell to China, and what China sells to us. John Solow:                       And we’ll just leave the rest of it aside and focus on that, those numbers. And that’s a pretty meaningless number in a very interconnected multi-country economy. If we buy things from China, and China spends that … This a loose example, but if we buy things from China, and they spend that money on things from Brazil, and then Brazil spends that money on things from us, we gain. Everyone has specialized what they do best, but our bilateral trade relationship with China looks like we send them millions of dollars, and their stealing our wealth. And this is just a meaningless thing. John Solow:                       The other thing is that the determinants of trade are not result of deals between presidents. They’re the result of economic forces. We import a lot because we don’t save very much, and we’re a good place to invest, and so people, rather than buying things, they invest in American companies, and American assets, and stocks, and bonds, and things like that. So I don’t think he understands it very well. That’s not to excuse China for being bad about intellectual property, for being bad about selling substandard products, and cheating on dog food that poisons dogs, and fluorine that poisons people, and things like that. But I don’t think that getting into trade wars all over the world, with our allies as well as the Chinese, makes the world a better place. John Solow:                       If you ask … And people have done this. If you poll economists, the one thing … Look at all these jokes about economists not agreeing with each other. Right? Paul Jarley:                         This is one. John Solow:                       But one of the Roosevelts said something … I think it was a Roosevelt, who said that, “I want a one-armed economist,” so he wouldn’t say, “on the one hand, and on the other.” It’s an old, old joke. The one thing we all agree on is that trade is a good thing, that free trade … 99% of th- … I think, the 1% that doesn’t is somebody named Navarro. John Solow:                       We’re not going at this very well. This is, again, in the Midwest, this is … In Iowa, where I used to live, this is hurting the agricultural economy badly. Yeah. So we give them money to prop them up, but that’s not really the solution. We cause the problem, and then we throw taxpayer revenue at them to help mitigate the problems. It’s not a good thing to be doing. Paul Jarley:                         Some of you want to beat that dead horse just a little more. Go ahead. Sami Alpanda:                   I, probably, agree with everything that has been said. Paul Jarley:                         How about rising healthcare and pharmaceutical costs? Concerned about that as a headwind on the economy? Glenn Hubbard:               Definitely. And it’s related to some of the other discussion we had, too. If you look at pay and compensation, which are two different things, pay is your wages, compensation’s your total package, a lot of what is happening to a middle, lower wage workers is higher healthcare costs are taking a lot of that. So a lot of the labor market discussion we had, it’s actually linked … It’s actually part of the healthcare discussion. Glenn Hubbard:               We, also, know that we’re paying way too much, that if we look at outcomes in the United States versus outcomes in our peers, and then compare that with the spending as a shared GDP, we’re paying too much. The causes are many. There’s no silver bullet. They have to do with the huge importance of third party pay. When economists use the words like insurance, we mean something specific. We mean catastrophes. What’s called insurance in the United States is tax-subsidized prepaid healthcare. It’s not surprising that, that would lead to over-consumption, public programs that have poor incentives. There’s a lot that we could do there. Glenn Hubbard:               And you are starting to see action on drug costs, too, where we’ve seen patents pushed too far. We’ve seen other areas, and I think the, both the right and the left, from different mechanisms and different perspectives, are trying to come at that. So this is an issue I expect to be a big one. Paul Jarley:                         John? John Solow:                       I agree. I think that all the polls suggest that healthcare is the single most important thing on voters’ minds, of the five things that were on our list. What voters are really s- … What’s impacting people in their daily lives is healthc- … They’re not thinking about automation, and … I mean, they may at some level, but what really matters to people is healthcare. And I agree with everything that Glenn said about that. Sami Alpanda:                   John, I completely agree, too. Healthcare is a very, very important part of the welfare of people, and obviously, high costs are of a major concern, and that should be a politician’s priority, I guess, to try to fix that in some way. Sami Alpanda:                   I would add though, I think we should rethink the fact that we have a system of employers … So we expect, essentially, employers to give healthcare. I mean, we don’t expect them to give, I don’t know, to pay for our rent, or pay for our cars, or anything like that, but we do expect them to pay for our healthcare. I think, we probably have to move away from that system. That system, probably, has been a negative, in terms of labor market mobility, too. I mean, you have to think about what’s going to happen to your healthcare, if you decide to change jobs, or geographic locations. Sami Alpanda:                   And then, maybe, start from that point, whether you go on the one hand to single-pay, or whether you go to a much, much more private-based, but perhaps, with some insurance about catastrophic healthcare expenses, for example, is going to be a political concern. But I think, we have to, probably, move away from this employer-based healthcare. Glenn Hubbard:               It’s interesting. On that point, the system we have was an artifact of wartime wage and price controls. So what the dead hand of policy that most Americans don’t even understand what it was, it was so long ago, has really shaped the healthcare system in odd ways. Glenn Hubbard:               It’s striking that the political discussion is just completely unrelated to what we’re talking about. So one side would say, “Medicare for all,” a $30 trillion spending expansion over 10 years. The other side says, “That’s socialist. We want nothing.” Where are all the ideas, the actual economic ideas. There somewhere in between all of that. There’s no reason we couldn’t have universal catastrophic health insurance. There’s no reason we couldn’t help low-income people through the funds that we currently put in Medicaid. Glenn Hubbard:               There’s solutions here. They’re just not being talked about. Paul Jarley:                         Last question. So with respect to the economy, what aren’t politicians talking about that they should be talking about? Glenn Hubbard:               To me, the biggest is an undercurrent in several of your questions that the anxiety, the economic anxiety that many Americans feel, that their futures are in peril, particularly for low and middle-skilled people, no politician is talking about this. We’re hearing a discussion on one side about universal basic income, or throwing money at it. On the other side, we’re hearing nothing. This is unsettling, as this problem’s not going away, and it’s going to get bigger. That would be my suggestion. Paul Jarley:                         John? John Solow:                       I agree with Glenn. I might put it a little bit differently, but I think, you mentioned earlier on sort of American exceptionalism, and I think this is a problem. I think, we think that we deserve to be the wealthiest people on earth because we are the wealthiest people. We’re America, darn it, and we just deserve it. You earn it. It’s not written in stone anywhere that we’re going to be the most successful country on earth. Other countries want to succeed, as well, and they put effort into it. John Solow:                       I’m going to plug something that … It sounds self-serving, and of course it is, but China has said at different times they want to build 20 MITs by the year 2050. Our state governments are cutting education budgets. That doesn’t sound like a very smart policy. Well, we just deserve it. You got to work for it. We’re not entitled to it. We have to earn it. John Solow:                       That’s something that worries me, that our … A hundred years ago, I sometimes put this up for students, a hundred years ago the country that was the world super power, whose currency was the world standard, that was the most innovative and creative on the planet, and the list goes on, and on, in 1900, that was England. The hundred years later, 120 years later, you wouldn’t put England in that category. It’s a nice place to live. Don’t get me wrong, but it’s not the world leader. John Solow:                       Things change, and we can’t expect just to coast on our laurels, and say, “Well, but we’re the greatest country that the world has ever seen.” You got to earn that every day. Paul Jarley:                         Sami? Sami Alpanda:                   Perhaps income mobility across generations could be more a bigger type of conversation. I think, one of the biggest worries that middle-income people now have is not only that they are falling behind, but they’re seeing, also, their children falling behind, so I think we have to preserve and sustain equal opportunity at least. Sami Alpanda:                   We don’t, necessarily, we don’t want equality of outcomes. We’re all capitalists, I think, here, but we do want to preserve human capital formation at the highest possible level, and also, make sure that every strata of the community actually have resources to get a good education, especially the Pre-K to 12 level. I mean, there’s a lot of emphasis at the college level, but I mean, for some of these kids, it’s actually too late by the time they get there. Sami Alpanda:                   There’s a lot of effort. I’m not trying undermine the effort, but we are ranked, I believe, like 25th out of 35 OECD countries, I think, in terms of math scores, science scores, reading, and that’s a shame in the richest country in the world. So we have to do something about that. Paul Jarley:                         Take a walk through any college of engineering and see where the bulk of the students are from. That’s all you really have to do. Yeah. Paul Jarley:                         So I know Tiffany wants to give time to mingle, but I promise I’m going to take two questions from the audience. Paul Jarley:                         Carrie? Paul Jarley:                         The mic failed to pick up a question from Carrie, but it was about the deficit and monetary policy. Glenn Hubbard:               Thank you. No one talks about that. Right? Audience:                           Yes. Glenn Hubbard:               Then no one talks about the deficit. You had two really big questions. I’m not sure we have a new monetary policy. I think, the Fed had gone a little too far in its rate increases. I think the president hectoring them doesn’t help matters, at all. I think, the Fed is in a fine-tuning mode. I’m more worried, the subject may be for another time, that the Fed is not clear enough with the public about where True North lies for its balance sheet, or its policy. I think, the communication’s just very poor. So I would give the Fed pretty poor marks at the moment. Glenn Hubbard:               On the deficit, we’re running a trillion dollar budget deficit in, essentially, a good time. We’re at, or above our potential growth rate. That strikes me as odd. More to the point, we have massive accrued liabilities in our entitlement programs, so we really are on a fiscally unsustainable path. Politicians say, “Well, look at the 10-year interest rate. It’s under 2%, so what’s the problem.” There will be a problem one day. Glenn Hubbard:               Unfortunately, our political system can’t really cope with this outside of a crisis. The major fiscal adjustments we’ve had have been in manufactured, or real crises, so I think of the Greenspan Commission in the early 80s. We’re about to have another manufactured crisis because the Medicare trust funds are going to run out of money. Glenn Hubbard:               So I think, it’s a huge problem, and no one is talking about it. And that’s bipartisan. No one on either side is talking about it. John Solow:                       Yeah, I’ll add to that a little. So when I was in graduate school, oh, so long ago, we read a book called The Social Security Crisis by … And that was what? 50, 42 years ago? This has been coming for a long time, and we all know, there is no magic bullet. The answers are either you cut benefits, you increase taxes, or some combination of the two, and the longer we wait, the worse it’s going to be when things really get tough. If you had made choices, modest choices earlier, then people have time to adjust their behavior. They have 30 years to save a little bit more because you know that you can’t count on quite as much in the way of Social Security, and so forth. But we don’t want to do it. John Solow:                       I think, the answer to a lot of this is just politics. Neither side … I think, both sides know what the right answers are. They may differ about the balance a little bit, but nobody wants to let the other side win by solving the problem, so we just don’t do anything, and we have this sort of paralysis. John Solow:                       I think, the same thing is true about the budget deficit. You either raise taxes, or cut spending, but neither side wants to let the other side win, so we go on, and on, and on. Sami Alpanda:                   If another country was running these types of deficits, we would, probably, think that this is definitely on a unsustainable path, and there’s going to be an imminent crisis, and the currency will depreciate by so-and-so percent. Now, we’ve seen this many, many times in Argentina, Turkey, other emerging market economies. Sami Alpanda:                   Our luck, or benefit is that we, actually, own the reserve currency in the world. So the U.S. dollar is the reserve currency of the world. We run deficits, we finance them by issuing treasuries, and the world gobbles it up, and at very, very low rates. They are, basically, renting us free cash. Paul Jarley:                         [crosstalk 00:37:36] we could pay our debt in our own currency. Correct? That we print. Yeah. Sami Alpanda:                   So as long as that continues, there doesn’t seem to be a problem, but there will … I mean, if you do continue this for- … You cannot continue this forever and ever. And given, as Glenn mentioned, that we have this unsustainable debt path, and obviously at some point, there has to be some correction to it. I guess, the markets do believe that we will, eventually, wake up to the point where politicians will, “Well, we’ll fix this.” So there are adults in the room, but if that doesn’t occur, then I think, we are probably going to crash hard. And we might even lose the reserve currency status, which would be sort of the big tail event that we probably don’t expect it will happen, but it’s possible that it could. Paul Jarley:                         Okay. Last question. Merrell. Merrell:                                   So I’m a CPA and I’m, also, a lawyer. Glenn Hubbard:                         Sorry. Merrell:                                   I deal- Merrell:                                   So I deal with taxes all the time, but I also deal with the elderly, and my estimates for my clients is that they don’t recognize that they’re going to get old. They think they’re going to be healthy forever. They’ve saved nothing, and they don’t think that things are going to cost a lot. Merrell:                                   And so, when you take that and look at the budget of so much in entitlements, and then you look at, well, how many people are, actually, paying for taxes, yeah, we got to cut spending, or we have to raise taxes, but I don’t know on whom. Because we can’t cut the benefits for the old people, and we can’t really squeeze that much more out of the 50% that are paying taxes because it’s, generally, the middle-class because low-income, in like what I see, low-end aren’t paying taxes, and the high-end have all the wisdom of the lawyers that bring it down. So it’s the middle-class that’s getting hit more and more, and may end up keeping their elderly in their home with ruining their lives, and their economics paying for it. And I don’t know how to fix it. Glenn Hubbard:               I, actually, think Social Security is fixable. It just requires political courage. And there are a couple of fixes that would go a long way. One would be to take up retirement ages because the ability of most Americans that we already discussed, the service sector’s the dominant thing, not manufacturing, or heavily physical work, so that’s part one. Glenn Hubbard:               Part two would be something more akin to what economists would call progressive indexation of benefits. So currently, everybody gets their benefit growth at the same growth of real wages. That could be slower for more affluent people, or an even more sensible system might be to raise the minimum benefit, but then flatten it, so that it’s much less generous for middle and upper income seniors. Glenn Hubbard:               We’re going to have to make these choices because when you say we can’t old people’s benefits, the law is that we will. So in 2034, the secretary of the treasury, whoever he, or she happens to be then, is going to have to start cutting Social Security benefits, unless we do something, and that may sound like it’s a long way away, and I suppose it is, but it strikes me as one we ought to think about. Paul Jarley:                         Well, thank you all for the panel, and thank you all for your attention. Paul Jarley:                         We’ve covered a lot of ground, so what’s the thing, and what isn’t. Or in these cases may be, what’s a good thing, and what’s a bad thing. From a purely macroeconomic standpoint, growing income inequality at the top isn’t really a thing. It’s the bottom that’s the real issue. Paul Jarley:                         People not having a productive skillset that allows them to share in the fruits of our economy is a bad thing. Technological disruption and changing economic forces are hollowing out the middle. Trade wars and immigration limits aren’t going to solve this problem and are net drags on the economy. They are decidedly not good things. Paul Jarley:                         Don’t get me wrong. Losing your job hurts, and the playing field needs to be fair. China has been a bad actor, but the solution involves investment in human capital that will help people compete, not putting up barriers to trade, or mobility. Paul Jarley:                         Rising healthcare costs are most certainly a thing. Our employer-provided healthcare system is a historical artifact of a bygone era, hurts labor market mobility, and has shaped the healthcare system in odd ways. It is especially a thing for lower-income groups where it is taking up a larger and larger share of their total compensation, and from an international perspective, the results of our system, well, it just hasn’t been very great. Politicians need to talk more about creative solutions here. Paul Jarley:                         More generally, the economic anxiety of the electorate is real. People are concerned about their long-run future. We need to invest in our people to bridge the income and equality gap and improve the future of our children, especially for those at the bottom of the income distribution. Paul Jarley:                         And while interest rates are low and financing the debt is not an issue now, those IOUs will come due. We are mortgaging our future, while limiting our ability to use fiscal and monetary policy to help us cope with the recession when it comes, and it will come. That is most certainly going to be a thing. What do you think? Paul Jarley:                         Check us out online and share your thoughts at business.ucf.edu/podcast. You can also find extended interviews with our guests and notes from this show. Special thanks to my producer, Josh Miranda, and the whole team at the Office of Outreach & Engagement here at the UCF College of Business. Paul Jarley:                         And thank you for listening. Until next time, charge on.   Listen to all episodes of “Is This Really a Thing?” at business.ucf.edu/podcast.

Many successful people are sleep deprived, but that doesn’t mean coffee and energy drinks are the keys to business success. In fact, these individuals are likely successful despite their lack of sleep — not because of it. Is shaving off a few hours of sleep really worth the extra time? Jeff Gish, Ph.D., Assistant Professor of Management at UCF College of Business, explains how sleep plays a pivotal role in the development of new ideas and business ventures.   Featured Guests Jeff Gish – Assistant Professor, Management Episode Highlights 0:46 – Paul Jarley’s introductory thoughts 1:39 – The effects of sleep on entrepreneurship 8:58 – How does sleep effect the evaluation of ideas? 17:56 – Jeff Gish’s sleep deprivation experiment 23:13 – Solving your sleep equation 25:05 – Questions from the audience   Episode Transcription Paul Jarley:                         Tom Ford, fashion designer, gets three; Donald Trump says he gets three to four; Martha Stewart, under four; Jack Dorsey, founder of Twitter, four to six; Barack Obama, six. Successful people tell us if you want to get ahead, you need to work more and sleep less. It’s the price of success, but is it? Paul Jarley:                         This show is all about separating hype from fundamental change. I’m Paul Jarley, Dean of the College of Business here at UCF. I’ve got lots of questions. To get answers, I’m talking to people with interesting insights into the future of business. Have you ever wondered, is this really a thing? Onto our show. Paul Jarley:                         Today’s podcast is from a Dean’s speaker series talk by Jeff Gish. Jeff is a professor in our management department and is an expert in entrepreneurship. He hasn’t just studied it. He’s actually lived it. As an entrepreneur, he spent a lot of sleepless hours trying to get his business off the ground. His insights are really meant to be an intervention for my chief of operations, Tiffany Hughes. You all know a Tiffany. She’s that person who never sleeps. She sends you calendar requests at three in the morning. She responds to your emails overnight. And she’s at work before you are. If you plead with her to stop, she answers you with something like, “I just have to get this done.” Mercifully, my Tiffany doesn’t really understand Twitter, but does it really need to be this way? Or is this workaholic culture that we’re all in just getting in our way? Listen in. Jeff Gish:                             Let’s get into this talk about sleep and entrepreneurship. And I’ve titled it, money never sleeps, but entrepreneurs should. That’s very prescriptive. I hope that you agree by the end of this presentation, and I’d like to start off the talk with this quote from Ben Horowitz. Ben Horowitz is co-founder of Andreessen Horowitz. It’s a VC firm over in the West Coast, but he’s a former CEO too, a former founder. When he talks about his CEO experience or his founding experience, he says, “When I was a startup CEO, I slept like a baby. I woke up every two hours and cried.” I share this quote because it’s a little bit funny. It gets people engaged, but it’s also very true. I had a business with 57 employees before joining the academic realm, and I felt a lot of pressure when I was an entrepreneur. And this person felt the pressure too, it was hard to sleep. Jeff Gish:                             And on top of that, you feel like your business is so important. There’s this tension in entrepreneurship that your business is so important that how can you sleep when you’ve got to keep things afloat and keep things moving. Ben Horowitz picks up on that in this quote, and I picked up on this with my coauthors that wrote this paper that was just recently published. Just the fact that entrepreneurs are of this culture that I’ll sleep when I die, or sleep is for weaklings. I was a person who touted those messages as a small business entrepreneur. I always knew that there might be some ill effects of that, but I just kept doing it because I felt my business is really important. I think a lot of entrepreneurs fall into that category. I feel like this context is a good place to study sleep restriction and how that affects pursuits that are unique to entrepreneurial ventures. Jeff Gish:                             All right. In order to talk about this, I’ve got to get through the theory part. All right. This is the academic portion. I draw on structural alignment theory, and I use a cliche picture of an iceberg, but it really fits in this instance. Structural alignment is how researchers have posited that expert entrepreneurs, and they do this by talking to entrepreneurs, how expert entrepreneurs make decisions about evaluating opportunities. If you think about alignment, you can think about two things. One thing being the market and a new technology that might be sold, commercialized to that market. Structural alignment talks about how similar those are to each other. Jeff Gish:                             There are levels of similarity. The first level is superficial. These are just the features, objects and people. This market sort of looks like this business, or the people who are founding this business, so that’s really superficial. That is not what makes the business go, all right. That’s not what’s important for the business, but superficial alignment that exists. Jeff Gish:                             The next one is first order of structural alignment. That’s the how and why a business might work for a particular market. And then even deeper than that is the potential benefits and potential problems that might exist. And if you can get to those deeper levels, you can do a better job at assessing whether an opportunity will be successful or not. That’s the idea in structural alignment theory. So, remember this iceberg diagram because it will come back several times during the presentation. And if you can click once… The top, when I say superficial, I’m talking about the superficial alignment between a technology and market. And on the bottom we’re talking about structural alignment, both first order and higher order. Those are both structural considerations about a market and a technology that is intended to be commercialized on that market. Jeff Gish:                             I’m going to give you an example because that’s really abstract, that theory. This example is asks you to look at, it’s a business example, and I’ll get to what the business is in a moment. What are some similarities between these pictures? Just think in your head. There aren’t a whole lot. It’s kind of a trick question. There is some orange in each picture. They’re both walking toward us. But, excuse me. If you look at this picture, these are individuals who… They’re NASA astronauts. They’re shuttle pilots. And over a long period of time, they’d been selected over and over again as the best of the best of the best. So these are really long-tail individuals who have shown excellence over time. This is a middle school or high school, kids walking down the hall. You might have some brilliant individuals in there, but you probably have the whole spectrum of abilities and performance. As far as similarities go, there aren’t many between the two. And so, superficially, on the surface, not much is going on there. However, I want to tell you about an example of where business from this area came over to the field of K through 12 education. All right. This slide or this picture, if you can’t see it, it says, “Back to school special: Ritalin.” I am by no means- Woo hoo. Speaker 3:                           [inaudible 00:06:24] in a 12-step program. Jeff Gish:                             That’s great. I am by no means speaking derisively of Ritalin. It’s helped a lot of people through a lot of, a lot of things, especially ADHD. But there are parents who would like to see a nonmedical solution to their kids’ struggles with ADHD. I’m just setting that up as a context. Jeff Gish:                             All right. Over here at NASA, these people do a very technical and demanding job. And when you’re flying a shuttle, I know the shuttle programs have been canceled, but we’re going to send people to space again. And when you’re flying some a spacecraft, it’s important that you pay attention. And so engineers who, I mean, there can be some catastrophic events that happen if you don’t pay attention. Engineers developed a simulation tool for NASA pilots that put an EEG helmet on their head and monitored their attention. And in the simulator, if their attention wandered, it would make the controls harder to operate the shuttle. All right, so there’s a real penalty when your attention wanders. Jeff Gish:                             And so one of the engineers that developed this technology said, “Hey, are there other markets that this could apply to?” This person was thinking structurally, not superficially, and went over to these kids experiencing ADHD and parents who wanted to see a solution that was not medical. And so what he did was he partnered with the Sony PlayStation platform, and they still have to wear the helmet to… These are fairly expensive treatments, but they put the helmet on the kids and he developed a racing game where a kid’s attention wanders. They have to go back and the controls become harder and they have to keep their attention focused on the screen in order to keep the car going down the road and driving appropriately and have the controls that they want to win the race. Jeff Gish:                             Now you can argue whether that’s a good idea to have kids who have ADHD to play more video games. I mean, I don’t know. This was commercialized that received venture funding, and there was a strategic partnership made with Sony. All right, so this is an example where superficially kids and teens are not similar to NASA pilots, but structurally where it’s important for the business to be successful, attention deficit is roughly analogous with pilot vigilance. And, again, here’s the the iceberg. At the tip, it doesn’t match. And at the bottom, it does. So that `NASA engineer who developed this technology was looking at the structural alignment. And we’ll come back to this example in a little bit. Jeff Gish:                             I want to look at whether sleep influences the ability to look at different parts of the iceberg for business opportunities, right? And so I do it in three different ways. There’s three different studies I want to talk about today. First, is an entrepreneur survey just to see is there something going on, totally correlational. Next, I talk to entrepreneurs in a daily entrepreneur study over a period of two weeks and measure their sleep and ask them to evaluate an opportunity each day. And then finally to to isolate sleep as a cause of this phenomenon that I’m investigating. I do a sleep deprivation experiment where people are randomly assigned to condition sleep deprivation and enough sleep at least seven hours. Jeff Gish:                             The first one I’m going to talk about is a field observation. In this field observation, I surveyed 784 entrepreneurs, talk to them about their sleep quantity, how many hours they slept the previous night, and then ask them to rank three business opportunities. The way I did that as I served them executive summaries for three different business opportunities, all of these business opportunities were superficially aligned. So tip of the iceberg, everything matched. But there was one that did not have structural alignment. If you get down beneath the surface on the iceberg, this third place business did not have structural alignment. I asked them to rank the opportunities and my measure of success was whether they ranked the third one in third place or not. And what I found was that that people who were sleep deprived actually had a harder time recognizing that that third one should be in third place, and there was a statistically significant difference. But, again, this correlational was a lot of noise in this type of design. But it said, “Yes, Jeff. Go forward, and do some more. Spend some more money, and collect more data. There’s probably something going on here.” Jeff Gish:                             The daily entrepreneurs study is interesting and it was a heavy lift for me to do and collect because I’ve been talking to entrepreneurs over a two-week period, checking in with them twice per day. These are entrepreneurs and six different continents. I’ve got to figure out time zones and deliver the surveys at the right time. I can automate some of that, but I also want to make sure that everything’s going well and check in with them and make sure I keep them engaged. But this helps me answer the question of, or at least the concern with the previous study, of that’s not me. There might be some of you in the audience saying right now, don’t people need different amounts of sleep? And to a certain extent, yes, that’s true. You know, somebody might need only an average of six hours of sleep, other people might need an average of eight hours of sleep. And this study helps me pit an entrepreneur against him or herself on subsequent days. It’s not comparing entrepreneurs to each other, it’s comparing an entrepreneur to him or herself. Jeff Gish:                             All right. This is just a histogram. I won’t spend much time on this slide, but it’s a measure of how many hours of sleep you got over the period of the study. Each entrepreneur has 14 times to get onto this chart, and it shows that entrepreneurs perhaps surprisingly sleep about as much as the American public at 6.7 hours per night. There’s a wide range of variation. What I want to point out here is that between person variance, that is my difference from Tiffany and how much I sleep, is less different than how much I slept last night compared to the following night. I’m more different from myself on subsequent days than I am from how much sleep Tiffany needs, and she’s a short sleeper. Jeff Gish:                             This chart just looks at… What I do with those ideas, as I eliminate all the between person variance. The way I do that is if you’re a person who over two weeks only needed five hours per night on average: when you slept six, you get a plus one; when you slept four, you get a minus one. If you slept five, you get a zero. The person who needs seven hours of sleep: if you sleep eight, you get a plus one; you sleep six, you get a minus one; if you sleep seven, you get a zero. So that takes between person differences out and just measures your deviance from your own sleep on average. Okay. And that’s what this chart is. Jeff Gish:                             These are three different individuals. This first individual has pretty decent sleep hygiene, but you can see that there’s wide variation. They average a little over seven hours of sleep per night, but there’s wide variation. Sometimes they’re doing recovery sleep, sometimes they’re staying up late and working. These are all practicing entrepreneurs, remember, around the world. This person needs less sleep on average, but there are times where they’re sleeping only three hours and then maybe this is a recovery night for that person. Even though they need less sleep, they’ve still got variance within person. And then this person had a couple of nights where they slept three hours, and then this is probably like a weekend night where they’re recovering or something, that did not work for them. they’re getting sleep. Jeff Gish:                             The reason I put these up is just to show you that that among the participants, this is not unique. This is how we all sleep more or less over time. All right. So what I did with those entrepreneurs in this, in this daily study is I took opportunities like that NASA opportunity. There were 14 of them over the two week period, so 14 different opportunities, and each day an entrepreneur could be served into one of these conditions. Let me tell you how these conditions work. The one that I pitched to you before with low-superficial and high-structural alignment, that’s the NASA example, but you can adapt this to show higher superficial alignment and high-structural alignment. Jeff Gish:                             In that case, what I did was I changed it from a NASA engineer to Stanford child psychologists. So Stanford child psychologists make this technology to monitor attention, and it would make sense to apply it to K through 12 education, that’s superficial alignment. And so the structural alignment was still there. I modify that. And then so you can also modify it so that there’s low structural alignment. And so let’s just stick with the NASA example. In that situation, you might change it so that this tool that was developed is to monitor pilot’s stress as opposed to attention and that changes so that structurally those aren’t aligned. I modify those to make four different cells for 14 different opportunities and each day you just get served into one of these cells. You don’t look at each manipulation, but over the 14 days you get multiple chances in each cell through the random assignment that I did. Jeff Gish:                             What I want to say about the iceberg, again, is bringing iceberg back up. And so on the tip of the iceberg, if you can judge an opportunity to merit on the tip of the iceberg, you don’t need to go deeper than superficial level. Here when it’s low superficial and low structural and up there where it’s high superficial, high structural, I don’t expect to see a difference from sleep because you don’t have to get deeper than superficial level of scanning to evaluate that opportunity. I expect the differences to exist on this diagonal where you have to go beneath the surface to evaluate whether it’s a valid opportunity or not, how high quality it is. Sure enough, what I find is that there’s no difference based on sleep on evaluating these opportunities, whether you slept less than you normally do or not. You evaluate those similarly because you don’t have to go deeper than superficial level is my proposition. Jeff Gish:                             What we see here is that with the NASA example, for example, where it’s low superficial alignment, high structural alignment, the more sleep you had, the higher you rated that opportunity. And so if you didn’t have sleep compared to yourself, you made an error and rated that lower. Down here, if you have more sleep, this is a non-obvious poor quality opportunity where it’s superficially aligned but not structurally aligned, so you wouldn’t want to give that an up vote. And sure enough, people who had more sleep rated those opportunities lower. All right, so saw the results that I expected to see there. Jeff Gish:                             I developed a relationship with a local business in Eugene, Oregon, where I was when I was doing this study. And this business does business planning software for small- to medium-sized businesses and they allow me to survey their customers. The CEO sent out an email on my behalf saying, “Hey, there’s some entrepreneurship research going on. Would you be willing to participate?” That was how I gathered the first 780 entrepreneurs sample and then in a different collection, different about a year later. Did the entrepreneur sample here. Speaker 4:                           One other question. What about the level of sleep? Not the amount of time, but you know some people they don’t sleep deep. Jeff Gish:                             Yeah, that’s right. Speaker 4:                           Did you account for that in this? Jeff Gish:                             Did I account for it? Usually when you are sleeping, that’s a good indication that you’re getting some of the recovery that you need. But we also measured sleep quality, so people’s subjective assessment of how well did you sleep last night? How restless was it? And those results hold with this too. So he used that as a predictor as opposed to sleep hours. Same type of result, same pattern of results. Does that make sense? If I get one more hour of sleep than I did the previous night, I could consider that a higher-quality level of sleep, but it is a little bit different estimation than quality just without any leveling up. So I would have loved to have done a sleep deprivation experiment with with entrepreneurs. But I asked, they said, “No.” I can do it with undergrads, though. This was all on the up and up. I got it approved by our IRB. I basically pitched it such that undergrads are going to pull an all-nighter anyway. And so I said they’re not asking him to do anything that they wouldn’t do on their own volition, and I didn’t ask them to do anything that I wouldn’t do myself. I stayed up with them, too. Along with the help of four RAs who made sure people weren’t falling asleep. Jeff Gish:                             Two different conditions, one that slept at least seven hours, one that did not sleep at all, zero hours. You can imagine quality assessment of sleep the previous night is like none. And everyone reported to the lab at 9:00 AM and answered the same questions that that first sample did of entrepreneurs about ranking those three business opportunities. So they’re looking at executive summaries and ranking them. I also had them give an open-ended response about a novel technology and I said which type of markets would you apply this to? In that exercise I’m looking at are they focusing on superficial relationships, are they focusing on structural relationships? I’ll tell you how I do that in a moment. Go ahead. Jeff Gish:                             This is the two different groups. On the left is the sleep-deprived group on the right is the well-rested group. And what I want to call out here is that an error in ranking is when you rank that low-quality opportunity in one of these buckets, higher is better here, so either in first place, second place. The sleep deprived group had a lot more people and in fact they were two 2.6 times more likely to make a false positive vote for that low-quality opportunity. All right. And very few people did that in the well-rested group that had at least seven hours. This is the open-ended assessment where I had them write about here’s a new technology and the technology was a video tracking software where it looks at video and sees how long somebody stands in a certain area in a space where they’re moving to where what they’re looking at. It measures their head and where their eyes are pointed, and it says whether they come back to that space. All right. I just sort of laid out that technology in a paragraph and said, “Which markets might you apply this to to these participants?” I had them write as much as they want. They could come up with as many ideas as they want and write as long as they wanted. I didn’t regulate their time. Jeff Gish:                             And so what I’m looking at in there is are they focused on the deep level stuff, the structural alignments, or are they focused on superficial? I trained some RAs to code the open-ended responses, and they were blind to experimental condition. They’re randomly given to the person who’s doing the coding. They don’t know whether this is the person who slept or not. What we found was that when someone had not slept in the sleep-deprivation condition within group, they were less likely to talk about structural alignment. This is first order higher order thinking, so structural alignment than they were to talk about superficial alignment. Jeff Gish:                             There’s also between group… This is the well-rested group over here. There’s a between group difference between the amount of structural thinking that is incorporated into the responses and over here with the sleep-deprived group, how much structural thinking they have. So within group and between group differences, and importantly we controlled for word count and number of ideas because you can think of that sleep-deprived group reporting to the lab. They’ve had at least 24 hours of sleep deprivation where they actually incentivize to go forth and write something. Word count was not significantly different. So they on average they use the same amount of exposition and the number of ideas was not significantly different. So importantly they’re still, the people who are sleep deprived are still doing writing. It’s just not as on point or it’s not as germane to the opportunity as what the people who are well rested we’re doing. Jeff Gish:                             What does this all mean? Where does this take us? A couple of years ago I gave the presentation before I had actually done the diary study, I had just done the survey with the entrepreneurs. And I had a group of 250 angel investors and entrepreneurs at this angel investing conference. And I had a couple of people come up to me afterwards and go, “Well, that’s not me. That’s not how I am. I only need three hours of sleep per night.” This person actually is an angel investor who mentors entrepreneurs and he advises people to sleep less. He’s participating in that culture. He critiqued my sample size, and I’m like, “Well, how big is yours? It’s one. Right?” I didn’t actually say that. That’s just what I was thinking in the back of my mind. Jeff Gish:                             He critiqued the sample size and he said, “That’s just not me. I only need three hours of sleep per night.” And I said, “Well, you have variance. And so, perhaps, you’re successful despite the fact that you only sleep three hours a night, but I can also say with this additional data collection that I did where I measured an entrepreneur against him or herself, that that person who only needs three hours of sleep per night, when they get four, they’re better at opportunity evaluation than when they get three.” That’s why I think that particular portion of the study is important. And then I highlight a causal mechanism with the sleep-deprivation experiment showing that this is what’s going on. It’s their ability to access those structural relationships between a technology and a market that it’s intended for, and that’s where the evaluation happens. Jeff Gish:                             The title is prescriptive. As I said, “Money never sleeps, entrepreneurs should.” My recommendation is not to talk to a group of entrepreneurs and say, “Hey, just sleep more.” I think that’s sort of like looking out at the ocean and telling the waves to stop crashing to the shore. I don’t think that’s going, I’m going to have much traction with that type of recommendation. However, what I want entrepreneurs and people who advise entrepreneurs to do is to to educate them on their sleep equation. Thinking about that second study, how much sleep do you need per night and are you more or less than that when it’s time to make a big decision like entry into an entrepreneurial venture? Jeff Gish:                             This deep-level thinking stuff applies to much more than just ideation or evaluation activity. It could be pivoting your business or taking on a strategic partner or making a key hire. These are all things that entrepreneurs do on a frequent basis, and sleep has an effect on all of those activities. And so I’m not asking people to stop hustling and stop grinding. I want you to do that, and I’ve lived that life. But if you are trying to make one of those decisions and you are short on sleep, don’t just wear it like it’s a badge of honor and say, “Well, I don’t need sleep.” Ask for extra time to sleep on a decision. And I think your future self will thank you when you’re down the road and reaping the benefits of that decision. Any questions? That’s it. Please. Jeff Gish:                             I haven’t investigated the effects of too much sleep. There is research out there that says that once you get to seven or eight hours, the National Sleep Foundation recommends seven to nine hours. Once you get to seven or eight hours, there’s diminishing returns on more sleep than that. And in this instance, it could be actually negative returns. If you’re getting 10 to 12 hours of sleep, you can be lethargic the next day. I don’t do research on that, but that’s an interesting notion. Yeah, please. Speaker 4:                           As an entrepreneur myself. I find that I’m actually measuring the amount of sleep that I get every night- Jeff Gish:                             via actigraphy or a Fitbit, Apple Watch. Speaker 4:                           Just my clock. Jeff Gish:                             Just thinking about it. Okay, that’s great. That’s the way we measured it here, too. Speaker 4:                           I noticed that what happens is I might be waking up every hour. I’ll go back to sleep after 15 minutes or so, but it’s not a solid sleep. And that’s why I was asking you about the quality of sleep. And if I get anything over six, I definitely feel a more positive of that. Jeff Gish:                             Yeah, there are noted effects on moods. I mean there are thousands of papers out there on sleep and how it affects cognition and decision making. This is the first of those about sleep and opportunity evaluation. It was just published in our top entrepreneurship journal, and I’m thankful for all the help from my coauthors. And actually I gave this presentation to the faculty here and they helped me develop the ideas and make it even better for the preparation to submit it to the journal. Jeff Gish:                             I think quality and quantity are correlated. As you get more sleep you also have higher quality, but they aren’t perfectly the same. Paying attention to both I think is important. In this study we talk about quantity, like I mentioned, the the results are robust to to when we measured quality as well. I think each plays an important role, how soundly can you sleep. I think when you’re ruminating on things, there’s an opportunity to be in bed, be asleep, but your mind is still cranking on some stuff that you had going on and that wakes you up. And when you wake up, shoot, you lost opportunity to sleep because you just had a little bit and now you’re on fire. That’s how my brain works anyway. In the back, you’ve had your hand up for a while. Speaker 5:                           Ignorance was bliss until my husband got me this Apple Watch, and now I know exactly how much I don’t sleep. I would think that would be great to get you more accurate information, have you been using the Apple Watch to [inaudible 00:27:06]? Jeff Gish:                             There’s research that uses, not Apple Watch technology, but there’s things called ActiGraph, and it’s like the same technology. It measures motion. Some of them even measure breathing patterns and they’ll listen to that. There’s also research that correlates or that looks at whether self-reported sleep matches what the ActiGraph says or what the Apple Watch says, and they’re very close- Speaker 5:                           They did it. Jeff Gish:                             … which is good. Yeah, in that research, it’s very close. Several papers that say that, but what you hinted at is that you’re getting more information. Is that always a good thing? There’s some recent research that comes out from one of the coauthors on this paper, University of Washington. He just published a paper about how when you find out this information and you’re paying attention to your sleep patterns, paradoxically it can cause you to sleep less because you’re like, I mentioned rumination before. You’re thinking about it too much and you’re not able to get to sleep because it’s like, “Oh, gosh, I know the importance of sleep, and I know I need to get to sleep. I’m looking at the clock, and the minutes just keep ticking. So where does that put me in there?” There can be some negative effects as well. Jeff Gish:                             Well, I think you can coach people to understand their sleep equation. I think it’s just hard to tell somebody who has invested his or her life savings into a business, perhaps, has asked their friends, family, and other investors to back them in this venture. It’s hard for them to say, “No, I’m never going to let forego sleep in order to make this business go.” I guess I’m trying to give more balanced advice. And I think coaching could give that balanced advice, just to understand. Jeff Gish:                             Because what happens is, and the reason I make this recommendation is because there’s a recent paper in 2017 that looked at risk-taking propensity and your willingness to dive into a risk. It’s a psychology paper. They serve these risky activities that people, and they look at people who are well rested, at least seven hours of sleep. People who are sleep restricted between four and five hours, and people who have total sleep deprivation. And which do you think takes the biggest risks. I’m curious, what do you think? [crosstalk 00:29:06] Maybe some people say the middle. That’s right. The people in the middle take the biggest risks, and I think it’s because these people did not sleep the previous night. That’s really salient in your mind. You’re like, “Okay, I’ve got to focus on what I’m doing right now. I know that that’s part of that’s exactly what happened last night, and it’s affecting the way I think.” Jeff Gish:                             These people like entrepreneurs perhaps who were lack of sleep as a badge of honor are marching forward as though everything’s fine, and I think that that’s why people need to understand their sleep equation such that you’re not just marching forward as though everything’s fine. You understand that if you haven’t received enough sleep or the amount of sleep that you need, then you’re going to have these cognitive deficits that exist with sleep deprivation or with sleep restriction. Jeff Gish:                             I love this notion of looking at diet and exercise and how these play a role. The people in the sleep-deprivation experiment were not allowed to take naps. We asked them about that to make sure that there was continuous sleep deprivation. Naps have a restorative effect, especially if you’ve lost sleep the previous night. You can immediately go back into the deep sleep when you take a nap. I don’t look at naps in this paper, but I think they hold the promise to have some of that restorative capacity that absent a good night’s sleep, you can take a nap and maybe recover from that. But there are other ways you can recover from it, too. And this gets back to what Paul was saying about, you know, mindfulness meditation. One of my good friends Chuck Murnieks at Oregon State University just published a paper about… They looked at both mindfulness and sleep, and showed that mindfulness can help entrepreneurs fix some of those ill-cognitive effects that exists with sleep deprivation. So mindfulness practices hold great promise to, in the absence of good sleep, because it nothing beats a good night of sleep, but if you’re trying to repair that and mindfulness practices hold promise in that area, too. Yeah. Speaker 6:                           Is there something to look at where even if you get the same amount asleep, if I end up sleeping earlier than I’m used to or later I still get that seven hours, I still feel like myself the next day. So even though I’m getting the same quantity, the time that I’m going to sleep tends to affect me the next day. Jeff Gish:                             Something in the future, I’ve actually got a paper that looks at both the homeostatic process of sleep. Homeostatic is trying to keep your body in stasis, getting enough sleep so that you can… This is more of a homeostatic paper looking at balancing out the amount of sleep that your body needs and then getting that amount of sleep. What you’re talking about is more of a circadian process. So people have these 24-hour clocks, and so if you sleep at the wrong period in that clock, it can throw you off. There are some similar effects that exist, especially for people who are, let’s say, morning people, and they’re asked to work in the evening. Or if you’re an evening person and you’re asked to work in the morning. Jeff Gish:                             I have a teenage son. Those of you who have kids out here can attest that they’re starting the high schools at like seven o’clock in the morning. And my teenage son getting up at six is like not a good thing. Even if he’s got the same and appropriate amount of sleep the previous night, he’s off his game because he’s not a morning person. So chrono type and these circadian processes can also play a role. Again, that’s not what I looked at here, but I think there’s potential there. Jeff Gish:                             You can accumulate sleep debt. Some people tell themselves, well this is how much I’m sleeping, so this is how much I should sleep. And that’s not always the case. It’s hard to know. Like I said, especially if you’re wearing lack of sleep as a badge of honor, it’s hard to know whether… You’ve got all this extra time. Great. I want to keep practicing this. Unless you do some activity that gives you disconfirming information you don’t know, but you can accrue sleep debt. Jeff Gish:                             And in fact there’s some papers out there that they recognize that five days of sleep restriction, this is less than five hours of sleep. People in a driving simulation are just as bad at driving as somebody who’s over the legal limit of being drunk. It has real cognitive deficits that exist. You can fix that in less than five days of recovery sleep. I think that’s because when you’re, when you’re sleep restricted, the homeostasis process that happens, your body wants to recover. And so when you fall asleep, you fall into a deeper sleep quicker than you would on a normal night. And some of you, maybe if you’ve worn yourself out over a week and you get the recovery sleep on the weekend, you might have seen this, you lay down on your head, it’s the pillow and you’re out. It doesn’t take as long to recover from accruing a sleep debt. But you need to do that if you’re not sleeping as much as you should. Again. Yeah. Speaker 4:                           How do you know how much you’re supposed to sleep if you’re chronically not sleeping? Jeff Gish:                             Well, you can do sleep studies. The reason I studied this topic is because I’m bad at sleep myself. I haven’t done a sleep study, but I’m thinking about going in and doing those. They will actually monitor your brain waves and how well you’re sleeping and seeing if you got enough sleep overnight. That’s one recommendation. That’s an expensive recommendation. But I’d like to go try that and see. But you also have a feeling, this subjective feeling of I’m getting enough sleep or I’m not getting enough sleep. Each of us sleeps. Very few of us go with no sleep. Well, nobody goes with no sleep. We’re humans. And so we’ve had a lot of experience that we’ve accrued over time in our lives that tells us, “Yeah, I got a good night’s sleep last night,” or “No, I didn’t.” And so you’ve got to just listen to that, short of going in and doing a sleep study to find out what’s good for you. If you’re paying attention to it, I think we’re pretty good judges of how much sleep we need. Yeah. Speaker 7:                           I heard somewhere at one time that a power nap should never be more than 45 minutes. Is there any research done to prove that? Jeff Gish:                             If you’ve got more than 45 minutes to take a power nap, I want your job. I think this gets back to the comment about the lethargic feeling that you have. If you’d sleep for more than 45 minutes, you have an opportunity to go into REM sleep, and the phases that your body goes through when you’re going through sleep can have an effect on the ability to wake up and be productive after you wake up. There’s the guy that I talked about before, Chris Barnes at University of Washington, he advocates for strategic naps. These strategic naps are more like 10 to 15 minute naps as opposed to 45 minute naps. I mean he first argues for a good night of sleep, but absent a good night’s sleep, take a shorter nap such that you can wake up and be productive afterwards. Because I think the lethargy does set in if your body gets into a wave where you’re into a deep sleep after 45 minutes, or maybe not even that long. Speaker 8:                           Is the sleep-deprived culture something that’s here in the United States among entrepreneurs or is it a global phenomenon or is there another country that does it better? Jeff Gish:                             That’s a good question. The culture, does it exist other places? I think that the notion to hustle when you’ve got a business on your back exist anywhere. For entrepreneurs, I think particularly, it is pervasive around many different cultures. I didn’t measure that in my study, but sleep attitudes would differ in a whatever your culture is and your organization. If you have a less individualistic organization and more collective country that you live in or the culture that you live in, perhaps you’re better at sleeping in the normal amount. If it’s not as competitive and your job, maybe you sleep more. This sleep problem and people sleeping less than they need is a worldwide phenomenon, and it’s particularly salient to the United States and other cultures where competition is a big deal. I can think of some East Asian cultures where people don’t get enough sleep there either. Japan as an example. Yeah. Jeff Gish:                             Thanks. Well, Hey, I really appreciate everyone coming down and getting breakfast, listening to me drone on and on about sleep and learn about your sleep equation. Know how much you need to sleep, and I appreciate you coming today. Thanks. Paul Jarley:                         Price. How skeptical Jeff is that his research will change people’s behavior. Maybe it’s because people control their behavior more than they do outcomes and think that more work is always better than less. Maybe it’s because technology has put us all on call 24/7. Maybe entrepreneurs believe investors see a willingness to forego sleep as a proxy for commitment and shy away from those who don’t seem to be all-in. There are exceptions to this rule of course, Bill Gates and Jeff Bezos come to mind, as successful people who highlight the importance of sleep. But my guess is that nothing’s really going to change unless we instill better sleeping habits in our children. Paul Jarley:                         How many of you have kids who have longer days than you do as they go to school, participate in sports, build a resume by volunteering and engaging in extracurricular activities, and then have to go home to do homework just before they go to bed. Many college students have the same cycle but at a part time job on top of it. It’s not just entrepreneurs who are victims of this logic. Will snoozing your way to success become a thing or will people just drink more caffeine? My money is on the latter. What do you think? Paul Jarley:                         Check us out online and share your thoughts at business.ucf.edu/podcast can also find extended interviews with our guests and notes from the show. Special thanks to my producer, Josh Miranda, and the whole team at the Office of Outreach And Engagement here at the UCF College Of Business. And thank you for listening. Until next time, charge on.   Listen to all episodes of “Is This Really a Thing?” at business.ucf.edu/podcast.

Everyone fails. It is part of life. Rather than pretend it won’t happen, you should count on it. We challenged our students to submit their best failure stories and explain the lesson they learned. Now you get to vote for your favorite.   Featured Guests Petrice Cineus, Student Sam Kotenko, Student Kevin Velazquez, Student Episode Highlights 0:38 – Failure Competition Introduction 1:43 – Kevin’s failure story 5:54 – Petrice’s failure story 16:26 – Sam’s failure story 24:48 – Follow-up questions from Dean Jarley   Episode Transcription Transcription coming soon.   Cast Your Vote!   Listen to all episodes of “Is This Really a Thing?” at business.ucf.edu/podcast.

With open banking, is technology creating a decentralized future of banking? Smartphone apps like Mint and Personal Capital paved the way for customers to access the entirety of their financial data in one place, but now, major banks are beginning to enter the open banking game. What are the repercussions for traditional banking institutions? What are the benefits and risks for consumers? And is this the beginning of the end of brick and mortar bank branches?   Featured Guests Charlie Lai, EVP/CIO, Fairwinds Credit Union Sumit Jha, Co-director, UCF Master of Science in FinTech Christo Pirinsky, Co-director, UCF Master of Science in FinTech Episode Highlights 1:55 – Panelist Introductions 2:55 – What is Open Banking? 9:05 – The current state of Open Banking 19:30 – Is this the end of traditional banking? 25:33 – Questions from the audience What is the single most important problem being solved by open banking and who’s problem is it? Will open banking create a larger cybersecurity threat, or reduce the risk? Is ransomware a concern? Why should I hand over my personal data to these FinTech companies without any financial incentive? 33:05 – The biggest threat to Open Banking 36:05 – Dean Jarley’s final thoughts   Episode Transcription   Paul Jarley:                         George Jetson, a man created in the 1960s to depict what life would be like in 2060. He lives in a city in the clouds. He drives a flying car that neatly folds up into a briefcase that he can carry into work. When he drops his kids off at school, he releases them in a pod that gently guides them to their destination. But when Jane, his wife, wants to go shopping, he tries to give her some cash. She takes his whole wallet. Cash, really? It’s 2065 and George is still using cash. Maybe it’s because nobody thought banks would innovate, or maybe it’s just George’s way of trying to control Jane’s spending. Either way, it seems woefully out of date. George, my friend, do we have some stuff solutions for you. This show is all about separating hype from fundamental change. I’m Paul Jarley, Dean of the College of Business here at UCF. I’ve got lots of questions. To get answers, I’m talking to people with interesting insights into the future of business. Have you ever wondered, is this really a thing? On to our show. Paul Jarley:                         Today’s podcast come straight from our Dean’s Advisory Board meeting where we spent the afternoon talking about FinTech. The College of Business has partnered with the College of Engineering and Computer Science to launch a master’s program in financial technology. Many of our board members have a keen interest in this topic. So we brought together a panel to talk about one of the many innovations in this sector, open banking. Today we’re going to talk a little bit about a subject that I don’t know very much about. I stumbled upon this a few weeks ago, which is often how we come up with ideas for the podcast, called open banking. And I have three people here who are going to help us understand what open banking is and whether or not it’s going to be a thing going forward. So I’m going to ask each of our panelists to start off just by introducing themselves, and I’ll start with Christo. Christo? Christo Pirinsky:               My name is Christo Pirinsky and I am a professor at the finance department, and I’m also the co-director of the FinTech program that we just launched. Paul Jarley:                         Sumit? Sumit Jha:                           Yeah, I’m Sumit Jha. I am professor in the computer science department, and co-director of the FinTech program from computer science, and my area of research is artificial intelligence, and we work on a variety of problems funded by DARPA, National Science Foundation, and a variety of other agencies that do not want to be named. Paul Jarley:                         Charlie? Charlie Lai:                          Hi, I’m Charlie Lai, I am the CIO of Fairwinds Credit Union. I’m responsible for all technology and innovation for the credit union and ideally staying ahead of trends like open banking. Paul Jarley:                         And Fairwinds has been a very strong supporter of our FinTech program. They’ve contributed a million dollars towards a professorship in FinTech and so we’re happy to have you all here. All right, well let’s start at the beginning. What the heck is open banking? Charlie Lai:                          Actually, the year 1985 is apropos for this conversation because I think that’s the last time that a bank has created something that’s truly innovated. Maybe the debit card. It’s probably inaccurate, but that’s a good starter for a conversation around open banking. From our perspective, the conversation starts with level setting with what the definition of closed banking is. Banking as an industry hasn’t really evolved out of a hundred year old, 200 year old model, where we have products and services that we think are important that you must have. And we make you come to us for how we’re going to deliver them to you, and you must pay for them, and you have to like them, and you have to tell your friends that they’re great so that they get them too. Charlie Lai:                          That’s changing pretty quickly, what we all have seen over the last 10, 15 years with the evolution of Apple, Facebook, Google, the power of technology has democratized the economy, much less financial services. And through technology, you actually can deliver financial services that are meaningful to the customer in a way that’s much different than what banks deliver today. So, we see this as kind of a tremendous door opening to competition and evolving to something that’s ultimately better for our customer. Paul Jarley:                         Gentlemen, either of you want to weigh in? Christo Pirinsky:               Op banking also more specifically refers to the idea of sharing of information, personal information of individuals across different… Information from different institutions. So, obviously data is very variable because there is information in it. If we observe how people shop, maybe we can advise them better about new products in the marketplace. If we observe how they spend money, or how they save, maybe we can advise them better to make better investment or consumption decisions. Unfortunately most of the data and information that people leave in the space out there, it’s very dispersed. It’s not concentrated. You have a credit card that you use and there is something variable in your statements that tell something about you. Christo Pirinsky:               You have a bank account, you shop in Target, but this information just spread all over the place, and value could be created if this information is somehow concentrated, and if people are able to aggregate and consolidate all of the information that they leave here and there, and use it for data analysis. So that we can learn something better about them. And my understanding is that this is behind kind of the idea about open banking, how to create… It’s more like a platform, similar to the internet, and refers to the idea of enabling people, individuals, somehow to aggregate and consolidate the information trays that they leave in the world out there so that it could be used for better intelligence. Paul Jarley:                         I’m still having trouble getting my head around this, if I might. Why do I care if my data is concentrated? Go ahead, yeah, yeah. Sumit Jha:                           Why open banking now? Why not in 1985? Paul Jarley:                         Yeah, what’s pushing for this? I mean- Sumit Jha:                           Open banking is really now an opportunity. For the first time you have the internet, which is allowing you to move data very fast. You have mobile phones, which are allowing an average consumer to have access to this internet, and to move data around. So open banking is really providing us an opportunity to use data as the new oil. So now data is now the source of riches, and so now people have the power to use this data to actually create value from it. So I have been a user for an open banking platform for a couple of years now, and it is amazing to see the kind of data it had mined from multiple bank accounts, about you. Sumit Jha:                           It can tell you that you are paying for the streaming service that you are never using, and I had been paying for the service for quite some time. So that level of data analysis is only possible when you have these multiple accounts coming in one place, going through very rich data aggregates, which is happening right now for two reasons. One, the internet and other massively parallel computing. So rise of GPUs, and neural networks, and AI is what is providing these companies the power to analyze your data better than in 1985. Paul Jarley:                         Okay. Ultimately though, this is going to allow me the consumer to make better choices about the financial products that I’m participating in? Is that where this is at? Because who’s pushing for this? Charlie Lai:                          Yeah, and it really is stemming from this sense of competition, enhancing competition, and ultimately doing something better for the consumer relative to what’s being provided by traditional financial institutions today. Today banks offer products and services, we create innovation, we create things that are really good for us, and sometimes they’re good for the customer. The concept of this, making data available more democratically, now opens up a level of transparency that you can do some really interesting use cases, for example. Charlie Lai:                          So, what if I had a view of all of my spending patterns, but also behaviors, things like I pay my rent on time, I go to school, and I get good grades, and that becomes potentially a proxy for a different credit scoring model that I’m using in lieu of traditional credit scoring models, and it’s based on an aggregation. That’s just one use case. The beauty of… I think if anybody looks at open banking on the surface, get it. But if you start to look at the use cases that you could potentially solve by opening up, democratizing, and also protecting the data, and then applying some innovation to that, then you start to get some really interesting power. Paul Jarley:                         Can I get you to work through steps here that will help me and maybe my listeners understand what’s really going on here. If I get this right, I can give permission to third parties to have access to my accounts, including maybe my bank account, that they would then be able to analyze my spending patterns, my investment patterns, my savings patterns, and provide me with either financial advice, or with opportunities to save money, or to purchase new products that are of interest to me. Is that right? Charlie Lai:                          That’s accurate. And that’s one use case. Paul Jarley:                         Okay. But if only I do that, that’s not very helpful, I suspect, right? So you need millions of people to do this. Now I’m going to tell you the story of my father. My father is 83, okay? Depression-era baby. And every month, the social security administration deposits a check in his account, and he walks down and withdraws all the money. He doesn’t have a lot of faith in that system, is that a fair statement to make? So why are millions of people doing this, or are millions of people doing this in a way that makes this effective? Sumit Jha:                           So if we look at what has been going on in the London and Europe, they have- Paul Jarley:                         They’re ahead of us in regulatory. Sumit Jha:                           The regulatory mechanism has forced them to develop IT infrastructure, which is different from their traditional IT infrastructure. With the idea that these third party companies only have access to data, not actually to moving money from the bank accounts. And these third party providers have access to what is called a scale-out systems. So even if millions of people enroll in this program, the servers are not going to crash. Paul Jarley:                         Yeah, let me make sure I heard something right here. Charlie, I’m glad you’re participating here. I’m being devil’s advocate, a little bad, right? But banks didn’t push for open banking. Charlie Lai:                          No, actually, if given their preference, this is the furthest thing from what banks want. Paul Jarley:                         Point number one. Point number two, I’m not sure consumers did. I think governments did. Is that fair to say? Charlie Lai:                          That’s fair to say. Christo Pirinsky:               But consumers influence the government through the consumer protection agencies and advocacy groups, in a way. So I completely agree. So incumbents, it is large banks they are not quite interested in shaking, changing the space quite a bit. I think the two major forces driving it are startup firms and on the supply side, people see new products which could be helpful, they could create value, and they start working on them. And the other side is the consumers possibly through the government, advocating for certain types of regulations and oversight. Paul Jarley:                         Because the banks have the scale by which to make this feasible though, right? Because that’s where the deposits are and where all the customers are. Charlie Lai:                          The largest banks do. Paul Jarley:                         Right? Yeah, yeah. Charlie Lai:                          And kind of the devil’s advocate position there is, besides consumers pushing for that, why would government push for this? A view that I have is they look at the banking model that exists today and they’re looking a little further out, and they see problems ahead. They see the consolidation that’s happening in the industry, and they see this constant battle around the edges of other entities trying to get into similar and like businesses, and they’re kind of… This concept of open banking, and opening the competition forces the industry to innovate itself. And it also raises the capabilities of your mid-size, small institutions to compete potentially at the same scale as some of the largest institutions without the largest institutions just using that scale to really dominate the entire marketplace. So, it may not be an accurate perspective, but it’s an interesting perspective. Paul Jarley:                         In the United States, as I understand it, you’re not forced to play in this [crosstalk 00:13:21]. Correct? Charlie Lai:                          We’re not. And that’s the interesting take is, so with the advances in Europe and U.K., and in Asia and Australia, our perspective is that your largest financial institutions are paying attention and if they’re not already doing that in those markets, they’re learning lessons that they’re getting ready to bring to the United States with the intent of protecting their market share, protecting their revenue streams, and what that does is that further compresses any of the mid-size, small, regional institutions who aren’t paying attention, and that just will weaken them further. Christo Pirinsky:               And it’s interesting that their cultural differences across the world actually shaped this process differently. And the way the data space changes is different in Europe and different in United States and different from Singapore, for example. Because the local values and cultures are different. Europeans, they’re very friendly towards regulations, so that’s why most of the changes there happened from top down. U.S., not so much, and the culture here is such, people are pro-market, and very unfriendly towards regulation. As a result, all of this innovation that happens, takes place in U.S. It is not top down, it’s more like bottom up. It’s driven by startup companies, and entrepreneurs, and they exercise certain pressure, and not as much from the consumer side I would argue and through the regulatory side, as it is in Europe. So, Europe is much more friendly. Sumit Jha:                           So as a consumer, when a bank does not play very well with a FinTech firm, and I don’t have the data need to do what I need to do, what I did was just stop depositing my money into that bank account, because I have no transparent access to that system. So I think that consumers have a power and they have a desire to use their money in a more visible manner. Those institutions who do not start adopting this, run the risk of losing their consumers, particularly the younger people, particularly people who spend their lifetime on a cell phone, and people who are on Instagram for whom privacy is probably not the same thing that it used to be 50 years ago. Paul Jarley:                         Or for my dad, right? Sumit Jha:                           Yeah. Paul Jarley:                         What’s your favorite app in this space, so far? Do you have one? Charlie Lai:                          Not a single one, but there’s a lot of innovation happening. Some interesting examples illustrate the power of this. There was a video that it’s been around for a few years, it’s called How China’s Changing the Internet, and it showcases some of the capabilities within somebody’s day in the life of using WeChat. And the payment illustration, or the banking illustration is in this person’s everyday life. They’re going to lunch, and they’re paying for lunch, and they’re socializing, and they’re doing normal daily tasks. I think one of the things they do is get their dog washed and then they pay for that, but they do all of this activity within the app, and what it illustrates for us is that we have to be cognizant of where consumers want to be, and how they define convenience, and don’t make them come to us for the things that they want to do every day. Charlie Lai:                          If they have to do that, once they have a better alternative they’re immediately going to choose that. That to me is what open banking embodies. If we can, through the technology, empower that and create new experiences, then we’ve got a different future and more relevance. Paul Jarley:                         Sumit, you got a favorite? Got a favorite app? Sumit Jha:                           I have one, I better not name it. Paul Jarley:                         What does it do? Can you tell me what it does? Sumit Jha:                           So it has all information about my bank accounts, my credit cards, if you have a car loan or a house loan, that information is in there, and it takes my fingerprint and then immediately it goes to all the accounts, gets the data at that point of time, and it displays the summary for me to watch. So it takes me like half a minute to find out how I am doing. And then, if I need to make a transaction, it has the power to make those transactions. I don’t use it for security purposes, I prefer to make those transactions myself. But in terms of just observing the data, it is very helpful. It sometimes provides useful insights. It says that you spend so much money on flights or on [inaudible 00:17:52], or something like that. So, it has a lot of AI built into it to analyze my behavior and say what I should be doing. Paul Jarley:                         Christo, you got one? Christo Pirinsky:               I personally don’t use one yet. I’m considering. Mint is one of the early players. Well they do personal financial advice, whatever you just described. So they could link a couple of different accounts, and then they follow your activities, and they alert you of behavior that could be potentially suboptimal. So they literally give you an advice. You’re probably- Paul Jarley:                         So what’ll make you do it or not do it? You said you’re considering it. Christo Pirinsky:               That’s a good question. So, I’m not a first adopter, so I’m not somebody who jumps, but I’m not the latest adopter either. So, I’m kind of very interested in the technology and I just maybe need to see the experiences of some of my friends and people I know and collect a little bit more information about it. And then I’m still not sure about the benefit that I’ll get relative to the cost that it will take to set it up- Paul Jarley:                         Spoken like a true economist. Keep going. Christo Pirinsky:               But I’m intrigued by the technology. I think that has definitely a potential, and I can see how it could evolve very quickly and at some point soon, probably I’ll jump and participate in some of those. Paul Jarley:                         Are we seeing the end of traditional banking as we know it? Charlie Lai:                          I think so. An interesting analogy that I’ll add onto the favorite app isn’t in the banking industry, it’s about Uber. And so think 15 years ago or 20 years ago, if you’re in any major metropolitan city and you get off your flight and you go out to the street and your options are really hoping that the time of day, right? There’s a taxi driving around. And if you hail them, you’re hoping that you catch their attention. And if you ask anybody 15 or 20 years ago, what type of innovation would you imagine for that industry besides more taxis, or longer arms, or something like that, you’d be hard pressed to identify how you would actually innovate the space. So the idea behind not really just open banking but technology innovation powered by FinTech is really thinking about creative ways to find unmet needs or unserved needs. Charlie Lai:                          And if you think about Uber, they’re not a transportation company, they’re a data company. And what they’re really just doing is connecting a need through data to a solution. And they’ve evolved into Uber Eats and whatever they’re imagining to do next. And it’s really about solving for an unmet need. I see that same parallel for open banking through the FinTech industry as the creativity explores use cases for consumers that can be solved through technology. There’s things we can’t imagine today that will resonate, but they’ll have that same impact as as Uber is doing. Paul Jarley:                         So will banks eventually turn around and buy some of these FinTech companies and incorporate them into their structures? Is that a viable path forward? I mean, if I’m a bank, I’m a little worried about what I’m going to be left with. I mean, one way that I can think about this is that all these FinTech companies are going to pick off all my high-margin services and drive those values to zero and I’m going to be left with the part of the business that no one wants. Sumit Jha:                           So we should try to answer that question with another question. Did IBM buy Microsoft? So, software has value. It might seem that from a very traditional perspective, that software and software systems or data systems have no intrinsic, or have limited intrinsic value but maybe times are changing, and these systems have intrinsic value and they may replace some of the traditional systems. Christo Pirinsky:               And also, the technology makes the pie bigger, so banks will actually get a piece of the pie so they could actually profit from it. And I’ll just give you examples. For example, one of the major applications of this big data analytics, it’s actually the ability to extend credit to a lot of unbanked people who currently actually are outside of the banking system simply because the system is not capable to screen them well and evaluate the risk level. But the new- Paul Jarley:                         But they’re going to be open bankers, is that what you’re telling me? Christo Pirinsky:               But the open banking actually allows for people to screen them, to screen people much better. And even somebody who’s virtually outside of the major financial space, they still could leave actually a lot of information based on where they show what they do, and this information would allow actually someone to evaluate their credit worthiness and risk level much better and extend them credit. So there be a lot of new people actually joining the financial system as a result of that. The pie gets bigger, banks could actually get some of it, so they could be actually interested in maybe supporting some of these. Paul Jarley:                         What do you see as government’s role in all of this? It seems a bit like the wild, wild West to me. We got a bunch of people out there running around developing a bunch of apps that are going to connect to my bank account or promise to connect to my bank account. I need to trust all of them, or at least some of them. I’m not sure I know what the definition of a bank is anymore. What’s the role here? Charlie Lai:                          Well, in the European markets, the role of government with regulation, is to drive standards, drive standard data practices, standardized security measures. Third parties that are going to connect to the APIs are vetted. That structure adds safety and soundness to the ecosystem. Paul Jarley:                         We’re regulating the highway here, right? That’s the word. Yeah. Any others? Your time at the SEC, Christo, give you any insight? Christo Pirinsky:               Yeah, it gives me, at least the way I see it, I mean, I think U.S., I mean, this could develop and could go a long way without severe government intervention, but one place where actually this government could step in and be very helpful is in order to standardize the information because a lot of different banks, institutions, they could simply keep this data in different formats, and which would make it very difficult to integrate and use- Paul Jarley:                         They’re being passive-aggressive about it? Is that what you’re suggesting? Christo Pirinsky:               Maybe imposing some type of standards. I think that’s one of the biggest benefits of the Securities and Exchange Commission is exactly standardizing disclosures and making companies use the same language. I think this could be very important in the data space because just to make sure that everybody is recording and keeping data using the same formats, the same kind of definitions. This would make it much easier for anybody to use it in, and it’s more difficult for companies to agree on that much easier if we have some type of regulatory body. It could be self-regulatory agency, maybe it doesn’t need to be a government agency, but I see this definitely could add a lot of value. Paul Jarley:                         We got a lot of smart people in the audience today. Anybody got any questions on this? Yeah, George? Speaker 2:                           So the question was what’s the single most problem being solved by open banking and who’s problem is it? Charlie Lai:                          Well, on the surface it’s the consumer, is the source point for the initial problem, and it’s really about increasing choice, increasing convenience just by exposing other avenues for them to control through their access to their data, how they’re provided financial services. More interestingly, the other entities are the banks themselves, kind of untouched the industry within an open competition market, the bigger guys are going to get bigger and they’re going to get stronger. Their scale that enables so much. The smaller to mid- size financial institutions will have a tougher time competing. And what that really means is less choice too. Speaker 2:                           So the question has to do with cybersecurity and financial transactions and whether it will become bigger or be reduced by this. Sumit Jha:                           The first time that customers lose money, or even lose their data, which has privacy issues there will be a big backlash. And I think, since there are multiple number of players, multiple types of apps, it is more likely to happen than not. And then there will be a need for some sort of either a standardization, or some sort of a body that comes and says, “Well, these are the good guys, these are the sort of all right guys, and these are perhaps people you should not trust. So cyber security is going to be a big challenge, and not just from individual players. It could be more much more serious. Well organized, nation-state type of actions for cyber security. Paul Jarley:                         Is it crazy for me to think about the rogue app that’s put on merely to steal the money out of my bank account? Sumit Jha:                           No, it is not crazy to think about a rogue app that steals your data because I think that is feasible, once you install an app, give it the permissions. If you choose to install the app, it is possible to do this today, but an app that actually moves money out of your account is much harder because all the banks have hardened their cybersecurity parameters. You have to have a one time password, and other mechanisms. It can probably be duped into doing this, but that will require- Paul Jarley:                         That’s what I’m thinking, yeah, actually that is what I’m thinking. Sumit Jha:                           But that would require some collaboration from our part. Paul Jarley:                         Or the North Koreans maybe have their own app? I don’t know. Sumit Jha:                           Stealing data is definitely possible. That I think is very easily done. Once you trust a system, it has your data. So if you choose to trust it, it will have your data. Paul Jarley:                         The question of ransomware on your FinTech app. Sumit Jha:                           So ransomware is also going to be a serious problem, depending upon what is there in the data, of course you’d be made to pay for it, or to pay for it not to be released. Paul Jarley:                         What about the idea if these fin companies are benefiting from getting my data, why don’t they buy it from me? It’s mine. Why should I just give it to them? Sumit Jha:                           That’s a very interesting view. And the same view also holds about social networks like Facebook, or Google+, or Instagram. We are data creators for giving data to these companies for free and they are benefiting from it. There are arguments to be made on both sides. There is some value in the argument. Paul Jarley:                         So I think, hasn’t Europe gone farther in that? Christo Pirinsky:               They’ve gone farther. But my immediate response in reaction to it is that your data has value zero because- Paul Jarley:                         By itself. Christo Pirinsky:               By itself. Your data has only value if it’s put in a pool of 1 million other people so you can actually see [crosstalk 00:29:21] exactly. I mean even your blood pressure, your cholesterol, they’re just numbers. They have no meaning if you don’t compare them to a large group of people. So that’s why it’s hard to… How much would you want, will you charge for your data? It’s hard to vet it. It’s a kind of very interesting [crosstalk 00:29:36]. It’s a very interesting phenomenon. Paul Jarley:                         Give it to a data exchange, they can sell it in bulk and I get cut. Sumit Jha:                           You know, in blockchain, it’s not very hard to imagine that your data can be coupled with millions of other data points, even in a very anonymized manner and can create value for you. I think that’s going to happen sooner than later. Christo Pirinsky:               Europe is moving in this direction. It gives you a property rights, in a way. It gives you more rights over your data. So if you would like to take it out of a bank, put it somewhere else, but they’re not monetizing that right. So there’s no market in which you can actually sell your data to the largest bidder or something like that. Paul Jarley:                         So I’m going to get more Google AdWords now every time I used the word bank in an email? Sumit Jha:                           So if you don’t want to do that, you just need to change what browser you use. Install the Tor browser and be anonymous, and incognito, be behind an anonymous proxy, and I know some computer scientists who do that, because they just want to be a private person. Paul Jarley:                         Because these apps, right, will have information to some really interesting information on you that companies would really want to purchase. So the role of big tech and all of this. Yeah, well Facebook’s been talking about creating its own crypto currency, for example. Back when I was in graduate school, I taught in a maximum security federal prison. And one of the ways that people got into it is they created their own currency. The government really, really frowned on that, as it turned out. But what about that? Christo Pirinsky:               I think they’re very good questions. And this is something which makes U.S. very unique and different from Europe is big tech. So, as much as the government might not be as involved in this process in U.S., big technology firms are, and they actually serve in a way perhaps similar role. And if it, as you mentioned, like Apple was technically in a war with Visa and MasterCard over Apple Pay, and they were able to actually push it forward. And so in some sense big tech here because it’s so big and so powerful, it’s almost serves the role of a government in a way, right? So there again, it is a powerful entity which plays with banks in this field, and Europe doesn’t have that. And I think it will continue to be very important. Christo Pirinsky:               In Amazon simply because we talk about open banking, but it’s not just about banking. I mean, Amazon probably has more information about all of us than any bank in the world. So it’s about hospitals, and it’s about health care, and online, and Facebook, and social media. So they are actually in this space. They are very important, the big tech companies, and they would push a lot of innovation in this. Christo Pirinsky:               Yeah and most of our big tech companies are very big into AI, and not all AI is created equal. So some of this AI is going to be much more intelligent than others. So they would know more about you than say a startup that has just made its own AI. And then someone was giving me a problem that I want to find out if my consumer is going to leave my bank. If you are a tech company and you have access to their social network and you know four of his friends have already left this bank, you know that this person is more likely to leave this bank than from his financial data. Paul Jarley:                         What’s going to make or break the open banking initiative? What’s the biggest threat faces to just go down in flames? Charlie Lai:                          In the U.S., lack of regulation. Paul Jarley:                         Tell me more about that. Charlie Lai:                          I think that’s the power for this to thrive here. If that doesn’t happen, then there’s really no motivation for the industry to embrace a standard that’s adopted by really everybody. I think the biggest entities will pursue this, and they’ll innovate for their own benefit, for their own objectives, and that really stifles a lot of the spirit of competition, what’s behind the sense of open banking. Sumit Jha:                           So you do not really need to have standards in place to enable open banking. It is harder to do it without standards, but it’s not impossible to do it without standards. There’s real demand from people, and people leave their banks because the banks are not helping the [inaudible 00:34:04], show them what they want to see. Then even without regulations there could be some push in that direction. Paul Jarley:                         Time to make a bottom line assessment, each of you. Is open banking really a thing, or is it a passing fad? Christo? Christo Pirinsky:               It is. I’m positive on that. I would bet on open banking, and I think it’s going to go beyond banking. So it would be perhaps expand in other areas, in other fields, and that would be my evaluation. And I agree that, regulation, there could be a lot of obstacles, but there is a potential that creates a lot of value, there is a lot of money on the table. Usually people find ways to to extract it. And there would be some type of intervention and collaboration may perhaps, that would enable this to happen. Paul Jarley:                         Sumit? Sumit Jha:                           I think by the end of next five years, more data requests will originate on third party open banking platforms than from the websites, or apps of individual banks. Paul Jarley:                         Yeah, that’s a thing. Charlie? Charlie Lai:                          I think it’s a thing, and we’re certainly trying not to play defense in our industry with our position. One of our initiatives that we’re going to be focusing on the next couple of years is really around how to create banking as a platform. One of the first ways is for us to produce and publish our own APIs with the intent of exposing that for intent development. Paul Jarley:                         Here’s how I think whether it’s going to be a thing or not for me personally. I have two kids in college. I want an app that when they use their credit or debit card at three in the morning at a bar, it automatically sends a message from me that says, “Go home. Nothing good happens at three o’clock in the morning. You have an exam tomorrow.” With that, thank you all. Paul Jarley:                         George Jetson might very well want one of those same apps to monitor household spending. He’s likely to get one along with a lot of products that will help him understand his own finances better than he knows himself. My guess is that marketers, even in 2065, will covet this information, and crooks will be scheming to get into George’s accounts. Keeping both groups out might be the ultimate key to success. What do you think? Check us out online, and share your thoughts at business.ucf.edu/podcast. You can also find extended interviews with our guests and notes from the show. Special thanks to my producer, Josh Miranda, and the whole team at the Office of Outreach and Engagement here at the UCF College of Business. And thank you for listening. Until next time, charge on. Listen to all episodes of “Is This Really a Thing?” at business.ucf.edu/podcast.

United Launch Alliance CEO Tory Bruno chats with Dean Paul Jarley on the state of space exploration. 50 years after the Apollo 11 moon landing, rocket launch technology has drastically improved and the prospect of commercial space travel is almost top of mind. Can space tourism really become the multi-billion dollar market that some expect it to be? And are Cape Canaveral and the Space Coast ready for the demand? Is space ready to be the final commercial frontier?   Featured Guests Tory Bruno – CEO, United Launch Alliance Episode Highlights 3:18 – How Tory Bruno became CEO of United Launch Alliance 5:48 – How United Launch Alliance came to be 8:42 – What’s it like being involved in the space industry during such a competitive time? 12:36 – How much cheaper can rocket launches get? 13:34 – What kinds of companies could be most successful in utilizing space travel? 16:33 – When will humans live and work in space? Engage in space tourism? Get to Mars? 21:27 – What’s the most important thing to know about the commercialization of space? 23:20 – Questions from the audience: Do you anticipate building things in space to avoid loss during launch? How do you see real property rights being involved in space? What’s it like working with Blue Origin on the Vulcan engine? Have there been any attempts to develop insurance for spacecrafts? Does ULA have any plans to develop a heavy lift rocket? Where did you see the space industry headed when you started your career? Can you elaborate on the difference between components vs. propulsion? Why does ULA exist? 34:35 – Dean Paul Jarley‘s final thoughts   Episode Transcription   Paul Jarley:                         There are certain moments in time that stay with you. I remember where I was 50 years ago today. I was 10 years old. I was on the beach at a lake near my hometown, clutching a radio, and listening to mission control. It was 4:18 in the afternoon when Neil Armstrong said- Neil Armstrong:                Tranquility Base, here. The eagle has landed. Paul Jarley:                         The beach erupted in applause. Paul Jarley:                         This show is all about separating hype from fundamental change. I’m Paul Jarley, Dean of the College of Business here at UCF. I’ve got lots of questions. To get answers, I’m talking to people with interesting insights into the future of business. Have you ever wondered, “Is this really a thing?” Onto our show. Paul Jarley:                         The race to the moon was a race to glory that brought a much needed boost to democratic capitalism in its Cold War with totalitarian communism. But this was not the first time a group of explorers had set out for glory and to assert the political power of a government patron. Christopher Columbus comes to mind. There what started out as a search for glory, quickly turned to commercial interests complete with conquistadors searching for gold and pirates looking to steal it. Colonization and wars followed. Will history repeat itself? Is space ready to be the final commercial frontier? If so, can space pirates and colonization be far behind? Listen into my conversation with Tory Bruno. He’s CEO of United Launch Alliance. In other words, a rocket man. He spoke to a group of business and engineering students earlier this year in The Exchange. Paul Jarley:                         So how cool is that? So, for my engineering students, this is The Exchange. And the idea behind The Exchange is that we have a speaker in here every day talking to business students about careers, about their career path. About how they might become part of an industry, if that’s what they’re interested in doing. And today we have kind of a double purpose. So, for those of you who don’t know me, I’m Paul Jarley, I’m Dean of the College of Business here. And my job is largely to think about what the college should look like five years from now and 10 years from now and how we’re going to get there. All right? So I get to do this kind of a lot. I get to sit down with really interesting people who have interesting things to say and provocative ideas. And it’s frequently the case that I’m sitting there during our conversation thinking, “Yeah, is that really a thing? Is that something that my students really need to know about? Or is this person just blowing smoke at me?” All right? Paul Jarley:                         And so that’s sort of the idea behind our podcast. I go out, I talk to people about various kinds of things and whether or not I think they’re really a thing or not. And so Tory, who’s with us today, who is the guy who runs that organization has graciously agreed to have that kind of a conversation with me along the way. So welcome to the College of Business, Tory. Tory Bruno:                        Thank you. Happy to be here. Paul Jarley:                         So I like to talk about people’s careers. I think students get confused a lot. People think their careers are going to be really linear. And how I always tell them that that isn’t going to be the case. Walk up to any five-year-old kid and ask them what do you want to be when you grow up? And if they say dean of a business school, you should run from them. Right? I mean, nobody says that. That’s not how you get to be me. So I want to know, how do you get to be in charge of a rocket company, rocket man? How does that path work for you? Tory Bruno:                        Well, I’ll start out by saying I really had no interest in management when I started. I just want to be a rocket scientist and that’s what I did for about the first 10 years of my career. And I always did want to be a rocket scientist. So if you had asked me when I was at a kid, I’m just old enough to remember seeing the first moon landing. And I was very inspired by that. So I always wanted to build rockets and I built rockets my whole life. I built my first rockets out of some 80-year-old, moldy dynamite I found in the back of my grandmother’s barn. 10 fingers, for everybody in the room who can see. And so I went to work for Lockheed and I was just a rocket designer. I worked in structures, I worked in control systems. I was a ballistician. Then about 10 years in I thought, well maybe I will sort of reluctantly go into management. Because I could probably have a greater impact there and maybe help other people in their careers, as well. Tory Bruno:                        And then it was a very traditional career progression after that. You know, I did program management and systems engineering back and forth of increasing complexity. But I’ll say the one unique thing about it was that I always wanted to work on the most difficult problems. So I felt very inspired by the missions that we served. And so, if something was really in trouble and struggling, maybe other people were kind of fleeing that project because it was going pretty rough. Paul Jarley:                         So, just to clarify for students, right? This was your missile bay period. Right? Tory Bruno:                        Yes, that’s right. Paul Jarley:                         You were involved in missile projects? Tory Bruno:                        Yeah. Yes I was. Paul Jarley:                         And I think it’s really helpful, right? In any kind of project like that to develop a mindset where… Things are going to go wrong. Right? And a lot of people do run from that. But the people who understand kind of that, “Well, that’s just part of the journey.” And solving those problems is really important. Tory Bruno:                        Well, that’s right. And especially if you’re doing something that is technically challenging, or even just programmatically challenging, because there’s an urgency or a need. Your country needs it, your team needs it, whatever it is. Then it’s going to be hard and there will be setbacks. That’s okay. Paul Jarley:                         So ULA is a joint venture between Boeing and Lockheed? Could you tell me a little bit about how that came about and why? Tory Bruno:                        Sure. So, first, let me start kind of at the back end of that with what does that mean? It does not mean that this is a combination. ULA is a stand-alone company. 12 years ago, people who worked at Boeing had to quit their jobs and be rehired by ULA. Same was true for Lockheed. And then Boeing handed over the factory and handed over the drawings to the Delta rockets. Lockheed did the same for Atlas, and a new company was stood up. There is a board of directors between us and those owners, but there are no commingled employees, facilities, anything like that. The intellectual property created afterwards belongs to ULA, it’s just owned by our two… You can think of it as two shareholders. How did it happen? Paul Jarley:                         Yeah, what drove that decision? Tory Bruno:                        Yeah. So once upon a time there was an idea that there would be a gigantic telecommunications industry based in space. And so lots of companies facilitized for that. Lockheed developed the Atlas V, Boeing developed Delta IV, they still had Delta II. Spacecraft companies stood up whole divisions. And then people discovered that you can build out fiber optics on earth instead a lot more cheaply and the bottom kind of fell out. And there wasn’t enough business for all of these companies. And Lockheed and Boeing consolidated what they had into this joint venture in order to make one viable launch business. It was also done at a time that the government desperately needed that. So what is not well known is that our country’s sort of space infrastructure has fallen into a pattern of sort of all the satellites go up at once in a short span of years, which means they all age out at about the same time. And then they all have to be replenished and so on. Tory Bruno:                        And, at that time, we were right at the back end of the life of everything that was on orbit then. And all the replacements were late and there was a crisis coming. There would of been gaps in capability. There would have been soldiers in the field calling for help and nobody on the other end of the phone. Gaps in GPS, which you take for granted today, it’s on your smartphones. But there would have been places where you couldn’t have it, where it wouldn’t have worked. And so there was kind of a crisis. And the government said, “Hey, we need ULA to sort of step in and never be late. And don’t lose one in 10 rockets anymore, which was the normal back in those days. We in fact have never lost a launch. 130, never failed to take our mission to space. And so the two things came together to create the company. Paul Jarley:                         So was there a boom-bust cycle? Did I hear you right then? Tory Bruno:                        Yes, you did. Paul Jarley:                         In terms of employment and a number of other things that kind of went with it? Tory Bruno:                        Absolutely. Paul Jarley:                         So let’s talk about the current economics for the industry. Because we’ve seen some new entrants, right? By some pretty big names, with big egos I would imagine. So talk a little bit about that competitive landscape. Tory Bruno:                        Yeah. So for the first time in several years there actually is a mature enough launch industry, kind of grew up around us, in order to have more than one source to go to space and to have competition. That’s a good thing. It’s healthy for the industry. You can’t make investments in new technologies and new capabilities if it doesn’t change your business outcome afterwards. And competition is one of the things that causes that to be true. So that’s good. It’s why it’s healthy for the industry and it’s good for the country to have a broader lift industrial base. Maybe what you’re really getting at is how about is it viable for as many companies to enter this market space? Paul Jarley:                         Yeah, I’m a little curious about that. Tory Bruno:                        Yeah. So the answer is no, it isn’t. There’s enough work here for two or three major launch companies. And right now it’s a gold rush, in a way. There’s dozens of companies that are trying to get into lift. And, in the end, all of them will not be there on the other side. That’s a fact. Paul Jarley:                         Is that where the money is in the industry? Is it in the launch? Tory Bruno:                        No. Paul Jarley:                         I figured not. Tory Bruno:                        It’s not. Paul Jarley:                         That’s probably the most commodity part of the whole operation. Tory Bruno:                        Yes it is, yeah. So the main… When you look at at a marketplace and you try and see where the centers of value are. In this particular case, you would probably say in the services that are provided. The closer you get to your end customer, typically the more attractive the economics. Paul Jarley:                         So I would have guessed, and we had a little chance to talk this morning. I would have guessed that the advances to greater commercialization of space would have been dependent upon reducing launch costs. And you know, we’ve got one guy out there who’s doing miraculous things, reusing vehicles. And I assumed that it was being driven by that. But you sort of bursted my bubble this morning. Talk a little bit about that. Tory Bruno:                        Well, yeah. So what we’re really talking about, since this is a business school environment, is a principle called elasticity in a marketplace. Where, if you can lower the cost of something, then the total volume in that market would grow. Smartphones is a great example. That’s not really true for the launch industry because, as it stands today… And we’ll talk about trajectories, but as it stands today, lift is never really more than about 10% of the value of any given mission. So the price of the satellite, the cost of operations and so on really swamp out lift. Lift is bought separately at the end of the process, so it’s more visible in a way. But the fact that it’s such a small portion means that there has not traditionally been elasticity present. Now, if you get a new mission in space that could create a different economic equation that could change. Otherwise you’ve got to drop the price of lift by at least an order of magnitude to create that elasticity. Paul Jarley:                         One of the reasons I was asking is we have a business plan competition in the college called The Joust. And a few years ago we had a rocket scientist in The Joust. And he had proposed a very cheap, reusable rocket for micro-satellites. And he projected that to be, if I remember right, a $20 billion industry by year three. And he didn’t win The Joust and, to this day, he doesn’t understand why. Because he couldn’t possibly have met that demand in that period of time. Tory Bruno:                        That’s right. Paul Jarley:                         But it, again, brought up the question of well how cheap do you think launch costs can go? Are we near the bottom of that? Do you think there’s advances there coming? Tory Bruno:                        So we’re near the bottom of the cost structure. That doesn’t mean we’re near the bottom of the price of lift. There are businesses for which fixed costs are a dominant factor. The launch business is one of those. Paul Jarley:                         I would think so. Tory Bruno:                        And so there is a rate curve, right? And economic order quantities have a tremendous effect on lift. Paul Jarley:                         Think marginal costs here, right? Tory Bruno:                        Think… Yes. Paul Jarley:                         Think marginal costs, for my students in the- Tory Bruno:                        I keep forgetting I’m in the business school. Paul Jarley:                         Yeah, yeah, yeah. Tory Bruno:                        Yes. So, because there’s a large fixed cost, there is a big effect on marginal costs. So if you can go from 10 launches a year to even just 20 launches a year, it has a profound effect on pricing. Paul Jarley:                         Yeah, yeah. And today that’s still largely around satellites, I assume, both military and commercial. Tory Bruno:                        Yes, that’s true. Paul Jarley:                         So when you read, maybe, futurist sorts of things on the commercialization of space. And I noticed in your video you mentioned the moon as an example of this? Three things usually come to mind, right? One is space tourism. And I guess there’s a list of like 250,000 people worldwide who have put money aside to be in a launch. Think about that, right? There’s pharmaceuticals, because of zero gravity as I understand it. And then there’s mining, particularly of the moon, which comes up fairly regularly. So which of those three do you think has the most promise going forward? Tory Bruno:                        As a sustained economic activity? Paul Jarley:                         Yeah. Yeah, yeah, yeah. Not a side show, right. Which I think the tourism probably will be for awhile. Tory Bruno:                        Yeah. So the space tourism still is so expensive. We’re really talking about billionaires. There’s only so many of those and they’re probably only going to go once. So what we’re really looking for is a more widespread activity, if we’re going to have a self sustaining economic sort of zone. And I look to natural resource development. I think one of the things that people are unaware of are the discoveries, over the last decade to decade-and-a-half, relative to the quantity of natural resources that reside just between here and the moon. Not even necessarily the moon itself, but the near Earth objects, or asteroids as they’re commonly called, that are in between Earth and the moon. There is about a thousand years worth of the entire planet’s production of industrial metals in 1,700 asteroids that reside between here and there. So we’re talking about a level of abundance that defies human imagination. Paul Jarley:                         Wow, you’ve made space a much scarier place than I thought, to be honest. Are we concerned that all at any of those are going to kind of get jarred from their orbit and land on our lap. Tory Bruno:                        We actually understand those objects pretty well. Paul Jarley:                         I would hope so. Tory Bruno:                        You do have an object encountering Earth almost every day. Paul Jarley:                         Yeah. Tory Bruno:                        Yeah. Paul Jarley:                         So is the idea there to capture those and bring them back to Earth Tory Bruno:                        No, it’s- Paul Jarley:                         Is that? Or is it? Tory Bruno:                        It’s to mine them there. And do as much- Paul Jarley:                         Using robots and whatnot? Tory Bruno:                        Using robots initially. And eventually people will be involved because of the scale of what we’re talking about. Paul Jarley:                         Who are the big players there? Thinking about doing that? Tory Bruno:                        These are all startup companies now. And they are waiting for a practical transportation infrastructure to be available to them. So companies like Planetary Resources, for example, Astrobotics. We’ve actually gathered them. At ULA we’ve gathered about a hundred of these small startup companies together into a community to help them mature their business plans and understand their needs and requirements. Paul Jarley:                         Is it also a vehicle by which you buy talent? Tory Bruno:                        No, I have not raided my future customers for their talent. Paul Jarley:                         Okay. Okay. But are you helping to ensure that industry then, in a sense? I mean, I know Google does this, for example. Tory Bruno:                        Yeah. No, we are absolutely doing our part to facilitate that. Paul Jarley:                         How far away do you think that is? Tory Bruno:                        Oh, that’s within two to three decades. You’ll see at least a thousand people living and working in space, in that economic zone. Paul Jarley:                         Are we going to get to Mars in the next 10 years? What’s your take on that? Tory Bruno:                        Yeah. Yeah. Paul Jarley:                         Humans on Mars? Tory Bruno:                        Yeah. Visit. We’ll go and visit within a decade. Paul Jarley:                         How many people are game for that ride? Tory Bruno:                        All right. Paul Jarley:                         Look at that. Tory Bruno:                        Okay. That’s an exploration mission. That’s not a… So let’s be clear, there’s no terraforming happening. There’s insufficient C02 on the planet to do that. So there’ll be first exploration, then there’ll be a permanent presence. But you will not see a terraformed Mars. Paul Jarley:                         So what keeps you up at night? Tory Bruno:                        Oh, what keeps me up at night? So we have a challenging, ongoing mission. Every time we go to space, it is some person’s life work of research at NASA. It is some soldier’s life on the line. It is some commercial company’s entire business plan. And they depend on us to be on time and to not fail. And this is a very difficult job. You know, you’ve got to think about the nature of the technology we use. A rocket is not an airplane. You know an airplane is a big machine with a little bit of fuel in it. A rocket is all fuel, 90% propellant. All propellant, little bit of machine wrapped around it. It is a physics-defying act every time we go to space. No one has the reliability record that we have. It is not by accident and it is very fragile and takes constant diligence to maintain that. Paul Jarley:                         So what do you see as your role in that process as CEO? Tory Bruno:                        Well, as CEO, I am responsible for a couple of things. Specific to that, it’s making sure our culture of mission success stays in place. Because culture is the most powerful aspect of a business. And then, of course, I have my traditional CEO role, which is the strategic direction of the company and making sure we stay a viable business for the long run. Paul Jarley:                         Okay. And here’s where the twist is going to happen, when I read Tory’s bio. So explain to me how the Knights Templar fit in to that view that you have. Tory Bruno:                        We put the most obscure things in my bio. Paul Jarley:                         Because usually when I’m seeing something about the Knights Templar it’s a conspiracy show on The History Channel. Tory Bruno:                        So, yeah, nothing that interesting. So I’m a history buff. I’ve written, what the Dean is referring to is I’ve written a couple of books on the Knights Templar. And it’s a really about how they operated as a business. Paul Jarley:                         That’s what caught my eye. Tory Bruno:                        So maybe the thing that’s relevant to the launch industry, and the changing marketplace is the big picture of the Knights Templar. When you look at their, the grand sweep of their history, they came into a particular place in history. They did a very specific job. They were very, very successful at it for 187 years. And then the environment changed. They refused to adapt, and seven years later they were gone. Paul Jarley:                         Well the King of France had something to do with that. Tory Bruno:                        He did. Paul Jarley:                         If I remember correctly. Tory Bruno:                        Yeah, well, he absolutely did. Paul Jarley:                         Why the Friday the 13th is- Tory Bruno:                        Very good. Paul Jarley:                         I know my stuff, yeah. Tory Bruno:                        Yeah. Yeah. October- Paul Jarley:                         Bit of a history buff myself. Tory Bruno:                        Friday the 13th of October, 1307. Paul Jarley:                         That’s why it’s considered unlucky. Tory Bruno:                        Yeah. Paul Jarley:                         Tell the story. Go ahead, Tory. Tory Bruno:                        Oh, sure. So the Knights Templar were based in the Holy Land and the European colonies in the Middle East. And, eventually, that was taken back by the native inhabitants there. And so there was no European presence. They didn’t have a relevant mission. They had a lot of money. They had a lot of special privileges. They didn’t pay taxes, for example, anywhere. They didn’t pay tariffs. They didn’t contribute to the incomes of the social and economic structure of Europe. And the King of France owed them a lot of money. And he wasn’t going to be able to pay. And the next best thing to repaying your debts is to arrest everybody that you owe money to and taking the money they have. And so he organized a mass arrest at midnight on Friday the 13th. Orders sent out months in advanced, unsealed at midnight. Go arrest the Templars, they’re all heretics, and make sure you don’t forget to grab their money. And that was pretty much the end of them. Because they weren’t relevant, they were vulnerable to that particular. Paul Jarley:                         And that’s what drives your thinking? Tory Bruno:                        Yeah. Paul Jarley:                         Very much. Tory Bruno:                        Stay relevant. Paul Jarley:                         So what do you think is the most important thing business students should know about commercialization of space? If you wanted to leave them with one thing? Then I’m gonna open it up for questions, I want to hear what you think. Tory Bruno:                        Well, I’d say probably two things. First, you should be excited about it. We are on the very threshold of a new human epoch in history where there will be a giant economy in space. The second thing is be realistic. It’s not going to happen overnight and it still will follow all the normal rules of economics and business. Do not let it be a bubble. Do not let it be the Silicon Valley of 2001 of the Tulip bubble of 16-whatever it was. Paul Jarley:                         You think there’s a real risk of that? Tory Bruno:                        Oh, absolutely. Paul Jarley:                         Yeah. Tory Bruno:                        Yeah. Anytime there’s that much excitement and free capital available in the economy to be invested by unsophisticated investors unfamiliar with that particular activity, you have the potential for a bubble. Paul Jarley:                         Because my sense is, right? These are really big bets that you’re playing over really long periods of time. Tory Bruno:                        Yes. Yeah, and it’s not a small incremental business. Everything we do in space comes in very large increments of investment and cost. And it’s an extremely difficult, high-consequence business. So if you take, for example, just the satellite and I’ll zero in on the launch piece of that for a moment. A satellite will spend five, 10 years getting designed and built, it’s going to spend 10, depending on the application, even 20 years on orbit doing a mission. There is literally 15 minutes in that entire lifespan when it can die in a ball of fire on top of a rocket. And pretty much everything has to go right and nothing can go wrong. There aren’t a lot of other industries like that. Paul Jarley:                         After my interview, we took some questions from students in the audience. Some of those questions are a little tough to hear. So I’m going to repeat each question before Tory’s answer. Paul Jarley:                         Our first question: Do you anticipate building things in space to avoid loss during launch? Tory Bruno:                        Yeah, yeah, I do. So I think of this eventual sort of cislunar, cislunar being the space between here and the moon. As a journey. So we kind of jumped right to the end state of people living and working there. And mining nickel and titanium, more platinum than has ever been mined in the history of humankind and all of that. It doesn’t start there. It starts, probably, with specialty manufacturing and research in low Earth orbit and microgravity, for things that are very valuable that can’t be made here. Ultra-pure materials would be another example. Audience Member:        So it’s a process? I know I’m thinking way out. Tory Bruno:                        It is a process, yeah. Audience Member:        But I just wonder if you ULA had a vision for how they wanted to- Tory Bruno:                        We do. We call it the CisLunar-1000. And you can read all about it and watch videos on our website, ulalaunch.com. Paul Jarley:                         So is your strategic plan projecting a hundred years into the future? Tory Bruno:                        No, I’m only gone about 40 right now. Paul Jarley:                         Okay. Because it’s just not worth it after that? The change and whatnot would just be too great to kind of even think about? Tory Bruno:                        In this particular environment? Paul Jarley:                         Yeah. Tory Bruno:                        Yes, the uncertainty grows. Paul Jarley:                         40 years is a long time. Paul Jarley:                         Our next question came from a young real estate student who asked: How do you see real property rights being involved in space? Tory Bruno:                        So what a great question. So no one imagined 40 years ago that there would be real economic activity in space. And so the outer space treaty and the lunar treaty regime really doesn’t address economic activity. Now the US passed its own law, a couple of years ago, that said, “Hey, you can actually go to space and mine something or develop something, own it, bring it home, and sell it.” This is a going to require an international treaty regime. So that was just a very small beginning. So I will say that the Space Council, which was recently stood up chaired by Vice President Pence, I serve on the Space Council’s User Advisory Group is jumping in. Tory Bruno:                        But they are jumping in at the beginning, so they’re streamlining regulation on how you get to space and who controls which regimes in the government to try and foster businesses to get going. But there’s a long ways to go. If you’re going to have a business mining platinum or rhodium on an asteroid, you need to have the ability to have a claim, not have somebody else wait until you’ve invested in all the prospecting to then jump on you. You’ve got to be able to extract it, take it home, own it, and sell it, obviously. And you need regulation to make all of that safe and responsible. It is a little different than activities here on Earth, in that everything is in orbit at incredible velocities and irresponsibility has catastrophic results. Paul Jarley:                         Another student brought up a partnership between Blue Origin and United Launch Alliance. The two companies are working together on ULA’s Vulcan Engine. She asked about what it’s like to team up with your competitor. Tory Bruno:                        Sure. Yeah. So, for the rest of you, what she’s referring to is we have two engines on our new rocket. We’ve just selected Blue Origins BE-4 for the first stage. And we had also selected, about a month earlier, Aerojet Rocketdyne’s RL10 for the other stage. And you’re asking about, “Gosh, you have a competitor in your supply chain.” That is the nature of the aerospace industry. It’s a very small community. And we have a phrase that we use that is called “competimates.” So you are very often in each other’s supply chains. You compete while having them as a supplier. You compete while being their supplier. That’s not unusual, but it does drive certain unique things in your relationship. It’s important to feel like there’s some symbiosis or mutual dependency there. Tory Bruno:                        So they will eventually compete with us with their New Glenn rocket. That’s really designed for a different… I’ll say centered on a different market segment than we are centered on. All you’ve got to do is look at a picture of it to figure that out. It’s Saturn V-sized. And it has a lot of engines. And, without our order rate, it is not very affordable because the engines would be very, very expensive. So they need us, we need them because they’re our engine supplier. And we’ll compete in slightly different places with overlap. And so all of that is pretty typical in our industry. I already have competitors elsewhere in my supply chain and vice-versa. Paul Jarley:                         So that’s why you bought rather than made, if I understand it. Tory Bruno:                        That’s why we buy rather than make. Now engines have a very large initial investment threshold. I won’t talk about the numbers involved in our deal, but the rule of thumb in rocketry is if you want a brand new liquid rocket engine, be prepared to spend one to two billion dollars to develop it. So that’s part of that equation as well. Paul Jarley:                         Our next question: have there been any attempts to develop insurance for spacecraft? Tory Bruno:                        There is actually, and has been for many decades, a big… Well, big industry. An industry around selling insurance. So everyone who is not the United States government that puts a satellite in space insures. You insure the spacecraft and the lift. And, on rare occasions, they may also insure some portion of the revenue stream. And that is actually a factor in the price of the launch service. Because, as we talked about a minute ago, that’s the big risk when you’re a satellite operator. And so, for example, if you’re a commercial company and you’re going to put up a big geostationary communication satellite and you choose to fly it on an Atlas? Your insurance will be about $12 million cheaper than if you flew it on somebody else’s rocket. Paul Jarley:                         That’s just an experience rating that they’re using, right? Tory Bruno:                        Yeah. Paul Jarley:                         Because it’s been so safe, yeah. Tory Bruno:                        Yes. And that’s also an interesting economic discussion, since we’re in the business school. At present, there’s a little bit of oversupply in the insurance market. Space is sexy right now and everybody wants to be in it. So the insurance rates are actually depressed a little bit below where they should be. Paul Jarley:                         Interesting. Tory Bruno:                        And narrowed a little bit more. If that industry ever rationalizes, these differences get bigger. Paul Jarley:                         So did I hear you right? You wouldn’t launch without them having insurance? Tory Bruno:                        They won’t launch. Paul Jarley:                         They won’t launch. Tory Bruno:                        Yeah. Paul Jarley:                         The next question: does ULA have any plans to develop a heavy lift rocket? Tory Bruno:                        No, we don’t because we don’t really see a market there that is attractive to us. So other people are designing rockets that are centered on lunar architectures or Mars architectures, for example. We’re really centered on Earth-orbit architectures. Not to say we couldn’t. So the Delta IV Heavy has a heavy variant that is a three cores, literally three rockets bolted together. It’s very impressive, if you ever had a chance to come out and see. We don’t plan to do that with Vulcan, but there’s no inherent reason why you couldn’t if there were a marketplace. But we just don’t see one. So it’ll be a single stick. It will have more capability than a Delta Heavy. So the cool thing about that is you get heavy performance, in fact about 30% more lift than a Delta IV Heavy, in a single stick configuration which collapses the price of heavy lift. And honestly, we just don’t see a need for more than that at this time. Paul Jarley:                         One student wanted to know where Tory Bruno saw the space industry headed when he started his career. Tory Bruno:                        Honestly, when I started I didn’t pay a lot of attention to space launch because I worked in missiles and in hypersonic re-entry systems. And so I sort of took lift for granted in a way. Paul Jarley:                         The next question asks for an elaboration on components versus propulsion. Yeah, I don’t know what that means. Tory Bruno:                        Yeah, sure. So when you look at a booster, and we’re talking about the first stage. The second stage is its own animal because it’s orbital. Okay? So we’ll talk about the booster. You have sort of this difference where you can bring the whole booster back propulsively, because that’s what it takes. In other words, you are going to first re-enter the atmosphere, hypersonically, experiencing really, really high temperatures. And then you’re going to light your engines off. And then you’re going to coast back down to the ground and you’re going to land. You’ve seen that on TV. Right? You get to recover the whole value. Some of the time there’s a 30 to 50% performance loss. In other words, on certain missions, you can only take half as much mass to orbit. So you can’t do it every time. But every time you do do it, you get the whole value back. Tory Bruno:                        Then there’s component. So, when you look at a booster, it turns out that two thirds the cost of a booster is just one part. It’s just the rocket engine. You take the rocket engine out from under a booster, what’s left? A giant empty gas tank. And so that’s a different approach. And our approach is to do that. We’ll burn all of our propellant, no performance impact, burn to depletion. Then we’ll separate the engine section. Re-enter behind NASA’s Mars 2020 inflatable heat shields, so no high-temperature environments. Scoop it up with a helicopter and bring it home. So we only get two-thirds of the value of the booster back when we do that. But you get to do it every time. So, business student, given the marketplace it really just matters on how often are the spacecraft so large that you can’t do propulsive versus how often you can do our technique. So is it better to get all the value back some of the time or two-thirds of the value back all of the time? It depends on that mix of customers. And we’ll find out. Paul Jarley:                         There’s an excel spreadsheet, though, that can solve that for you. Tory Bruno:                        Definitely. Paul Jarley:                         And our final question from the audience was: why does ULA exist? Tory Bruno:                        Why do we exist? Oh, okay. Well, believe it or not, we are still the world’s premier launch company. We’ve launched everything that is important to our country that is on orbit now, or nearly everything. We touch your life every single day. Use GPS recently? That was us. You check the weather to see where that hurricane might be coming in? That was us. We’ve been to space 130 times. We have never failed to get our mission there, that is unprecedented. We’ve been to Mars 18 times and every celestial body of every significance in the solar system and beyond. We have the experience and the expertise to continue being the market leader and we will be. Paul Jarley:                         It’s my podcast so I get to go last. This just might be our geekiest podcast to date. So I feel compelled to offer a science fiction reference in relation to the question of whether space commercialization is really a thing. Resistance is futile. It’s already happening in launch vehicles and satellite communication. The competition between ULA, Blue Origin and SpaceX has reinvented the Space Coast and brought a lot of funded research to UCF, a place that was founded to support NASA in the race to the moon. I suspect space tourism and space mining won’t be far behind. And, as our young real estate student noted, that will put the question of property rights in space front and center. Maybe the first space real estate program will be right here at UCF. That seems fitting, but that will probably be an assignment for a dean a few deans after my time here at UCF. Paul Jarley:                         What do you think? Check us out online and share your thoughts at business.ucf.edu/podcast. You can also find extended interviews with our guests and notes from the show. Special thanks to my producer, Josh Miranda, and the whole team at the Office of Outreach & Engagement here at the UCF College of Business. And thank you for listening. Until next time, charge on. Listen to all episodes of “Is This Really a Thing?” at business.ucf.edu/podcast.

  Some claim a company’s brand is its most valuable asset, while a logo can have a powerful impact on consumer behaviors. Household names like Coca-Cola, Tropicana and Gap are just a few examples of companies that have enjoyed tremendous success and endured rebranding failures. But how much can packaging, imagery and marketing tactics really inject new life into an unchanged product? And will a customer’s relationship with a brand really prevent them from buying into a competitor?   Featured Guests Carolyn Massiah – Associate Chair, Department of Marketing, UCF College of Business Episode Highlights 6:33 – What makes up a company’s brand 13:58 – Why consumers form relationships with brands 17:55 – Reasons a company would benefit from a rebranding effort 29:11 – Tips to carry out a successful rebrand 40:56 – Dean Paul Jarley’s final thoughts   Episode Transcription   Paul Jarley:                         FTU became UCF in 1978. Since that time would become the Knights, the Golden Knights, and the Knights again. Kentucky Fried Chicken became KFC in 1991. Backrub became Google in 1997. Deloitte added a green dot in 2003. Tropicana changed the packaging of its orange juice in 2009 and then changed it back. CFE Credit Union became Addition Financial in 2019. In all but the first case, I’m pretty sure some rebranding genius got paid a fortune. But seriously, does any of this really matter? Paul Jarley:                         This show is all about separating hype from fundamental change. I’m Paul Jarley. Dean of the College of Business here at UCF. I’ve got lots of questions. To get answers, I’m talking to people with interesting insights into the future of business. Have you ever wondered, “Is this really a thing?” Onto our show. Paul Jarley:                         I’ve been known to tell staff in meetings that I’m not the dean of that. It’s my way of letting people know that I think their issue isn’t worth my time. I hit upon this phrase back in my days at the University of Kentucky. The college had just gone through a rebranding effort, and one of my colleagues didn’t like our new stationary. He was refusing to use it, and he wanted me to tell the dean that he should get a pass. After listening to this for 20 minutes I told him that I refuse to be the associate dean of stationary and asked him to get out of my office. The phrase just stuck with me. Paul Jarley:                         My marketing colleagues, on the other hand, would disagree with me. They think a company’s brand is its most important asset and that any rebranding campaign is a process that is fraught with peril, like employees not embracing the change. Meh, maybe. Or maybe it’s just a way for consultants to charge big bucks to help you design a new logo that they claim with rival the swoosh and make you the darlings of consumers everywhere. Paul Jarley:                         A few weeks ago we hosted our last dean speaker series of the academic year, and given that our sponsor, CFE Credit Union, had just changed its name to Addition Financial, we thought it was the perfect time to have Dr. Caroline Massiah address the whole rebranding thing. It was such an engaging discussion that we decided to turn it into our latest podcast. Carolyn Massiah:             I’m going to begin with a quick, funny travel story, and it will help us lead into the discussion. Carolyn Massiah:             This past weekend I had to go, not had, I wanted to, I went to Boston. My goddaughter got married and, first of all, for those of us in Florida, when we travel anywhere, we forget that the rest of the world doesn’t have the same weather all year around, so I experienced three seasons in three days in Boston. Carolyn Massiah:             The other thing that happened, we get to the airport to return home and my teenage son and I, my husband was staying behind for business, my teenage son and I, we board the plane. We get on the plane. We do what I think is probably the slowest taxi ever. I’m thinking at this point I can walk to Orlando quicker. We get all the way to the end of the runway and then we sit there, and I’m thinking there must be many planes. But at the point the pilot has not said one word to us. All of a sudden you feel the plane make a deep U-turn, and I thought, “Oh my gosh, a delay, maybe a mechanical issue.” We get back to the gate. When we’re pulling up to the gate we see flashing reds lights, they open the door of the plane, Homeland Security gets on the plane. They take a man and a woman off in handcuffs. I can’t even make that up. I’m like, “Oh my goodness.” Carolyn Massiah:             Then then pilot comes on and says, “Well, I don’t know if you know, but since 9/11 we run the flight passenger list until wheels up, and we take a slower taxi if for some reason we are not able to clear a passenger’s name from that security watch list, and if we still aren’t able to clear them, Homeland Security has us return. We’ve deemed there are two people on the flight weren’t safe to fly, and that’s why we had to return.” Carolyn Massiah:             We finally took off, were supposed to land here Monday night at 10:00 PM, landed at 1:30. The best laid plans of travel. Why do I say that? We have several companies, including our host today, who have gone or are about to go through rebranding, and it’s a journey. Carolyn Massiah:             Most times when we travel we think about the point B, the destination. However, we find that when we travel, sometimes it’s not the where, where we end up, the location where we end up, that will cause us the angst, the most pain, hopefully the most excitement and happiness as well, but it’s the what of the trip, the why of the trip, and the how of the trip. Carolyn Massiah:             When we talk today about navigating, rebranding, that’s what I want to focus on. The first thing, whenever you go on a trip, you want to make certain that we’re all on the same page or will go with the same map, if you will. I want to start with first talking about what is rebranding. The reason I say that is because, and I know I have a couple of marketing practitioners in the room and we all at times think, “I know, we’re doing it now, I know what rebranding is”, but sometimes we take a different view where I just want to help expand the view of what rebranding is. Carolyn Massiah:             Then I want to talk briefly about some reasons why we would choose to go through this experience of rebranding, and then I’m going to finish up with five very quick toolbox methods you can take with you as far as how to do it in the most painless processes possible. Carolyn Massiah:             In order to get on the same map let’s first talk about brand. When I say brand to some people they immediately think of the logo, they think of a name, and we’ll see in a moment that it’s so much more than that. But what’s important are two words here, the brand of your company, and we’ll talk about what all that entails in one moment, the brand of your company identifies your company, the value that you’re creating for your customers, how you’re delivering that value, that’s the brand, that identification. Even as important as identifying your own company, remember that a big role of your brand is to differentiate yourself from the competition and hopefully in a positive way. Carolyn Massiah:             I just said that brand is a little bit more than a logo, so let’s talk about some different elements of the brand when we’re talking about brand because when I talk about rebranding, once again, I want to make certain we are on the same map. Carolyn Massiah:             First and foremost, a big part of brand is the brand name, the brand name. We think about some brands that we see and we automatically have a thought about, if I say Nike you automatically think competition, sports, aggressiveness, achievement, winning, so already just in the brand name there is identification and definitely a differentiation from the competition. Here’s the thing though, when we talk about brand we are going to expand our view because it’s so much more than that. Carolyn Massiah:             In this day and age we also have technology, social media, digital media marketing being such a big part of the brand. We’ve taken a URL and made it into a verb. Now in the Merriam-Webster dictionary Google is a verb. I’m actually putting money on the fact that within the next two years Uber will be a verb. We already use it that way, right? When we talk about google.com, amazon.com the URL is a very important part, a very important part of the brand. Carolyn Massiah:             Logos and symbols. I’m [inaudible 00:09:03] talk about product and we’re going to talk about people here. I talked about Nike. First, anyone know that way that we became a Nike school instead of Adidas school, UCF? I’ll tell you really quickly because it’s actually pretty interesting. It’s truly a marketing story. We were an Adidas school and then two young men came to play here, came to play basketball, and their last name happened to be Jordan. Michael Jordan’s sons came to play with us briefly. We were Adidas school, which mean Adidas had to tow. When the first Jordan player, the first Jordan son, playing his first game said, “I’ll wear Adidas everything but I’m wearing Nike shoes. I’m Jordan.” Adidas gave us an ultimatum, should the Jordan player take the court in anything but Adidas shoes, they’d pull the sponsorship. Talk about a marketing dilemma there for us, for Jordan the son, Jordan the father. Can you imagine the PR that will come from having the Air apparent be wearing Adidas shoes on the basketball court? Oh my goodness. Carolyn Massiah:             The young man did take the court in Jordan shoes. Within 24 hours Adidas pulled their sponsorship. Nike got to come in like the knight in shining armor and pick up that sponsorship and that’s how we became a Nike school. A little bit of trivia for you to take with you. That brand is so powerful we only need to see the swoosh. Carolyn Massiah:             I said product, let’s talk about people. I’m a big fan of music, and actually one of the artists I absolutely love, love, love, and I was very fortunate to see him in concert at one point was Prince. If you don’t know the backstory behind that period where he was not Prince but the symbol, and we’d called him the artist formerly known as Prince. His original record label, he wanted to separate from them, and they said, “Okay, you can go but the Prince name belongs to us.” He said, “Okay, well this is my name from now on until my contract expires.” Once the contract expired then he became Prince again. A symbol, even for a person, is a big part of a brand. Carolyn Massiah:             Characters. We live in the land of characters. Whenever you fly into the Orlando airport, you have the Disney greeters, and they have the white Mickey glove on. You don’t need anything else, all you need is that white glove and children just loose their minds, “Mickey! It’s Mickey!” We live in the land of characters. Carolyn Massiah:             Slogans. Going back to Nike. Nike says, “Just do it.” We don’t know what it is but we’re going to get on it. Just do it. Slogans become very powerful. Carolyn Massiah:             I’m a veteran of the U.S. army, I was a combat medic, joined when I was 17, seems like another person lived that part of my life, but it was wonderful experience. Why do I say that though? Actually, U.S. army has really struggled with what their slogan is. When I joined it was be all you can be. I was like, “Okay, I’m on it. I’m going to be all I can be.” In the late ’90s, early 2000s they went to army of one. Well those of us who had served… Any prior military people? Any prior military? Those of us who have served in army realize, “Well, they train you from day one that you’re not a one person. Now, all of a sudden, they’re telling me I’m a army of one? That’s kind of strange.” Now it’s army strong, which I think is a good one. The other one is soldier for life. I don’t know if that one is going to stick with the army strong, so they’ve really struggled with their changes in their slogans. Carolyn Massiah:             Last but not least, a big part, which is underestimated, colors and any relevant sounds. Those of us who grew up in the original AOL time period… Okay, so I have some friends. You were waiting for that sound and telling someone, “Don’t pick up the phone, I’m on.” It’s like, Okay.” Carolyn Massiah:             Colors as well. Sometimes we don’t realize we’re rebranding just when we change a package, but in the consumer’s mind we’ve rebranded. In the consumer’s mind we have rebranded. Colors and symbols are so extremely important. Carolyn Massiah:             Talk about the value of brand, I saw this one time and I said, “I’m going to have to keep this in my slides because it’s just funny.” Because it’s so true. Here we have a wonderful teapot. Put a price on it, $25. Everyone is like, “Ooh, okay.” I change it just a little bit. We’ve went from a teapot to a ipot. It’s radical, it’s innovative. I bet it has a charging USB port on it too. It’s so funny because it’s so simple because it’s so true. That’s how powerful your brand is. We form relationships with brands. We form relationships with brands. Carolyn Massiah:             Why do consumers form relationship with brands? Let me talk about your grocery shopping for a moment. You go grocery shopping in the store. We put on our track in our mind, “Grocery shopping track, put it on.” Then we shop according to that, “Okay, I get my Pop-Tarts, I get my Kellogg’s, I get my…” We shop according to brand. Now, and you’ll all relate to this when you go grocery shopping, all of a sudden you get to that aisle… I love my raisin and spice Quaker oatmeal in the morning. I’m a creature of habit, so raisin and spice Quaker oatmeal in the morning. I get to the aisle where the Quaker oatmeal is and I see the apple one, “Eh, I don’t like that one.” I see the maple and brown sugar one, “Eh.” I don’t see the raisin and spice one. It’s not there, but above it they have a different of the raisin and spice. “Oh, but I don’t know, that’s not the one I usually get.” Carolyn Massiah:             Honest to goodness, how many of you have done this? You were standing right there in the aisle, you don’t see your brand there, what do we do? We step back like it’s magically going to appear because we did that. Then we actually may stand there and we’ll look to the side like maybe they moved it because we are that linked to that brand. A lot of times that link to a brand isn’t out of loyalty, it’s out of ease. I don’t want to have to think. Can you imagine if you had to make a decision about every individual product every time you shopped? You think about if you get a new roommate or a new significant other, a new spouse, and you go grocery shopping together and all of a sudden they’re reaching for something and we’re just like, “Oh we don’t buy that.” Carolyn Massiah:             Brands help our consumers make the right purchase. It helps us make an easy purchase as humans in general are what I like to call cognitive misers. We don’t want to really put a lot of thought into this. This should be easy for us, which why when we rebrand we want to make certain we don’t confuse our customer. Carolyn Massiah:             One of the main things, one of the main values behind a brand is that it helps facilitate that purchase. It helps establish loyalty because I know I always buy. We always say that, “Well no, I always get that.” You’re saying you’re loyal. “I always get that.” Which means then that if we’ve done well with our brand to begin with we’re protected from competition because when I’m standing there in the grocery aisle I can’t even fathom sliding down or up to the next brand because that’s what I always buy. That’s the one I can count on. That’s the one that’s reliable. It helps protect from the competition. Some of you, I bet, have made a stop at an additional store on the way home to get that brand. I see heads shaking, I have friends. That means then our brand is an asset and impacts our market value. Carolyn Massiah:             Now we are all on the same page, the same map on this journey of rebranding. That’s the what of the travel. Let’s talk about the why. Why would we rebrand? Perfect, our host today, Addition Financial, a little backstory. Carolyn Massiah:             As of June 1st, I’ll have been at UCF for 14 years. 14 years. Speaker 6:                           Woohoo! Carolyn Massiah:             Yeah, that’s a woohoo. At 20 years at UCF they give you this big desert-size plate of medallion you can wear to graduations, so I’m six years away. Six years away from the medallion. When I came here on June 1st, I immediately joined the Credit Union. At that time it was UCF Credit Union. That’s actually how I saved it in my Quicken, UCF Credit Union. I’m a creature of habit, it still says UCF Credit Union in my banking software. As time and geography spread, it went from UCF Credit Union to Central Florida Educators. Now, as the company has grown in such a positive way, we’ve moved now from Central Florida Educators to Addition Financial. Carolyn Massiah:             One of the first reasons you might rebrand is because of growth. Whether it’s growth domestically or internationally, that is one way, one reason why you might go on this journey of rebranding. Carolyn Massiah:             Walmart originally was always low prices, “We’re the value-based store. Always low prices.” When, in 2003/2004, the country went through a recession, and there were those customers who stepped down from other brands to shop at Walmart, they wanted to be able to hold on to them when the economy improved, so they repositioned themselves from always low prices to save money live better, so that hopefully then they weren’t perceived always as, “that’s the bargain basement low-value option” for those who had switched down during the recession. So, sometimes we might do a rebrand because of just repositioning to either gain or keep new audiences. Carolyn Massiah:             Another reason we might rebrand? New CEOs. 50% of our largest American companies will see a change in CEO within the next four years. The why of that doesn’t always mean success, and I’ll tell you a little story about JCPenney. I see some heads shaking, so some of you know the story. Carolyn Massiah:             JCPenney decided to let go of their CEO. They hired a new CEO. Anyone know the company where that CEO came from? Apple. That’s going to be important to know in just one moment. I will tell you that JCPenney has made their bread and butter on door buster sales, on coupons, on Saturday door buster sales. Their most loyal customers live for the sale. Their most loyal customers live for someone circling their receipt at the end saying you saved this much. That’s what they live for. They hired a new CEO. The new CEO said, “We’re not going to do sales anymore.” Everyone was like, “What? No sales?” Remember he came from Apple. What does Apple not do? Sales. He said, “No, we’re not going to do sales anymore. Instead, what we’re going to do is we’re going to mark all the clothing at the lowest price it would eventually sell for anyway, and we’re going to call it fair and square deal pricing.” Carolyn Massiah:             If you remember JCPenney implemented that square in their logo and everyone was like, “I don’t know, what’s the square?” Fair and square pricing. So they said, “Okay, no sales. Lowest price possible, yay.” They introduced it. Customers come into the store. “Where is the sales rack?” “No, we don’t do sales anymore. It’s marked at the lowest price possible. You’re already going to pay the lowest price.” “So you’re not having a sale?” “No, you don’t understand, we are saving you more than you probably would have saved before with coupons, and we…” “So, there’s no sale is what I’m hearing.” In two months they lost 30% of their sales. They’re like, “No, you don’t understand!” So then they enlisted different actors and spokespersons saying, “No, it’s a fair and square deal. No sales. You don’t need a sale. We are selling it to you cheaper than if you were searching for the coupon.” And they’re like, “But that’s what we like.” So they let go of that CEO. They went back to the original CEO and said, “See, what had happened was…” Carolyn Massiah:             Other times we may decide to change because of an outdated image or we want people to think of us as more than what we are. Dunkin’ Donuts. Another interesting thing about being in Massachusetts. Massachusetts is home to them. So, if you’ve ever gone to Seattle and every three feet there’s a Starbucks, it’s like that in Massachusetts. Dunkin’ Donuts is everywhere, except they’re not Dunkin’ Donuts anymore. As of this year, it’s just Dunkin’. Why? Because they want to reposition themselves as having more than donuts. They’ve expanded their menu option, and they want people to think of them that way. Unfortunately, a Donuts just rolls off my tongue, because I’m like, “Dunkin’ Donuts, Dunkin’ Donuts.” So they’ll have a little bit of time with that, but overtime they’ve changed quite a bit going from focusing on coffee to the coffee and donuts, and now you see they’ve even actually moved the coffee out of their logo and just Dunkin. Carolyn Massiah:             You could have changed because you’ve had a rough time with the current brand. Altria is actually who? Speaker 3:                           Philip Morris. Carolyn Massiah:             Philip Morris. Enough said. In 2003, because at that point the conglomerate was Philip Morris and Kraft, but they’d eventually sold off Kraft, but they were like, “Well we don’t want that halo effect from Philip Morris onto the Kraft brand.” So, they went to being the Altria Group. Carolyn Massiah:             Mergers, acquisitions and demergers. Another big rebranding that’s happened here in our area, Florida Hospital moving to AdventHealth. A lot of that came out of different purchases that they’d made that has also expanded them beyond the geographical area of Florida. You don’t want to be in Tennessee and you’re like, “This is Florida Hospital? I’m confused. Did I take a wrong turn?” Carolyn Massiah:             Changing markets. Now, this is a pretty interesting one with Mastercard, and it has a lot to do with different readers. The more that they’re using mobile payment in things, Mastercard actually first of all figured out by having this lettering in the middle and the placement of this logo, it would impede processing of mobile payment. So, what they did first of all was make this a smooth logo and then move the Mastercard down in order to answer to that changing market. That happened at the beginning of this year. Carolyn Massiah:             Corporate identity development. I’ll talk about two different ways there. Carolyn Massiah:             First of all Gap. Gap decided, “Maybe we need to differentiate the different brands.” You go to the mall and you see right next to each other Gap, Gap kids, Gap baby, Gap dogs, I don’t know, but it’s the same logo. Well they decided, “Well now we’re gonna switch it up. We wanted to differentiate it.” That lasted for six months, and then they are like, “Oh we realized the identity that people know is that square gap.” Carolyn Massiah:             When I was in the military there were two financial organizations that served us. You have young individuals, particularly on the enlisted side, and twice a month they give you what we thought was this huge amount of money, and we’re like, “Wow! What do we do with it?” Well, they made it mandatory for us to go see one of the two organizations. One of them was USAA, which is still obviously a very powerful, very large financial institution. The other one at the time was named USPA. Here’s what they figured out. USAA was the older of the two companies, but USPA figured out what? We were confused. We thought it was the same company. So, USPA actually went through a total rebrand in the mid ’90s, and they’re now First Command because they figured out that the military people were having, we were having difficulty differentiating between USAA and USPA. In particularly, when you have the same target market of one group and you’re marketing the same services, they needed to really grab that corporate identity, and so they became First Command. Carolyn Massiah:             When Pandora chose their new logo, the one P, the single P, PayPal had a little problem. One of the biggest complaints people got was if you have both these apps on your phone… I see some heads are shaking, I have friends. When both of those apps are on your phone, you get kind of confused. Actually, PayPal sued Pandora over that, and that’s why your Pandora logo now looks like sort of a rainbow logo to differentiate that. Carolyn Massiah:             Last but not least, when you have a company, Procter & Gamble sort of the golden calf, if you will, of marketing and consumer packaged goods in this country, when you have a company like Procter & Gamble, such a long history, 1863. When you have a company like them that overtime they’ve acquired so many different brands, they had a big choice to make as far as branding goes. Do they put P&G on everything or do they maintain those individual brands? Both of them were the pros and cons. Obviously they chose to, on the very, very, very back of every products there’s a small P&G. Most American consumers don’t realize that, so they think, “Well I’m buying Gain because Tide tries to rip you off” and P&G is like, “It’s okay, you have choices.” They’re both P&G. Carolyn Massiah:             In that particular case they’ve kept the individual brands. Of course those of us those who are marketing practitioners know that they are the world’s largest single spinder on advertising because of that, because they have those multiple brands that they have to support because of that. Carolyn Massiah:             I want to wrap up with a toolbox-kind of thing to take with you. When you’re going through rebrand or even thinking about going through rebranding, first of all hopefully you’ve gone through that list of why and your why shows up on that list because you never want to undergo a rebranding effort without having a really good reason why that’s happening. You don’t ever want to go on a very long trip unless you know why you’re doing it. Carolyn Massiah:             How do we do it? I’m going to go with my favorite be nicer during your customers during the rebrand. Be nicer to your customers. What do I mean? Carolyn Massiah:             First of all N. Notify your customers as soon as possible that there might be a change coming. I had a good friend of mine, we did our MBA program together, and he went on to work for an advertising firm. He was not on this particular account, yay, with Tropicana. Tropicana decided they wanted something fresh and new for their containers. They spent right at about $35 million on this redesign and here is what happened. Remember when you go grocery shopping we are cognitive misers and we’re on the shopping track and we’re like, “Grab this, grab this”, get to the refrigerator aisle, “Where is the Tropicana? I don’t see the Tropicana. I don’t see my orange with the straw. Where is it?” I always tell my students that for me, going to the grocery store, I can spend an hour or so even more in the grocery store. You know why? It’s just so much fun watching consumers, and this was when I almost wanted to take and have a long island iced tea and a little seti chair and just sit at the refrigerator and watch people go through this because you see that process. Then they ask the grocery store person, “Oh you don’t have Tropicana in?” “Oh yeah, no, there’s Tropicana.” “No, that’s not the Tropicana I buy.” “Oh, no, it’s the same, it’s the packaging.” “No, it’s not.” Carolyn Massiah:             Over two months, they lost 20% of their sales just because they changed the package and they didn’t tell them. They didn’t tell customers the change was coming. They had to pull all those packages, so not only beyond the money they spent on the redesign, the sales they lost, they then had to pull all the rest of the packaging. Carolyn Massiah:             When the new container came out, the clear one, all of you remember seeing the Tropicana commercials where they’re like, “A new, clear container! Look, the oranges are going in! Look, it’s Tropicana!” As soon as we think there might be a change, let our consumers know. Carolyn Massiah:             Introduce that new brand with a clear explanation why. You don’t like change. We don’t like change. I’ll tell you how much people don’t like change. I was telling this story to someone the other day, and I could write books on my students, but one time I had a quiz due on a Friday. I always have quizzes due at 11:55 PM on Friday. Not midnight, learned my lesson, people don’t know what midnight is, so 11:55 PM. I realized there was a home game on that Saturday, also we were in the middle of a religious holiday Sunday, on that day was going to be the start of a religious holiday, so I was like, “Well, okay, well go Knights. Let me extend that date out to Tuesday.” I sent out an e-mail and you think the expression or the comment you would get would be, “Oh wow, great, thanks”, and one student e-mailed me and said, “But I planned on it being due on Friday. You really messed up my schedule.” I e-mailed back, I said, “Well it’s open, you know, you can go ahead and do it. Just pretend that it’s due still today.” And he wrote back and he said, “I can’t, I now know the truth.” I can’t make that up. I’m going to write a book, I’m going to write a book. Carolyn Massiah:             Introduce the brand, the new brand, the new logo, the new symbol, the new color, whatever it is as soon as possible. I had the very good fortune to work with OUC when they were going through their rebranding efforts several years ago as they were focusing more on being an environmentally conscious company, and I was working on doing some focus groups for them. Never during that time did we enter the focus groups even thinking about the actual logo. It was more about the tag line underneath. Thank goodness we did that though because when we introduced the concept of environmentally friendly company to the customers, seven out of the ten focus groups someone noted, if you remember, the old logo had a water drop, and it bothered people, and they said, “Well how can you say you’re environmentally friendly? You have a leaky water faucet.” We would never have thought of that. We would never have thought of that unless we had introduced that before, which is why now the OUC logo does not have the water drop. So, introduce that logo as soon as possible. Carolyn Massiah:             C. Co-brand if at all possible. Many of us have had BrightHouse as a service provider. Of course our wonderful football team plays in the BrightHouse stadium, played in the BrightHouse stadium. They went through a transition and over a time period they told us, “We’re becoming Spectrum. We’re becoming Spectrum. We are becoming Spectrum.” Once again, remember, we don’t want sudden change because it will be a problem. Customers equate that consistency with reliability. Carolyn Massiah:             Get the customer engaged with the new brand, and fortunately we have wonderful social media to help us with that. I’ll tell you a story. Old Spice is a Procter & Gamble brand. Old Spice is one of their older brands, and it got to the point where most people said, “Oh, Old Spice, that’s like my grandfather’s cologne.” That’s [inaudible 00:35:33] Old Spice. Their sales were plummeting, they were on their way to try to decide whether they put that brand in sleep status, but then they did some focus groups, and they figured out that 60% of men’s personal care items are bought by women. Makes sense, right? Carolyn Massiah:             They decided then to reposition and rebrand and target that audience. Old Spice Ad:                     Hello ladies. Look at your man. Now back to me. Now back at your man. Now back to me. Sadly, he isn’t me, but if he stopped using lady’s scented body wash and switched to Old Spice, he could smell like he’s me. Look down. Back up. Where are you? You’re on a boat with the man your man could smell like. What’s in your hand? Back at me. I have it. It’s an oyster with two tickets to that thing you love. Look again. The tickets are now a diamond. Anything is possible when your man smells like Old Spice and not a lady. I’m on a horse. Carolyn Massiah:             They started that campaign and saw a 300% increase in their web traffic and their sales doubled from the previous year. Now, they have a whole social media campaign around that. They now started a new one, which is great. I can relate as a mother of two older sons. They have one of mother’s whose sons are going off to college and everything and how you deal with that. They just started engaging the customer with the brand. But that’s a rebrand. Carolyn Massiah:             Last but not least in being nicer to our customers, we want to reassure them. We want to reassure our customers that in the changing of a brand, the changing of a logo, the changing of a tag line, the changing of a company name, we are still delivering the same, if not more, value to the customer. Carolyn Massiah:             UPS, company that’s been around a long time, and then throughout the ’70, ’80s and ’90s they had the UPS with the package on top because they’re like, “We’re a delivery company.” But then they said, “Well, no. We want to focus less on delivery and wider on logistics overall.” So, they started that new campaign what can brown do for you. In that they told consumer both B to B and B to C. They told consumers, “What can we do for you besides just put our hands on your package and get it from point A to B?” They made certain to reassure customers, “Don’t worry, we’re still doing that, but we want to do more for you while we are doing that.” Carolyn Massiah:             Sort of a tool/chest kind of thing to take with you while you’re working through a rebrand or even thinking about going through a rebrand, be nicer to your customers. Notify them that it’s coming as soon as possible. Introduce the new brand. Co-brand with that existing brand if at all possible. Engage the customers in some way, and fortunately, as I say, with social media we have that capability to do that unlike any other time in marketing history. Reassure them you’re still the same company and you’re giving more value, not less. Carolyn Massiah:             I’ll finish with my own rebranding story, and actually dean Jarley kind of prepped that when he talked about how many students I’ve had, and they really kind of take Dr. Massiah to a whole new level, so it’s like me, I even look at the person going, “Wow! Dr. Massiah.” Carolyn Massiah:             Two years ago, almost two years ago I got remarried, and before that we were engaged. My husband is from Brazil, very strong, Latin man. We were having a conversation one day and I said, “Well you know, I don’t, I don’t… Carlos I’m really sorry but I don’t think I’m gonna be able to change my name. I mean, I’m Dr. Massiah.” He says, “Well, no. I want you to be Parera, I want you to be Parera.” I said, “Oh, okay, well let’s just table that conversation. We’ll come back to it.” “I’ll sell you on it. I can sell ice to Eskimos. I’ll sell you it.” Carolyn Massiah:             We go out to breakfast one morning. The manager of the restaurant who had me in class several years ago. He came over to me and he says, “Oh hi Dr. Massiah, it’s so great to see you.” I said, “Oh, let me introduce you to my fiance.” He never even turned to him. You would think I just told this man Santa died. He said, “You’re not gonna be Dr. Massiah anymore? What are you gonna be? I mean, you have to be… You’re Dr. Massiah. You’re gonna change your name? How are you gonna [inaudible 00:40:16]?” I was like, “No, it’s okay, it’s okay. I’m still gonna be Dr. Massiah. I’m gonna keep Dr.” He said, “Oh, okay, okay. Oh my goodness, because you’re Dr. Massiah.” And then I said, “Okay, so once again, here is my fiance.” He walks away, my husband turns to me and says, “I understand.” Carolyn Massiah:             So, in order to follow my own, I’m slowly co-branding. Speaker 5:                           In a happy home. Carolyn Massiah:             Exactly, exactly, slowly co-branding. Thank you for letting me share a little bit of my wisdom and knowledge with you this morning. Paul Jarley:                         I still don’t want to be the dean of stationary, but Carolyn provides a convincing case that names and symbols matter. Would UCF have achieved regional dominance if it had remained FTU? It’s hard to say. Rebranding is clearly a risky business. The downside seems to outweigh the upside in a lot of cases, and if you have to explain the rebranding to people, well, you’re probably losing. This is why I don’t think it’s an accident that many of the most radical rebranding efforts had been motivated by a desire to escape a negative association in the minds of customers. You want them to forget that bad experience and have little to lose in becoming something different. It’s the one time you want the marketing to be out in front of the reality. What do you think? Paul Jarley:                         Check us out online and share your thoughts at business.ucf.edu/podcast. You can also find extended interviews with our guests and notes from the show. Paul Jarley:                         Special thanks to my producer, Josh Miranda, and the whole team at the Office of Outreach and Engagement here at the UCF College of Business and thank you for listening. Until next time, charge on.    

As technology rapidly improves and provides people with a never-ending list of ways to stay connected, those responsible for urban planning are finding new ways to integrate connectedness with essential city services. Cities like Orlando are jumping into the smart city movement with hopes to build a data-driven infrastructure that will support safer, cleaner and more efficient travel and an improved quality of life for the community. However, some are concerned the introduction of smart cities could infringe on citizens’ safety, security and privacy. So, is any of this really possible? And is your average resident interested in living in a smart city?   Featured Guests: Mike Hess – Smart City Project Director, City of Orlando Craig Ustler – Owner and President, Ustler Development, Inc. Episode Transcription:   Paul Jarley:                         When I worked at the University of Kentucky, I swore I would vote for any politician who could synchronize the stop lights on Harrisburg Road and cut my travel time to and from work. Smart city initiatives promise to make city life more efficient. But are people really willing to give up their privacy on the promise that Big Brother can cut down on their commute time or save them money on their energy bill? And honestly, if smart cities require smart politicians, I’m skeptical. Paul Jarley:                         This show is all about separating hype from fundamental change. I’m Paul Jarley, Dean of the College of Business here at UCF. I’ve got lots of questions. To get answers, I’m talking to people with interesting insights into the future of business. Have you ever wondered, is this really a thing? On to our show. Paul Jarley:                         So about a year ago I was half asleep in a meeting of deans when somebody said the term smart cities and I hadn’t heard that before, so I wrote it down and I will have to tell you, my initial thought was, “Dang, those people in Silicon Valley have the best marketers in the world.” I mean, who could be against smart cities? Paul Jarley:                         So I wanted to do some learning about that and what that really means and whether the marketing is far ahead of the reality or not and what it’s likely to do to my world and my students’ world going forward. So a couple of people have graciously agreed to join me today who have some opinions on it and I’m going to probe their opinions a little bit. Paul Jarley:                         So, next to me is Craig Ustler. Craig leading the master development team for the Creative Village here in downtown Orlando. He is also co-developing several vertical projects at Creative Village, including a $105 million student housing project that’d better be ready by August 2019, or we will have a lot of homeless students downtown. Paul Jarley:                         We’re also joined by Mike Hess. Mike is the smart city director for the city of Orlando. He’s a Leed fellow and mechanical engineer. He was recently brought on board by the city of Orlando to lead off their smart city efforts. He’s worked as the VP of smart and sustainable buildings for Panasonic Smart City team. And he has worked on several smart city projects across the US. Paul Jarley:                         So, let’s start at the beginning. What the heck is a smart city? Craig, you want to? Craig Ustler:                       There’s a couple answers. So one is sort of consistent with your experience. It’s become a buzzword that is somewhat self-invented through some marketing folks and real estate folks. And it means in theory, this idea that you’re going to use data driven or the Internet of Things and whatnot to connect everything and measure it and analyze it and make things more efficient. Craig Ustler:                       I sort of choose to turn the term and I say cities are smart and suburbs are dumb. I sort of feel like the city by definition is smart, city and urban development is smart, and suburban development is inefficient and dumb. So in my view, it’s more of an urban planning question about how you arrange things to be smarter and more efficient, and then you use technology in what is I feel like a better arrangement of how you build a city. Craig Ustler:                       And that sort of, to me, what a smart city is. It’s sort of, you start with city building a city design and then you overlay technology on top of that to make a really great place. Said a different way, you could build the smartest city in the world, but if it’s in a place nobody wants to live or it’s poorly designed or has a bunch of other attributes that don’t make it attractive, it’s really not ultimately gonna matter how smart it is. Right? Craig Ustler:                       And I think technology and what Mike’s sort of background brings is part of being smart. So I think being able to use technology and analytics and data driven intelligence, I think that’s one form of being smart. I have a different term that I call urban IQ. But the idea of a city’s IQ is not just its sort of technology footprint and how smart it is, but there’s an IQ about being more cultured and being more diverse. It adds value to society. Craig Ustler:                       So, so I tend to think about being a smart city is kind of like a technical degree. It’s like getting a master’s in engineering and being smart. Being a truly great city with a high IQ is a liberal arts degree. And it’s like being good at a bunch of things. So, I think you gotta be both to truly be a smart city. That’s my definition of it. That’s not the definition you were referring to, but that’s how I think of it. Paul Jarley:                         Mike? Mike Hess:                         Yeah, so I would certainly agree with that. In my previous life, I worked for a technology company and I think one of the things we learned very early on in our, you know, role in the smart city space is smart city is not all about the technology. In fact, technology should really be the last part of the discussion. Mike Hess:                         There’s plenty of technology out there already. Technology is already changing. It’s always changing. And so that really shouldn’t be your first step because a lot of times if you just start throwing shiny objects and technology to try to solve a problem, it may not actually work. We saw a lot of technology that was out there to try to solve problems that didn’t necessarily have to exist. So really to me, smart city has to start with a good planning processes, so stakeholder alignment, getting people to sort of think outside their silos, both within city, city working with developers, but getting people to sort of think differently and think together was really the first piece to smart city. Mike Hess:                         And also really starting to think about what are the new business models or different ways we can work together once we get out of our silos to figure out how to solve our city’s issues. And that may be a technology solution; it may not be. Mike Hess:                         So, I agree with you Craig, 100%. And really then, technology comes in at the end to kind of fill the gaps. And you know, I would also encourage everyone to Google the definition of smart city. I mean, it’s sort of all over the place and most of them that you see are very technology-focused. But I would encourage you- Craig Ustler:                       Or self-declared. Right? Paul Jarley:                         So, whenever I’m trying to think through whether something is a thing or not. The first question I always ask is what problem are we solving here? So what is the promise of a smart city? What is it looking to solve? Mike Hess:                         And so that’s an interesting question because that answer is going to depend on where you are. So really, the first part of any smart city process should be around planning and having the community decide what do we want to solve under this sort of smart city. Craig Ustler:                       Like, traffic on I-4? Mike Hess:                         Yeah. So, and I can tell you this is something that the city of Orlando is about to really dive into is a smart city master planning process. We’re literally going to be a getting started on some of this next week. And really that process is all about community engagement. Residents, developers, all the stakeholders in the community, to come together and figure out what does smart city mean to us in Orlando? What do we want to solve? Mike Hess:                         And once you get to that point, I mean, there are a million things smart city can solve and I can kind of walk you through from an Orlando perspective, when we do this planning process, we’ve already started to sort of figure out what some of our major categories are that we want to work within in our planning process. Paul Jarley:                         Give us a sense of what’s the top three things, like on your list. Mike Hess:                         Yeah, so I would say communications infrastructure is a big one. How do we solve that digital divide? How do we make sure everyone is connected and has access to technology? Paul Jarley:                         Because increasing inequality could be an outcome here, right? Mike Hess:                         Absolutely. I mean, another example on sort of the equity side from an energy perspective, a lot of my past work has been around energy equity and resiliency, so that everyone has clean power. Everyone has access to resilient power. So, that’s another thing you can potentially look at in the smart city space. Paul Jarley:                         Two more on your list. Mike Hess:                         Okay. I was going to say I could keep going. Paul Jarley:                         Go ahead. Mike Hess:                         I don’t know. How long do you guys have? We could be here a while. Mike Hess:                         I think transportation is a big piece. You mentioned that. There are different ideas that we’re already starting to think about from a city perspective in in the transportation space. I actually was in a meeting just this morning where we were actually looking at technology to create a frequent flyer program for alternative transportation. So, finding new ways to leverage technology to encourage people to use alternative transportation. Mike Hess:                         And I’ll give you one more, because this was also a discussion yesterday: food waste. So think about all of the food that we just had at this event that is now going to go to waste. Our Office of Sustainability has been working on the food waste issue, because it’s actually a very big issue in central Florida. So our smart city team actually has been coming across some technology that we can use to basically get rid of food waste on demand using GrubHub, Uber Eats and those kinds of things. So that’s another area that we can tackle under smart cities. Paul Jarley:                         Craig, do you have a wishlist? Craig Ustler:                       Yeah, so the problem to solve in Orlando … it’s not unique, it’s the same problem Atlanta has, any really suburban sprawl-based city has. So Orlando has really, really strong, what I call an urban asset balance sheet. We have a lot of things you want and we have population growth and all these great stats and all this stuff, but it’s arranged poorly. It’s arranged inefficiently. So that’s the promise of a smart city for a place like Orlando. It’s efficiency. I mean the problem when you asked me what we need to solve, it’s all these assets that should add up to more than they are, but they don’t add up to what they should be because of the way they are disconnected and inefficiently arranged. Craig Ustler:                       So the promise of a smart city, especially in a suburban layout, is if you can connect all that stuff in a way where you can essentially just achieve a lot better efficiency, a lot higher return on your investment. So this is the promise on down from traffic and all that kind of stuff, that you can manage what you have better. That’s a somewhat different promise than in a truly smart city market leader, a New York City or a Boston or internationally, Shanghai. Whatever it is, I mean. That’s somewhat of a different promise, right? I mean that is sort of these global leaders in thought and technology and advancement. Craig Ustler:                       I don’t think, at least in the short term, that’s Orlando’s promise as a smart city, I think you sort of start with some stuff you can do as a city, especially. You identify some of the ways you can really just gain efficiency. And I like to also break the problem down to somewhat of a scale you can manage. I’ve struggled with the term smart city from the get go because the promise is too big. If you go to the conference of the smart city guy, it’s like you’re going to live your whole life on your device. It’s this George Jetson promise of efficiency, which is really, really difficult to achieve. So Craig Ustler:                       I think if we bring it down to a top, whatever we can do, make those things more efficient and make you feel better about the way you do it, then I think that’s quote-unquote the “problem” you’re trying to solve. Craig Ustler:                       And then I also would say that there’s just an inherent frustration by many, many, many stakeholders in what seems to be a false promise of technology improving something. And so we’re still challenged. Craig Ustler:                       I use digital permitting as an example, right? As a city, it should be easier to get digital permitting ready. As a real estate person, digital communications should have made your life, it should have freed up your time because you now have quicker ways of getting it, but it hasn’t. It’s sort of made it more complicated. Craig Ustler:                       So it also would be in my mind, the challenge, the problem that you’re trying to solve would sort of be if the city is quote-unquote “smart,” then make it better for me. Make the outcome be better for me. And you guys are supposed to be so smart now and have all this technology, why doesn’t the road move traffic any faster than it did? And the capacity is the same, there’s not any more cars on nit. Because everybody is texting and driving and technology’s made it worse. Right? Craig Ustler:                       It’s a weird thing that we’re sort of searching for outcomes. Technology’s delivered on its promise in some areas, like on your phone. It hadn’t delivered and how you manage parking inventory in downtown Orlando. And it just frustrates you that, how in the world can I not be an app for that? I mean, Uber’s figured it out and our app exists and doesn’t really working. You can’t get the private garages and the public garages. Right? So that’s where I’m talking about, come up with a problem we can solve. And I think maybe that’s a quick, that’s what you’re looking for, right? It’s something we can do. Mike Hess:                         Absolutely. You sound like you’re a little mad at me there, Craig. Craig Ustler:                       So, parking management. Mike Hess:                         Yeah. And honestly, so I mean I can tell you, and I don’t have all the answers yet. So as we go through our smart city planning process, we intend to engage the community. So I think you just made it onto the advisory committee. Paul Jarley:                         That’s always how you get on the advisory committee. Is Orlando a particularly good candidate to be a smart city? If so, why? Craig Ustler:                       I can start that with that. Oe of the number one things about this, you’ve got to want to do it. So the reason that Orlando is a leader in sustainability is cause Mayor Dyer’s committed to that and he’s committed executive leadership position and resources for. So, he’s done the same thing with Mike’s position. It matters to him. He travels around the country and he sees other cities and talks to other mayors and he sees what they’ve accomplished. He’ll see a place like Pittsburgh that’s reinvented itself essentially based on sustainability and being smart. And he’ll say, “How’d you do that?” The Pittsburgh mayor will say and Mayor Dyer says, “That sounds like a good idea. Maybe I could figure out how to do that on my team.” Craig Ustler:                       So that’s part of it, is we are a good candidate because we have leadership that cares about it. And then I also think we’re a pretty good candidate for it just because we have some things, we have some projects especially, where the particular developers are interested in it, so the sports and entertainment district project that the Magic are working on, are very, very committed to a smart city approach. Tavistock is very out in front of a lot of smart city technology. Creative Village and we’ve talked about an alignment with the university and doing it there and making that a living laboratory for a lot of university stuff. So yeah, I think, I think we’re well positioned in the sense that we have some real influential stakeholders that would be willing to do it. Craig Ustler:                       And I think tourism is also a neat candidate. We haven’t talked about that yet today, but I think we would all agree that this technology, if you’ve been to Disney lately and you’ve figured out how to pay more money and skip the line and all that, that’s a place it has delivered. But I think that’s a huge audience to try to analyze, you know? The tourist market and make that more efficient. So, I do see that as kind of low hanging fruit and probably a lot of good strategic partners there. Mike Hess:                         Yeah. And I would agree. I think Orlando is a great city for this and I can give two perspectives from past life working with a technology company. Mike Hess:                         One of the things we noticed as we were working with cities is a lot of times the sort of medium-sized cities were really better at being innovative and you know, really thinking differently about smart cities, as opposed to some of the bigger cities. Mike Hess:                         And then from a city perspective of, I haven’t even been with the city for two months, but obviously the leadership of the mayor has been a key, but also just the rest of the city team. I think Orlando has really assembled an A Team within the city. A lot of our staff are excellent. And so I think we’ve got the right team to be able to implement these things. Paul Jarley:                         So, one of the issues that routinely comes up in the smart cities conversation is privacy, right? Somewhere, George Orwell is rolling over in his grave when he’s thinking about smart cities. You know, I’d be really interested to know how many of you are willing to give up your privacy to get to where you want to go 10 minutes quicker in town or 15 minutes quicker? Yeah, more of you should raise your hand, because you do. Okay? Google tells me this. But that’s a challenge. Right? Craig Ustler:                       Probably the greatest challenge we have on the implementation side is if you take, and especially as it extends to social issues, so someone says, “I want to really address crime and homelessness,” and some stuff like that. We have the technology to do that right now, if everybody will submit to a face scan when they walk out of here and every public right of way, your face was constantly, we could virtually eliminate a lot of segments of crime, if we would all commit to that level of, you know, whatever. Craig Ustler:                       So, it’s a challenge in a lot of the ways we think about deploying the technology because again, the promise of technology is intriguing. But then when you actually tell somebody the reality of what that means, it’s controversial. Charlotte and I were just in New York this weekend, huge new development called Hudson Yards. They’ve got a great public art piece that everybody wants to climb up, or so they thought until they read the social media policy that you sign, you have to get the app and it says we can use any photo you take and post on Instagram for our own profit and for our own whatever. Craig Ustler:                       And a lot of people have really pushed back on that because they don’t like it from a privacy standpoint. And you’re sort of like, well what did you think? You were going to go take a picture in New York City of a famous piece of art and put it on Instagram and you were gonna own? That was going to be private to you? But you’d be surprised how many people struggle with that. Craig Ustler:                       So, that’s an unknown right now. I will say that- Mike Hess:                         We’re talking about acts of government here, by the way. Craig Ustler:                       Yeah. To me that’s still a really, I don’t know if I want to call it generational, because that makes me sound old. Mike Hess:                         Not a thing. I already covered that. Craig Ustler:                       Suffice it to say, maybe a younger generation is a little more open minded to the way technology might be completely interwoven into your life. And we have found pushback, corporate tenants and other folks that come from a more privacy-driven mindset. I don’t know if that’s been your experience, but. Mike Hess:                         No, that’s absolutely been my experience, and I think that really goes back to the very beginning of what is a smart city and that that definition changes based on your community and the local culture. I’ve worked on smart city projects in Japan where it’s a little bit different culture and they’re willing to give up a lot of that privacy. In the US, it’s different. Within different communities in the US, it’s different. Mike Hess:                         I mean, I can say as part of our smart city planning process, that’s something we really want to wrap our minds around. There’s really this balance between data privacy and cybersecurity versus transparency and open data. And so we’re going to continue in that planning process to think about our policies around open data and data privacy because it’s a huge issue. Paul Jarley:                         You mentioned that security issue, right? Let me give a plug to my colleagues in engineering at UCF who has probably the best cyber-hacking team in the country. The issues around terrorism, right? Around getting that data I think would be enormous challenges here for people to kind of confront going forward. Paul Jarley:                         So, I’ve got a bunch of real estate professionals here today. What should they know about smart cities? How’s it going to impact how they do business? Craig Ustler:                       So the way we think about it is in Orlando, especially as Mike has more time on the job that there’s essentially going to be in the same way you think about a region that has a transportation master plan and a sustainability master plan, there will be a longterm plan and view about how we think about ourselves as being a smart city. And I think that’s good. That will set the framework for what we expect and then we will have this, and the real estate community will respond, as it usually does, sort of based on what the market decides it wants. Craig Ustler:                       And that to me is the tough part to figure out right now. We’re conflicted. When you build multifamily units or student housing or whatever, the technology intelligence that they hold in their hand is superior, right? You don’t need to really worry so much about programming the air conditioning, you know, they just now sell the air conditioning thing that adds onto your air conditioning unit that you control over your phone. I mean, physically building it into your real estate is probably not as important as just the ability to accommodate a lot of these innovations that come along. Craig Ustler:                       But I do think an overarching commitment to being a smart city, as I said, is important. And I do think real estate developers will ultimately figure out what we think some of the innovative things that make you smart or make the city smarter are. And in Orlando, the good news is, we’re still in that sort of adolescence phase of growing up as a city and we don’t have this mature transit system and we don’t have a mature sort of data analytics around a way a lot of these things could end up. And so, I’m encouraged by that actually, because we kind of get to figure out what we invent our future to be. Craig Ustler:                       Real estate developers are notoriously bad at what I call presumptive arrogance. We decide what we think the market wants and we build it. And this has really been a huge mistake in smart cities. You thought everybody wanted this house that had a control panel. And the next thing you know, ADT came out with it six months later and no one cared. So this is where I feel like the risk in real estate is. In some ways, we need to sit back and figure out what the market tells us we need to be able to adapt to and we need to build in smart locations so that we can put smart people in smart cities, right? But we don’t need to focus too much on the actual kind of thing that it is. And I worry that thing would get outdated quickly anyway. Paul Jarley:                         You can just count the numbers of miles of cable I have in BA1 and BA2 that no longer matter. Craig Ustler:                       That you were told- Paul Jarley:                         As a result of wi-fi, right? Craig Ustler:                       That you were told was the best and the brightest at the time. Paul Jarley:                         Mike, what do you think about that? Mike Hess:                         And this is all experience from my past life. I mean, I’ve seen impacts on real estate all over the place. So it really depends on what you want to focus on. Mike Hess:                         Some of our early smart city projects, in my past job in Japan, what we actually saw were increases in value. So we were building a smart city development and seeing that residents were willing to pay a 25 to 30% premium to live in that development because they wanted the resiliency. They wanted the technology that was helping with public safety. I mean, they wanted those things. Mike Hess:                         On the flip side though, some of the projects we were working on in San Francisco were really geared around affordable housing. How can you use smart city technology to create places where the police and firemen and teachers can actually afford to live in San Francisco? How can we use technology to drive down construction costs? Some of my work in Denver, we really wanted to focus on carbon neutrality. So, it was really partnerships with utility with Denver Airport on really a new business model and new planning process around energy that quite honestly unlocked a carbon neutral neighborhood without it costing any more. So it really depends on what are your goals and then you’ll get the desired impact you want on your real estate. Craig Ustler:                       Yeah, so from a real estate standpoint it’s a good thing that we think about, so it would be smarter to house yourself in less square footage. This is what should happen, as we try to keep addressing affordable housing and you can’t really affect, although you’d like to, how much concrete costs or anything. Ultimately, a smarter generation, a smarter city will house people in an average dwelling size that is not 2,500 square feet. Just sort of by definition, it will be smarter to live more efficiently. Craig Ustler:                       The office world has actually already discovered this, whether you like coworking space or not. And I think this pendulum will shift a little bit back, but coworking space is nothing if it’s not more efficient. I mean, it just is. You’re using real estate for a longer period of time with more people using it. Craig Ustler:                       And so I do think that thought process will extend into residential, and this is starting to be talked about a lot. For a very long time, it was thought that you could invent a better thing to build it out of, like 3-D printing a house or something. That was where technology started in addressing the affordable housing thing. I actually think now the promise is really in the efficiency of a lifestyle you can create through a smart citizen. This is in Asia and everywhere already. Paul Jarley:                         I should buy IKEA stock? Craig Ustler:                       Right, so IKEA … that’s exactly right. The idea of an IKEA unit being smart. Paul Jarley:                         Tiny houses are a thing, apparently. Craig Ustler:                       Yeah, they are a thing. That is what I think you’re going to see in real estate as far as the way we house ourselves in the future, it’s ultimately becoming about less square footage. Paul Jarley:                         So when we reached out to you, you replied that you thought it was a really interesting topic and that there were smart-smart cities and dumb-smart cities. Would you like like to expound upon that a little bit? Craig Ustler:                       Yeah, so I think about that a couple of ways. So, smart-smart cities or what we’re trying to do. They’re intentional and they’re thoughtful in their plan and they actually have a reason to call themselves that. Craig Ustler:                       Dumb-smart cities are really a marketing gimmick. They are in a location that isn’t smart or they don’t have technology that’s smart or they don’t have stakeholders that are committed to being smart, but yet they just call themselves that to give you the false promise that they have one thing like, a guard gate that goes open automatically when your car thing sets it off or something. It’s not even smart in the first place. Right? But because it’s sort of a buzz thing to say that you’re smart, right? Craig Ustler:                       And then I also think smart-smart cities have smart people, right? Dumb- smart cities have done people. You have to retain and attract intellectually superior and knowledge sort of based economy, all this idea. I mean, that’s what the whole world has become about, right? And we’re all in competition for this subset of really, really smart people. And so, that ultimately is the measure of a smart city. Craig Ustler:                       I don’t know if you actually scored how it would shake out the places that we aspire to, but there tends to be a relationship. San Francisco and Seattle and Denver and Austin and Portland and Boston. All these people that show up on these places as being these really smart. It’s not just because the technology is smart, the people are smart, they tend to have the most universities per capita. They have very high education attainment level. Right? Craig Ustler:                       So, that’s sort of what I mean by this idea. You can’t just sort of build the bones of it and still have it. But I do think there is also a self-selecting kind of a thing. I might want to live in a dumb city. I don’t know how smart I am. That’s why I’ve struggled with the term, just even of itself of calling yourself smarter than the other place. But I do think that’s what we’re talking about. I mean, to hear Mayor Dyer say and hear us say, we’re all after this same, I always argue that dumb people need a place to live, too. Craig Ustler:                       But the smart city piece of is, that’s what we’re talking about. At the end of the day, it’s just can we get a place that where we all want to live in would attract the talent and sort of what we need to grow our economy? And be diverse. And you know, if you think about it, which I think is what smart city means, smart means being diverse and having a place for everyone and being inclusive and all these things. Right? Craig Ustler:                       So, that’s what I want us to mean by smart. I don’t want it to be this elitist term that we’re just trying to get everybody from Harvard with an MBA to move to Orlando. That’s not what I think it means, but I think it does get misconstrued sometimes. Mike Hess:                         I was going to say I would agree with that. I mean, it’s a very strange term, smart city. It always has been to me. You may actually see the name start to change. I mean, some players in the industry already are. They’re using connected city or other definitions. It’s a buzzword now, but the buzzword might change. Paul Jarley:                         You can’t be smart city certified, like you can be lead certified. Is that that fair to say? Mike Hess:                         Yeah, not, not quite yet. Paul Jarley:                         Do you think that’ll come? Do you think there’s a set of standards there that might apply? Mike Hess:                         There are always standards that develop. So yeah, I would, I would suspect, yes. Paul Jarley:                         So, the podcast does not end wishy washy. You each have to answer the question in three sentences or less. Are smart cities a thing? Yes or no? Craig? Craig Ustler:                       Yes, smart cities are a thing. I don’t think they’ll be called that when they ultimately become a big thing, though. Paul Jarley:                         Mike? Mike Hess:                         I hope it’s a thing or I’m going to be looking for a new job soon. But no, I think some vendors sort of treat it as a gimmick to try to sell you a shiny object. But I think the whole process of bringing the community together, getting people aligned, understanding what issues we want to solve, I think that’s absolutely a thing. Paul Jarley:                         So, it’s my podcast, so I get to go last. Paul Jarley:                         My dad was a hoarder. One of the things he hoarded was magazines from the 1950s and I remember one that Life did on what life was going to be like in the 1970s and it had a number of predictions in them, and all of them were wrong. Okay? Paul Jarley:                         I think smart cities is going to be a lot like that. What we think smart cities are today probably aren’t going to be a thing, but some version of it, after people interact with it, probably will be a thing. Paul Jarley:                         Thanks for the conversation. Really appreciate it and for all of you participating. Paul Jarley:                         So, what’s your take? Check us out online and share your thoughts at business.ucf.edu/podcast. You can also find extended interviews with our guests and notes from the show. Special thanks to my producer, Josh Miranda, and the whole team at the Office of Outreach & Engagement here at the UCF College of Business, and thank you for listening. Until next time, charge on.    

Some people are born with leadership skills, but that doesn’t necessarily mean others can’t learn. Dr. James T. Brown packs an impressive 16 years of increasingly responsible leadership positions at NASA and later worked as a consultant and trainer in leadership, project management and decision making before becoming a faculty member at the UCF College of Business. Dr. Brown is simply an expert in leadership training and project management. But does teaching someone what makes a leader mean they can become a leader themselves?   Featured Guests: James T. Brown – Lecturer, Integrated Business, UCF College of Business Episode Transcription:   Paul Jarley:                         It’s not uncommon to hear people say, “You can’t teach leadership. Leaders are born, not made.” It’s a fair argument. Quality of leadership isn’t always something that can be measured. And you just can’t expect to become a leader by reading stuff out of a book. After all, you don’t become a chef by studying a cookbook. You have to cook. But that doesn’t mean theory from the classroom can’t be put into practice. Paul Jarley:                         This show is all about separating hype from fundamental change. I’m Paul Jarley, Dean of the College of Business, here at UCF. I’ve got lots of questions. To get answers, I’m talking to people with interesting insights into the future of business. Have you ever wondered, “Is this really a thing?” On to our show. Paul Jarley:                         This episode features one out our Integrated Business faculty. Dr. James T. Brown, is an engineer at heart. He spent more than 15 years at NASA. He later used this experience to offer consulting and training services on leadership, project management, and decision making, to companies both small and large. Every month, we pick one of our faculty members to address a crowd of local business partners and alumni at an event we call The Dean’s Speaker Series. This time, we invited Dr. Brown to talk about what makes a good leader, some of the worst pitfalls he’s ever seen, and how to avoid some of these missteps. Naturally, we pulled out the best parts, and turned it into a podcast. I hope you enjoy. James T. Brown:               Project management is an art. That is why everybody can’t do it. I don’t care how much process you have, doesn’t make a difference. Project management is an art. Just like art, it has principles. Every artist knows what happens when you mix red and yellow. `The principles are there, but the actual application of it is an art. It’s very difficult. James T. Brown:               There’s a little girl. You may have heard of her before. She shows up at the three bears’ house. And she says, “Too hot. Too cold. Too hard. Too soft.” What is she looking for? Crowd:                                 [crosstalk 00:02:06] James T. Brown:               Just right. This is what we’re looking for with process. Just right. Can you give me the just right amount of process? And good process is born out of leadership. You get the leadership right, the process will be right. You can’t take process and be successful in the absence of leadership. James T. Brown:               The reason I wrote a book on program management and not project management is this. Most project failure isn’t caused by the project manager. It’s caused by the people above them. The people above them are the ones that put the project managers in a position that makes it difficult for them to be successful. So a lot of what I talked about today with leadership, it applies to project managers, but it also applies to those people that are above them. James T. Brown:               So this is our, our breakfast menu today. The one that’s underlined there, establish accountability and clear direction. That’s what I’m going to talk about first. So establish accountability and clear direction. I was in the company headquarters. And when I walked through the door I was conducting training for a week. First morning in, huge building. And it was interesting because, they had a special door for the executives. And that door was roped off with a velvet rope, like if you ever went to a nightclub. I nobody here probably goes nightclub, but if you ever went to a nightclub, sometimes they have a velvet rope that that separates things. So they had this velvet rope separated them, and the executives would come in on their side of the velvet rope, get the Wall Street Journal, get on their private elevator, go to the top floor where they had a private dining room. Do you think that they had a feel for what really goes on at the company? James T. Brown:               If you can’t even ride the elevator with the regular workers, odds are you don’t have a feel. They are what I call PowerPoint leaders. They don’t actually know how work is accomplished at the working level, because everybody brings them a presentation. And then when the company gets in trouble, do you know what they do? They go and hire consultants. These leaders are consultants’ dreams. They hire consultants. You know what the consultants do? They go talk to the people at the working level, where they find a problem, and the answer, they put it in a PowerPoint package and take it back up to the people on their private elevator. James T. Brown:               It’s a real simple process, drives a lot of capitalism in America. And this is what frustrates me. My wife, she loves to watch this program called, which is it… Undercover Boss. Undercover Boss, and I’m like, I can’t even watch it because it makes me so angry. That that you are a leader and this is the first time you’ve actually seen how things work in your company. All right, so this whole leading with a feel. That means you really have a feel. This picture I put up here with [inaudible 00:05:14], because that’s how you’re leading, if you don’t have a feel. You have to have a feel, for what is going on. James T. Brown:               There’s a launch director, that launched more space shuttles than anybody, and he’s one of the first people I interviewed for my book. When I was conducting research. And he was famous. He was famous, for getting the shuttle off the ground, and he was famous for a lot of things. But he always said this. That, “I will go out and see what’s going on third shift. I will go to different locations throughout the space center. I will go different to different locations throughout the country and talk to people at the working level.” And then he said this. “There has never been a week, when I went out and talk to people at the working level, that that wasn’t the most valuable part of my week.” The most valuable part. James T. Brown:               So here’s my tip for you. I don’t care if you have 3,000 people working for you, or 50. You can use a random number generator in Excel, you put all the people in there. And every day, somebody’s name is going to pop up at the top, at random. You go talk to them. You don’t have to necessarily even ask them about their work. You can just go and talk to them. Because when you talk to people, you learned a lot. Even if you’re not talking about work. You see how frazzled they are, how un-frazzled they are, or you see a lot of things and then you will have feel. James T. Brown:               The next thing I’m going to talk about, slow it down. Some people think the leader’s role is to expedite, expedite, expedite. My opinion is, the leader’s role is really to slow it down. Everybody’s trying to get it done. That same leader I was talking about, famous for getting the show off the ground. The launch team would say this. He was so famous for doing it. If it was a cloudy day. This is what they would say, “Don’t worry. [inaudible 00:07:04] will find a hole in the clouds.” He was famous for managing the cut, the countdown clock. Because in Florida, you know we got clouds, a windows sun, clouds. Cloudy day, window of sun, off goes the space shuttle. Done. James T. Brown:               When I asked him about that. This was his response. He says, “People think my role as launch director is to get the show off the ground. Since my role is launch director, my role as the leader, is to stop the launch. Everybody has launch fever. Everybody’s trying to find a way to make it work. I have to make sure that is really ready to go.” And he said, “Even the astronauts will tell me. They’ve been on their back for four hours. They’ve been training for this mission for a year. They’ve been wanting to go to space their entire life. When you asked us if we’re go, we’re always going to say go. We depend on you stop.” And so when you’re the high level leader, you have to be that person to make sure insanity doesn’t take place. James T. Brown:               But if you’re always pushing, pushing, pushing. Then you end up creating insanity. When you cross 90% capacity, you end up getting less work done over the course of a year. If you cross 90% capacity, you get less work done over the course of a year. Because what you’ve done now is, you created a whole lot of waiting time and interference in the system. In other words, your work environment’s characterized by a lot of firefighting. Starting and stopping, starting and stopping, starting and stopping. Oh, we’re working on this? Now, oh wait, this happened over here, we got a vector over here. That’s how your work environment’s characterize. And this is true for any system. James T. Brown:               If you don’t believe it, I’ll say it this way. Have you ever been on I-4 at a certain time of day? Once that interstate gets certain, I mean, gets a number of cars on it. Then it’s going to be starting and stop. And if somebody slams on their brakes, it doesn’t even have to be an accident, they can create a two mile backup. Just by slamming on the brakes. And sometimes that happens in the work environment. Somebody slams on the brakes with an incident, and then we have this whole backup. If you still don’t believe me, if you have a computer system and your memory gets above 90% full, or your hard drive gets above 90% full, what happens? You look at the hourglass. James T. Brown:               So the role of the leader here is to make sure. Are we like at 80, 85% capacity? give us some margin, some buffer, so that we can handle things that come up? Because everything always goes, we produce more work when things go smooth. And sometimes people ask me, can you measure capacity? In a lot of environments, you may be able to, but in most environments not. But we certainly know when things aren’t going smooth. We certainly know when we’re dominated by firefighting. We certainly know when we’re going, starting and stopping, starting and stopping. And if that’s the case, we either got to cut back on work, or increase capacity. Because nothing comes for free. And this is where the leader has to step in. This is a leadership role. James T. Brown:               That deals with number three, don’t ask for the impossible. I’m always astounded by leaders that, [inaudible 00:10:17] something, this has to happen by May 31. No clue about what resources are available. They think because they are the VP, the CIO, the director, whatever their title is. If they just name it, then it will happen. And then people are jumping through hoops to try to do it. They don’t want to do it. No one will listen. James T. Brown:               I was dealing with a company. I can’t say the name because, since I had a contract with them at the time, but this was written up in the Wall Street Journal. So it is public knowledge. They took a 2 billion with a B dollar write off on a project. Billion with a B. Some of the articles you can read about it today say 4 billion dollar loss. And here was the problem. And a lot of you I guarantee have their service or product in your product or pocket right now. The problem was the technology didn’t work. The technology didn’t work. And what happened when a technical person said, “Excuse me. This technology doesn’t work.” They took out the machine gun, gunned them down. After they see three people get gunned down, the people just put their head down. And they put their head down all the way to a 2 billion dollar loss. The company would hold these rallies and say, and I’m going to call the Project X-Y-Z, “If you weren’t on the X-Y-Z train, you’re not part of this company.” They called that motivation. And that’s the way they did it, and this was the result. James T. Brown:               Then finally on this one, communicate through prioritization. This is how we communicate, from a project point of view. From a leadership point of view, I would hold you in dereliction of duty if you can’t show me your top 10 issues in priority order. Project managers that work for me, I want to see their risk in priority order, the requirements in priority order, the stakeholders in priority order. And priority order drives communication. It drives it, because I can’t say, A is more important than B, or B is more important than C, unless I understand A and B. If I’m sitting down with the people that work for me, we can’t say this is more important than that, unless we all have the same understanding. So it drives me. So if I worked in your organization, I would expect to see all… You should show me a list of all the projects in priority order, so I know what’s most important. And let me give you the sheer sign of a lack of, if you want to identify somebody that’s not a leader, I’m gonna give you a test right now. James T. Brown:               If they say everything is top priority, they’re not a leader. Leaders put things priority order. If they say everything is top priority, in your mind, this is what I want you to think. Slacker. Unworthy of the check they’re taken from the company. Don’t say it out loud though. That is what I want you to think because, I can use third grade math and prove to you that that’s fictional. If everything is top priority, that means everything is equal priority, and if everything is equal priority, the statement everything is top priority is no different than a statement, everything is bottom priority. It’s the same thing. How would you feel, if you show up for work in a new job and they say, “At our company, everything is bottom priority. You’re my bottom priority, too.” James T. Brown:               So, if you’ve ever said everything is top priority, I forgive you. But from this day forward, if you say that, I want you to toss and turn at night. I want your significant other to say, “What’s wrong dear?” And you say, “Well, I said everything is top priority today. An I know, I know that’s not true.” James T. Brown:               Create an environment that does not create mediocrity. I’ll do that, then I will go in investing in developing people in teams. When I was in high school, I rode the bus. Riding the bus in high school it’s not cool. Not cool at all, but I rode the bus. And one day on the bus, a fight broke out. And the fight was between a real hoodlum. Like a real hoodlum, okay? And a play hoodlum. Now, a play hoodlum is somebody that tries to talk like a hoodlum, act like a hoodlum. But, when they get off the bus, they go to a 3,000 square foot house, and their father is the, you know. And so they’re just acting like a hoodlum. James T. Brown:               So the real hoodlum and a play hoodlum were fighting. And somebody actually grabbed the real hoodlum. And I said, “Wow, that’s impressive. If he can grab the real hoodlum, I can certainly grab the play hoodlum.” So I grabbed the play hoodlum, and I’m holding them back. And they’re holding the real hoodlum back. And they’re young men, 17 years old, full of testosterone, saying what they want to do to each other. And the play hoodlum is talking so good about what he wants to do this guy, that I start to think, “If I don’t let him go and finish this is, it’s going to affect him the rest of his life.” So I started easing off his biceps, and he just cut me a look and said, “Whatever you do, don’t let me go.” He was just talking. He was just, he didn’t really want to do it. James T. Brown:               So when I say walk the talk here, in a lot of organizations you have leaders to say, “Quality is our first priority. Customer service is our first priority.” But what do they do, when you’re under pressure? Do they say ship it out the door anyway? Find a way to make it work. In other words, the people that work in an organization, or the people that support your projects. They see what you really do. They see what your actions are. You can have, and this cracks me up when I go to companies where they have posters on the wall everywhere about this and that, and this. But their culture doesn’t reflect the poster. I don’t care how many posters you have, people judge you by your actions. How you handle the situations. When you say, “We’re going to take a hit here, because we can’t do it. We’re going to tell the customer this, this, and this, and we’re going to take the hit.” James T. Brown:               So also here, set standards and boundaries on what is acceptable. You know we should know what is acceptable here. Like when I’m a project manager, I make one thing very clear. If I ever catch you working outside of the control process, doing work that hasn’t been approved, that is like my number one no-no. I will… My father was a marine so that’s when I say, I will go in Marine Corps mode on that one. So everybody knows that’s a boundary. So, we have to establish whatever these boundaries are, and people know what is acceptable. James T. Brown:               A sense of pride. We should also have that. That we have to create pride. We want to be proud of our organization, proud of our company. Sometimes people mistake pride and arrogance. They think that because a certain company does so well and whatever, and the people who might… I want to call their name, but they’re a local company, and I’ll get in trouble. But I work for this company. And they have an attitude about it. And I’m saying there’s nothing wrong with that attitude. If you look at people to do things at a very high level, they have pride in it, and they have a certain degree of confidence in it. And when we’re the leader, we want to instill that. James T. Brown:               Another thing that I would say that this is, and this is in, if you’ve heard of the restaurant Shake Shack, the author, I mean that restaurant owner. He has a book out there. I’m not saying to read the book, but this is an interesting point from it. He says there’s three kinds of employees. You have overwhelmers. By the way, I can’t spell and my boss is here. So I hate to say this, but you have overwhelmers. You have underwhelmers. And then you just have whelmers. He says, the most dangerous employee in an organization is not the underwhelmer, because you will get rid of them. The most dangerous employee in the organization is the whelmer. The person that says, “Average is good enough here.” James T. Brown:               When you let that person stay, that is when things happen badly. Because then you have a whole culture that says, “Average is okay here.” And you have to get rid of them. I speak to a lot of small businesses sometime, and this is what they will say. “I had a person that was average, and when I got rid of them, I was surprised at 14 people came by my office and told me they’re so glad that we got, that I got rid of that person.” Don’t tolerate mediocrity. Do not tolerate, because you’re… I always looked at it like this. It’s my role to protect the entire team organization. And when I let that mediocrity exists, I’m not doing that. James T. Brown:               In other words, yes, that person may have this or that, but what can you say? Management measure the fundamentals, we get away from the fundamentals a lot. Here’s the thing about leadership and project management. There’s really nothing new in it. Been doing it, thousands of years. Nothing new. People put it in new packages, but it’s still the same thing. But the question is, do we do it? A lot of times when I conduct training or anything like that, people come to say this. “You really didn’t say anything new, but it reminded me of what I didn’t do. It reminded me of what I used to do.” And so all I’m saying is, pay attention to the fundamentals. Great, great athletic teams, they practice the fundamentals. Blocking and tackling if it’s football. All of that great musicians practice the fundamentals. So this is something we have to do in the business world also. James T. Brown:               So we’re going to jump now to invest in developing people in teams. It is not enough to get all the work on your plate done in the next year. In other words, whatever you had outlined for the next year to get done. If that year walks down the road, and we’re a year from now, we got everything done. That’s not enough. I have a year from now, not only do I have to get everything done, but I have to grow the people along the way. You should be much more capable as an organization, a year from now, than you are today. Because you consciously chose to grow the people, as you executed. And it dawned on me once, when I was watching this high level leader that I was working with, and it finally clicked in my head as I was watching him that, he is actually teaching in this meeting. It’s not just a meeting. He is teaching. And this is when you’re the leader, or you’re the project manager. You, whoever, every time you have a meeting, it’s not just a window where you’re going to go accomplish the agenda. You have to think about, what am I teaching in this meeting? James T. Brown:               And so I develop people all along the way, because sometimes I hear people that are leaders in companies or an organization say, make this statement. “We don’t have anybody we can promote to this position. Nobody at our company is capable of doing this.” And I want to say, “Whose fault is that? Whose fault is that, that you haven’t developed people along the way?” This is one of the things we have to do, but sometimes we’re in such a hurry to get things done, that we don’t develop people as we go. So this is one of the things that we have to do consciously. Consciously we have a strategy for it. Team building should be part of the budget and plan. In other words, I have a budget for team building. I’m going to do activities. James T. Brown:               When I worked for NASA, if you saw the Apollo 13 meeting. That flight director, Jim Krantz, was director of mission operations. We were extremely busy. This is when they said, “We’re saying the shuttle’s going to going to fly 78 times a year.” We were extremely busy, and certain things about him impressed me as a leader. One was this. Every new employee in his organization, you would have to come and brief him a year after being in the organization. He would take his time out, to hear what you did your first year in his organization. The other thing he did, is he would personally come and brief all new employee groups, once a quarter. So anybody that was hired in his organization, once a quarter he would come in and brief. And he would talk to you for hours about his opinion of manned spaceflight, and the cost required, and what it takes to be successful, and all of that. It was amazing. But, as busy as we were, every year we also had something called the Mission Operations Directorate Olympics. Where the organizations competed against each other. James T. Brown:               So every section in the organization competed in each other in Olympic events. Like coin toss, three legged race, basketball, softball, all of these events, we would compete with each other over the weekend. And to tell you what kind of guy he was, one year he either separated his shoulder or elbow diving for the finish line in the sack race. That’s what kind of individual was. But, and the winner got a trophy that was a horse. Half of the horse. The winner got the first half of the horse. The losing organization, got the back half of the horse. And nobody wanted to lose. Your leader didn’t want to lose, because the loser had to run the Olympics that next year. So it was really intense competition, because you do not want to have to run it. But all I’m saying is, as busy as we were, he had structure team building. If you don’t have time for team building, you don’t have time for success. I’ll say it that way. You have to build it in you have to block it in. James T. Brown:               Also, you have to humanize people. Sometimes we look at people and say, “That’s the IT guy.” Are they the IT guy, or do they have a name? Do you look at people as a representative of their organization? In other words, I’ll say it this way. Do you see them as human being first, IT guy second. Or IT guy first, who may or may not be human being. I see a lot of star stuff in there, but how do I see them? So this is one of the things that I have to make sure that I deal with. I’m always trying to, the more I can get people to look at each other in the eye and see them as human beings, the more problems I prevent from happening. So it’s one of those things. James T. Brown:               Accelerate the development of high achievers. A lot of high level, NASA leaders got there because they have a program that has a formal name now. But it had a very politically incorrect name then. Now you’re like, they call it, “You’re the center director’s technical intern.” When I worked there, it was the Bubba Program. Bubba was, “Hey Bubba, do this. Hey Bubba, do that.” So once you became the center director’s technical intern, then at a very low level, you went everywhere the center director went for six months to 18 months. You heard every sensitive thing the center director her for six months to 18 months. And because of that, somebody that had a perspective on NASA like this. After 18 months, has a perspective like this. James T. Brown:               And often, they can now solve problems across organizational boundaries, because they develop relationships with all the other senior executives. And this is one of the things a lot of organizations struggle with. How do we solve that problem that causes four organizational boundaries, with all the competing stakeholders. Now you’ve created people in your system that can do that. And so it’s been very successful. Multiple summon directors came out of this. Multiple high level leaders came out of this process. And then also sometimes identifies people that you know are never going to get to that level. But it’s good because, one of the things high level leaders always have to do, or leaders have to do is, how do I take what’s the knowledge and experience in my head, and how do I efficiently transfer it to others. So that I don’t become the point of contact bottleneck. James T. Brown:               Handle mistakes positively. There was a there was a high level leader in NASA that I respected him so much that I stalked him. In other words, whenever there was a meeting, I would try to sit as close to him as possible, so I could hear what he would whisper to the person sitting next to him. And so he would be, he was one of the first people I interviewed for my book. And one of the things he told me was this, which was the first bullet. He said, “James.” He said, “Your best people, are always going to make your biggest mistakes. Your best people, are always going to make your biggest mistakes.” And it’s kind of counterintuitive you think my best people are going to make. But then he follows with this. He says, “Your best people are doing the most work. They’re doing the most complicated work. They are the ones trying to make it happen.” He said, “So when that person makes a mistake, before pound them in the ground, or before we criticize them. This is what we have to say. What did we do as leaders to put this good person in a position that they made a mistake?” James T. Brown:               That’s the first question you asked when the mistake is made. What did we do as leaders that put this good person in this position, that they made this mistake. Because often, we bear the majority of the blame. We know the person is good. And they made this mistake. Are we working them too hard, or were things not set? James T. Brown:               The second one is let people fail safely so they can grow. There’s an insurance company I deal with in the Midwest. If you make a mistake there… And I’ll say this. The only reason that they’re in business is that they can arbitrarily raise rates. Because nobody at that organization will make a decision. They all wait until the circumstances decide, because if you make a bad decision you’re punished. Or you have to let people make a mistake. And when I tell, when I have project managers that work for me, or this is what I tell project managers. If you make three out of four decisions correctly, I consider that great performance. That’s what I tell project managers. I give them permission to make a mistake. Because what I don’t want them doing is waiting, and waiting, and waiting, trying to be perfect. But I say this, when you make a mistake, identify it early. Own it, don’t pass it off on somebody else. Change it. James T. Brown:               I want to be an environment where people make a decision. “Oh, that’s not.” Then once you see is not the correct decision, you own it. You don’t say, “Well, if this person over there hadn’t told me this.” No, you own it and change it. Because otherwise, you’re going to be waiting, and waiting, and waiting, and waiting. I give them permission to make a mistake. And another thing is, you can’t develop people if they don’t make mistakes. They can’t grow if they don’t make mistakes. So I like to make aggressive mistakes. I want to fail with the sword of aggressiveness, in my hand. I don’t want to die behind the shield of a passiveness with 1,000 micro cuts, oozing blood. So I’m going to go out and be very aggressive. Especially in project management. It’s one of the things that I have to do. James T. Brown:               And this last one is huge. Calculated failure points. Every organization should have calculated failure points. In this room, somewhere that, we have lights, we have electricity. Somewhere in this building is a breaker box, that if there’s a short in the wire something pops. It is poor leadership, if something in your organization breaks, and it breaks where you did not want it to. You’re always going to have failures on occasion, but those failures should always occur where you chose for them to occur. James T. Brown:               In other words, I’ve thought about it ahead of time. In other words, if I have people that are trying to juggle 12 plates. I tell them, “Okay, I know you’re trying to juggle 12 plates. If you have to drop one, drop a blue one or green one. Never drop a red one.” I give them permission in direction or where I want them to make the mistake. Meaning if I have 16 customers, four of those customers might generate 80% of my revenue. I never want to have anything happen with any of those four customers. But that customer who’s only two or 3% of my revenue, if we’re going to make a mistake, we’re going to make it with that customer. In other words, I not only defined that, I communicate that, so people know where they can make a mistake. So I think about this. This requires a thought process to say, what are our calculated failure points? Where are we choosing not to be good? What are our calculated failure points? Paul Jarley:                         Is leadership really a thing? Well of course it is. Can it be taught? Frankly, I’m not so sure. What I do know, is that followers make leaders. People follow someone because they trust them. They trust them, because they’ve learned that the leader does what they say they’re going to do, and delivers on a shared vision. If you want to be a leader, you should understand that you need those followers more than they need you. Act accordingly. Paul Jarley:                         So what’s your take? Check us out online, and share your thoughts at business.ucf.edu/podcast. You can also find extended interviews with our guests, and notes from the show. Special thanks to my producer Josh Miranda, and the whole team at the Office of Outreach & Engagement here at the UCF College of Business. And thank you for listening. Until next time, charge on.  

Starting a business with no money or funding could be easier than you think. Jesse Wolfe, founder and CEO of O’Dang Hummus, got his start at UCF with some big ideas and little capital. Several years later, he’s CEO of a multi-million dollar business and has turned the salad dressing industry on its head. But one success story does not mean everyone could do it…   Featured Guests: Jesse Wolfe – Founder / President, O’Dang Hummus Cameron Ford – Director, UCF Center for Entrepreneurial Leadership Michael Pape – Dr. Phillips Entrepreneur in Residence; Lecturer, Management Donna Mackenzie – Executive Director, StarterStudio Carol Ann Dykes Logue – Site Manager, UCF Business Incubator Episode Transcription:   Voice:                                “If you build it, he will come.” Terence Mann:                “He will come, Ray. He will most definitely come.” Paul Jarley:                       That’s my favorite line from Field of Dreams. But, what if you can’t build it? Jesse Wolfe:                     It came out to a $700,000, almost a million dollar, order. And they needed them to be about $10 a cart and I could not figure out how to get them below $25 a cart. Paul Jarley:                       Or, what if they don’t come? Cameron Ford:                The Google Glass, people started using it out in public and stuff like that, and quickly were scorned as being what were described as Glass-holes. My understanding is they pulled from the market. Paul Jarley:                       Lean start up offers a different approach, but is it really a thing? Or, is it just academics hyping the scientific method? Paul Jarley:                       This show is all about separating hype from fundamental change. I’m Paul Jarley, Dean of the College of Business here at UCF. I’ve got lots of questions. To get answers, I’m talking to people with interesting insights into the future of business. Have you ever wondered, is this really a thing? Onto our show. Paul Jarley:                       This is how significant businesses started back in the day. Michael Pape:                 What we were, I’ll just say, required to do as an entrepreneur with VCs with trying to get, maybe, economic development funds. Paul Jarley:                       Yup. Michael Pape:                 And this was in the biotech space. Paul Jarley:                       That’s Dr. Michael Pape, Professor of Practice here in the College of Business, and Director of our UpStarts program. Michael Pape:                 So it was a tech-oriented business that I’ve been involved in, was write the business plan, and I have sat down, myself and with my teams, of writing the 40 to 60 page business plan. The fat startup, if I may define it that way, had you do that. Venture capitalists would request it, and they would want to make sure that you saw the plan from beginning to end. Paul Jarley:                       Then a funny thing happened starting in the early 1990s. Universities started to develop entrepreneurship programs. They did this partly to serve their economic development missions, partly because donors loved to give money to this cause and partly because more and more students became interested in entrepreneurship as a career path. Paul Jarley:                       In the early 1990s, ideals spun out of Stanford, with an emphasis on design thinking. Another decade passed and Berkeley started developing what has come to be known as lean start up. It had a coming out party in 2011, with the publication of Eric Riles book by the same name. But, are universities and business schools really the place to start businesses? Paul Jarley:                       I had my doubts. We excel at getting rule followers great jobs in companies who are looking for functional talent. We really aren’t geared up to help people who want to color outside the lines, pursue their crazy dreams, even when people say they’re wrong. That said, a quarter of my students say they want to start a business, and students seem to love the lean startup methodology. Cameron Ford, Director of our Center for Entrepreneurial Leadership, has a pretty obvious reason why. Cameron Ford:                Our students love the lean approach because, of course, they don’t have any resources. So- Paul Jarley:                       Simply put, they’re broke. But what exactly is lean startup, and what are its challenges? Jesse Wolfe:                     That’s how I started my business. Paul Jarley:                       We’re going to take you on a journey with this guy. Jesse Wolfe:                     Lean startup, bootstrapping 101. That’s where great businesses, in my opinion, come from because people that start off with too much funding usually have an issue staying on course. When your back’s against the wall is when I feel you think the fastest, the brightest, the quickest and you become the most resourceful. When you have too much money you tend to get lackadaisical in my opinion. Paul Jarley:                       That, my friends, is Jesse Wolfe, CEO and founder of O’Dang Hummus, and quite frankly a soundbite machine. Jesse Wolfe:                     We run a very successful, thriving business and people are like, “Oh where’s the Lamborghini?”. I’m like, “Someone else’s hands because I’m dumping all my money back into the business”. Paul Jarley:                       Now let’s follow Jesse’s startup story. A startup isn’t the same as a company. Back to Cameron Ford. Cameron Ford:                It’s not a miniature version of a company, it’s actually a vehicle, for remaining humble, viewing all of your ideas as hypotheses and going out and collecting data to validate or invalidate these things and move forward- Paul Jarley:                       It’s a product development process more than a- Cameron Ford:                I would say it’s more of an uncertainty reduction process. Because it’s not just about the product, it’s also about relationships. So it’s kinda three elements to building a company. You gotta have conceptual kinda stuff put together, you’ve gotta have social stuff put together, people right and you actually have to invest material resources. Paul Jarley:                       Interestingly, Jesse got started in exactly the way Mike Pape described except he didn’t have investors. Jesse Wolfe:                     I had a business planning writing class with professor Michael O’Donnell. He told us we had to come up with a business plan idea and I didn’t want to be a part of a team that wrote for another bar concept. So, I had this idea after I had my wisdom teeth pulled out for a Ben and Jerry’s style Hummus company. And when I started writing the business plan for it, I realized there was this massive gap in that market. It was almost billion dollar category and there was one big contender really monopolizing it. And it was really primed for competition to come in. Paul Jarley:                       Jesse had a plan but no product. So he got busy with the help of his grandmother. Jesse Wolfe:                     I actually started O’Dang Hummus with about a hundred and fifty bucks. My grandmother gave me a food processor, so that was the freebie. And the rest of it was honestly just ingredients and some labels from like a little local printer that hooked me up. Paul Jarley:                       Jesse had created what we call a minimum viable product or MVP. Cameron Ford says, it’s really important to have a prototype. Cameron Ford:                Because you give them something tangible, I always like to tell people a picture’s worth a thousand words. A prototype is worth a thousand pictures. You get something that people can literally see and put their hands on that’s very tactile. That often will enhance the conversation and imagining process for a lot. Paul Jarley:                       You could do more than just touch Jesse’s prototype. You could taste it. And it was yummy. Jesse Wolfe:                     And that was the basis you know, it got me in front of people getting a taste testing and samples. And then when it came time to really launch the product and start selling it, I entered the UCF Business competition called ‘The Joust’. Paul Jarley:                       Rather than seek out a network of advisors that could help Jess grow his business, he went straight for the financial kill. In retrospect Jesse realizes this may have been the biggest he made. Jesse Wolfe:                     Not getting more people around me quicker in that space was a bit of a hindrance. Donna Mackenzie:         I think starting a new business is sort of like waiting into the ocean with waves crashing around you and birds pulling you this way and that. Paul Jarley:                       Donna Mackenzie is executive director of Starter Studio. She thinks Jesse waited way too long. Paul Jarley:                       How early does that need to start? That mentorship and guidance. Donna Mackenzie:         Day one. Paul Jarley:                       Jesse didn’t win ‘The Joust’ and the big money that came with it. In fact, he finished third. Jesse Wolfe:                     I took third place in that. And I’m proud of that. Paul Jarley:                       That’s always the path to success in ‘The Joust’. Always finishing third! Jesse Wolfe:                     Third place is the winning spot. It’s not first, it’s not second, it’s third. Paul Jarley:                       The money is in third. Jesse Wolfe:                     The money’s in the third. Yup. Paul Jarley:                       You lost to women who wanted to pee in a cup. Jesse Wolfe:                     Yeah, that’s [crosstalk 00:06:57] I lost to a female urination cup so that’s one of my greatest prides thus far at UCF. But yeah, I took that prize money it was about four thousand dollars. And again, I launched now our multi-million dollar business with $4,150. Paul Jarley:                       But in fairness of that day, because I remember that day really well. Jesse Wolfe:                     So do I. Paul Jarley:                       I can imagine you do. I don’t think anybody there believed you didn’t have a killer product. I think they thought you couldn’t make any money at it. Jesse Wolfe:                     Yeah, agreed. Paul Jarley:                       Understand that Jesse isn’t the kind of guy who takes no for an answer. He decided to double down instead. Next stop, the real shark tank. Jesse Wolfe:                     Hello Sharks! My name is Jesse Wolfe. I’m a UCF student from Orlando, Florida and my company is O’Dang Hummus. Today we’re seeking $50,000 for 10% equity stake in my hummus empire. Paul Jarley:                       Jesse got his offer from the sharks but they took way too long with their due diligence. In the meantime, Publix came knocking. What’s surprising here, is they didn’t want Jesse’s traditional hummus, they wanted his hummus based salad dressing. So he signed a deal, found a packager and had to scale up production without sacrificing quality. Jesse Wolfe:                     We’re doing truckloads of chickpeas at a time right now but it’s the same exact quality and consistency. As a matter of fact, we’re still using- Paul Jarley:                       As what came out of your blender right? That’s the tough part right? Jesse Wolfe:                     Same blender. The toughest thing I’ve had to bridge. Paul Jarley:                       Problem was, Publix didn’t know what to do with it. Paul Jarley:                       They didn’t know where to put that product. Jesse Wolfe:                     Exactly. Exactly. Paul Jarley:                       So where I would always find it is near the deli, kind of by where the rest of the hummus was but not really. Jesse Wolfe:                     Not really it was by like, the gourmet mustards and stuff. I’m like alright this is random. Paul Jarley:                       And I knew right away, I thought “Oh that’s a problem.” Jesse Wolfe:                     Yeah it was a huge problem. And we called it a sauce. We let people convince us to call it a sauce. It was so jacked up. Yeah, and again but it was such a good learning lesson because we re pivoted to what, I mean it’s always been a dressing. So we relabeled it a dressing, we fixed the formulation, we listened to our fans and we delivered a product that’s bar none phenomenal. Paul Jarley:                       Since that time, Jesse has had more than his fair share of struggles. Jesse Wolfe:                     Never giving up. There’s so many times that I look back and thought we were dead and I stepped one more step. Paul Jarley:                       He’s fixed his mentoring deficiencies. Jesse Wolfe:                     But where I’m at today, I have very strategic, very specific mentors that are in the food space, that know packaging, that know consumer product goods. These are people that are really helping me thrive in my space. Not all mentors are created equal. Paul Jarley:                       And he doesn’t panic the way that he used to. Jesse Wolfe:                     Don’t burn everything down around me, you know trying to freak out. I just step back and I go “Here it is.” Right, we have another problem. Instead of panicking and pointing fingers at whose fault it is, what’s the solution. Paul Jarley:                       And he is definitely a man who knows his value proposition. Listen to his pitch to Costco. Jesse Wolfe:                     So, you know what I did is I walked in and I put a plate of salad down. A really beautiful salad. And I said, “Here’s one salad.” and I put a second plate down, I said “Here’s another salad.” And I took a bottle of canola oil that you cook with and I poured it all over top of this lettuce and I took a bottle of water and I poured it all over top of this lettuce. And then I took about a cup and a half of sugar and I poured it on top that salad. And then I took mine and I put chickpeas, beautiful fresh cooked chickpeas, I put fresh squeezed lemon juice on it, put it on the side and I put beautiful extra-virgin olive oil. And I put a fork right between the two plates. And I said, “Now, I want to ask you which salad would you like to eat?” Jesse Wolfe:                     Our food system in America is broken. We’re the only salad dressing in the United States to gain national distribution being 100% plant based. Priced completely competitive to the big guys. We’re not a $10 salad dressing. We’re in Wal-Mart at $3.79. Paul Jarley:                       No doubt about it, Jesse is a wonderful UCF success story. But is he typical? Does lean start up work everywhere? Or do other kinds of companies face other kinds of challenges? Carol Ann Dykes Logue: There are companies that failing fast is better for them, I say sometimes it is. Paul Jarley:                       Carol Ann Dykes Logue is site manager for the UCF incubator program. She stresses the difficulty a lot of the high tech companies have in implementing the lean start up approach. Carol Ann Dykes Logue: It’s very difficult to apply the lean start up methodology many times. I’m working with very leading edge technology and innovation companies where the first question really is, “Can we make the technology work?” Paul Jarley:                       That takes money, sometimes lots of it. Then there’s the challenge of getting technologically oriented minds to focus on the value added to the customer. Here’s a recent conversation with one of her clients. Carol Ann Dykes Logue: And I kept asking him, “Tell me what you think. What’s the benefit of this technology that you are in the process of developing?” Throw something at me that was really a technical capability, I would come back to “Why should I care about that? How’s it gonna help me?” Tell me how it’s gonna help me. Carol Ann Dykes Logue: A lot of times I use analogies and turn the tables on them and ask them “Alright, share with me a recent buying experience that you’ve had. Tell me what went through your head.” And they can pretty clearly tell you that and then they go, “Ohhhh, I see now.” Yeah I didn’t really care how it does what it does necessarily, I care that it does what I need done. Paul Jarley:                       For students, finding the right people to talk to can be challenging when they wanna validate their ideas. Back to Cameron Ford. Cameron Ford:                Well I think in the early part of the process we’re working on with most students. I think for them it’s very intimidating to think about going out and talking to a bunch of people about their idea. They just don’t know that many people that can connect them to the kinda folks that it would be relevant to speak to. It’s one thing if they’re talking about “Hey I’d like to open up a food truck that’ll pull up here on campus and serve sandwiches to students.” Well then you can go around campus and talk to students right, that’s who you’re trying to sell it to. But if you’re trying to do something that might help the elderly or something like that, you need to go out and talk to 50 or 60 people. Where are you gonna find those folks? How are you gonna conduct those interviews? That part of the process can be pretty daunting if you’re a student trying to go and really do the lean start up process really the way it’s supposed to be done. Paul Jarley:                       Even when you find the right people to talk to, Donna Mackenzie says that the discovery process can lead to conflicting information. And it can be hard to sort out without experienced mentors. Donna Mackenzie:         Oh that’s the tricky part. You know, you get so much feedback and it’s sometimes hard to discern whether this is the right direction or that’s the right direction. Just giving them the tools but not giving them the guidance and the mentorship to kind of sort through all of that. I think that’s really where you get that analysis by paralysis and it’s hard to get unstuck from there. Paul Jarley:                       And if you skip this step, things can get ugly. Cameron Ford:                Don’t start organizing your resources and your people before you get your story straight. Because if you do that, you’re going to cause a lot of harm. A lot of things aren’t gonna work out, you’re gonna burn a lot of bridges. Paul Jarley:                       People lose confidence in you. Cameron Ford:                Right. Paul Jarley:                       And according to Mike Pape, there’s a lot more to creating a company than the lean start up process contemplates. Michael Pape:                 An investor’s going to ask you, you want $400,000 what are you gonna spend that on? Well, you have to justify the use of funds and- Paul Jarley:                       Ping pong tables probably aren’t it. Michael Pape:                 Yeah, aren’t gonna be it right. Exactly. And a big salary is not going to go [crosstalk 00:14:42] Yeah there’s something to that. Paul Jarley:                       So, you need to have a strong, long term financial plan. Michael Pape:                 So with financial modeling the first thing you need to do is you have to establish what are and what I call and try to convey, value generating milestones. Not just milestones but value generating. To accomplish each of those milestones and they’d be value generating because they can create an influction let’s say. The value for the company, they can move the needle per say. Paul Jarley:                       The hockey stick. Michael Pape:                 The hockey stick. But then there’s a cost associated with hitting each of those milestones. And the investor wants to know how much it will cost to hit that milestone which is the basis for your budget. Paul Jarley:                       Right. Michael Pape:                 Which you then transfer to a spreadsheet which is your pro form a budget which is your financial model. And if that cash balance gets below zero and is red, I ask do you have a company? Paul Jarley:                       No. Paul Jarley:                       It’s time to call the question. “Is lean start up really a thing?” from Donna Mackenzie. Donna Mackenzie:         Yes. It’s really a thing and I think it’s really a thing because it gives you a framework from which to build out of uncertainty because building a business is full of uncertainty. Paul Jarley:                       From Michael Pape. Michael Pape:                 I think lean start up is a thing where you can be nimble and adjust to the pace of change. Paul Jarley:                       From Cameron Ford. Cameron Ford:                Yes, it’s a thing. It’s made people understand how to evolve their ideas into fitness. Paul Jarley:                       From Carol Ann Dykes Logue. Carol Ann Dykes Logue: Sometimes it is. There are companies that failing fast is better for them. Paul Jarley:                       From that hummus king, Jesse Wolfe. Jesse Wolfe:                     100% yes I do. Paul Jarley:                       It’s my podcast, so I get to go last. Reducing uncertainty by employing hypothesis testing in the scientific method is hugely appealing to academics. It’s how we think. But any good, thoughtful researcher knows the limits of such work. Especially when you’re trying to understand how people behave. It’s why having experienced mentors is so important in start ups. It can augment science with experience and increase the likelihood of success. If I were looking for a school to help me start a business, I would want to know much more about their network of experienced mentors then their grasp of frameworks like lean start up. Paul Jarley:                       Management research can be kind of trendy. And something will eventually replace lean start up as the darling theory of the day. But building a strong network of advisors that can help navigate you through uncertainty is never going to go out of style. What do you think? Check us out online and share your thoughts at business.ucf.edu/podcast. You can also find extensive interviews with our guests and notes from the show. Paul Jarley:        Special thanks to my producer, Josh Miranda. And the whole team at the office of Outreach and Engagement here at UCF College of Business. And thank you for listening. Until next time, charge on.

Featured Guests: Sean Snaith – Director, UCF Instiute for Economic Competitiveness Don Unser – Retail President Anand Krishnamoorthy – Associate Professor of Marketing Jahir Hernandez – Student, Former Old Navy employee Tina Hand – Dean’s Assistant Jessica Dourney – Assistant Director of Outreach and Engagement Episode Transcription:   Paul Jarley:                         Black Friday used to sound like this. Jahir Hernandez:             They come in waves and I remember specifically that the check out line was all the way to the back of the store and you couldn’t get from one side of the store to the other because that line was so massive. Paul Jarley:                         And now … News Anchor:                    News Center 6 team’s Joshua Short is inside the UP Mall where the doors will be opening in just under an hour from now. Josh how are things going. News Reporter:                Look we were expecting a big crowd. We don’t have the big crowd that we expected. I got up at three o’clock excited to do my first ever black Friday and ain’t nobody here. I am literally upset right now. I don’t know why people did not wake up. Paul Jarley:                         Where did all the shoppers go? Tina Hand:                          Wasn’t worth it so I haven’t done it probably for the last five years. Jessica Dourney:              I won’t be there cuz I’ll be watching the UCF Knights, our national champs, playing at the, in Tampa. Paul Jarley:                         Eh, maybe they’ll shop on Monday. Paul Jarley:                         This show is all about separating hype from fundamental change. I’m Paul Jarley, Dean of the College of Business here at UCF. I’ve got lots of questions to get answers, I’m talking to people with interesting insights into the future of business. Have you ever wondered, is this really a thing? On to our show. Paul Jarley:                         UCF student Jahir Hernandez recalls his most vivid Black Friday memory. It was from behind the cash register at an Old Navy. Jahir Hernandez:             The pleasure and the privilege of working Black Friday, my hours were from 1:30 a.m. until 12:30 p.m. Paul Jarley:                         Jahir didn’t love it. Jahir Hernandez:             My most vivid memories would definitely be that rush I think at around 9:00 a.m. where people kinda get up, they have that turkey hangover where they’re done with that. They come in waves, and I remember specifically that the actual checkout line was all the way to the back of the store and you couldn’t get from one side of the store to the other because that line was so massive. You have people that are super nice that maybe they’ve worked in retail before, they understand the craziness. You also have those other people that are there just to get whatever they want and they’re very upset. Paul Jarley:                         Who’s responsible? When did all this holiday shopping madness get its start? Black Friday isn’t as old as you think. It started in Philadelphia back in the 1950s, and got its name from police officers who hated being dragged out the day after Thanksgiving to deal with the local shopping madness. It didn’t become a national phenomenon until the 1980s, and by then it was reinvented to be the day that retailers finally got into the black, well, at least that’s the story. Don Unser is a USF alum and retail group president at NPD. NPD is the nation’s leading retail sales data company. If anyone would know when retail companies turn into the black, it would be them. And well Don, he’s a little skeptical of the story. Don Unser:                         The original roots of Black Friday, it was a point in time at which the retailer turned for the year to be profitable, and there are a lot of myth busting things out there that said did that really happen or did that not happen. I guess back when we had a traditional predictable retail season, when we had just stores and we knew what the season was, we knew what the consumer was going to do, it was this kinda static environment, I think there could have been a relative time on the calendar where there was some profitability. Paul Jarley:                         But those days are long gone. Here’s professor Anand Krishnamoorthy from our marketing department. Anand Krishnamoorthy:               The data suggests that either retails are already significantly profitable before Black Friday, or if they’re not profitable by Black Friday they are not turning a profit after Black Friday. Paul Jarley:                         Don sums up the evolution of Black Friday story this way. Don Unser:                         It’s just a milestone that they use to create a buying holiday for the consumer. Paul Jarley:                         But who the heck needs a buying holiday? Anand says, “department stores, for one.” Anand Krishnamoorthy:               Department stores are traditionally the ones that banked on Black Friday turning things around for them. Traditionally stores that don’t rely a lot on sales promotions tend not to be affected by Black Friday a whole lot. Target and Walmart for example, they’re not into sales promotions, they’re low priced stores right traditionally speaking. So, like if you’re a Ross or a Burlington operations, you’re traditionally not affected by Black Friday. If you’re an upscale retailer, you’re not affected by Black Friday because you don’t discount a whole lot. It is stores in the middle, traditionally have been department stores. Paul Jarley:                         And online merchants, well, they like to create fake shopping holidays too. Sean Snaith:                       You know the made up holiday of Single’s Day and Prime Day I think are studies in and of themselves. Paul Jarley:                         Hallmark might be able to tell us a lot about that, but what do you think? Sean Snaith:                       Exactly. Neither one of those days mean anything. Matter of fact on Prime Day most people don’t even remember the origin of it, but what Prime Day was is Amazon saw that Jet was about to launch their platform and so they did a Prime Day to put out great deals that would squelch the launch of Jet.com. And that was Prime day. So, the origin of these two days are interesting. The fact that Single’s Day did as much volume as it did and does is absolutely fascinating. Paul Jarley:                         Oh, it’s more than fascinating. Listen to Anand. Anand Krishnamoorthy:               How much did Alibaba bring in on Single’s Day four days ago, do you know? Paul Jarley:                         I can’t imagine. It’s gotta be a humongous number- Anand Krishnamoorthy:               [crosstalk 00:05:44] an excess of 30 billion dollars alright, in one day. Amazon’s Prime Day brought in four billion dollars or so. Paul Jarley:                         And then there’s that fake online holiday phenomena. Anand Krishnamoorthy:               Cyber Monday is the most attractive online shopping day of the year. Brings in I think about six seven billion dollars or so. Paul Jarley:                         But like Black Friday, online holiday shopping is a bit over hyped. Anand Krishnamoorthy:               What percentage of holiday sales do you think takes place online. As of last year, what was that percentage? Paul Jarley:                         I would guess forty percent. Anand Krishnamoorthy:               It was a hundred billion dollars in change. It was less than twenty percent of all of holiday sales alright. 700 billion sales of holiday shopping take place. Only a hundred billion comes from online. Paul Jarley:                         Anand’s data tells me, you’re going holiday shopping. If you can’t help yourself and feel the need to battle the crowds in search of that bargain, here’s some things to keep in mind. First, our resident economist Sean Snaith tells us, “It’s going to be a big holiday season. People have money in their pocket, they’re feeling good, and they’re ready to spend.” Sean Snaith:                       One of the strongest in quite a few years. Take home pay is a little bit larger, and that’s also converging with faster growth in wages and salaries as the labor market tightens. And consumer confidence is at eighteen year highs, people are feeling pretty good. The labor market’s good, the economy is doing well, and those are conditions that are conditions that are conducive to spending. Paul Jarley:                         And Don says, “Retailers are ready.” Don Unser:                         I think the retailers are set with inventory. Paul Jarley:                         Especially with this year’s hot ticket item. Don Unser:                         We think that the Smart Speaker, the Echo products, and the Google Home products will continue to be very hot this holiday. We think stereo headphones are gonna be very hot, really led by Apple Air pods. Those are just absolutely on fire right now, and for the last year, year and a half those have been in heavy allocation. Retailers haven’t been able to get enough and now they are. We also think that anything having to do with the home categories are gonna be really strong. The Instant Pot, last year, which was a super hot product, and the air fryers. These are two convenience splays basically for the consumer. Both of those will continue to be very hot this year. Paul Jarley:                         But what about the kids? Don Unser:                         To tell you some of the hottest toy products, Lol Surprise will still be hot this year Anand Krishnamoorthy:               I think [inaudible 00:08:17] which is a soft plush doll that comes in a hard package so you’ll have to soak it, rinse, then you’ll dry, but then it becomes a plush doll after you do all of that. There’s another, I think it’s called Hatchibabies, so now instead of Hatchimals it’s now Hatchibabies where you can actually get a boy or a girl from an egg so they’ve taken parenting to the kid’s level with them. Paul Jarley:                         But there’s not much need to go out early. Anand Krishnamoorthy:               Traditionally shopping on Black Friday has never been about peoples showing up at three in the morning and waiting in lines. The peak shopping season- Paul Jarley:                         That’s fake news. Is that what you’re telling me? Anand Krishnamoorthy:               Not much of the sales comes from there. Much of Black Friday sales actually happens in the early to mid afternoon. So, peak Black Friday shopping time in terms of foot traffic is between two and four in the afternoon on Black Friday. It is not the mornings. Paul Jarley:                         And it could be dangerous. Anand Krishnamoorthy:               The numbers tell you that you’re more likely to get killed shopping for a door buster on Black Friday than from a shark bite. Alright, more people die in stampedes on Black Friday. Paul Jarley:                         You can reduce the likelihood of getting injured, and increase the likelihood of landing that toy by having the family spread out, and using their cell phones. Anand Krishnamoorthy:               Today, holiday shopping on Black Friday is more engaging because you can now have different people in the family go to different stores, communicate on the phone, and extend information that expands the shopping options for the family and friends. Paul Jarley:                         So browse at the stores, and if you don’t find what you’re looking for, well then, shop online. Anand Krishnamoorthy:               Friday online brought in about five or six billion dollars last year. So, when we talk about Black Friday, the old definition of people walking into the stores may not be doing its thing, but people are still shopping in droves online on Black Friday. Traffic on Black Friday doesn’t appear to be significantly off either. Paul Jarley:                         So they’re browsing and then going home and buying it online? Anand Krishnamoorthy:               There’s a lot of store roaming going on. They find out what’s going on and then they go to a lower price to a location online, don’t have to leave the house- Paul Jarley:                         Or if that’s not social enough for you. Consider this. Don Unser:                         People getting together and going to the coffee shop and doing their eCommerce shopping together. We see some of that. Paul Jarley:                         I sense a fake Starbucks Holiday on the horizon. It’s time to call the question, is Black Friday still really a thing? From Jahir Hernandez. Jahir Hernandez:             I think it definitely still is a thing. I think people nowadays are always lookin’ for like one deal. Maybe there’s something that you really want that’s in Best Buy at may three in the morning that you’re willing to get, so I think it’s still a thing. Paul Jarley:                         From Sean Snaith. Sean Snaith:                       No. Paul Jarley:                         Why not. Sean Snaith:                       Yes. Paul Jarley:                         We’ll get back to you Sean. From Anand Krishnamoorthy. Anand Krishnamoorthy:               Yes, and no. Black Friday is not what it used to be in terms of retailers becoming profitable. Black Friday’s meaning has changed. It is not retailers turning a profit that day. It is not about bringing people into the stores at three in the morning. It is also moved online. Paul Jarley:                         Okay Sean, try again. Sean Snaith:                       I’ll say yes it’s still a thing because it’s symbolically still important if not important because of where it falls on the calendar as much. Paul Jarley:                         From Don Unser. Don Unser:                         Black Friday is not really a thing. Does it matter. It is a point in time in the retail selling season that is a bit of a milestone, if you will, but one of the proof points that Black Friday is not a thing is just look at the advertising that’s done. It really starts in early November, late October. That’s your first proof point that Black Friday really isn’t the start of the holiday season. It is now the beginning of November and the end of October. Paul Jarley:                         It’s my podcast so I get to go last. I had one last important question for each of my guests. Are you going Black Friday Shopping? Jahir Hernandez:             Personally, I procrastinate as much as possible and online. Sean Snaith:                       I for two won’t be going Black Friday shopping. Maybe cyber Monday if I remember. Don Unser:                         I am going Black Friday shopping. Personally, because it’s my job. I have to be at the malls and I’m live tweeting. Anand Krishnamoorthy:               Online yes. In store, probably in the afternoon. Paul Jarley:                         Just to make sure I didn’t miss the target audience for Black Friday, I sought out a few expert shoppers. First from Jess Greene Dourney. Jessica Dourney:              No, I won’t be there cuz I’ll be watching the UCF Knights our national champs playing in Tampa. Paul Jarley:                         From my executive assistant Tina Hand. Tina Hand:                          I’ve done it before. I’ve gotten up at five o’clock in the morning before with my girlfriends, I went Black Friday shopping, wasn’t worth it. By twelve o’clock I’m back home. So I haven’t done it probably for the last five years. Paul Jarley:                         Notice, there’s not a sense of urgency in any of their voices. When shopping was local, scarcity was a real concern, and retailers could play on this. If you couldn’t find that coveted holiday gift within a reasonable drive of your home, you risked disappointing a loved one, and that drove you to get up early and get it done. Today, shopping is global, and with free two day delivery and stiff competition for the consumer dollar, people have plenty of options other than getting up at three in the morning to get that gift before the appointed time. Paul Jarley:         Tina Hand nailed it. Sorry Black Friday, you’re just not worth it anymore. What do you think? Check us out online and share your thoughts at business.ucf.edu/podcast. You can also find extended interviews with our guests and notes from the show. Special thanks to my producer Josh Miranda and the whole team at the office of outreach and engagement here at the UCF College of Business. And thank you for listening! Until next time, charge on.

Featured Guests: Stan Horton – Former Enron Executive; President & CEO, Boardwalk Pipeline Partners, LP Scott Keith – Regional President, North & Central Florida Region, BB&T Marshall Schminke – BB&T Professor of Business Ethics (Management) Robert Folger – Distinguished Alumni Endowed Professor in Business Ethics Merrell Bailey – Managing Partner, Your Caring Law Firm Episode Transcription:   Stan Horton:                      I was on the Enron executive committee when the company went bankrupt. I just witnessed firsthand how a company can implode just due to poor ethics. I saw good people do bad things. Paul Jarley:                         It’s not just about good people doing bad things. Marshall Schminke:        But it’s also interesting to figure out why bad people do bad things and good people do good things. Right? Paul Jarley:                         It focuses on what people do rather than what authorities say they should do. Rob Folger:                         The advent of behavioral ethics was the advent of doing research on what people do and why they do it rather than telling them what they should do. Paul Jarley:                         And it might empower people to step forward and question things. Even when it turns out their wrong. Merrell Bailey:                  How would you be able to train a teller to say it’s okay to tell a client no and we will back you up and you won’t lose your job and you won’t lose your health insurance and your… Paul Jarley:                         Even if you’re wrong? Merrell Bailey:                  Even if you’re wrong. Paul Jarley:                         Right. Paul Jarley:                         Behavioral ethics holds the promise of helping companies do the right thing. But will firms provide faculty with the access necessary to help them solve their deepest problems? Or, will they just keep them locked up in the closet? Paul Jarley:                         This show is all about separating hype from fundamental change. I’m Paul Jarley, Dean of the College of Business here at UCF. I’ve got lots of questions. To get answers, I’m talking to people with interesting insights into the future of business. Have you ever wondered, “Is This Really a Thing?” Paul Jarley:                         On to our show. Paul Jarley:                         This podcast is a little different. It was done over drinks and hors d’oeuvres before the Colleges’ Deans’ Advisory Board Meeting in September. We brought together five people with a common interest in ethics, had a conversation, and edited it down to what you’re about to hear. Our guests were: Paul Jarley:                         Merrell Bailey. Merle is a four-time alumnus of the College. She’s on our Deans’ Advisory Board and has degrees in Accounting and Law. Two fields with extensive codes of ethics. Paul Jarley:                         Scott Keith is Regional President for BB&T in North and Central Florida. BB&T sponsors both an ethics class in the College as well as the faculty member who teaches that course, Marshall Schminke. Marshall is the BB&T Professor of Business Ethics. He joined us for the evening via Skype because he was speaking at a conference in East France. Paul Jarley:                         They’re joined by Rob Folger. Rob is considered the Father of Behavioral Ethics. He sits in an endowed position that was funded by our last guest. Paul Jarley:                         Stan Horton. We caught up with Stan a couple of weeks after the event and added his insights into the conversation. Stan is an alum of the College and the President and CEO of Boardwalk Pipeline Partners. Stan was the only member of Enron’s top management team that was not indicted in the Enron scandal. He closed Enron. It is not a stretch to say that the biggest corporate ethical breach of the last century started a chain of events that led to a whole new way to study ethics and that that is happening at UCF. Paul Jarley:                         My first question was for Scott Keith. Paul Jarley:                         Could you explain why BB&T has had a long-term interest in ethics and what it hopes to get out of ethics education? Scott Keith:                        To BB&T, the people, the values that we have is the culture of our organization. There are three non-negotiables in our organization: our vision, our mission and our values. We want to be the best financial institution possible but the only way that we do that is by living-out ten core value which we deem the ethics of BB&T. We have thirty seven thousand associates; we’re bringing new ones on all the time. We think it’s critical that we invest in the future of not only BB&T but the future of the markets that we serve. To do that, we have the opportunity to team up with wonderful institutions like UCF’s College of Business. For us to be able to partner with Marshall and have a course speaking to young-minded, young professionals with bright futures about ethics and the importance of that in business is helping us live out our mission. It’s critical to our culture long-term. We want to hire folks that live that way because they’ll fit within our organization. Paul Jarley:                         Stan, tell me a little bit about your motivation for giving the gift that led to the Ethics Chair. Stan Horton:                      On that, it’s pretty easy. I was with Enron. I was on the Enron Executive Committee when the company went bankrupt. I was the only member of the Enron Executive Committee that stayed during the bankruptcy and I just witnessed firsthand how a company can implode just due to poor ethics. I saw good people do bad things that I didn’t really know if they knew they were doing bad things at the time. But, some of them compounded themselves and after you look back for while you realized that it was the culture of the company and that culture did not stress or recognize strong ethical behavior. When you don’t do that, over time, the culture deteriorates and what happened to Enron, happens. Paul Jarley:                         I’m going to turn to Rob. Rob, you’re considered one of the founders of behavioral ethics. I’d like you to talk a little bit about how behavioral ethics maybe differs from traditional ethical approaches and training. Rob Folger:                         Sure, let me say, first of all, thanks to Stan because part of what behavioral ethics is today is because of him, is because of his support. Ethics, for me, or in business schools, for example, it was dominated by philosophers and so ethics was about ethical philosophy. Paul Jarley:                         Aristotle, right, if we want to go all the way back? Rob Folger:                         And so, the advent of behavioral ethics was the advent of doing research on what people do and why they do it rather than telling them what they should do. The kinds of things that Scott, for example, wants to be able to promote, how do you promote it? What motivates people besides the inspiration of the leadership of a company when they’re in the trenches? Paul Jarley:                         Marshal, do you think its fair to say that behavioral ethics is the study of how and why good people do bad things? Marshall Schminke:        A lot of people would agree that that’s a pretty reasonable place to start. But, I think we go beyond that as well because it is interesting to try to understand why good people do bad things. But it’s also interesting to figure out why bad people do bad things and good people do good things. Right? My big epiphany came; I spent eight years a an academic fellow with the Ethics and Compliance Initiative. They’re a group of about sixty or so Chief Ethics Officers from Fortune 50 level firms and people from the SEC and VA and that sort of thing. You don’t have to spend very many years with a group like that to figure out what they’re interested in is what levers do we pull to get the sorts of behaviors and the sort of commitment that we need to see among our ninety thousand employees. Paul Jarley:                         How about you Rob? Would you agree with that? Rob Folger:                         Oh, yeah. Oh, absolutely, I think that the experience of people in business many times is they don’t always know the levers to pull the buttons to push in a positive, promotive way. Paul Jarley:                         Merrell, you have degrees in two areas which have had a long history of ethical codes of behavior, and training people to abide by those ethical codes of behavior, and so talk a little bit about what’s been the traditional approach in accounting and in legal areas to questions of ethics and what you think might be the value of behavioral ethics, or not. Merrell Bailey:                  Well to quote Marshall, my epiphany was realizing that two different professions, because I’m licensed as a CPA and also as an attorney, can have different ethical standards that are completely diametrically opposed. I don’t think most professions realize that they have different ethical standards. So the ethical standard for a CPA is, for auditors, they’re supposed to keep everyone informed and share information on an equal playing field. And attorneys, we have to advocate for one person and forget all the rest. I’ve got this information, I’m going to use this information and I’m not sharing it and, in fact, it would be a breach of my duty if I did share it. So, I think that’s part of the tension of CPA’s working with attorneys because the CPA is like, “Well if we all would work together and you gave up this we, and I gave up that, we’d all have a really great solution” and the attorney is like, “Screw you. I’ve got my client and I want all of the pie”. Merrell Bailey:                  Every single profession that I deal with has a different ethical standard. Paul Jarley:                         Hmm. What would behavioral ethics have to say about that gentleman? About resolving those conflicts where ethical standards vary? Rob Folger:                         Ah, it’s interesting you’d bring that up. There’s a topic that is one of our core topics. It’s called Role Morality and it’s about the conflict of different standards in our… the different hats that we wear. The technical definition of the term is when you would do something in a given role, like at work, that you wouldn’t otherwise do outside. Paul Jarley:                         Can you give us an example? Have you every had a situation where the accountant ethics in you conflicted with the lawyer ethics in you? Merrell Bailey:                  It primarily would have to do with negotiating a contract where I was representing two out of three partners. We had all the information as CPA’s. We knew all the financials. But I was actually representing these two as an attorney and the other attorney was not a CPA, that was representing the third party, and he didn’t understand the numbers. He just rolled over on something that was so, on a CPA level, was such an easy thing that he should have held his ground. But as an attorney, I was like, “Yeah, well we’ll just… okay” then I moved right on. ‘Cause it was in the best interest of my clients and I was representing them as an attorney so I had a duty to do that. Paul Jarley:                         Mm-hmm (affirmative) Paul Jarley:                         Scott, what do you see as the main ethical dilemmas in your world and how do you try to address those? Scott Keith:                        They vary based on the constituents that we’re talking about. Generally, when we lend money out, fundamentally we want to know two questions: Can you pay us back and will you pay us back? We identified ethical challenges in our client selection during the last major recession where we had individuals that could pay us back for a period of time but chose not to. When we have our client selection and engage with our clients we want to understand, I’ll say their ethical motivations. We want them to be like-minded to us and with us. But, they also have to trust us. They share personal information with us, business information with us. We have to be confidential in our professional endeavors with them. And that trust, generally, is built over a long period of time. We’ve been around since 1872. We’re proud of the fact that we have become a trustworthy organization, but we have to earn that every day. And the other constituent are our associates, so when I think about our support for the teaching and the encouraging of ethics in business through the university, and the students that are able to go through that. They’re learning a piece of what we hope when they look to apply to our financial institution, that they see it matches up with our culture. Scott Keith:                        So it’s important that we hire individuals that are going to support the cultural way we go about business. It’s really important that when do that, that we then let them be who they are, and watching them do good and right things every day transparently, even when we have to admit when we’re wrong, is encouraging and good. Scott Keith:                        When we miss that, when we make a mistake, we wanna be honest and open about it. Rob Folger:                         Paul, I wanna jump in here just for a second. Scott Keith:                        Sure. Rob Folger:                         It’s interesting that you would mention being honest and admitting your mistakes because just the other day I was asked by a reporter to talk about the fraud case involved Sea World where precisely what they didn’t do was to get out in front of it and admit what they done and so the CEO lost his job. SCC filed a case. And he had to pay a financial fee as well. Paul Jarley:                         Stan, tell me if I got this right. I remember you telling me that [Ken Lay 00:12:16] had come back from being Chairman of the board to being CEO. And he picked up a rock and he thought oh my god I need to fix this. What he didn’t know at the time, if I remember your story right, was that we legally required to report it right then. Stan Horton:                      Yeah. That was my belief, and knowing Ken Lay, he was the son of a Baptist preacher. I first met him back in the early 70s when I went to work for Florida Gas, and he was a man that if you looked at and knew you would stray, he had a very strong ethic, and I believe that, in my own belief, I don’t think Ken understood what was happening at Enron. A lot of the day to day stuff he had given over to others. Stan Horton:                      And then when Mr. Skilling left Enron and Ken came back as CEO, it’s my belief that he didn’t really know what had gone on in some of the financial structuring that later proved to be illegal, but as he found out about them, you have an obligation under security laws to report those. Stan Horton:                      But if you’re someone that has your entire persona tied up in a company, your financial net worth tied up in a company, who you are as a person defined by all of that, there is a tremendous incentive to not disclose that and try to fix it, especially if you’re someone that had a history of an entire lifetime of being able to fix things. Merrell Bailey:                  To me, I look at the Arthur Anderson portion of that and it, to me, breaks down to two different employees, not knowing where the line was or being so tired they forgot. So the lawyer said to Arthur Anderson delete the documents, spread the documents. And the auditor did it. It was not illegal in the long run. They found out it was not illegal but it was unethical on both sides to have deleted those documents. Merrell Bailey:                  I would not have done it and what I tell CPA’s and young attorneys coming up is you need to know that line, and you need to go into an engagement knowing where the line is and you need to never forget where it is, because you’re gonna get tired and you’re gonna have people pushing you and you’re trying to please people, but you have to know where to hold the line. Scott Keith:                        Oh I think that’s where a culture of an organization comes in. Merrell Bailey:                  Yeah. Scott Keith:                        If you feel like you can’t raise your hand or identify an error or mistake or an egregious act that’s going on then it likely can continue and I think a large organization, small organizations, they have to, from a leadership perspective, foster a culture of being willing and comfortable transparently identifying and understanding that. Paul Jarley:                         Stan? Stan Horton:                      I always challenge my Human Resource department to come up with ways and I must admit, I’m not sure that we’ve totally done it. How do we incentivize ethical behavior? Most compensation in a corporation is built around achieving financial goals. Net income goals, cash flow goals, balance sheet goals. How do I take that and marry it with the culture that you wanna build in an organization and I believe that culture, the foundation of it, has to built on a strong ethical as I tell our new hires, I just want you to do the right thing, every time. Just do the right thing every time. Paul Jarley:                         Marshall, I’ve heard three different kinds of variables here that might influence whether people act in an ethical manner or less than ethical manner. The first one, fatigue. Maybe personal situational issues. Secondly, would be culture of an organization. And the third would be incentives. And maybe misaligned incentive. Paul Jarley:                         Do you have any sense from a behavioral ethics standpoint, which of those three category of things is likely to dominate? Marshall Schminke:        Well, you sort of hit something close to me because I’m an ethics culture researcher. That’s kind of on me. Scott Keith:                        Give us a softball buddy. Marshall Schminke:        So of course I think [crosstalk 00:16:24]. And one of the reasons, and it’s not that incentives don’t matter because clearly they do, and people not thinking enough moves ahead is that first step toward doing the perp walk. Most of these guys that you end up seeing doing the perp walk, they’re not people who woke up six months ago and decided to engage in broad based unethical practices towards their clients or employees or whatever. Marshall Schminke:        Some do, clearly. But the lion share of those folks basically made a bad decision that they didn’t really think through far enough and then woke up the next morning and they saw they dug a little hole and they think they’re doing their best at filling that little hole, and next thing you know there’s another line gets crossed, and next thing you know we’re doing 10 years in Duluth Federal Prison Camp. Marshall Schminke:        I’m a guy who’s committed a lot of years now to studying ethical cultures and ethical climates and what makes those tick, and that’s the one that I end up circling back to. Marshall Schminke:        Some of the big projects that we did while I was with the ERC, one of the most surprising things that we found out of that, that when it comes to what really drives the average workers decisions on a day in and day out basis, was that it’s those first line supervisors, where all of the action is. Marshall Schminke:        As far as the average employee is concerned, that immediate supervisor is the organization, and the kind of standards that that first line supervisor sets has a bigger impact than top management, colleagues, all of those combined, and that’s a culture thing, right. I mean, culture happens rights down at the work unit level. Paul Jarley:                         Rob? Rob Folger:                         I also wanna add a favorable word to economists, behavioral economists in particular, and the notion of nudges may not always have the best ethical flavor, but there definitely are cues, triggers, in situations that can make a difference. Positively and negatively. As well the structure of the situation. Rob Folger:                         I mean, sometimes we put employees in situations that don’t incentivize them so much to cheat as encourage the need to use a work around, to stretch the rules, and that’s another one of the many issues. Rob Folger:                         I don’t always try to pin it down to one particular thing. Paul Jarley:                         Mm-hmm (affirmative). Could you give me an example of that, of a situation where there’s that nudge? Rob Folger:                         Well, I’ll give you one that’s a positive nudge. Paul Jarley:                         Okay. Rob Folger:                         And that is if we encourage people to make a commitment up front. I mean, something … I know this sounds simple, but having people have people sign something. Turns out, we find from research, that if they sign first, an honor pledge for our students, for example. Scott Keith:                        Take the oath. Right. Sure. Rob Folger:                         Yeah. Rather than at the end. That’s a very simple little thing that makes a difference. Rob Folger:                         But another one is if people have a chance to cheat, but before they do that, if you ask them to recall as many of they can of the 10 commandments, they don’t cheat as much. It doesn’t matter if they can actually remember them or not. Scott Keith:                        It’s just the priming effect, is what you’re telling me. Rob Folger:                         Exactly. Scott Keith:                        You know, Paul, in our organization, every year we re-certify our acknowledgement and understanding and commitment to the Code of Ethics that we have, and that we think it’s very important, that it is foundational to the culture that we strive to live out every day. Scott Keith:                        And so, some of the most important individuals in our organization are tellers. So we put structure in place to make sure that we don’t inadvertently create a scenario where in the wrong moment at the wrong time, a good person may consider doing the wrong thing. Scott Keith:                        There’s a reason why tellers need to balance their drawer every single day, and it’s because it’s our depositors money that we’re taking care of and it’s a trust thing and it’s also, these are great professionals with hopefully long careers. We want them to do it with a confidence that there’s not something that might trip up. Scott Keith:                        So I think structure in many roles within many organizations should help alleviate some of the potential of possible cues that might lead you into doing something that you otherwise wouldn’t want to do. Paul Jarley:                         [Meryl 00:20:43], do accountants and lawyers regularly get training on ethics and ethical decisions here in the state of Florida and what’s that like? If you could improve it in a way, how would you do it? Merrell Bailey:                  Both attorneys and CPA’s get trained in ethics and in fact, for the CPA exam and for the bar exam, there’s a separate portion for each just on ethics. There’s some room for improvement with the Florida Institute of CPAs for their ethics training, because right now it pretty much consists of someone who has a certain amount of experience, who is currently licensed, reading from the book. Merrell Bailey:                  It is the least entertaining or memorable experience of your life and you have to sit there for a couple hours a year. Merrell Bailey:                  If they would bring in some talented or younger, not necessarily younger in age, but younger in experience teachers, they would have a better outcome. Scott Keith:                        But that isn’t that different, and I don’t mean to make light of this, but that approach isn’t that different from reading from a religious text. If I understand behavioral ethics, one of the lessons of behavioral ethics would be yeah, that’s probably not gonna work out all that well. Scott Keith:                        Is that fair to say Marshall? Marshall Schminke:        Yeah. I mean, I think the training issues a really tricky one because most corporate training has really been focused a lot on the failures we have in ethical decision making, but you don’t learn ethics the same way … I mean you don’t learn how to swing a golf club or play a piano by reading a book. Ethics is something that you do and I think that’s one of the ways that those involved in behavioral ethics really take a different perspective on this. That really has a strong implication for the way that we set up ethics training programs. Marshall Schminke:        The other component is that it’s not just all about making ethical decision. You can know the right thing to do and still be shut down in, sort of face a road block in whether or not you carry through on that based on whether you care at all about the person on the other end of that action. If they’re not morally relevant to you, then you can know all day long what the right decision is, but you’re not going to carry through. Marshall Schminke:        And the final piece I think that turns out to be really important in corporate settings is people have to believe that even if they know the right thing to do, and they are about the customers or the community or whoever it is that’s on the receiving end, that they have the ability to actually execute on that. There are lots of folks who would really like to be the ones to stand up and say this stops now, but if they don’t think they’re in a position to actually make [inaudible 00:23:16] impact on things, they’re not going to carry through on what they think the right thing to do is. Rob Folger:                         A couple of footnotes on what Marshall said. One, a marketing plug and the other an anecdote. The marketing plug is for Marshall and his wife who wrote a terrific paper on the idea of road blocks that get in the way of people acting ethically. This anecdote is about not learning from a book. I went through an ethics training program, sponsored by a large organization. We went to their campus. Their training campus and we had all sort of authorities speak to us. The company that sponsored that was Arthur-Andersen. Paul Jarley:                         One of the things we really value in the college is engagement and bringing practitioners and researchers together. When I ask my practitioners, “What’s the biggest problem you would like to see faculty do research on in ethics that would help you out?” Merrell Bailey:                  I think it comes with having the backbone to say no. Most people don’t know that it’s okay to say no, or their hesitant to say no and they’ve been put in a situation where they’re expected to say yes to doing something that they may know is wrong. Paul Jarley:                         Scott. Scott Keith:                        Yeah, I think a little hitting on actually the paper that Marshall co-wrote with his wife, if we had the ability at BBWT with our leadership institute, we dive into a lot of the biases that our teammates have and we study that. And our leaders spend a week at managing leadership dynamics to understand themselves and how they interact with each other. And we try to understand where we get in our own way. And so in getting in our own way, can we connect those dots to understand just to the point when unethical behavior is in front of us, when there is a cue, are we identifying the biases of those that might be shut down from saying it and being able to, as an organization, clarify that we want them to step up in that situation. To raise their hand. And obviously from an organizational perspective, more insight as to how do we continue to strive to have a culture of accepting and encouraging that? And making sure that there’s no harm or concern for someone that identifies that. Merrell Bailey:                  But how would a teller know that he or she is allowed to say no. How would you be able to train a teller to say, it’s okay to tell a client no and we will back you up and you won’t lose your job and you won’t lose your health insurance and- Scott Keith:                        Even if you’re wrong. Merrell Bailey:                  Even if you’re wrong. Paul Jarley:                         Stan, do you have any policies or procedures in place for people who want to report unethical behavior? Stan Horton:                      Yes we do. First of all, we have a hotline that people can call and report anonymously. Those calls do not go to me, they go straight to our General Counsel. You can remain unnamed, but we need enough information that we can research and verify whether the accusation is correct or not. Or you can go directly to the CEO if you want to, or you can go through Human Resources. Paul Jarley:                         Have you tried to measure the number of ethical lapses that you have in your organization each year? Stan Horton:                      Only by looking at … If you say ethical lapses, I guess the answer to that would be no. Because I’m not quite sure how to do that. We can measure incidents that we’ve had, we can measure our safety record against the industry, but some of those things aren’t really ethical lapses, some of those things are just things that happened that … Equipment failure, things like that. So I haven’t been able to figure out total ethical lapses. Paul Jarley:                         Okay, time for our faculty to give back. If you had one or two key insights of behavioral ethics that you would want to make sure that a practitioner knew, that you thought was useful, that would add value to their day, what do you got Marshall? Marshall Schminke:        I talked about a couple of those here tonight. Let’s focus on first line supervisors, those folks just get completely ignored. They don’t get the attention anywhere near the impact they have on the organization. So that’s something that really has to be key. I mentioned another one previously, about it’s gotta be more the training and the programs and such have to be something at work beyond just compliance. It’s gotta go beyond that and it’s gotta go beyond just thinking your way through ethical problems. You have to understand how to sort of put yourself in the shoes of the folks across the table from you and make sure, and we talked about this a little bit earlier, make sure that the folks have this understanding that when they decide to be the one to stand up, somebody’s got their back. Marshall Schminke:        Make a little bit of a pivot on those two fronts in terms of the kind of training that gets done. These are quantifiable, measurable outcomes. But one of the things that I came away from with the ERC group, a lot of those firms were high-tech, manufacturing, defense contractors and such. These guys measure everything. And they could make a pivot on a piece of training technology for 90,000 employees over a weekend and six months later they were able to demonstrate in terms of quantifiable outcomes related to things like amount of pressure that employees were feeling. The likelihood that they would pick up a phone and actually report wrong doing. All these things that they really wanted to see. Those are quantifiable outcomes. Marshall Schminke:        And so as part of the training program, we’ve gotta have really solid, quantified baselines on those things. And then as you start to pull levers, you see relatively quick improvements, or at least changes. You’ll know what’s working and what’s not for you. And lots of companies I don’t think give adequate attention to that sort of quantifying and measuring aspect of ethics. They think it’s a little fuzzier than that, but in the aggregate, you can really just watch the needles move on these things if you’re careful about how you measure things up front and then continue to do that regularly as part of your employee survey. Paul Jarley:                         Rob? Rob Folger:                         We need to be more cognizant of human frailties. It’s not just people who are evil and malicious who do the bad stuff. That gets all the attention, that gets all the news. But the simple concept of the slippery slope. They’re edging toward the line, the edge of the line. So that’s one thing I’d say. And the other one, to piggy back on that is that common sense can be a lot of it. But common sense is not always common practice. And we need to teach people how to put into practice some of the things that they already know. Paul Jarley:                         Is there anything that you learned tonight that you thought was useful that was worth pursing? Merrill? Merrell Bailey:                  I think behavior ethics is a thing, because the more people that understand that there are morals or ethics and where the lines are and they have the right to say no, the better off the society would be. Paul Jarley:                         Scott? Scott Keith:                        Yes, I absolutely think behavioral ethics is a thing. So I vote yes on that. I see it everyday in the associates that I get to work with and I think that you can see it around in society. I really do. I do think that there needs to be continued cooperation with academia and businesses so that we can evolve and become better. And I love the idea of how do we continue to partner to get there. I think that’s really important. Paul Jarley:                         Stan, do you think your money’s been well spent? Stan Horton:                      Yes I do. And when I looked up the definition of a “thing” it’s that it was an action or an activity or a thought and I think ethical behavior is an action. I think you choose to be ethical or not. I think it’s an activity. I think it’s a thought process that people utilize. So yeah, if I didn’t think that they were onto something, I would probably come talk to you. Paul Jarley:                         It’s my podcast, so I get to go last. Marshall and Rob don’t get a vote. They’ve devoted a good portion of their lives to studying behavioral ethics. One of the people in the audience called behavioral ethics old wine in new bottles. Ironically, she had worked for Arthur-Andersen and Ron left a bad taste in her mouth. I suspect that she thought bad people who want to do bad things will find a way. That said, the key insight from behavioral ethics is that ethics is not squishy. It’s measurable. Prone to both positive and negative influences. And needs to be practiced everyday if it’s to remain resilient. It isn’t something that you just train people to do on Thursday. First line supervisors carry a lot of the burden here and they need the support of higher-ups to ensure that things are done the right way, rather than the expedient way. Paul Jarley:                         Is behavioral ethics a panacea? Of course not. But it certainly beats people reading from a book. Companies willing to partner with researchers can uncover actionable insights to improve ethical behavior. It really is a thing. What do you think? Paul Jarley:         Check us out online and share your thoughts at business.ucf.edu/podcast. You can also find extended interviews with our guests and notes from the show. Special thanks to my producer, Josh Miranda. And the whole team at the office of Outreach and Engagement here at the UCF College of Business. And thank you for listening. Until next time, charge on.

Featured Guests: Cindy Barth – Editor, Orlando Business Journal Grant Heston – Chief of Staff and Vice President for Communications & Marketing, UCF Rick Brunson – Associate Instructor, UCF Nicholson School of Communication & Media Episode Transcription:   Paul Jarley:                         It makes you believe there’s no such thing as truth. Grant Heston:                   There’s a lot of things labeled fake news that people just don’t like. Paul Jarley:                         It’s a popular Halloween costume. Rick Brunson:                    There are companies selling fake news costumes. You can dress up in a fake news … It’s plastered with newspaper pages and it has red fake across the front … Yeah. $54.95 online. Paul Jarley:                         And combined with data analytics, it can be, well, clickalicious. Cindy Barth:                       There are certain things that we know all we have to do is put these keywords in a headline, and we’re going to have what we call a clickalicious day because everybody in town is going to be going, bang, bang, bang, bang, bang on that story. We know that. Rick Brunson:                    Where, oh where have you gone, Walter Cronkite? Walter Cronkite:              That’s the way it is. Friday, March 6th 1981. Paul Jarley:                         This show is all about separating hype from fundamental change. I’m Paul Jarley, Dean of the College of Business here at UCF. I’ve got lots of questions. To get answers, I’m talking to people with interesting insights into the future of business. Have you ever wondered, is this really a thing? Onto our show. Paul Jarley:                         Let’s talk a little bit about how the world is changing in really broad strokes. When we were hunter gatherers and we started to plant crops, land was the most valuable thing and the people who were the richest and the most powerful owned the most land. And then machines were invented, and the Industrial Revolution happened and market economies occurred. In that, who owned the most machines became the most powerful people. Today, the most valuable asset is information. It’s data. And the most powerful people in the future are going to be the people who control the most data, and they can use that data either to help inform you or they can manipulate you with that data. Paul Jarley:                         This gets us to the topic of fake news and whether fake news is really a thing or not. Is this something that 10 years from now we’ll kind of laugh about and move on from, or will it be a part of our daily lives? And if it is, how do we determine what’s fake from what’s real out there? That’s certainly something that my students need to know how to do, or we’re all doomed. So, I brought together a panel of experts to talk a little bit about fake news, what it is, and whether it’s really a thing or not. So I’m going to allow my guests to kind of introduce themselves. I’ll start with Grant. Grant Heston:                   Sure. Thank you, Paul. I’m Grant Heston. I’m our Vice President for Communications in Marketing and Chief of Staff at the University of Central Florida. I got my undergraduate degree in journalism from a university about 90 minutes north of here, a little bit smaller than us. Football team is not quite as good. And so I live and breath with this every single day. Cindy Barth:                       Hi, I’m Cindy Barth. I’m Editor of Orlando Business Journal. I am a UCF graduate. My degree is in journalism with a minor in political science. Rick Brunson:                    Morning, everybody. My name is Rick Brunson and I’m an Associate Instructor of Journalism at the University of Central Florida where I’m also a proud alum. Got my degree there in 1984 and became a reporter and editor for the next 30 years and have been really privileged to return to the university where I learned about journalism and I teach it there now. Glad to be with you. Paul Jarley:                         Thank you all for joining us this morning. Rick, since you’re the academic in the group and academics love definitions, let’s start there. What is fake news? Rick Brunson:                    If you start with the word fake, it means counterfeit, which means there’s something real to judge it against. If you start from that point, then there’s hope because there is something real to judge it against. The thing about the term fake news, it’s become very elastic in the last couple of years. We used to think of fake news as that news or information that was intentionally falsified and based on untruths with the intent to deceive the public. Now that term has been elasticized in the American mindset to also encompass things such as editorial decision making that is crafted with the intent to deceive or mislead, and it’s also become politicized where fake news is the news that I don’t necessarily agree with. And so it’s a very mushy, mashed up … I did notice this morning that next week is Halloween, and there are companies selling fake news costumes. You can … Paul Jarley:                         Then you know it’s a thing, right? Rick Brunson:                    There you go. You can dress up in a fake news … It’s plastered with newspaper pages and it has red fake across the front. Yeah. $54.95 online, so, yeah. There you go. Paul Jarley:                         Fake news is expensive. Cindy, would you agree on that definition? Do you have anything to add? Cindy Barth:                       I would. I think the most dangerous thing is just that everyone has kind of their own definition of fake news sometimes, and for me in journalism, fake news would be something that is just completely not based on any fact at all. But for many people, as Rick shared, if they don’t agree with something that you write, all of a sudden it’s fake news. And it’s a very easy thing to just throw around nowadays because you hear it used so often. So to me, that’s a very alarming trend, is just how quickly we immediately turn to calling stuff fake news without really thinking it through. Paul Jarley:                         Grant, where did fake news come from? Should we blame Facebook? Grant Heston:                   Goodness gracious, you would ask me that question. I think fake news has been with us forever. It’s just the medium has changed right now and it seems easier to share and be duped by fake news than it was 100 years ago when you had newspapers and the beginnings of broad, really mass communications. But no. I think it’s been with us for a long time, and to your question to the start, I think it’s going to be with us into the future and that’s why understanding it, recognizing it, and coming up with ways to combat it is more important now than probably it’s ever been. Paul Jarley:                         So what motivates it? What problem is it solving? Cindy Barth:                       It’s basically reinforcing what you already believe in many cases. I think a lot of times I see things in people’s Facebook feed where they will post something and someone will immediately debunk it and say this is fake. Here’s the site. Go check this. But it still remains in their sight because it’s something that they’re already convinced in their mind that they believe and it’s correct, and so that’s the difficult thing. How do we get back to a point where we will be people who are curious enough to actually figure out is this real or not rather than just believing it right off the top of our head. Paul Jarley:                         But is it fair to say that fake news is meant to provoke, that it’s meant to elicit an emotional reaction and perhaps a behavior that follows that? Is that where it comes from? Grant Heston:                   I think it’s meant to influence. It’s meant to try to either reinforce your point of view, or often times just get you to give up. The truth is knowable. We can find the truth, and I often think the point of fake news is to try to blur those lines just to say, you know what? We’ll never know the truth about this, will we? And that’s a dangerous place to be. Rick Brunson:                    In the last election cycle which we’ve now parsed and studied and there have been criminal indictments from the Criminal Justice Department in terms of Russian and other offshore troll companies and troll farms that deliberately put fake news stories in social media with the intent to disrupt our election process and to so discord among Americans so that we fight about hot red button issues like immigration and other things, and it’s meant to disrupt democracy, frankly, when it comes from offshore overseas, I think. Paul Jarley:                         And data analytic techniques allow me to amplify that now, right, because I know what you click on and I can continue to feed you more of that to make it seem like it’s even more important and happening more often than you might otherwise think and reinforce what you think about that going forward. Grant Heston:                   No. I agree. I think we are becoming very much creatures of our own bubbles, of our social media, of our own reading habits. I’ve heard Rick say this before. If you subscribe to the New York Times, that’s great. Subscribe to the Wall Street Journal too. If you watch CNN and MSNBC, tune into Fox News as well. Expand your world view, and maybe you won’t agree with everything, but you’ll get a different perspective. You’ll see how other people are being informed and that makes you better able to understand the world around you. Paul Jarley:                         So has fake news influenced real news? I’m picking up on something Grant said there a minute ago. If you watch CNN and you watch Fox News, it’s hard to believe they live in the same world. Whatever your politics are, it doesn’t really matter. It’s just really hard, and I wonder if some of that is a reaction to what’s going on in social media and perhaps fake news, generally. What do you think, Cindy? Cindy Barth:                       I think there has been a definite change, particularly in broadcast news. I remember when I was little growing up in the Walter Cronkite days, and Walter would just tell you the news and it was pretty much up to you to figure out what you thought about it. I’m sure he had very strong opinions on a lot of things, but at that point you didn’t express that as part of your news coverage. We blurred the lines a little bit over time where we’ve become a bit little out front sometimes with where we stand on issues, and I think that has created a little bit of the confusion as well. I don’t think that any news organization sets out to try to be influenced by it because we all have the same standards where we must report factually, we must present both sides, we must have all of that in our coverage, whatever it is that we’re writing or broadcasting. But I think it has made it a very interesting arena now for news. Paul Jarley:                         Would you agree with that, Rick? What are you thinking? Rick Brunson:                    I would, and I think it’s caused a lot of news organizations to look at their own editorial processes … Shore them up. The struggle has been to keep your eye on the ball as a journalist and try to stay true to your ethics and your values when we’re in an environment where you’re constantly attacked rhetorically and in some cases physically. I had an alum in my Monday night journalism class who just got back from covering hurricanes Michael and Florence. He works for the Associative Press. He’s a videographer. And while he was on a flooded public street up in North Carolina filming people as they were evacuating their homes in boats and loading their belongings and goods and their pets to get out of harm’s way, a man came up to him and screamed at him and said, you’re fake news. We don’t want you here. Knocked his camera over and punched the guy in the face. He showed us video of this. Rick Brunson:                    What was interesting to me was that he did not include that incident in his reporting. I think I would have, but he didn’t. Instead he chose to focus on a North Carolina man who was using his own personal watercraft to get his 88 year old mother out of her house. Rhetoric has become incendiary and it can lead to real punches being thrown, so I’m concerned for some of my colleagues who are out there in the field who are under constant … Rick Brunson:                    The barrage of, you’re the enemy of the people, you’re fake news. Most people are not going to act on that, but a small subset of people, like this man in North Carolina can, will and do. That’s not only an attack against the individual journalist, but I think that’s an attack against all of us who think that a free vigorous press is crucial and essential to a democracy. Grant Heston:                   It’s the first amendment, right? Rick Brunson:                    Exactly. For a reason. Grant Heston:                   Okay, the first amendment. The very first one. Paul Jarley:                         So I think when people think about fake news, they naturally go to politics, but I run a business school. Is there fake news in business, Cindy? Cindy Barth:                       Of course there is! Paul Jarley:                         What’s it like and what’s it’s purpose? Cindy Barth:                       Well I think sometimes we find when we get news from companies and stuff sometimes, let’s say you’re a public company and you really had a core performance like here. So you want to highlight this instead. So you make sure that you’re highlighting this and you’re hoping that we’re not thorough enough to actually look at the entire report and see what you actually did over all. Sometimes it can be as simple as that. Cindy Barth:                       Sometimes even it’s cases where the business can become the victim of fake news. Look what happened in 2016 with the Pepsi company when word linked out that they said, “Yeah, we don’t want any Trump support’s business.” Okay, the CEO never said that, somebody just manufactured that and then all of a sudden you have people protesting, boycotting, doing this kind of thing against a business that actually didn’t have any involvement in what was said. So I think it can work both sides of it. Paul Jarley:                         How about in University settings, Grant? Is there fake news? Do you have to deal with fake news? Grant Heston:                   I don’t know if I’d call it fake news. Again, I worked as a reporter, I have my undergraduate in journalism, so I have the utmost respect for it. I might call it more lazy news sometimes. Reporters will come and say, “hey’ we’re doing a story about XYZ, we need a quote from you about it.” And we’ll say, “Well, have you looked at this? Have you looked at this? Have you looked at … ” “Well, no, I just need a quote from you. Can you just give me a quote for this story that’s already written and done.” Grant Heston:                   And so, that’s just more lazy and I think media companies are just in really tough times right now. I think that’s just a symptom of it. We probably deal more with lazy news than we do fake news, thankfully. Paul Jarley:                         Even in college athletics, would you say that? So is Danny engaging in fake news right now in his campaign to get us into the college football playoffs? Grant Heston:                   Paul I thought we were friends. There would be no athletics questions on this podcast. No I- Paul Jarley:                         I’m still mad at Danny for called esports not a sport and they’re not athletes. Grant Heston:                   No, I think that’s … We’re doing what organizations that are proud of their accomplishments do, which is say, “Look at what we’ve done. Look at the facts.” So if someone says, “Well you guys aren’t really scheduling power five teams.” Well, we played Stanford, North Carolina, Georgia Tech, Pitt, Michigan, Ohio State, all within the last five years. Those are the facts. So let’s have a conversation based on the facts and based on outcomes and then see where that takes us, not the perceptions of institutions from 15, 20, 50, 100 years ago. Paul Jarley:                         Wow. Just so you know, everything in our podcast eventually comes back to the UCF National Championship football team. That’s really why I [crosstalk 00:16:34]. Grant Heston:                   I like it, I like that for sure. Paul Jarley:                         I try to get that into as many of the podcasts as I can… So if fake news is real, how do we combat it? Cindy Barth:                       I think you have to get to the point where you want to make sure that you do your own investigation of things. I mean, there’s lots of places where you can check to see if something is real or not. You can check Politifact. You can check a lot of these types of sites where you can take a look, make sure that what you’re reading actually is factual. I think you also have to look to see, who else is reporting this? Cindy Barth:                       Sometimes you’ll get something kind of in a vacuum that just suddenly appears out of nowhere. If nobody else is reporting it, that should be a red flag almost immediately. Paul Jarley:                         Can I push back, just a little Cindy? I don’t think your strategy is wrong, but I’m going to actually go back to something Grant just said a minute ago. I’m lazy. You know what? I’ve got a ton of information. The last thing I need is more information. I might be short on meaning, but I’m not really short on information. Cindy Barth:                       Yeah, and that’s why fake news is making such headway right now, because we won’t push back. People are lazy and won’t look at it. You can try to argue with folks and say, “Hey, let me point you to where you can actually find this.” And they still may chose not to actually do that. Paul Jarley:                         Well, Rick, I hope our colleagues over at Nicholas’ school are thinking about this a little bit. You got a few things you want [crosstalk 00:18:05]? Rick Brunson:                    Yeah, we think about it a lot. In my own classes, I teach my students about the different between skepticism and cynicism. Skepticism is intellectually rigorous. When you chose not to take something at face value, but then you take the next step to investigate it for yourself and check it out for yourself. You’re not being lazy. Rick Brunson:                    Cynicism is lazy. Cynicism dismissed out of hand any information that’s being presented to you because you just automatically assume that the source that it’s coming from lies. So you don’t make any effort to investigate for yourself and your brain turns to mush. You’re a happy little cynic. You’re self satisfied because you think you know because you assume that things are not true because a person is lying. Right? That’s lazy. It doesn’t make for good citizens. Good citizens are skeptical, just like a good journalist should be skeptical, but not cynical. Rick Brunson:                    I think to Grant’s point, where we get in trouble in journalism is when we let our skepticism turn into cynicism. Then when the story is already predetermined and you’re coming to Grant for a quote to fill in a gap because you already got the story in your mind because you already assume certain preconditions about things or people, that’s people a cynical journalist or a cynical reporter. That’s not healthy for democracy either. So good, rigorous skepticism. Rick Brunson:                    I tell people, look for news organizations that have rigorous systems internally of authentication. The [Austric 00:26:03] Journal for one, I’m getting ready to leave here today, go back to the campus and I’ve got 25 students sitting down for the Dow Jones News Fund Exam for their national internship program. Dow Jones is the slowest notification on my feed. When something breaks, I hear from six other companies before I hear from the Wall Street Journal. They’re slower. I don’t care because they have six levels of fact checking and authentication before they put something out. Because they do that, I trust their information more than somebody whose headline is coming across my screen first. Rick Brunson:                    Look for and support with real money, a subscription, or if it’s NPR and PBS a gift or donation, support sources of information that have good rigorous internal mechanisms of fact checking before they put information out. So that was my advertisement on that. Paul Jarley:                         So I’m reading a book right now called 21 Rules for the 21st Century. There’s a chapter on fake news. I’m a big believe in simple rules. The simple rule that was offered there is that if you’re not paying for your media, you probably shouldn’t trust it. Is that fair? Grant Heston:                   I think that’s very fair. I mean, journalism and reporting, it’s a profession. You go through training and you go through rigorous work. Just like if you were going to go to a doctor, you want to make sure they know what they’re doing, they practice it, they had recommendations, you should do the same thing for your news sources. Make sure you go to places that are trusted, that have processes like Rick said, in place, that can put up guards against fake news getting into the stream. Paul Jarley:                         None of you mentioned regulation or legal action as a potential solution to the fake news problem. Why? Rick Brunson:                    Well, it’s on the minds of certain Americans. IPSOS just did a poll where the good news was that 85% of Americans believe idealistically in the concept that a free press is essential to a democracy. So 85, that’s the good news. There’s a critical mass of people who still believe that a free press is important and crucial to a democracy. But 26% of Americans in that same poll said that the president should have the power and ability to shut down news organizations that “do bad things.” So, one in four american are ready to toss out the constitution to give the president the ability to shut down news organizations that do bad things whatever that means. There’s people ready to agree with changing libel laws and things like that to make it easier to shut down press organizations that they don’t like or think are doing harm to the country. Paul Jarley:                         But you’d rather have the fake news out there than to give government the power to do that? Rick Brunson:                    Absolutely. Paul Jarley:                         [crosstalk 00:22:59] argument. Rick Brunson:                    Absolutely. Grant Heston:                   I think it’s an incredibly slippery slope and I think fake news, demonstrably false news is one thing but I think the point is that we’ve made so far this morning that there’s a lot of things labeled fake news that people just don’t like. You know, you’ll see somebody on a Monday say, “That media outlet, that’s fake news! That story’s fake news.” On Friday there’s a different story comes out, says, “Hey! Look how great I’m doing. You read it in such and such.” So it’s really content driven, not the fact that it’s unreliable source. Cindy Barth:                       Many times, I think you’ll also see actual fake news sites, you’ll never see a correction on anything that they do.That’s going to be missing. But you know, if you’re a legitimate news organization, if you make an error, and yes, we all make errors from time to time, you correct it and you correct it in a very visible way so that everybody understands what the error was, what was corrected. Sometimes with the fake news stuff, it’s just out there, just kind of free floats forever and people continue to share it, but you’ll never see anything mentioned about anything be corrected in it. Paul Jarley:                         So you think traditional news media has become more opinion driven and perhaps more polarized because of fake news? It’s so crowded out there, to stand out. I assume you were all taught that you wanted to report the news, not be the news. But I might make the contention today, if you aren’t the news, or if you aren’t the trusted source of news that are giving somebody a take, your future is probably not very bright in the business. Is that fair to put that on fake news? Rick Brunson:                    I don’t know about fake news. I think opinion started creeping into the news columns before Donald Trump came along. It’s been leeching into the news columns for years. I don’t think that’s a good thing. I think people see it and they smell it. Among good smart, reasonable people that I converse with who are highly skeptical of journalism and the news business, that’s always the first thing that they mention, that they see and smell too much opinion in articles that are supposed to be straight news. I don’t think that’s … I think that’s bad for us going forward. We’ve got to find a way to … Rick Brunson:                    But to your point, Paul, people also seem to want news with an edge, news with a voice, news that- Paul Jarley:                         Or with meaning right? I get all kinds of information. Rick Brunson:                    News organizations get conflicted about this because we get mixed messages from consumers about what they really want. Paul Jarley:                         And you do [crosstalk 00:25:46] signals in fairness. Rick Brunson:                    Yes, right. Grant Heston:                   I think it’s too about what people want versus what they need. You know? I think maybe one of the things that have hurt media companies over the years has been being able to track page views. You need to report on what’s happening at city hall that may or may not get a lot of page views. It’s pretty easy to report on things that will attract page views. We all know what those types of stories are. Those are easier to do, they require less work, they require a less sophisticated, maybe an entry level person can do that as opposed to somebody that’s been there 25 years. Grant Heston:                   I think that’s driven a lot of what we’ve seen as well. I guess, maybe I’d ask a question, if I could Paul- Paul Jarley:                         Yeah, of course. Grant Heston:                   -To Cindy and Rick. Do you think news organizations are passive sort of bystanders to this happening or are things happening that they’re contributing to this epidemic? Cindy Barth:                       I think the whole introduction of being able to see in real time what’s actually happening with this story is really frightening sometimes because, I’ll be honest with you, there are certain things that we know, all we have to do is put these key words in a headline and we’re going to have what we call a “Clickalicious” day because everybody in town is going to be going, bang, bang, bang, bang, bang on that story. We know that. Cindy Barth:                       So with that becomes the responsibility of, is this actually news that you should report or are you just trying to get clicks? It’s something that we measure every day, honestly. There are certain stories, as you say, you should report and you must report, because they’re important. People need to know that. Will they get the page views? The clicks? No, probably not but you still need to report it because people expect you to report it. So it is kind of a conundrum. If you’re not careful you can error one side or the other pretty quickly. Rick Brunson:                    Yeah, a big part of this, and we’re in the college of business, a big part of this is that the business of news has been radically disrupted by digital. Radically disrupted. What you used to be able to count on in terms of revenue from subscriptions, it is gone. The advertising market has been chopped up. Lilly Tomlin used to say, “It’s not called ‘show art,’ it’s called ‘show business’.” Right? Rick Brunson:                    It’s the same thing with the news. News companies are there to make money. And because the business model has been seriously disrupted, news companies are having to scramble to chase more eye balls on their content because that’s where the advertising dollars these days in digital come from. There is the temptation to spend more of your resources on things that maybe aren’t that important or substantive, but will generate traffic and it’s not good. Rick Brunson:                    People having to make the decision of, yeah, we need to give the broccoli, but maybe we need a little cheese on the bro colli to make it more appetizing. Paul Jarley:                         Honestly Rick, when you were mentioning the polling data before about how many people support the free press, I hesitated on the word “free” and maybe what they were telling us there. Why should I pay for news when I can get it for free? And how that’s kind of impacting kind of what’s going on. Cindy Barth:                       It does because you know, when you put some kind of a paywall block on a story, I will always invariably at some point during the day, if it’s a really popular topic that you know people want to read, will invariably get emails of people complaining, “Well, I can’t access this? Why can’t I access this?” It’s like, “Because you’re not a subscriber.” “Well, I don’t want to subscribe, I just want to see this story. Can you just let me see it for free?” “No.” Paul Jarley:                         But that’s a less clickalicious day. Cindy Barth:                       Yeah. Grant Heston:                   I’ve got to tell a story about clickalicious from a UCF perspective. Paul Jarley:                         That’s totally getting into the cheese [crosstalk 00:29:52]. Grant Heston:                   Right. We- Paul Jarley:                         You’re in the lead, Rick. Grant Heston:                   At UCF are always amazed how often UCT appears in headlines, where the connection is very tenuous at best. Paul Jarley:                         Somewhere in Europe, right? Grant Heston:                   Right, like a former UCF student, it was semester eight years ago that a former UCF student, but our favorite was we’re waiting for the headlines of Rollin’s college student arrested on Rollin’s college campus near UCF. Grant Heston:                   I think it goes because we know that you have 280 thousand alum who live around central Florida so you’re going to have people who click on that kind of thing. Paul Jarley:                         So that gets us to the question, so what do students need to know about fake news? That’s the business I’m in, right? How do we help prepare them for that? Or discern that. Rick Brunson:                    Go ahead, please Cindy. Cindy Barth:                       I think it goes back to the same thing of really what we all need to be conscious of, and that’s not just taking things at face value, first look. It’s really incumbent on all of us to do a little bit more research, be a little more thorough in what we think that we’re reading and make sure that it’s actually real, because I’m not sure that we’re ever going to get rid of fake news at this point. It’s just such an easy thing to throw around. But I think that we have to begin training people and kind instilling in them the understanding that it’s really important that you know that what you’re reading is actually factual. You don’t want to be helping spread something that’s not proved. You don’t want to be just relying on something that’s not true. Paul Jarley:                         Rick, what do you think? Rick Brunson:                    This whole thing, well, the business that we’re in at UCF is critical thinking no matter what our discipline is. It’s turning out citizens who are good critical thinkers. This whole enterprise of America is built on the idea and a crucial nature of informed citizens. Madison, Jefferson, all those guys, their biggest fear was a dummy with the vote. It really was. They put education in place, they put the first amendment in place. You have to have informed citizens. You have to have facts before you can have meaningful debate. Rick Brunson:                    Who gathers those facts? Primarily journalists, but all of us, as citizens, as consumers, owe it to ourselves, and this is going to sound corny and cheesy, but we owe it to our country, we owe it to our communities to inform ourselves with good solid information and intel that’s actionable. We’re coming up on midterm elections and we’re going to be voting about a whole host of things including amendments, we’re constantly dealing with the constitution in Florida. You have to have good, solid information upon which to exercise your voice as a citizen. Rick Brunson:                    It’s important that you be able to think critically, that you be able to weigh different sources of information, look at their sourcing, look at how recent they are, how primary are the source documents or the expertise of the people being interviewed? Do they know what they’re talking about? What’s the intellectual basis of what this news article or story on television that you’re reading, what is it based on and is that solidly sourced information? Rick Brunson:                    It comes down to being critical, can vigorously skeptical about what you’re reading without becoming Cynical and not reading anything. I’m worried about the person whose just thrown their hands up and given up and been like, “I’m not going to read anything and just look at cat names all day.” That person scares me more than anything. Paul Jarley:                         Grant? Grant Heston:                   I think specifically the business students, I think of the interdisciplinary work, like the college of medicine does with the Rosen College of Hospitality Management, or the college of business does with engineering. Wouldn’t it be interesting to see if the Nicholson School and the college of business could work on, how do you monetize real news? How do you overhaul a business model that really isn’t working? Grant Heston:                   I remember, I came to the Sentinel in 2000. We just gave everything away for free. That’s hard to pull that back. You’re used to getting something for free, it’s going to be hard to get people to pay for it. It’d be interesting to see, is there a different type of model that’s fit for the 21st century that brings value to the news gathering and the expertise that journalists have, but also elevates it clearly above all the rest of the noise and the nonsense that’s out there. Paul Jarley:                         It’s my podcast, so I get to go last. Distorting or inventing the truth is not new. It’s been around well before the printing press. It has been part of the arsenal of totalitarian regimes for a long time. What is new is that today anyone can be a reporter who creates and disseminates real as well as fake news far and wide. Even more dangerous is the marriage of fake news with data analytics. Not everyone has access to such metrics, but those who do can target their falsehoods to people who are most receptive to their message and most likely to disseminate it widely through their networks. Paul Jarley:                         It’s impossible for any of us to check every fact, we all come to rely on certain sources that have earned our trust. Perhaps the best weapon we have against fake news is to question any story or source of data that just confirms what we think we already know. Paul Jarley:                         It is increasingly likely that you are targeting to receive that information by an algorithm that understands your biases well better than you do. Fake news will continue to be a thing so long as it’s effective and motivates people to do what the fake news reporter wants you to do. In a democracy founded on a free press, it’s not going away any time soon. Reader or viewer, beware. What’s your take? Paul Jarley:                         Check us out online and share your thoughts at business.ucf.edu/podcast Paul Jarley:                         You can also find extended interviews with our guests and notes from the show. Special thanks to my producer Josh Miranda and whole team at the Office of Outreach and Engagement here at the UCF college of business. And thank you for listening! Paul Jarley:                         Until next time, charge on.        

Featured Guests: Kelly Dowling – Assistant Dean for Advancement, Stony Brook University College of Engineering and Applied Science Ken Bradley – Former Winter Park Mayor Ron Piccolo – Chair, UCF Department of Management Mark Dickie – Professor of Economics Jonathan Hasford – Assistant Professor of Marketing Carolyn Massiah – Associate Chair, Department of Marketing & Associate Lecturer, Marketing Episode Transcription:   Paul Jarley:                       Green Acres was a popular TV show when I was a kid. Simple plot line. Wall Street attorney forces socialite wife to give up New York and move to the farm. Cultures class, chaos ensues, but now it seems the tables have turned. Chickens are leaving farms in favor of urban backyards. Some inner city chickens even have Facebook pages. What’s going on here? Are backyard chickens a thing? If so, why, and more importantly how can we stop them? This show is all about separating hype from fundamental change. I’m Paul Jarley, dean of the College of Business here at UCF. I’ve got lots of questions. To get answers, I’m talking to people with interesting insights into the future of business. Have you ever wondered, is this really a thing? Onto our show. Paul Jarley:                       My wife and I lead complicated lives. Careers and homes in two different states, five children spread across four time zones, our club’s soccer schedule that takes Suzanne and sometimes meets towns far and wide, my work related travel, and our love of experiencing new places. Honestly, there are days I’m not sure where I am when I first wake up. One morning a few years ago, I was home in Lexington when I heard this. Suzanne was raised on a farm, but I was pretty sure we weren’t at her parents’ place. When she woke, I asked her about hearing that rooster crowing. She smiled and told me that the neighbors have installed a chicken coop, and that we were getting farm fresh eggs as part of the deal. “Much healthier and better tasting than store bought eggs,” she stated with authority. Everybody knows eggs come in two rows in nice little cartons that sell for a few bucks at the grocery store. If you want to go crazy, you can buy the free range chicken variety, pay a dollar more, feel morally superior, and cook an extra one because they’re puny. Paul Jarley:                       No one in their right mind believes it makes any economic sense to raise chickens at home. Besides, they’re dirty, smelly creatures. There’s a reason most of us stay away from the harsh realities of the food chain. I cracked a few eggs, scrambled them, and took a few bites. Different, not obviously better, I thought. Not a thing. Just a few hippies. This thing will be gone very soon. It turns out, I may have been wrong. Kelly Dowling:                 Hi, chick chicks. Paul Jarley:                       This whole chicken in the backyard thing has got some legs. The government has even released a series of studies on it. The best data on chicken migration to the cities comes from a 2013 study by the US Department of Agriculture. They looked at urban chicken issues in LA, Miami, Denver, and New York City. A few takeaways. More than half a percent of single family homes in these urban areas have backyard chickens. That’s a lot of chicken. Second, overall more than 40% of people in these cities were in favor of allowing chickens in their communities. That’s a lot of chicken support, and third, nearly 4% of households without chickens said they plan to have them in the next five years. Now, lots of people tell you they intend to do something and never follow through, but let’s take that last nugget as evidence that urban chickens are on the rise. The USDA did. To understand why people do this, I wanted to get into the mind of an urban chicken owner. Someone who is harboring those dirty birds. Kelly Dowling:                 Really, I think of it as the pet that makes you breakfast. Paul Jarley:                       That’s Kelly Dowling. Kelly has her MBA from UCF. She is wonderfully quirky, and she was my development officer. These days, she’s assistant dean for development at Stony Brook’s College of Engineering, and most importantly she is a novice urban chicken owner. Kelly Dowling:                 I have not done the chicken math as yet, but I can tell you so far I’ve had these chicks and I bought these chicks at four days old. I’ve got the feed, the brooder, the chicken run, the chicken coop. I bought a chicken playground set for them to jump up around on. I have built a little chicken sanctuary, and so far I’m all in about $1,700 dollars. Paul Jarley:                       Chicken playground. Since Kelly is a novice chicken owner, we’re going to use the resources of UCF to help her out. I’ll do the chicken math for Kelly. Kelly has six chickens. Egg production varies a bit by breed, but to keep the math simple, let’s say these chickens lay 500 eggs over their lifetime. Not a bad estimate. That means those six chickens will produce 3,000 eggs. She’s in $1,700 dollars. A little of that is variable cost, mainly chicken feed. So, let’s say that her fixed costs are $1,600 dollars. That means just the fixed cost of an egg for Kelly, 53 cents. That translates into $6.40 a dozen. Comparison, Publix $2.49. Whole Foods, $4.99. Now in fairness to Kelly, she may be able to spread her fixed costs over more than a couple of years. That’s about the average length chickens are regular egg producers, but if you consider that there still are more variable costs, it’s not an economic bargain. Don’t believe me, believe a real economist. Now, Mark Dickie is a professor in our economics department. As he explains, the industrial egg complex is built to minimize costs and Kelly’s six little chickens, well they just can’t really complete. Mark Dickie:                    So, the industrial egg complex has many, many chickens. They’ve got everything automated. They’ve got everything down to the last cent measured, and they’re going to do it more efficiently. She probably has happier chickens than the industrial egg complex, but doubtful that she’s gonna get the eggs more cheaply. Paul Jarley:                       In fairness to Kelly, she mainly wants to enjoy them as pets. It’s how you end up spending $1,600 dollars on a chicken mansion, but what I really want to know is, do they love you back? Kelly Dowling:                 One of them seems to at least enjoy my company. The other five run screaming every time I come into the coop. Paul Jarley:                       And then there’s the biggest question facing any pet owner. When you go on vacation, what do you do with your chickens? Do you send them to a chicken pound where they hang out with other chickens? What do you do? Kelly Dowling:                 I have two extended feeders so my chickens can live in their coop and in their run for a week without any problem for food and water. I also have a battery powered door opener and closer, so every night that door to their coop closes automatically. Every morning, it opens automatically. So, I have them on automatic pilot. Everything is easy peasy for me. Paul Jarley:                       Chickens seem a lot like cats. Disinterested in love, but low maintenance. Kelly Dowling:                 So, I hope that I like to eat the eggs of my chickens. I hope that I like it. I’m not entirely sure because a tiny bit of me is a little grossed out by this, but I feed them really well. Paul Jarley:                       I told you she’s wonderfully quirky. Let’s help Kelly out here. Jonathan Hasford:          Anything that we invest time, and effort, and energy into we feel more attached to, we feel more bonded towards and so we like it better. Paul Jarley:                       That’s Johnathan Hasford, assistant professor in our marketing department. Johnathan thinks Kelly is gonna like those eggs just fine. Jonathan Hasford:          There’s literature and marketing research on co-production of value and stuff like that, and so- Paul Jarley:                       Talk to me about that. Jonathan Hasford:          Yeah, I mean companies from the time they start to innovate a new product, the benefits are immense. They can bring in consumers and have the consumer feel like they’re a co-producer in whatever this idea, service, object, thing is that’s being developed and so it could just be the fact of co-production in a sense of, “I feel like now I’m contributing more to the food that I produce.” Paul Jarley:                       So, she’s going to love the eggs, but can she really raise the chickens? Kelly Dowling:                 You know me. I was born in Detroit, so I didn’t come by this naturally. Paul Jarley:                       No, you’re not really prepared for this. Kelly Dowling:                 That’s absolutely correct. It took me a year to get it together. I took a backyard chicken class, I bought several books, I told everybody I know I was gonna get chicken. I sought a lot of advice from people, and then after about a year I felt comfortable in starting. Paul Jarley:                       But Kelly seems to have prepared well for the challenges that lie ahead. Ron Piccolo:                     And then only once that’s done does someone like Kelly have confidence in her ability to raise chickens. Paul Jarley:                       That’s Ron Piccolo, chair of our management department and an expert in how people build confidence when facing new challenges. Ron has only one piece of advice for Kelly; maybe she should join an urban chicken support group. Ron Piccolo:                     My reaction is if someone’s making an effort to raise chickens, which is a rather unique circumstance, they’re gonna look for validation of that effort from other people who are doing the same thing. People like to be different, but not all that different, and so she’ll want to do something distinctive and get support and validation from others who are doing similar things. Paul Jarley:                       But not everyone has prepared like Kelly, and winging it can lead to a rarely talked about issue: chicken abandonment. Kelly Dowling:                 This is an issue, and there are many Facebook pages for re-homing chickens and roosters. Paul Jarley:                       It doesn’t always end well though, people. Cover the kids’ ears. Kelly Dowling:                 [inaudible 00:09:18] are people that will let them just run out into the yard and a raccoon, or a hawk, or an osprey will pick up that chicken. Remember, chickens are on the bottom of the food chain not just for us as humans, but for the entire animal kingdom. So, if we don’t want them anymore all you really have to do is let them out in the yard and another animal- Paul Jarley:                       Yeah, you get the idea. Roosters crowing, chicken abandonment, predators lurking behind the bush, kids wanting to play in the chicken coop. Makes you wonder, what do your neighbors think? Has anybody had any concerns about their property values falling or chickens that are getting in their backyard, or [crosstalk 00:10:02]. Kelly Dowling:                 Doubtful. I have to tell you, besides the predators my number one concern is what the neighbors think. I have not gone around my neighborhood and had the chicken talk. Paul Jarley:                       So, we had the chicken talk for Kelly. We went to her former mayor Ken Bradley to ask him about the types of complaints people raise about urban chickens. Ken Bradley:                    I’m not aware of any complaints. I’m aware of residents being concerned when we were looking at our ordinances, and I know the City of Orlando went first. Oviedo had done some things. Paul Jarley:                       Oviedo is chicken heaven, by the way. Ken Bradley:                    You know, Winter Park, this is one area where Winter Park didn’t necessarily want to be at the forefront of. We wanted to see what other municipalities and others would do, and for the most part I’m not aware of any complaint. Paul Jarley:                       Winter Park has been a little chicken about legalizing chickens, but rogue chicken operations don’t seem to be a problem either, and Kelly has good reasons for wanting those birds. Do you distrust the food supply? Kelly Dowling:                 Absolutely. Paul Jarley:                       Give me your top three hesitations. Kelly Dowling:                 Chemical additives and preservatives, the freshness, and ultimately the experience of the animals in the food supply. Paul Jarley:                       Johnathan backs Kelly up here. Jonathan Hasford:          The grocery store does …eggs sometimes will take thirty days from the time the egg is hatched [crosstalk 00:11:26]. Paul Jarley:                       And I know from my days at an unnamed, large Midwestern university that when you walked past the poultry research building, it sounded like this, but I think the real reason that a lot of people raise urban chickens is this. Kelly Dowling:                 So I feel in control of what they’re eating, and so I feel in control of what I’m eating. Paul Jarley:                       I blame FUD marketing for people’s insecurity around the food supply. Listen to Johnathan Hasford talk about fear, uncertainty, and doubt in food marketing. Jonathan Hasford:          In food, I think that when it comes to health one of the biggest motivators that people can use is fear and anxiety we’ve seen in over the years when it comes with what you eat might be causing cancer or something, and so I think it’s an easy thing to play on people’s fears and then offer them a route to fixing that. It’s a great way to motivate people’s behavior if you can pull it off effectively. Paul Jarley:                       One last insight into the mind of Kelly Dowling. I don’t know what to do about this. Are you gonna have your own Facebook page for your chickens? Have you considered that? Kelly Dowling:                 Not only have I considered it, I don’t know if you’ve ever watched chickens, it’s really [crosstalk 00:12:39]. Paul Jarley:                       No, don’t got the time. Kelly Dowling:                 It’s calming, and it’s relaxing. There’s something about watching chickens peck, and scratch, and peep that is just harmonious, and so I thought I’m gonna put some chicken cams up and people can sign into my chicken cams and watch my chickens. Paul Jarley:                       Can Kelly’s chickens be social media stars? We asked Doctor Carolyn Massiah of our marketing department to take a look at Kelly’s chickens and give us her assessment. Carolyn Massiah:            This would actually be Facebook worthy. Paul Jarley:                       Carolyn takes this conversation in a bit of an unexpected direction. Carolyn Massiah:            This would probably end up being a mid-workday break for individuals to escape from the office you’re in to nature, and be able to watch it. I’ll tell you, it’s a form of meditation that people aren’t having to put the effort into calm themselves for meditation, to talk themselves through, to isolate themselves in a quiet area. Paul Jarley:                       Believe it or not, Carolyn goes on to suggest a multi-platform approach. Carolyn Massiah:            Actually, what would probably be really neat is they had their own Twitter so that then … yeah, that would really build that all together. You’d have the complete brand then. The Facebook, the Twitter feed, and Snapchat. Share the names and have them form relationships. Next thing you know, people are buying t-shits. Paul Jarley:                       You can tell why Carolyn is in marketing. She goes on to talk about the lessons for students in urban chickens. Carolyn Massiah:            First of all, they can learn that no matter the technology that they know, particularly here in the United States we see a shift to simplicity, particularly at home and in extracurricular activities, and so that might actually be the new frontier of products, is actually in simplicity not technology. The other thing that we can learn or our marketing students can learn as they go forward is, literally anything can become a product. So, even simplicity. Paul Jarley:                       Yeah. I’ve lost control of this whole podcast, and probably the argument around urban chickens, but for the record, are urban chickens a thing? From Kelly Dowling. Kelly Dowling:                 As more and more people become concerned over what they’re eating, the backyard chicken movement will continue to grow because of the control issue. Paul Jarley:                       It gets worse. From Johnathan Hasford. Jonathan Hasford:          Oh, sure. Whether it’s because it’s just a hobby and things that you like to do, or whether you’re trying to retain a part of yourself if you used to live in the country and now you’ve had to move into the city for work- Paul Jarley:                       She’s from Detroit, Johnathan. Jonathan Hasford:          Or just as it becomes more efficient, people might use it to save money. Paul Jarley:                       They’re not saving money. Jonathan Hasford:          As this grows, companies devoting R&D and technological development to help people do this in their own backyard more efficiently and cost effectively. Paul Jarley:                       I’m thinking of firing him. Finally, a voice of reason… from Ron Piccolo. Ron Piccolo:                     I say it’s a passing fancy. I suppose people finding ways to be different and looking for healthier ways to eat that’s against these prevailing culture, that’s not gonna go away, but raising chickens is just one example of that. Paul Jarley:                       There’s a reason why he’s a department chair, people. From Mark Dickie. Mark Dickie:                    I’m glad they’re not a thing next to my backyard. Paul Jarley:                       From College of Business Hall of Fame member, Mayor Ken Bradley. Ken Bradley:                    I don’t think it’s gonna go away. I have a cousin that has backyard chickens in Seminole County, and they love it. It’s a great addition to their family. Paul Jarley:                       From Carolyn Massiah. Carolyn Massiah:            I think they’re gonna say the more we saturate ourselves with technology everywhere else, the simplicity we look for, and its immediate access to simplicity either through a social media like Facebook or Twitter, or stepping out into your backyard and experiencing it. It looks like an idea ready to hatch. Paul Jarley:        It’s my podcast, so I get to go last. Simplicity and control are powerful motivators. Oliver Douglas moved his wife from New York City to Hooterville in search of that simplicity and clean living. Trouble was, he was a terrible farmer and his life was anything but simple. In fact, it was chaos. I’m afraid there are many more Oliver Douglases in the world than there are Kelly Dowlings. The urban chicken movement might be comprised of more than just a few hippies, but I don’t think store bought eggs are going away any time soon. What’s your take? Check us out online and share your thoughts at business.ucf.edu/podcast. You can also find extended interviews with our guests and notes from the show. Special thanks to my producer, Josh Miranda, and the whole team at the Office of Outreach & Engagement here at the UCF College of Business, and thank you for listening. Until next time, charge on.

Featured Guests: Jesse Wolfe – Founder / President, O’Dang Hummus Cameron Ford – Director, UCF Center for Entrepreneurial Leadership Michael Pape – Dr. Phillips Entrepreneur in Residence; Lecturer, Management Donna Mackenzie – Executive Director, StarterStudio Carol Ann Dykes Logue – Site Manager, UCF Business Incubator Episode Transcription:   Voice:                                “If you build it, he will come.” Terence Mann:                “He will come, Ray. He will most definitely come.” Paul Jarley:                       That’s my favorite line from Field of Dreams. But, what if you can’t build it? Jesse Wolfe:                     It came out to a $700,000, almost a million dollar, order. And they needed them to be about $10 a cart and I could not figure out how to get them below $25 a cart. Paul Jarley:                       Or, what if they don’t come? Cameron Ford:                The Google Glass, people started using it out in public and stuff like that, and quickly were scorned as being what were described as Glass-holes. My understanding is they pulled from the market. Paul Jarley:                       Lean start up offers a different approach, but is it really a thing? Or, is it just academics hyping the scientific method? Paul Jarley:                       This show is all about separating hype from fundamental change. I’m Paul Jarley, Dean of the College of Business here at UCF. I’ve got lots of questions. To get answers, I’m talking to people with interesting insights into the future of business. Have you ever wondered, is this really a thing? Onto our show. Paul Jarley:                       This is how significant businesses started back in the day. Michael Pape:                 What we were, I’ll just say, required to do as an entrepreneur with VCs with trying to get, maybe, economic development funds. Paul Jarley:                       Yup. Michael Pape:                 And this was in the biotech space. Paul Jarley:                       That’s Dr. Michael Pape, Professor of Practice here in the College of Business, and Director of our UpStarts program. Michael Pape:                 So it was a tech-oriented business that I’ve been involved in, was write the business plan, and I have sat down, myself and with my teams, of writing the 40 to 60 page business plan. The fat startup, if I may define it that way, had you do that. Venture capitalists would request it, and they would want to make sure that you saw the plan from beginning to end. Paul Jarley:                       Then a funny thing happened starting in the early 1990s. Universities started to develop entrepreneurship programs. They did this partly to serve their economic development missions, partly because donors loved to give money to this cause and partly because more and more students became interested in entrepreneurship as a career path. Paul Jarley:                       In the early 1990s, ideals spun out of Stanford, with an emphasis on design thinking. Another decade passed and Berkeley started developing what has come to be known as lean start up. It had a coming out party in 2011, with the publication of Eric Riles book by the same name. But, are universities and business schools really the place to launch business startups? Paul Jarley:                       I had my doubts. We excel at getting rule followers great jobs in companies who are looking for functional talent. We really aren’t geared up to help people who want to color outside the lines, pursue their crazy dreams, even when people say they’re wrong. That said, a quarter of my students say they want to start a business, and students seem to love the lean startup methodology. Cameron Ford, Director of our Center for Entrepreneurial Leadership, has a pretty obvious reason why. Cameron Ford:                Our students love the lean approach because, of course, they don’t have any resources. So- Paul Jarley:                       Simply put, they’re broke. But what exactly is lean startup, and what are its challenges? Jesse Wolfe:                     That’s how I started my business. Paul Jarley:                       We’re going to take you on a journey with this guy. Jesse Wolfe:                     Lean startup, bootstrapping 101. That’s where great businesses, in my opinion, come from because people that start off with too much funding usually have an issue staying on course. When your back’s against the wall is when I feel you think the fastest, the brightest, the quickest and you become the most resourceful. When you have too much money you tend to get lackadaisical in my opinion. Paul Jarley:                       That, my friends, is Jesse Wolfe, CEO and founder of O’Dang Hummus, and quite frankly a soundbite machine. Jesse Wolfe:                     We run a very successful, thriving business and people are like, “Oh where’s the Lamborghini?”. I’m like, “Someone else’s hands because I’m dumping all my money back into the business”. Paul Jarley:                       Now let’s follow Jesse’s startup story. A startup isn’t the same as a company. Back to Cameron Ford. Cameron Ford:                It’s not a miniature version of a company, it’s actually a vehicle, for remaining humble, viewing all of your ideas as hypotheses and going out and collecting data to validate or invalidate these things and move forward- Paul Jarley:                       It’s a product development process more than a- Cameron Ford:                I would say it’s more of an uncertainty reduction process. Because it’s not just about the product, it’s also about relationships. So it’s kinda three elements to building a company. You gotta have conceptual kinda stuff put together, you’ve gotta have social stuff put together, people right and you actually have to invest material resources. Paul Jarley:                       Interestingly, Jesse got started in exactly the way Mike Pape described except he didn’t have investors. Jesse Wolfe:                     I had a business planning writing class with professor Michael O’Donnell. He told us we had to come up with a business plan idea and I didn’t want to be a part of a team that wrote for another bar concept. So, I had this idea after I had my wisdom teeth pulled out for a Ben and Jerry’s style Hummus company. And when I started writing the business plan for it, I realized there was this massive gap in that market. It was almost billion dollar category and there was one big contender really monopolizing it. And it was really primed for competition to come in. Paul Jarley:                       Jesse had a plan but no product. So he got busy with the help of his grandmother. Jesse Wolfe:                     I actually started O’Dang Hummus with about a hundred and fifty bucks. My grandmother gave me a food processor, so that was the freebie. And the rest of it was honestly just ingredients and some labels from like a little local printer that hooked me up. Paul Jarley:                       Jesse had created what we call a minimum viable product or MVP. Cameron Ford says, it’s really important to have a prototype. Cameron Ford:                Because you give them something tangible, I always like to tell people a picture’s worth a thousand words. A prototype is worth a thousand pictures. You get something that people can literally see and put their hands on that’s very tactile. That often will enhance the conversation and imagining process for a lot. Paul Jarley:                       You could do more than just touch Jesse’s prototype. You could taste it. And it was yummy. Jesse Wolfe:                     And that was the basis you know, it got me in front of people getting a taste testing and samples. And then when it came time to really launch the product and start selling it, I entered the UCF Business competition called ‘The Joust’. Paul Jarley:                       Rather than seek out a network of advisors that could help Jess grow his business, he went straight for the financial kill. In retrospect Jesse realizes this may have been the biggest he made. Jesse Wolfe:                     Not getting more people around me quicker in that space was a bit of a hindrance. Donna Mackenzie:         I think starting a new business is sort of like waiting into the ocean with waves crashing around you and birds pulling you this way and that. Paul Jarley:                       Donna Mackenzie is executive director of Starter Studio. She thinks Jesse waited way too long. Paul Jarley:                       How early does that need to start? That mentorship and guidance. Donna Mackenzie:         Day one. Paul Jarley:                       Jesse didn’t win ‘The Joust’ and the big money that came with it. In fact, he finished third. Jesse Wolfe:                     I took third place in that. And I’m proud of that. Paul Jarley:                       That’s always the path to success in ‘The Joust’. Always finishing third! Jesse Wolfe:                     Third place is the winning spot. It’s not first, it’s not second, it’s third. Paul Jarley:                       The money is in third. Jesse Wolfe:                     The money’s in the third. Yup. Paul Jarley:                       You lost to women who wanted to pee in a cup. Jesse Wolfe:                     Yeah, that’s [crosstalk 00:06:57] I lost to a female urination cup so that’s one of my greatest prides thus far at UCF. But yeah, I took that prize money it was about four thousand dollars. And again, I launched now our multi-million dollar business with $4,150. Paul Jarley:                       But in fairness of that day, because I remember that day really well. Jesse Wolfe:                     So do I. Paul Jarley:                       I can imagine you do. I don’t think anybody there believed you didn’t have a killer product. I think they thought you couldn’t make any money at it. Jesse Wolfe:                     Yeah, agreed. Paul Jarley:                       Understand that Jesse isn’t the kind of guy who takes no for an answer. He decided to double down instead. Next stop, the real shark tank. Jesse Wolfe:                     Hello Sharks! My name is Jesse Wolfe. I’m a UCF student from Orlando, Florida and my company is O’Dang Hummus. Today we’re seeking $50,000 for 10% equity stake in my hummus empire. Paul Jarley:                       Jesse got his offer from the sharks but they took way too long with their due diligence. In the meantime, Publix came knocking. What’s surprising here, is they didn’t want Jesse’s traditional hummus, they wanted his hummus based salad dressing. So he signed a deal, found a packager and had to scale up production without sacrificing quality. Jesse Wolfe:                     We’re doing truckloads of chickpeas at a time right now but it’s the same exact quality and consistency. As a matter of fact, we’re still using- Paul Jarley:                       As what came out of your blender right? That’s the tough part right? Jesse Wolfe:                     Same blender. The toughest thing I’ve had to bridge. Paul Jarley:                       Problem was, Publix didn’t know what to do with it. Paul Jarley:                       They didn’t know where to put that product. Jesse Wolfe:                     Exactly. Exactly. Paul Jarley:                       So where I would always find it is near the deli, kind of by where the rest of the hummus was but not really. Jesse Wolfe:                     Not really it was by like, the gourmet mustards and stuff. I’m like alright this is random. Paul Jarley:                       And I knew right away, I thought “Oh that’s a problem.” Jesse Wolfe:                     Yeah it was a huge problem. And we called it a sauce. We let people convince us to call it a sauce. It was so jacked up. Yeah, and again but it was such a good learning lesson because we re pivoted to what, I mean it’s always been a dressing. So we relabeled it a dressing, we fixed the formulation, we listened to our fans and we delivered a product that’s bar none phenomenal. Paul Jarley:                       Since that time, Jesse has had more than his fair share of struggles. Jesse Wolfe:                     Never giving up. There’s so many times that I look back and thought we were dead and I stepped one more step. Paul Jarley:                       He’s fixed his mentoring deficiencies. Jesse Wolfe:                     But where I’m at today, I have very strategic, very specific mentors that are in the food space, that know packaging, that know consumer product goods. These are people that are really helping me thrive in my space. Not all mentors are created equal. Paul Jarley:                       And he doesn’t panic the way that he used to. Jesse Wolfe:                     Don’t burn everything down around me, you know trying to freak out. I just step back and I go “Here it is.” Right, we have another problem. Instead of panicking and pointing fingers at whose fault it is, what’s the solution. Paul Jarley:                       And he is definitely a man who knows his value proposition. Listen to his pitch to Costco. Jesse Wolfe:                     So, you know what I did is I walked in and I put a plate of salad down. A really beautiful salad. And I said, “Here’s one salad.” and I put a second plate down, I said “Here’s another salad.” And I took a bottle of canola oil that you cook with and I poured it all over top of this lettuce and I took a bottle of water and I poured it all over top of this lettuce. And then I took about a cup and a half of sugar and I poured it on top that salad. And then I took mine and I put chickpeas, beautiful fresh cooked chickpeas, I put fresh squeezed lemon juice on it, put it on the side and I put beautiful extra-virgin olive oil. And I put a fork right between the two plates. And I said, “Now, I want to ask you which salad would you like to eat?” Jesse Wolfe:                     Our food system in America is broken. We’re the only salad dressing in the United States to gain national distribution being 100% plant based. Priced completely competitive to the big guys. We’re not a $10 salad dressing. We’re in Wal-Mart at $3.79. Paul Jarley:                       No doubt about it, Jesse is a wonderful UCF success story. But is he typical? Does lean start up work everywhere? Or do other kinds of companies face other kinds of challenges? Carol Ann Dykes Logue: There are companies that failing fast is better for them, I say sometimes it is. Paul Jarley:                       Carol Ann Dykes Logue is site manager for the UCF incubator program. She stresses the difficulty a lot of the high tech companies have in implementing the lean start up approach. Carol Ann Dykes Logue: It’s very difficult to apply the lean start up methodology many times. I’m working with very leading edge technology and innovation companies where the first question really is, “Can we make the technology work?” Paul Jarley:                       That takes money, sometimes lots of it. Then there’s the challenge of getting technologically oriented minds to focus on the value added to the customer. Here’s a recent conversation with one of her clients. Carol Ann Dykes Logue: And I kept asking him, “Tell me what you think. What’s the benefit of this technology that you are in the process of developing?” Throw something at me that was really a technical capability, I would come back to “Why should I care about that? How’s it gonna help me?” Tell me how it’s gonna help me. Carol Ann Dykes Logue: A lot of times I use analogies and turn the tables on them and ask them “Alright, share with me a recent buying experience that you’ve had. Tell me what went through your head.” And they can pretty clearly tell you that and then they go, “Ohhhh, I see now.” Yeah I didn’t really care how it does what it does necessarily, I care that it does what I need done. Paul Jarley:                       For students, finding the right people to talk to can be challenging when they wanna validate their ideas. Back to Cameron Ford. Cameron Ford:                Well I think in the early part of the process we’re working on with most students. I think for them it’s very intimidating to think about going out and talking to a bunch of people about their idea. They just don’t know that many people that can connect them to the kinda folks that it would be relevant to speak to. It’s one thing if they’re talking about “Hey I’d like to open up a food truck that’ll pull up here on campus and serve sandwiches to students.” Well then you can go around campus and talk to students right, that’s who you’re trying to sell it to. But if you’re trying to do something that might help the elderly or something like that, you need to go out and talk to 50 or 60 people. Where are you gonna find those folks? How are you gonna conduct those interviews? That part of the process can be pretty daunting if you’re a student trying to go and really do the lean start up process really the way it’s supposed to be done. Paul Jarley:                       Even when you find the right people to talk to, Donna Mackenzie says that the discovery process can lead to conflicting information. And it can be hard to sort out without experienced mentors. Donna Mackenzie:         Oh that’s the tricky part. You know, you get so much feedback and it’s sometimes hard to discern whether this is the right direction or that’s the right direction. Just giving them the tools but not giving them the guidance and the mentorship to kind of sort through all of that. I think that’s really where you get that analysis by paralysis and it’s hard to get unstuck from there. Paul Jarley:                       And if you skip this step, things can get ugly. Cameron Ford:                Don’t start organizing your resources and your people before you get your story straight. Because if you do that, you’re going to cause a lot of harm. A lot of things aren’t gonna work out, you’re gonna burn a lot of bridges. Paul Jarley:                       People lose confidence in you. Cameron Ford:                Right. Paul Jarley:                       And according to Mike Pape, there’s a lot more to creating a company than the lean start up process contemplates. Michael Pape:                 An investor’s going to ask you, you want $400,000 what are you gonna spend that on? Well, you have to justify the use of funds and- Paul Jarley:                       Ping pong tables probably aren’t it. Michael Pape:                 Yeah, aren’t gonna be it right. Exactly. And a big salary is not going to go [crosstalk 00:14:42] Yeah there’s something to that. Paul Jarley:                       So, you need to have a strong, long term financial plan. Michael Pape:                 So with financial modeling the first thing you need to do is you have to establish what are and what I call and try to convey, value generating milestones. Not just milestones but value generating. To accomplish each of those milestones and they’d be value generating because they can create an influction let’s say. The value for the company, they can move the needle per say. Paul Jarley:                       The hockey stick. Michael Pape:                 The hockey stick. But then there’s a cost associated with hitting each of those milestones. And the investor wants to know how much it will cost to hit that milestone which is the basis for your budget. Paul Jarley:                       Right. Michael Pape:                 Which you then transfer to a spreadsheet which is your pro form a budget which is your financial model. And if that cash balance gets below zero and is red, I ask do you have a company? Paul Jarley:                       No. Paul Jarley:                       It’s time to call the question. “Is lean start up really a thing?” from Donna Mackenzie. Donna Mackenzie:         Yes. It’s really a thing and I think it’s really a thing because it gives you a framework from which to build out of uncertainty because building a business is full of uncertainty. Paul Jarley:                       From Michael Pape. Michael Pape:                 I think lean start up is a thing where you can be nimble and adjust to the pace of change. Paul Jarley:                       From Cameron Ford. Cameron Ford:                Yes, it’s a thing. It’s made people understand how to evolve their ideas into fitness. Paul Jarley:                       From Carol Ann Dykes Logue. Carol Ann Dykes Logue: Sometimes it is. There are companies that failing fast is better for them. Paul Jarley:                       From that hummus king, Jesse Wolfe. Jesse Wolfe:                     100% yes I do. Paul Jarley:                       It’s my podcast, so I get to go last. Reducing uncertainty by employing hypothesis testing in the scientific method is hugely appealing to academics. It’s how we think. But any good, thoughtful researcher knows the limits of such work. Especially when you’re trying to understand how people behave. It’s why having experienced mentors is so important in start ups. It can augment science with experience and increase the likelihood of success. If I were looking for a school to help me start a business, I would want to know much more about their network of experienced mentors then their grasp of frameworks like lean start up. Paul Jarley:                       Management research can be kind of trendy. And something will eventually replace lean start up as the darling theory of the day. But building a strong network of advisors that can help navigate you through uncertainty is never going to go out of style. What do you think? Check us out online and share your thoughts at business.ucf.edu/podcast. You can also find extensive interviews with our guests and notes from the show. Paul Jarley:        Special thanks to my producer, Josh Miranda. And the whole team at the office of Outreach and Engagement here at UCF College of Business. And thank you for listening. Until next time, charge on.

Featured Guests: Erik Kohler – The “Voice” of UCF Football Carolyn Massiah – Associate Chair, Department of Marketing & Associate Lecturer, Marketing Yael Zemack-Rugar – Assistant Professor of Marketing Nick Riggle – Philosopher, Author of On Being Awesome: A Unified Theory of How Not to Suck Episode Transcription:   Paul Jarley:                         Today’s biggest viral sensation isn’t a cat playing a piano or the Annoying Orange. It’s an 18 year UCF college student staring at a camera. Seriously, can this really be a thing? This show is all about separating hype from fundamental change. I’m Paul Jarley, Dean of the College of Business here at UCF. I’ve got lots of questions. To get answers, I’m talking to people with interesting insights into the future of business. Have you ever wondered, is this really a thing? Onto our show. Paul Jarley:                         So how can a college freshman staring blankly into space get more likes on social media than the UCF national championship football team? Erik Kohler is the stadium voice of UCF football. Erik Kohler:                        Well, what’s funny is, I’m up there in the production box of the sights and sounds of the stadium, and we go through the camera shots like we’re doing like a fan of the game or marketing promotions and such. And we came across the crazy students section and everyone was going crazy and all of a sudden, the camera caught Anthony Allan, that just had this dead stare face. I think his nickname is Frozen Face. And the camera caught it and I could hear our camera guy says, hey, go back to that kid. And sure enough everybody started looking at video board, everybody just became enamored that he didn’t blink, it was just kind of like a blank face, or a frozen face, I should say, and then it took off like wildfire. Paul Jarley:                         This didn’t stop at the first game. It continued last week. Erik Kohler:                        We had it, where there was cutouts of his face, right. The fans were moving it and then the TV camera perfectly zoomed through all those faces that were fake, or the fat heads and there was real Anthony right in the middle, and that was hilarious. Paul Jarley:                         Marissa, one of our UCF College of Business ambassadors was in the stands at the time. Marissa:                               I think I definitely thought creepy at first. But because everybody started laughing, then it became more funny. His social media went a little bit viral, he got a ton of followers from that. So … Paul Jarley:                         I was at the game last week, it was awesome, to understand what happened, I went to Nick Riggle. How are you doing my friend? Nick Riggle:                        I’m great. I’m great. Paul Jarley:                         Nick holds a PhD in philosophy from NYU. He was our guest speaker at Welcome to the Majors a couple of years ago, and he’s written a book called, On Being Awesome: A Unified Theory of How Not to Suck. Nick and I sat down to talk about social openings. Nick Riggle:                        A social opening is an opportunity, it’s a kind of …. It happens when an individual expresses him or herself in a way that gets other people to express themselves, often by like breaking the norms or breaking out of your social roles or doing what’s unexpected or surprising. Paul Jarley:                         Is our staring man, is that a social opening? Nick Riggle:                        And so I think the staring guy actually does this, and I think it’s brilliant. But what’s special about this one is that it seems to me to be a social opening between the audience member and the cameraman, and maybe the producers as well. But it’s one that is so weird and fun that it resonates throughout the rest of the crowd. And so they’re kind of engaging at one remove. Paul Jarley:                         A philosopher can explain to me the ethics of awesomeness. But to understand why this went viral, well now I need my marketing faculty. Yael Zemack-Rugar:        A big piece of when things go viral in an internet world is about connecting. Paul Jarley:                         Yael Zemack-Rugar is an assistant professor in our Marketing Department. She goes on to note that sporting events are particularly prone to situations that lead to viral social media. Yael Zemack-Rugar:        Where does that happen more than sports? People define their entire being based on the sports teams that they love and hate. So if we’re gonna connect, if we’re gonna get this, this is us feel, it’s gonna be at a sporting event. Carolyn Massiah:             There’s a community of college students who want to feel like they are unique and one. Paul Jarley:                         That’s Carolyn Massiah from our UCF Marketing Department. She goes on to stress authenticity and the fact that people want to stand out from the crowd. Carolyn Massiah:             I think if it resonates with the target market, if it resonates with a certain segment, if it’s like that could be me too, I think it’ll go viral. He gets to be unique in a crowd, just by being himself. Paul Jarley:                         But how long can this continue? Nick Riggle has one take. One of the questions, I had was how long can a social opening last? Do you have any sense of that? Nick Riggle:                        So I think it’ll last in that context, as long as people are still enthusiastic about it, as long as it’s still reverberating throughout the crowd like that, and the producer and the audience and Anthony are having fun doing it. One thing I was thinking was it might be kind of like the high five, where the high five started out as part of the community building function of a baseball team, of the LA Dodgers in the 70s. And it might be kind of fun to see the stare happen outside of the stadium. Paul Jarley:                         It is by the way. Anthony’s taken his show on the road. He’s visited his trigonometry class. But seriously people, if this is a thing, somebody’s got to make money at it. We’re a business school after all. Back to Yael. Yael Zemack-Rugar:        You can do ads, you can merchandise or you can sponsor; this doesn’t seem to apply here. Paul Jarley:                         Well he has the big heads of himself, out there staring. Yael Zemack-Rugar:        Yeah, well maybe there’s hope. Paul Jarley:                         I don’t know if he’s selling those or not, yeah. Yael Zemack-Rugar:        And then, the other dimension is if he accrues enough followers on his social media to become an opinion leader, then people will start paying him for that. Paul Jarley:                         So he got more likes on his Instagram than the UCF National Championship team did. Yael Zemack-Rugar:        Okay so if he can leverage that to actual influence, that is ongoing … Paul Jarley:                         Then he could be a thing. Yael Zemack-Rugar:        Have there been other 18 years old with no discernible skill that have been able to do this. The answer is yes. Paul Jarley:                         Our friends at Rock ‘Em Apparel have an angle on this. They’ve made five special pairs of socks with Anthony’s face on it. Not sure they’re really gonna do a run of 5,000. They’re kind of hedging their bets. But Carolyn Massiah has an ingenious idea for Anthony. Think Halloween people. Carolyn Massiah:             You know what, I would maybe put a bank on someone on the UCF campus having his face as their Halloween costume. Paul Jarley:                         Oh now there’s a whole new element… [crosstalk 00:06:17] Carolyn Massiah:             Yeah, but after, I think it’ll trickle off. Paul Jarley:                         So Carolyn Massiah has called the question here: Is this kid really a thing? Our student ambassador notes, the football team sure seems to think so. You mentioned that you tutor some of the football team. Marissa:                               Yes. Paul Jarley:                         What do the players think? Marissa:                               I mean, there all saw the kid. I know that when I went on his Instagram, cause his picture went viral, I saw there were several comments from football players, saying you’re our guy, man. You’re so cool, yada, yada. Things like that. And all the football players definitely saw him on the screen. Paul Jarley:                         From Erik. Erik Kohler:                        I think if you have socks, you’ve made it, yeah. Paul Jarley:                         From Nick. Nick Riggle:                        Ah it’s a good question. Paul Jarley:                         Eh, he’s a philosopher. From Yael. Yael Zemack-Rugar:        Yeah, he’s an engineering student. He has a good day job. Paul Jarley:                         Hopefully. It’s my podcast so I get to go last. Anthony offered a social opening, the cameraman was game, he was authentic, it was awesome. Right time, right place, bam, viral. I don’t see this becoming the high five, but Halloween night on campus, well that just might involve a lot of staring. Keep studying Anthony, you have a great story to tell your kids someday. But your future belongs to engineering. Or if that doesn’t work out, you can always walk down the hall to the College of Business. Paul Jarley:                         In the meantime, go Knights. Stare on. Paul Jarley:                         What’s your take? Check us out online and share your thoughts at business.ucf.edu/podcast. You can also find extended interviews with our guests and notes from the show. Special thanks to my producer, Josh Miranda, and the whole team at the office of Outreach and Engagement here at the UCF College of Business. And thank you for listening. Until next time, charge on.

Featured Guests: Libby Mustaine – Professor of Sociology Chris Leo – Lecturer, Integrated Business Bill Steiger – Associate Instructor of Marketing; Instructor & Coordinator, Professional Selling Program Bob Danna – Retired Managing Director, Deloitte Episode Transcription: Paul Jarley:                         Some say they’re the result of failed parenting strategies. Others say they’re addicted to their phones, narcissistic, and entitled. The Western Michigan Whitecaps celebrated them by giving the first thousand people to come watch the team’s baseball game a participation trophy. Whitecaps Fan:                 Oh, you know, we just really want a participation trophy. Whitecaps Fan 2:             Yeah. Whitecaps Fan:                 It’s been a long week of hard work and- Whitecaps Fan 2:             We really earned it. Whitecaps Fan:                 I feel like we really deserve something. Paul Jarley:                         They job hop, have no loyalty, and want to have an impact, yet their greatest invention just might be selfie. Consultants everywhere just can’t stop talking about them. Millennials want you to think they’re special, but maybe, just maybe, they’re just like the rest of us. Paul Jarley:                         This show is all about separating hype from fundamental change. I’m Paul Jarley, Dean of the College of Business here at UCF. I’ve got lots of questions. To get answers, I’m talking to people with interesting insights into the future of business. Have you ever wondered, “Is this really a thing?” On to our show. Paul Jarley:                         Like all data-driven decision makers, I’m sensitive to the differences in my staff’s dispositions when assigning them tasks. A few examples. Tiffany is an Aries like me. Anyone that knows Tiff recognizes that she needs to be in a leadership position to satisfy her need for control. Tiffany Hughes:                I believe I’m tough. I believe I can negotiate extremely well. Paul Jarley:                         But if Tiff is an Aries, she’s also cold-hearted, reckless, and ruthless. Tiffany Hughes:                Oh, my heavens, no. I hope not. Paul Jarley:                         And then there’s the Aries’ legendary ability to deliver bad news. Tiffany Hughes:                Every day I try to look for the sunshine. Paul Jarley:                         Yeah, not her. My Associate Dean of Learning, Foard Jones, is a Libra. Like all Libras, he’s extremely intellectual and needs a job that is mentally stimulating. Libras are excellent networkers and take a look at every aspect of the job before completing it. But if Foard’s a Libra, that should also mean he’s resentful, overindulgent, spiteful, indecisive, and gullible. Foard Jones:                      At times, but most of the times, no. [laughs] Paul Jarley:                         That doesn’t sound like Foard. Libras sound more like Catbert, the evil HR manager from Gilbert. Good thing I took Foard out of that role. That sounds ridiculous, doesn’t it? No one in their right mind would assign people jobs based on their astrological sign. I don’t know a single reputable management consultant that argues we need to tailor our company HR policies and people’s roles to their birth month. But I do know a ton that say we should vary these same policies based on people’s birth year. Paul Jarley:                         They say things like this. Bob Danna:                         One of the things that we’ve teased out is that diversity and flexibility are the key to loyalty. The younger workers, the younger of the millennials feel that they are unprepared for industry 4.0. Paul Jarley:                         Bob Danna sits on my Dean’s Advisory Board. He’s a retired managing director at Deloitte. Bob has spent much of his career studying people in the workplace. We’ll hear much more from him a bit later. Paul Jarley:                         For the record, there are seven living generations in America today. But practically speaking, just four are currently in the workplace. Baby boomers were born between 1946 and 1964. Generation X-ers were born between 1965 and 1979. Millennials were born between 1980 and 1994. And Generation Z, people who were born between 1995 and 2012. Right now, the millennials are the ones making the news. The boomers are retiring. Nobody ever thinks about Generation X. And Generation Z is really just getting to adulthood. Paul Jarley:                         So, if you wanna position yourself as a management consultant who is in the know about generations and make money doing it, you focus on millennials. They’re a very large group entering the primes of their career. But are they really different, or is all this generational advice what Sheldon Cooper might call- Shelden Cooper:              Just as I suspected, nothing but hokum. Paul Jarley:                         To find out, I started at the source, millennials themselves. Jean Paul Enriquez:        My name is Jean Paul Enriquez, and I’m a junior in the College of Business. Amaireny Lantigua:         I’m Amaireny Lantigua. I’m a junior. Austen Horton:                 My name’s Austen Horten. Paul Jarley:                         I didn’t have to go far to get their take. Jean Paul Enriquez:        Well, the first thing I gotta say is that we definitely always use our phones. We’re attached to technology like never before. Something else is, apparently, we are … we feel like we’re entitled to a lot of things. We’re entitled to more than what we deserve. The last thing is, we lack social intelligence compared to other generations. Amaireny Lantigua:         When I think about the things that sets millennials apart, would be the technology, as well. Another different thing that sets generations apart will be the culture and what each generation … current events in each generation were. Austen Horton:                 We’re impatient, confused, and challenged. Rather than entitled, I think impatient’s a better word because a lot of millennials, they just want things done fast. It’s not like they feel they deserve it, it’s just they feel they deserve it quicker. Paul Jarley:                         Attached to technology, entitled or impatient, socially awkward in face to face situations, confused, challenged, and lost. YouTube Clip:                     Adulting is hard. Paul Jarley:                         Good lord. How did they get this way? Professor Libby Mustaine is chair of the UCF sociology department. Libby Mustaine:               So, I think there are some differences in values. Paul Jarley:                         She stresses the importance of early life experiences. Libby Mustaine:               There are historical things that happened. Period effects, if you will, that actually do impact the way people grow up and the way people respond to the experiences that they’ve had. I think a couple of really important things that have happened with millennials is technology. We are so … Think about when we were growing up. I was telling my kids the other day, I was like, “Here you are walking around with a smartphone, all of your friends have one. When I was your age, I had a phone that was tacked to the wall, and if I wanted any privacy at all, I had to hope the cord was long enough and I could go around the corner and talk on the phone.” And then, inevitably, my sister would come and interrupt me and say, “I need time on the phone.” Today, we have nothing like that. We just call each other on our own little personal thing. Paul Jarley:                         And then, there’s Google. Libby Mustaine:               You can find out information wherever, whenever, whatever, today. All of that is so impactful, I think, on a generation. Paul Jarley:                         Bob sees things a little differently. He believes long run industry and technology cycles create pairs of generations that tend to repeat themselves over time. Bob Danna:                         I think that we’re on a major cycle that’s probably 40 or 50 years in length, including the technology cycle. If you think of the technology revolution that was going on in the 70s, the boomers really drove a big portion of that, and now, looking at the industry 4.0, all of the automation, and connectivity, and A.I., and cognitive technologies, and robotics, that the millennials will drive and are starting to drive, there’s some real parallels to that. The smaller generations that followed both, the X-ers and now the Z’s, probably gonna generally fall in behind those major generations. But it’s not only kind of a generational element, but the cycle is probably more like a 40 or 50 year cycle than just a generational cycle, a single generational cycle. Paul Jarley:                         Baby boomers and millennials share characteristics because they kicked off technology cycles, while Generation X-ers and Z’s are similar because they closed out these cycles. Bob Danna:                         I think there’s a number of defining features for both of those groups that actually parallel quite interestingly the characteristics that were associated with both the boomers and the Gen X’s. I’ll just go through them really quickly. Millennials were seen as optimistic. Gen Z are now starting to be seen as realistic. And think about boomers and X’s as I’m going through here, as well. Paul Jarley:                         We’re going to give you some common contrasts between boomers and X-ers along the way so you can compare. Nothing scientific. Boomers, optimistic. X-ers, pragmatic. Bob Danna:                         Millennials, collaborative. The Gen Z, independent. Paul Jarley:                         Boomers, consensus. X-ers, independent. Bob Danna:                         Millennials, digital pioneers. Gen Z, digital natives. Paul Jarley:                         Boomers, early IT adopters. X-ers, digital immigrants. Bob Danna:                         When it comes to millennials, they’re very public. We’re seeing on the Gen Z, they’re becoming more private. Paul Jarley:                         I got nothing here. Bob’s right. Some of his contrasts have obvious parallels between boomers and X-ers. But others, well, they just don’t seem to fit. For example, social media didn’t exist in the baby boomer, Generation X era, so the privacy contrast that seemed to differentiate millennials from Z-ers just doesn’t apply to the two earlier generations. Makes you wonder, are all these labels really accurate? Libby Mustaine points to some limitations of this research. Libby Mustaine:               What are the millennials like? And we come up with some list of characteristics. Some of them are a little bit stereotypical, because we don’t all have all of them, you know? I think there’s definitely limitations, because society does not do a complete 180 every 25 years. And I think a lot of times with generations the differences with the generation is … are the younger people. And as you get older, you begin to lose, perhaps, some of your uniquenesses. Paul Jarley:                         These differences might fade pretty quickly. Bill Steiger, head of our Professional Selling Program, sees no real differences across generations of college students and what they want in a career. Bill Steiger:                         I just studied the 2,000 business students here at UCF with regard to what are their expectations for their first job? What are they looking for? What’s important to them? What I found is, some of the basis for my study was a questionnaire used ten years ago with Gen X-ers. And guess what? Four of the top five things that were most important were exactly the same. Bill Steiger:                         Number one was the job itself. In other words, a meaningful job. Number two was a defined career path. Number three was supervision. Number four was comp. It was the only extrinsic motivator in the top five. And the other one was … the fifth one was personal development. Paul Jarley:                         So, supervision was about feedback? Is that what you’re- Bill Steiger:                         A defined feedback loop. And in business, the days of the annual performance appraisal are over. They’re done. Nobody in their right mind, even with boomers, wants an annual performance appraisal. Paul Jarley:                         The serious empirical work on generations is far from conclusive. Listen to Dr. Chris Leo from our Integrated Business Program. Chris Leo:                            There’s a lot of conflict with this. So you’ve got one researcher by the name of Dr. Jean Twenge who’s written a book called The Me Generation and sold over a hundred thousand copies, and she purports that her research supports that there are generational or cohort differences. Paul Jarley:                         Which generation does she think is the me generation? Chris Leo:                            That would be the millennial generation. Paul Jarley:                         So, it’s really interesting to note that the original me generation were the baby boomers. Chris Leo:                            And this is the other problem, is how do you define the millennials versus Gen Y, versus Gen X? There are a lot of different authors and researchers that have different definitions. Some Pew research says that millennials start from 1981. Other researchers say 1970. So there’s no agreement among researchers as to how do we clearly define these generational cohorts. Chris Leo:                            In the other camp, you’ve got a researcher by the name of David Costanza, who’s at George Washington University, who says look, there’s no empirically sound research that is able to pull out time effects and age effects versus just looking at the generational cohort. Paul Jarley:                         If the research on generational differences is so shaky, why do people keep wanting to talk about it? Bill Steiger offers one explanation. Bill Steiger:                         It’s fun to talk about. I think that’s one of the reasons why it’s evident in popular press. And it, in fact, provides some basis to explain what is inexplicable, which is the way that people behave. Paul Jarley:                         Chris Leo says maybe it’s the almighty dollar. Chris Leo:                            This is big business. There are generational consultants. There’s … I mean, the author that I mentioned, she sold 115,000 copies of her book. Paul Jarley:                         Nobody in the College of Business is against making a buck. But both Chris and Bill agree that basing your HR policies on generational differences is a very dangerous thing to do. Bill Steiger:                         I think any situation where you make an assumption based upon how the other person is going to react, if you make that assumption before you ask questions, you listen, you are going to find yourself in some deep water, because people don’t behave the way that, fundamentally, they always behave within a generation. Paul Jarley:                         Chris explains this concern in greater detail. Chris Leo:                            I think that it leads us to stereotyping. We cannot assume that a person who was born in 1981, that may have these stereotypical characteristics, to be like another person or to be different from a person who was born as a Gen X-er. So, we would say that … a common stereotype is, well, you know the millennial generations are more tech savvy. Well, I mean, that’s not to say that a Gen X-er may not be as tech savvy. You never look at the average and then apply that average to the individual. That’s dangerous. Paul Jarley:                         Great. If this is all hokum, what do I tell my millennials, all of whom believe they’re part of a special generation destined for greatness? Chris Leo:                            Well, I mean … I think we’re … I think every generation is great. I think every generation is special. Everyone is unique. But, the recipe for success doesn’t change. Whether you’re in this generation or that generation, it’s hard work, and it’s persistence, and it’s taking risks, smart risks, and persisting in the face of failure. Paul Jarley:                         Chris, by the way, is a millennial. Bill Steiger:                         I would guess that last year’s undefeated UCF football team, Scott Frost didn’t tell every player that they were special. Everybody had a role. That role varies. And within context of when you were born, you have a role. Whether you’re special or not really is determined by you. Paul Jarley:                         Yes. Everything at UCF eventually does come back to our National Championship football team. Both Bill and Chris might poo poo generational research, but they both believe in period effects. And as Bob Danna notes, the times, they are a changing. Bob Danna:                         The younger workers, the younger of the millennials, feel that they are unprepared for industry 4.0. They expect the companies they’re working for actually to help them prepare for industry 4.0. So, what happens after everything that can be automated is automated? Everything that’s turned over to AI and cognitive technologies has been turned over to AI and cognitive technologies. Everything that’s self-service is self-service. What’s left for them? How are they gonna now contribute in an organization? They feel unprepared to answer that question. Paul Jarley:                         If you’re a boomer or an X-er, you probably think you’re gonna be able to retire before this wave really hits. But if you’re a millennial starting the middle of your career, this scares you to death. And frankly, it keeps deans like me up at night. How do we prepare students for this great unknown? It’s time to call the question. So, do you think millennials are a thing? From Libby Mustaine. Libby Mustaine:               Yes, I do. Paul Jarley:                         From Bob Danna. Bob Danna:                         I’m a big believer that there are generational differences. Paul Jarley:                         From Chris Leo. Chris Leo:                            We like using labels. Paul Jarley:                         From Bill Steiger. Bill Steiger:                         No, I don’t think they’re a useful thing. Paul Jarley:                         It’s my podcast, so I get to go last. Boomers started the IT revolution. Millennials launched the digital age. These two generations have had the huge impact on our world. But that doesn’t mean that they’re all wired the same way. Gross generalizations are dangerous, and some things are timeless. A good job is one of them. And as far as millennials wanting things too fast, well, that sounds a lot like that old guy who tells kids to get off of his lawn. Sorry, millennials, you’re not special, and you’re not really a thing. Tiffany Hughes:                Oh, heavens, I hope we didn’t hurt anybody’s feelings. Paul Jarley:                         What’s your take? Check us out online and share your thoughts at business.ucf.edu/podcast. You can also find extended interviews with our guests, and notes from the show. Paul Jarley:                         Special thanks to my producer, Josh Miranda, and the whole team at the Office of Outreach and Engagement here at the UCF College of Business. And thank you for listening. Until next time, charge on.

Featured Guests: Greg Trompeter – Director, Kenneth G. Dixon School of Accounting Melanie Fernandez – Partner, BDO Paul Gregg – Assistant Chair, Finance Executive in Residence, Dept. of Finance; CFO, Rini Technologies, Inc. Jim Adamczyk – Senior Executive VP / CLO, FAIRWINDS Credit Union Mike Johnson – Dean, UCF College of Sciences Episode Transcription:   Paul Jarley:                         This is a story of a man who was ahead of his time. Some say that he had the most important idea of the last 500 years. He may very well have helped to invent the future. He most certainly understood the role trust plays in our modern economy. And he was of all things, a mild mannered accounting professor. Paul Jarley:                         This show is all about separating hype from fundamental change. I’m Paul Jarley, Dean of the College of Business here at UCF. I’ve got lots of questions. To get answers, I’m talking to people with interesting insights into the future of business. Have you ever wondered, “Is this really a thing?”. On to our show. [music]` Paul Jarley:                         A few months ago, I received an email from Mike Johnson. Mike is Dean of the College of Sciences and more importantly, my drinking buddy. The subject line read, Innovations in Accounting. Who knew? I opened the email and clicked on the link to an article entitled, “Why Everyone Missed the Most Important Invention of the Last 500 Years”. I was skimming the article when Greg Trompeter walked into my office. Greg is the director of the Dixon School of Accounting, and so I turned to him and said, “Hey Greg, have you ever heard of triple entry bookkeeping?” Greg Trompeter:              (laughs). Triple entry bookkeeping. Paul Jarley:                         Indeed he had. Greg Trompeter:              It’s an idea that came up, maybe in the mid to late 1970s. There was a professor at Carnegie Mellon. His name is Yuji Ijiri and he came up with a notion that for four or five hundred years people had been using double entry bookkeeping as if it were perfection itself. He said, “Well, maybe you could make it better”. Paul Jarley:                         Okay, let’s stop right there. I realize a podcast in accounting theory is a bold move. But Dr. Ijiri was quite the dude. His obituary notes he was interested in things like the relationship between accounting, quantum physics, and quantum computing. How many people do you think are trying to connect those dots? He didn’t strike me as the kind of guy who would waste his time on frivolous pursuits. Yuji Ijiri:                               Bookkeeping evolved from single entry, which just recorded what happened, to a double entry, where what happened has to be explained by reasoning. Paul Jarley:                         Dr. Ijiri might be dead, but in the miracle of today’s modern technology, he left behind a YouTube video explaining his ideas around triple entry bookkeeping. Yuji Ijiri:                               I get attracted by three. Everything three is very interesting and much more complex than two. And what the triple entry might look like. Paul Jarley:                         He challenged a group of Ph.D. students to figure this out. 10 years lapsed, when he realized… Yuji Ijiri:                               Nobody is doing anything about it. (laughs). Paul Jarley:                         So he decided to take matters into his own hands. Yuji wrote two books on the subject. The second of which… Yuji Ijiri:                               bases on the calculus of taking a type of derivative of existing accounting and come up with a new dimension and then create the double entry at that level. I think it has a lot of applications… Paul Jarley:                         I know that seems esoteric, but Dr. Ijiri’s ideas might just rock your world. As Greg explains, changes in accounting facilitated changes in markets and significantly impacted the geographic scope of trade. Paul Jarley:                         A brief history lesson… Greg Trompeter:              The Sumerians, I believe, invented single entry bookkeeping. So describe single entry bookkeeping for me. Paul Jarley:                         Basically keeping track of my cash. It was really simple. At the end of the day, you sort of balanced out your cash. Greg Trompeter:              That would have been single entry bookkeeping. And it had a problem with…there could be errors that wouldn’t be caught. And there was less accountability. It was really difficult to check on any assets or any liabilities you have other than cash. Paul Jarley:                         So your single entry accountant, was probably a relative. Greg Trompeter:              Yeah. And the ventures you were involved in were probably very local. Paul Jarley:                         It wasn’t just the that boundaries of trade were expanding. Owners started hiring managers to run the business on their behalf. Greg Trompeter:              Somebody other than the manager is the owner. So you had this agency problem where the owners have to have the ability to trust the managers and so trust becomes a bigger issue, enterprises get larger, it’s easier to screw up the books. So double entry bookkeeping did a couple of things. At the simplest level, double entry bookkeeping made it so that debits had to equal credits, assets had to equal liabilities plus owners’ equity. So at the end of the day, there was an internal check on the accuracy of the records. Greg Trompeter:              But perhaps more importantly, it gave you better controls. Paul Jarley:                         [music] The first book on double entry bookkeeping was published in 1494. A lot has happened since then. Publicly held companies came along, auditors followed. Their job is to make sure what is being reported actually happened. And that investors aren’t being duped. Government regulations followed, lots of them. 500 years later, double entry bookkeeping still rules. It’s been a remarkable run that’s facilitated trust in our financial network. But it’s an inherently backwards system. M. Fernandez: Everything is looked at historically. Paul Jarley:                         Listen to Melanie Fernandez, a partner at BDO and a College of Business Hall of Fame member. M. Fernandez: That’s probably the biggest complaint that I get as an auditor, is, can’t you have more real time information that is reliable and has been certified. Paul Jarley:                         Dr. Ijiri thought he could help by introducing calculus notions into accounting, what he calls, momentum accounting. Greg Trompeter:              He argued that assets and liabilities is where we are today, owners’ equity is the accumulation of where the company has come from in the past. And the third entry force, he called it, would be tied to how we were doing in the future. So if you think about his financial statements that would come out from the triple entry, you would have a balance sheet, which is at a point in time: this is assets, liabilities and owners’ equity. Then you have the income statement, which sort of explains using cool accounting, how we get from one balance sheet to the next balance sheet. So the income statement is sort of like the first difference. Paul Jarley:                         Right. Greg Trompeter:              Then his notion of momentum, forced acceleration, taking us more into the world of calculus and physics, was sort of why last year’s income was different from this year’s income. Much the same way the income statement explains why last year’s balance sheet was different from this year’s balance sheet. Paul Jarley:                         Which might be of more interest to a financial investor. Greg Trompeter:              Absolutely. One of Ijiri’s points was that investors … if in fact the statement just showed that the momentum was this year’s income is $30 bigger than last year’s income, you can do that easily enough. But if the bookkeeping system actually tracked why it was different, and we could see sales were up in part because it was an increase in prices, partly because it was an increase in volume. That would actually be useful information to an investor, to see why are profits up? And to highlight that on the face of the financial statement. Paul Jarley:                         Sorry for the accounting lesson. It will pay off later when our story takes a sharp turn. Stay with me people. My next stop is Paul Gregg. Paul Jarley:                         So Paul, would momentum accounting help investors, or can they get that information by other means. Paul Gregg:                        They know some of it. Paul Jarley:                         Paul is an executive in residence in our finance department. He has a wealth of experience and currently serves as CFO of Rini Technologies. Paul Gregg:                        So let’s take Apple. Apple discloses in their 10K the unit sales of things like iPhones and iPods. And so one could track those, but the question is, what are they going to be in the future? And then one could say, well let’s take Microsoft as an example of where we were all buying our first pc and they had an extremely high growth rate. That ultimately leveled off. That’s typically what happens to big corporations that they may go through periods of extreme growth, and then they level off. And when you’re trying to figure out what those future sales and earnings and cash flows will be, the question is how long will they grow at hyper growth and at what point will they level off. That’s where, using calculus and other regression tools could help one in saying, well what would be the case for the iPhone compared to the case for Microsoft and what would that predict by way of when Apple’s growth will start leveling off because we had a similar anomaly when Microsoft was starting off. Paul Jarley:                         When I was listening to Gregg, I couldn’t help but think about our Bloomberg terminals. Would you be able to do those kinds of analyses using the data that Bloomberg provides today? Paul Gregg:                        Absolutely. Paul Jarley:                         I can’t help but think that Dr. Ijiri might have invented economy information systems. If computers had been just a little more advanced when he started his work. The timeline is important. Yuji’s second book on triple entry accounting came out just two years after the first version of Microsoft Excel for Windows. We’ve come a long way since then. Back to Paul. Paul Gregg:                        Systems that we use from Oracle to PeopleSoft Paul Jarley:                         Yeah, yeah. Paul Gregg:                        [inaudible 00:09:28] They’re all providing the type of management information systems. But corporations that spend millions of dollars for these systems are integrating the fine-tuned reporting data that they need. Paul Jarley:                         That Dr Ijiri would’ve asked for. Paul Gregg:                        It’s not just debits and credits. Paul Jarley:                         That’s not to say there aren’t weaknesses in today’s financial reporting system. Judgment still plays a large role. Managers sometimes manipulate earnings. And people lie for personal gain. Paul Gregg:                        But many of my clients push the edge, and frankly I think it’s a problem where the auditors either didn’t do enough work or turned the other way in order to keep the client. From management standpoint, the pressure to hit earnings is immense, from a performance goals and compensation, and maintaining the stock price. The pressure is there. A lot of it is in the revenue recognition area where companies have some ability to manipulate revenues, and recognizing revenues. A very complex area of accounting. Some of it’s just outright fraud, like Worldcom where they were basically capitalizing expenses and calling it a capital budget item instead of a pure expense which is what it was. And it materially distorted the cash flow statement and income statement. Paul Jarley:                         Ah, now this is where our story takes a sharp turn. I’m sure trust was on Dr. Ijiri’s mind when he was developing his triple entry system, but hardly anybody was listening. 16 years after Yuji’s second book, a financial cryptographer named Ian Grigg, published a working paper entitled, “Triple entry accounting.” Ian Grigg:                            [Music] Triple entry takes us from this inside the corporate trusted scenario and extends it to other customers, to outside the company border into other companies. Paul Jarley:                         Listen to Ian explain his key ideas. Ian Grigg:                            What we can now do is cryptographically sign an entry, Alice assigns her payment to Bob. It goes out to some intermediary, which could be the blockchain, it could be a server, … Paul Jarley:                         No, did you just hear that? Ian Grigg:                            Which gets signed again and then goes across to Bob. And now we’ve got three entries which are sitting there. We’ve got Alice and Bob sitting with their primary copies and if they have any dispute, Ivan or the blockchain is sitting in the middle, which guarantees that we’ve all got the same thing. Paul Jarley:                         Welcome to blockchain. Bitcoin is released less than four years after Ian’s paper. Now, the article Dr. Johnson sent me speculated that someone read Professor Ijiri’s work as well as Ian’s paper, and produced Bitcoin. Ah, maybe. But I can tell you that Grigg’s paper doesn’t even reference Ijiri, and as Gregg and I discussed… Ian Grigg:                            It happens all the time in our world, where people from very different fields are working on very similar ideas and don’t even know it.[crosstalk 00:12:25] Paul Jarley:                         And don’t even know it.[crosstalk 00:12:25] Sorry Yuji. Ian seems to have come up with his ideas independently, and I can’t sew where understanding your triple entry accounting system was necessary to create Bitcoin. If you’re an academic like me, you can’t help but feel sorry for Dr. Ijiri. What happened to him seriously sucked. But none of this means that blockchain won’t have a major impact on the accounting profession and the future of trade. In some ways, you could think of today’s podcast as the second part of our podcast on bitcoin. In that podcast, we mentioned that blockchain had the potential to severely limit the company’s ability to cook the books. Paul Gregg agrees. Paul Gregg:                        It will make verification easier. Paul Jarley:                         Much easier. Paul Gregg:                        Because today.. before we had blockchain the transactions are documented except that I had my bank and my bank records and you have – Paul Jarley:                         Exactly. Paul Gregg:                        Your bank and your bank records. Paul Jarley:                         I’ll put mine as my business. Paul Gregg:                        So we know from each other’s side. But there are plenty of instances – AIG comes to mind – where there was a transaction that Warren Buffet’s insurance companies booked conservatively, and AIG took an aggressive stance which was not in accordance with GAAP in order to book the earnings immediately. Paul Jarley:                         Okay. If two companies entries on a transaction are simultaneously verified in real time, what is there left for auditors to do. Trust seems to be built right into the blockchain. When I asked Jim Adamczyk, vice president of Fairwinds Credit Union this question, as part of my interviews on bitcoin, he took the fifth. Jim Adamczyk:                  I’m not answering that question [laughter] – no. It could make their job more efficient and more transparent. Paul Jarley:                         Greg is a bit more forthcoming, Greg Trompeter:              If in fact blockchain takes off as some people say it will. You’ll need auditors to redouble their efforts on control testing. If once something goes into the system it can’t be changed, you want to make sure that what goes into the system is right, so internal controls are going to become even more important than they have been in this post Sarbanes Oxley era. Paul Jarley:                         It’s also worth noting that blockchain isn’t the only high tech way to reduce fraud. Accounting firms are also investing in big data. Back to Melanie. M. Fernandez: Initially we’ll be using it to bring in the data and look at it in different ways that will highlight unusual trends, anomalies things that we might not have looked at just from a person trying to analyze data using the human mind to really uncover whether there’s fraud. I mean that’s really kind of the whole purpose of getting the money and all this training and everything is to really be able to make it easier to identify situations where there’s higher risk or just outright fraud that may have occurred. I think there’s some jobs for people out there that really enjoy that stuff and understand that stuff. Paul Jarley:                         Greg agrees. Greg Trompeter:              I also think though you’re going to find accountants are going to be needing a lot more background in inferential statistics and analytical modeling. That’s going to become much more important for auditors. Paul Jarley:                         Time to get to the bottom line. Is Yuji’s triple entry bookkeeping system a thing? From Greg Trumpeter. Greg Trompeter:              I’m guessing his thing is not a thing. But I also know it took over a hundred years before double entry bookkeeping caught on. Paul Jarley:                         From Melanie Fernandez M. Fernandez: I’ve never heard of it. I’ve never heard of triple entry bookkeeping. Paul Jarley:                         From Paul Gregg. Paul Gregg:                        No, I think what will happen is we’re continuing to have more sophisticated reporting and disclosures that allow analysts to better forecast the result to the company. Paul Jarley:                         It’s my podcast so I get to go last. If only Ian had footnoted Yuji I would be singing his praises as the inspiration for blockchain. But he didn’t. And ERP systems ran past any notions of momentum accounting. There was only one thing left for me to do. Paul Jarley:                         [background noise] Do you remember that email you sent me a while back about innovations in accounting? Paul Jarley:                         When we completed this podcast, I went straight to the bar with Mike Johnson. Mike Johnson:                  You’re talking about triple entry bookkeeping … Paul Jarley:                         I am indeed. Mike Johnson:                  The most important invention in human history. Paul Jarley:                         You owe me a bourbon over sending me down a rabbit hole. Mike Johnson:                  I’m happy to pay you the bourbon. Paul Jarley:                         It’s Woodford Reserve by the way. Paul Jarley:                         So what’s your take? Check us out online and share your thoughts at business.ucf.edu/podcast. You can also find extended interviews with our guests and notes from the show. Paul Jarley:                         Special thanks to my producer, Josh Miranda, and the whole team at the office of outreach and engagement here at the UCF College of Business. Paul Jarley:         And thank you for listening. Until next time, charge on. [music]

Featured Guests: Danny White – UCF Athletic Director Richard Lapchick – Director, DeVos Sports Business Management Program Ben Noel – Executive Director, Florida Interactive Entertainment Academy Tony Schiller – Executive Vice President and Partner, Paragon Marketing Group Abiel Payano – President, UCF Gaming Knights Episode Transcription:   Paul Jarley: You remember that, right? Well, video games have come a long way since then. It’s no longer just guys playing in their moms’ basements. Now teams play in their own arenas. They’re ranked in coach’s polls, have television contracts and even their own sneakers. 380 million people say they are fans. The China championship sold 80,000 tickets in one minute. Your son or daughter likely has a favorite team. Danny White and Dale Whittaker would do well to help the UCF Gaming Knights be part of this global phenomenon. The college experience is changing my friends, welcome to e-sports. This show is all about separating hype from fundamental change. I’m Paul Jarley, dean of the College of Business here at UCF. I’ve got lots of questions. To get answers, I’m talking to people with interesting insights into to the future of business. Have you ever wondered, is this really a thing? Onto our show… Danny White: We feel strongly that we have every right to claim the national championship and that’s why we’re doing it. Shaquem Griffin: You know, the only things we can do is win games and we won all of them. If you want to put one more in front of us, we’ll probably win that one too. Jarley: Yes, we’re the self-proclaimed national champions of college football. And unless you’ve in a closet for the last six months, you know Shaquem Griffin’s story. It was a great year to be a UCF Knight. But I sometimes wonder if college football isn’t really the last war. Maybe the next war is e-sports. E-sports? Listen in. No that’s not a crowd reacting to a Justin Upton homer. It’s Justin Wong making an epic comeback in a game of Street Fighter in 2004. Ask any 16-year-old boy about e-sports, and whether UCF should field a team, and you get an answer like this. Spencer: It’s a great idea, honestly, I’d watch it. Jarley: Trust me that’s Spencer being excited. He’s a man of few words and in fairness to him, I was interrupting his game of Fortnite, so I kept my interrogation short. Jarley Interviewing: And how much would you pay to go to an event? Spencer: However much it would take I guess, how much they would charge. Jarley: I needed to get up to speed on this whole e-sports thing. So I went to visit Ben Noel. Ben is a former EA Sports executive and currently heads up UCF’s Florida Interactive Entertainment Academy. That’s our nationally renowned video gaming program in Downtown Orlando. Jarley Interviewing: So Ben, I know you’ve been in the gaming industry for quite a while. What is e-sports? Noel: Well e-sports is short for electronic sports and it was basically, you’re playing competitive gaming. Jarley: Calling video games sports? Now I know what you’re thinking, “that’s kind of a stretch.” But Ben says that the level of skill and teamwork actually makes the two kind of similar. Noel: It’s usually team based and it’s online and it’s usually played globally. And it never really became big until we had the internet that could allow for such things. Jarley: Big is an understatement Schiller: Globally there’s over 380 million that self-identify as e-sport fans. Jarley: Listen to Tony Schiller, Executive Vice President and Partner at Paragon Marketing Group Schiller: We help big brands like Gatorade, PNC Bank, and Yokohama Tires and many, many more. We help big banks engage with their target audience and it’s all about the affinity that the target audience has. It’s mind blowing. You know, there are events at the United Center of Chicago, at Madison Square Garden in New York, the Staples Center in Los Angeles that go on sale, e-sports tournaments and they go on sale, and within half an hour, hour or two hours they are sold out clean. And that’s 20,000 people paying money to watch a few people down at center court basically, playing a video game. Jarley: 20,000 tickets ain’t nothing. Listen to Rich Lapchick, Director of the DeVos Sports Business Management program here at UCF. Lapchick: Eighty thousand tickets were sold to the China championship in one minute. Jarley: And then there’s this nugget from Mike Redlick, Director of External Affairs for the DeVos program Redlick: The athletic shoe companies are now coming out with actual gaming shoes for players. They have their own specific type of shoe. Jarley: Yes they do, K-Swiss is designing a pair of sneakers for an e-sports team called The Immortals. You can expect them to be on shelves and display in December for the bargain price of $110 a pair. I don’t need anymore evidence than this, e-sports is definitely a thing. But that doesn’t mean it’s a college thing. Should colleges nurture this? Should it become a varsity sport? Should the NCAA get involved? It was time to get a students view. So I searched out the president of the UCF Gaming Knights, Abiel Payano to get his take on this. Jarley interviewing: Thanks for doing this…we’ll try to make it painless. Payano: Thank you for having me. Jarley: Abiel is a student majoring in psychology here at UCF. His Gaming Knights has about 120 dues paying members. Making it one of the largest student organizations on campus. Jarley interviewing: Suppose someone came up to you and said, “we want to recruit you to the UCF e-sports team that is going to play in the American athletic conference just like the football and basketball team do and we’re offering scholarship money for you.” Would you take that deal? Do you think e-sports is going to go that way? Payano: I think it very much has the potential. Florida itself is a little behind on that note, for e-sports. But if we were to get that offer, we would definitely try to take that offer, if possible, because scholarships are a goal for collegiate e-sports. Jarley interviewing: So you can imagine a day when maybe in addition to football team and a basketball team, we have an e-sports team. Payano: Yeah, very much. If you look at examples like, I believe its Oklahoma State, they have an e-sports arena built for them already. Jarley: He’s right, we’re behind. More than 70 universities offer scholarships to the varsity e-sports teams. Even campus libraries are giving way to e-sports. Boise State for example has cleared 3,000 square feet of its library and devoted it to its e-sports team. And then there’s the Big 10. Audio: Hello and welcome to the second broadcast of the 2017 Big 10 network League of Legends. Jarley: The Big 10 fielded a competition among all 14 schools that was broadcast on the Big 10 Network and gave out 500 thousand dollars in scholarship money. So why aren’t we trying to get into the League of Legends top 25 coach’s poll right now? Well, e-sports has issues. Issue one, violent games with fickle fan bases, Tony Schiller Tony: A lot of these games are shooter games and that should be something that the NCAA and universities contemplate very deeply. Relative to is this something we want to be a part of? Introducing violence within e-sports into our campuses. If you know e-sports a game like Fortnite, which is at mass hysteria levels now, and I don’t mean to denigrate the game but in a year or two Fortnite may not be the game anymore. So, does the NCAA utilize one game? Does the game constantly evolve? And there’s different publishers who are part of the NCAA pool. Jarley: Abiel on the other hand, thinks that’s all manageable. Payano: I’ll use the Smash series as an example. Melee has been out since 2001. It’s been 17 years and people are still playing that game and it still has an insane amount of following. There are active tournaments and there are major tournaments every other week practically. Jarley: Issue 2 Audio: *Rage, yelling and profanity* Jarley: Yeah, that…Ben Noel. Noel: When they go online and go on to these environments its like their own fight club. They can smack talk and use inappropriate language that they wouldn’t use in a classroom. Jarley: Abiel agrees but he knows gamers can be self-regulated. Payano: We’ve had to deal with our own toxicity in sportsmanship within our events. For example we use to have a bad relationship with the CSGO community, that’s Counter Strike: Global Offensive. We had an issue with them during a tournament where they were yelling at each other from across the room and that doesn’t help an open casual event flow properly. It doesn’t feel great. It wasn’t fun to be there. So we had to talk to them and then we didn’t host tournaments for them for a bit as a form of punishment or just negligence. But now we’ve reconnected and they’re one of our e-sports team. Jarley: Issue 3: It’s a bunch of white guys playing in their mom’s basement. Rich Lapchick. Lapchick: The concept of e-sports is a team sport, if you don’t play together as a team you’re not going to win. So depending on who’s on the team, if it’s five white guys, the power of the huddle is going to be limited to that. It’s going to draw them together and make them closer, but when I talk about the power of the huddle, my concern is about what people look like, where they are from, what they believe, and coming together in that huddle. And at this stage, although there are a fair number of people of color playing e-sports I’m told that that’s not really an issue, especially globally. Jarley: But Abiel says that things are changing. Payano: Most of our teams, if it’s a team of six, they’ll have one or two females participating on that team, just because they’re the best. Jarley: Issue 4 PEDs. The suppliers don’t just juice the participants, they sponsor the events. Rich Lapchick. Lapchick: Adderall is very commonly used, anti sleep pills are used, energy drinks are consumed. Monster Energy is actually sponsoring the UCF team. Jarley: Issue 5, the establishment, meaning they’re not athletes and it’s not a sport. Danny White is UCF’s athletic director. White: As part of intercollegiate athletics, calling them athletes and e-athletes, I just don’t think that sends the right message to our student athletes who spend so much time and invest so much of themselves physically and mentally and the experience that they get from a leadership standpoint, being a part of a team in a sport… In my mind you can’t replicate that in gaming. Jarley: Don’t get the wrong idea, Danny thinks there’s a place for e-sports on campus, just not in the athletics department. He likens it more toward our student competitions in professional sales or cyber-security. But nobody is buying tickets to cyber-security or sales competitions, despite the fact that UCF has won national championships in both of these areas too. Nor are these academic competitions being broadcast on something like Twitch TV. Twitch is the e-sports streaming channel, e-sports’ huge fan base and marketing potential has Danny White the Athletic Director interested in e-sports as a way to promote his teams and help drive his bottom line. White: Everybody has kind of a similar interest that we’re seeing out of pro sports. I know the Magic are actively engaged with e-sports as it relates to building a fan base, as it relates to even filling a venue. Jarley: I’m not sure that’s going to work. Listen to Abiel. Payano: For example I used to play basketball and football when I was younger. But I don’t exactly find playing Madden or NBA2K on Xbox or PS4 to be as fun as actually playing it. Playing the team sport like Madden or 2K while sitting down on a controller kind of doesn’t feel right to me. Jarley: and Tony Schiller notes NBA2K just hasn’t lived up to expectations yet. Schiller: However the NBA marketing machine hasn’t really been targeted against 2K yet and once the NBA start leveraging all of their marketing resources against 2K, I think you’ll see a lift. But with that said the numbers have been pretty low. Jarley: Issue 6. Why not just turn pro? There’s a ton of money in it. But as Tony Schiller explains, there’s a potential role for colleges both in player development and marketing the sport. Schiller: You may want to create a technology environment that supports the student athletes and treats them like student athletes and provide them with the resources. Whether it’s technology, whether it’s sports psychology, whether it’s nutrition, whether it’s fitness. Provide these student athletes with the same level of resource and support that other programs would have. Potentially you might want to create your own tournament and host a tournament. Noel: I would question that. Jarley: Ben agrees that colleges could theoretically provide the player development pieces e-sports athletes need. But he thinks it’s going to be an uphill battle. Noel: If we wanted to get into MMA or boxing, we could do it. Fraternities would have boxing clubs and stuff like that but it’s not going to make a whole lot of money because it’s not playing it at the highest level. And so, you have a professional e-sports league and these people are very good, they’re pros, they’re the best in the world at doing it, those are the ones that people want to watch. Using the brand of a college, you know, to compete against each other, I could see something there, of a college competition, but I don’t see it being near as big. Jarley: Issue 7, the NCAA. They’re considering getting in, but hardly anyone thinks that’s a good idea. Let’s not beat a dead horse here. Danny White. White: As a membership, we’re struggling to regulate what we currently have in the NCAA. Jarley: Rich Lapchick is even more blunt. Lapchick: I don’t have a lot of faith that the NCAA is in the position to monitor a lot of the things that they monitor. So this so different, so new, I’m not sure if they would be in the position to do it. Jarley: The lone dissenter is Tony Schiller. Schiller: The NCAA is an entity that is focused on revenue, and there is a lot of revenue, and it’s growing exponentially in terms of sponsorship, in terms of advertising, in terms of ticket sales so I think that is one of the drivers why the NCAA will want to be there. Jarley: Whether the NCAA figures it out or not, the DeVos program has plenty of young talent to help manage e-sports. As Mike Redlick notes, it’s already creeping into the curriculum. Redlick: ESPN two years ago came to us and we have a partnership with them at the DeVos program and ESPN asked us to have a real world experience project for our students where they would determine to what extent ESPN should actually become involved with e-sports. Broadcast e-sports, coverage, etc. The students were thrilled, they felt that ESPN should be devoting a good portion of their coverage to them. Jarley: And as Rich notes, students are eager to get jobs in the industry. Lapchick: My personal GA this semester, who is just fantastic, he would like a career in e-sports. Jarley: Mike agrees, noting lots of students want to get into the industry. Redlick: I think the percentage is extremely high. I walk into the classroom, and I talk to our students about more traditional sports like baseball or anything that has a demographic that they’re not a part of and the interest isn’t really there. If I talk to them about a job in e-sports, they’re all excited, the buzz goes around the room immediately. Jarley: Time to get to the bottom line. Is e-sports going to be a thing on college campuses like college football or basketball? From Tony Schiller Schiller: The answer is simply yes. Jarley: From Ben Noel. Noel: I think you’ll have e-sports teams on college’s campuses, but might be fraternity versus fraternity. Jarley: From Danny White White: It could be a pretty cool thing, but it’s definitely not sport. Jarley: From Mike Redlick Redlick: Every indication is that it’s going to continue. Jarley: From Rich Lapchick Lapchick: I don’t think there’s a way to avoid it. It’s growing so quickly, it’s so lucrative. I think college sports is about money in a lot of ways. Jarley: From Abiel Payano Payano: Already, yeah, we already have teams that are entered in the relevant leagues for their games. Jarley: It’s my podcast, so I get to go last…Spirit Splash, the best college campus tradition in the country didn’t start because university administrators decided to engineer an event for a young institution looking for new traditions. It started when kids jumped into the reflection pond, the university eventually got on board, despite the lawyers offering plenty of reasons to be against it. And now it’s hard to imagine UCF without it. Ditto for e-sports, students are jumping in. High schools are getting into e-sports, the university will catch up. People will figure it out because there’s too much money in it. It’s going to be a thing; it’s going to be a big thing. Probably outside the NCAA, but don’t be surprised to see us cheering on the UCF Gaming Knights at a competition someday soon similar to March Madness or the World Cup. So, what’s your take? Check us out online and share your thoughts at business.ucf.edu/podcast. You can also find extended interviews with our guests and notes from the show. Special thanks to my producer Josh Miranda and the whole team at the Office of Outreach & Engagement here at the UCF College of Business.

Featured Guests: Stefanie Hill – Career Coach, UCF College of Business Office of Professional Development Lina Pabon – Campus Talent Acquisition Business Partner, ADP “Ellen” – Student “Casper” – Student Vera – Robot Interviewer Episode Transcription:   Paul Jarley:                         Russian hackers aren’t just messing with our elections, they’re disrupting the job application process, too. Companies like IKEA and Pepsi are hoping artificial intelligence will help cut hiring costs, but all this new technology may just be leading to more incivility in the job market. Prepare to be ghosted, my friends. Paul Jarley:                         This show is all about separating hype from fundamental change. I’m Paul Jarley, dean of the College of Business here at UCF. I’ve got lots of questions. To get answers, I’m talking to people with interesting insights into the future of business. Have you ever wondered, “Is this really a thing?” On to our show. Paul Jarley:                         To a graduating senior, the job market can be a scary place. If you think a 4% unemployment rate has eased these concerns, think again. Just pray that this horror story doesn’t happen to you. “Ellen”:                                I got three interviews. I did all of them and I got called back for one from a local firm. I went to the second interview. They told me that, it was maybe on a Monday, and they told me they would reach out to me again by Friday. They even gave me the employment paperwork, and then they never reached out to me ever again. Paul Jarley:                         Let’s just call her “Ellen.” But an incident like this? “Ellen”:                                Nothing. Just completely ghosted me. Paul Jarley:                         It’s a bit of shock to the ego. “Ellen”:                                I figured that if they didn’t want me, they would at least tell me they didn’t want me. Paul Jarley:                         What has that experience done to you? “Ellen”:                                It was really frustrating because I put a lot into preparing for it. I was really excited about it. It’s discouraging. Paul Jarley:                         Discouraging, but hardly new. Stefanie Hill:                     I think with technology, there are so many platforms now and, depending on the business, you’re not paying for every single platform. Paul Jarley:                         That’s Stefanie Hill, a Career Coach in our Office of Professional Development. She’s explaining how greater use of technology in the applicant screening process is leading to more ghosting by employers. Stefanie Hill:                     An applicant tracking system is what employers use to track all of the applicants that come through and apply on their website. If you’re using that ATS, that’s great, but you have to drive traffic to you website, which a lot of employers don’t pay for extra marketing to do that. You’re gonna go on CareerBuilder, you’re gonna go on Indeed. If your organization doesn’t shell out thousands of dollars to pay for these different platforms, then they’re not communicating with your ATS. In that instance, you’re going on three different platforms. You would have to send rejection letters to all three different platforms, depending on who applied on which, and a lot of times with all of those applicants it’s hard for employers and recruiters, especially, to keep track of all of that Paul Jarley:                         It’s just too much work to contact everybody. Stefanie Hill:                     I believe so. I also think it depends on the means of how you’re communicating with somebody. Paul Jarley:                         Sometimes when the employer calls, no one’s home. Given the pressures of time, the employer just moves on. Stefanie Hill:                     If you’re doing that through a phone call or voicemail, nobody really checks their voicemail. They don’t clear their inbox for their voicemail. You can’t leave a voicemail. Why spend multiple times trying one person when five other people answered your first phone call? I also think that has to do with it, is really the timing around that. If you’re a recruiter, you need to meet numbers. If you’re not doing that quick enough, that’s a problem. Paul Jarley:                         Laziness, rudeness, and time pressures do have their costs, though. Lina Pabon:                        Never ever again. That tells me something. Paul Jarley:                         That’s Lina Pabon, a Recruiter with ADP. Lina Pabon:                        We’re one of the largest human capital management companies in the United States. Paul Jarley:                         She would never work for a company that ghosts applicants. Lina Pabon:                        I would never. Even if I had a friend who was interviewing or something, I would even be like, “Well, that was my experience with them?” Just as an FYI. It’s definitely a negative thing, especially at the level I was at. You’re telling me I’m moving to a second round, and then I never hear back. That’s not professional on their end. Paul Jarley:                         But it’s not just the initial screening process that’s becoming automated. Meet Vera. Vera:                                     Hello. My name is Vera. Thanks for your time. Paul Jarley:                         She’s a robo-interviewer developed by a Russian company who works for both IKEA and Pepsi. I sat down for an interview with her. Vera:                                     Are you ready? Paul Jarley:                         Yes. Vera:                                     Alright. For a start, tell me how do you grow the net promoter score of your accounts. Paul Jarley:                         I hire smart people like Josh Miranda, who does these things for me. Vera:                                     And by the way, what was the best customer service you have ever received? Paul Jarley:                         I had a tailor who once measured me one day in my hotel room and delivered me three suits the next day. Vera:                                     Hm. Me, too. Now, please, define the word “leadership” in one sentence, just without using the word “lead.” Paul Jarley:                         It’s the ability to articulate a vision that motivates other people. Vera:                                     Hm. Brilliant. I enjoyed our talk. I will get in touch with you by email by the end of this week. Have a prosperous day ahead. Paul Jarley:                         Vera winked at me twice during the interview, but I don’t think we made a deep personal connection. I honestly don’t think she’s calling me back. Perhaps that lack of a personal touch leads to things like this. “Casper”:                            My first urge is to ghost. Paul Jarley:                         That’s another UCF student. Let’s call him “Casper.” In Casper’s experience, impersonal recruiting practices have led to cyber stalking and make some companies seem illegitimate. “Casper”:                            On LinkedIn, you get just the most bizarre messages. You don’t have a very private account ’cause you’re trying to get that exposure. You get the startups and the questionable ventures that are like, “Oh, yeah, we’d love to have you!” Paul Jarley:                         “Hi, we’re a pyramid scheme, would you like to join us?” “Casper”:                            Yeah, yeah, exactly, exactly. I had a recruiter contact me saying, “Entrepreneur is looking for me to report to the CEO.” I mean, I’m flattered, but I just graduated with my accounting degree. Those things don’t add up. I’m suspicious. Whenever you just know it’s not really worth your time, it’s easy to just pass up on it. Paul Jarley:                         How about a more reputable … “Casper”:                            More reputable ones. My first urge, a lot of times- For example, on my LinkedIn, on my header it says, “I’m looking for public accounting in this market. I graduated here.” I would get offers on LinkedIn like, “Hey, we want to interview for this management training role in Orlando starting summer.” You just got all three of the things in my header wrong, so I had the urge to just ghost them because you’re not really paying attention to who you’re reaching out to. Paul Jarley:                         Have you ever ghosted someone after they actually called you for an interview? “Casper”:                            Just that recruiter for the one where they want me to be a controller. It wasn’t really worth my time. I mean, I had asked a couple more followup questions and the answers were not as through and through as I would have liked. I just kind of let it go. Paul Jarley:                         Pay attention, employers. As Stefanie notes, Casper’s story is hardly unique. Stefanie Hill:                     Applicants ghost for the purpose of, “I’m applying to a ton of jobs and you’re getting phone calls and you’re not answering those phone calls for whatever reason.” Definitely in the initial process when a company reaches out through phone screen, we’ve also seen seVeral students that my have gotten hired with a company. They’re expected to be in training or they’re currently in the organization and all of a sudden, they fall off the face of the Earth. Paul Jarley:                         I’d really like to revoke their degrees. Stefanie Hill:                     I think a big thing with that and why students are doing that, not necessarily students but just about everybody is doing that, is not only the competition, you may have just taken a job for the sake of taking it, but you like something better. Paul Jarley:                         Casper adds: “Casper”:                            You’re not sure if you wanna be that confrontational with somebody. Paul Jarley:                         Ah, difficult conversation. “Casper”:                            Yeah, exactly. A lot of times, my peers, they’ll have offers from not their first choice and they don’t want to decline it in case something happens, but they don’t wanna accept it, either. Paul Jarley:                         A delay strategy. “Casper”:                            A delay strategy, exactly. It’s easier to sit on it a little bit, keep it on the back burner. Paul Jarley:                         Okay, let’s do some ghostbusting. Who you gonna call? Why, Stefanie Hill, of course. She says if you’re a job applicant: Stefanie Hill:                     Really focus on your top five companies and try to get in with those companies. Follow up through email if you don’t hear back from them after a week of putting your resume in. Also, after your talks on the phone, after your interviews, respond back to that employer. Court them whenever they’re on campus. Anytime they come, the College of Business, we have employers everywhere. Really trying to court and follow up as much as possible is my biggest advice there. Paul Jarley:                         If you’re an applicant thinking of ghosting an employer, Stefanie warns: Stefanie Hill:                     It’s a small world and if you burn a bridge with one person, especially if you’re trying to stay within a certain industry, you’ll probably burn bridges with everybody in that industry because people talk. Paul Jarley:                         As Lina notes, unthoughtful behavior like this tends to come back to haunt you later in your career. Lina Pabon:                        If you didn’t get back, if you were unprofessional, people can remember that and it could potentially affect a future opportunity. You just never want to do that. You never want to hurt your future opportunities. All we need is an email. Not even a phone call. I appreciate it as an employer when a candidate does take the time to send me a quick email to thank me, just, “Thank you for considering me. I have accepted another opportunity.” I’m like, “Great, I wish you the best of luck.” Paul Jarley:                         There’s no downside to class and civility. Lina Pabon:                        Exactly. Paul Jarley:                         Speaking of class, one last tip. If you don’t get the job, send them a thank you note anyway. You never know what might happen next. Lina Pabon:                        To your point, you never know when that person’s gonna back out and you were the second or third or what have you. But you took the time to send out a thank you note, hopefully reiterate your interest, why you’re a good fit for the role, and they might think, “Well, this person, they were interested and they took the time. Let’s revisit that. Let’s see if they’re still available.” Paul Jarley:                         Casper may be a ghost, but he’s got some advice for employers who don’t want people like him floating away to the competition. “Casper”:                            Some of the online and automated systems won’t even respond, even whenever you submit. You don’t even get confirmations of it. Paul Jarley:                         You don’t know if you submitted it properly. “Casper”:                            Exactly, exactly. A lot of times, they just scan your LinkedIn or scan your PDF and upload a lot of it normally or automated. You’re not sure if it even incorporated correctly. You’re left wondering. Paul Jarley:                         Because if you feel like you’ve been ghosted, well, you’re more likely to ghost them. “Casper”:                            While I don’t take it personally, it makes me less inclined to want to respond to somebody else. They’re ghosting, why don’t I ghost, too? I feel almost as if I’m flogging myself by trying to write this really personal, “I’m sorry, but” email. Paul Jarley:                         Lina points out in today’s world, getting a reputation as a ghoster, well, that’s gonna get you burned. Lina Pabon:                        Nowadays with social media and Indeed and things like that, that’s gonna get out there and that’s gonna affect your branding. We have a best practice where we do try to get back with all of the candidates within three to five business days, whether that’s positive or negative. Paul Jarley:                         Even if it’s automated, right? Lina Pabon:                        Right, exactly. That’s what I was going to say. With automation now, it’s so easy to just send out an automated email saying, “You know, unfortunately, we’re not moving forward.” Paul Jarley:                         To Lina, it’s all about the personal touch. Lina Pabon:                        Having that personable touchpoint with them during the phone screen where I try to create that relationship so that I don’t get ghosted. Paul Jarley:                         “Ghostbusters” puts it nicely. Janine:                                  Do you believe in UFOs, astral projections, mental telepathy, ESP, clairvoyants, spirit photography, telekinetic movement, full trance mediums, the Loch Ness Monster, and the theory of Atlantis? Winston:                              If there’s a steady paycheck in it, I’ll believe anything you say. Paul Jarley:                         But it’s not 1984, and in today’s market, as Stefanie and I discuss: Paul Jarley:                         Do students expect to be dated by employers today? Stefanie Hill:                     Oh, for sure. Paul Jarley:                         When you show up for that date: Stefanie Hill:                     I think millennials are extremely focused on culture. I think that’s one thing that employers sometimes fail to focus on. Paul Jarley:                         For a lot of applicants, they just won’t consider small companies. They’ll be thinking this. Stefanie Hill:                     I’m not gonna call them back. That’s not a good opportunity. Paul Jarley:                         One way companies could maybe reduce the likelihood of being ghosted by a UCF College of Business student would be to spend some time on campus, get students to know them, and the opportunities that they have because they’re not, say, Amazon. Stefanie Hill:                     They want the employer to sell them because it’s so competitive. Paul Jarley:                         Casper underscores the importance of a human showing up. “Casper”:                            I would say be personable, mention their name, make it as unique as possible while not going over the top because the student wants to feel recognized and like they’re not wasting their time. I mean, not to cater to individuality too much, but mainly just show that you are a person on the other side. You’re not a company, you are a recruiter working for a company. You’re an individual and the more personable you make it, I think the more assume I realize, “Hey, I should be courteous to this person rather than blow off a company.” Paul Jarley:                         Time to get to the bottom line. Is ghosting a thing? From our victim Ellen: “Ellen”:                                I don’t think it’s in my nature to ghost. I just find it so incredibly rude. Paul Jarley:                         From ghostbuster Stefanie Hill: Stefanie Hill:                     Yes, definitely a thing. Paul Jarley:                         From Lina Pabon: Lina Pabon:                        Yes. Actually, on both ends. Paul Jarley:                         From that ghost, Casper: “Casper”:                            Ghosting, in general, is a real thing. Paul Jarley:                         It’s my podcast, so I get to go last. Recruiting new employees is time-consuming and costly. It’s easy to understand why companies are looking to new technologies to help keep these costs in check, but it’s a seller’s market right now. People might put up with Vera in the application process when they’re desperate to find work. Vera:                                     I could not hear your answer. Do you want to continue the dialogue? Paul Jarley:                         But in an economy with a 4% unemployment rate, that personal touch might be the difference between landing your candidate or waiting by the phone for somebody to call back. Ghosting might be a thing, but it’s not inevitable. Be your own ghostbuster. Spend the time to engage and get to know people because it almost always pays off. What’s your take? Paul Jarley:                         Check us out online and share your thoughts at business.ucf.edu/podcast. You can also find extended interviews with our guests and notes from the show. Special thanks to my producer, Josh Miranda, and the whole team at the Office of Outreach & Engagement here at the UCF College of Business, and thank you for listening. Until next time, charge on.              

Featured Guests: Sean Snaith – Director, UCF Institute for Economic Competitiveness Honghui Chen – Director, Master of Science (M.S.) FinTech Initiative at UCF Jim Balaschak – Principal, Deanja, LLC Mike O’Donnell – Executive Director, UCF Center for Innovation & Entrepreneurship Alexander Golding – Founder and CEO, HelpedHope; Bitcoin Investor David Metcalf – Senior Researcher and Director, Mixed Emerging Technology Integration Lab (METIL), Institute for Simulation & Training Jim Adamczyk – Senior Executive VP / CLO, Fairwinds Credit Union Episode Transcription:   Paul Jarley:                         This episode has bank robbers, bitcoin, blockchain, and bacon. Maybe those are the four Bs of Fintech? As it turns out, not all of them are a thing. Paul Jarley:                         This show is all about separating hype from fundamental change. I’m Paul Jarley, dean of the College of Business here at UCF. I’ve got lots of questions. To get answers, I’m talking to people with interesting insights into the future of business. Have you ever wondered, “Is this really a thing?” Onto our show. Paul Jarley:                         I have a murky past. I paid my way through graduate school by teaching macro and micro economics to inmates in a federal penitentiary. How I got that gig is a story for another day. Suffice to say, it’s not easy to get into a facility like that. Most of my students were drug dealers, counterfeiters, or tax evaders. My best student was a bank robber. Paul Jarley:                         When I first heard of bitcoin and its alleged underworld origins I thought, “Yeah. Government’s gonna shut that down right away. It’s not going to be a thing.” Some South American countries like Bolivia and Ecuador have shut down bitcoin; many countries in the Muslim world have too. Paul Jarley:                         Countries like China have made it difficult to trade, others like India and Canada have safeguards that keep it out of its banking system. But, here in the United States bitcoin is legal. Why? To answer that question I went to my resident hater of all government regulation. Paul Jarley:                         Well, that’s a little harsh. He’s the director of the UCF Institute of Economic Competitiveness, Dr. Sean Snaith. Paul Jarley:                         Hey, Sean. Got a couple of questions for you. Sean Snaith:                       All right. Paul Jarley:                         Sean is one of the most recognized people at UCF and his office is just down the hall from mine. Paul Jarley:                         Why are cryptocurrencies like bitcoin legal? Doesn’t government have a monopoly on money production? Sean Snaith:                       They do. The thing is, with bitcoin and other cryptocurrencies they really haven’t infringed greatly on the role of money as the medium of exchange that is official government money. Paul Jarley:                         It’s not really legal tender is what you’re telling me? Sean Snaith:                       No. I can’t be forced to accept bitcoin in payment. Now, if I was willing to, then we do see transactions where bitcoins functioning as the medium of exchange. But, it’s not widespread and that’s why I think the government is not sort of clamping down on bitcoin in a forceful way. Sean Snaith:                       It’s not taking revenue away from the government that the government accumulates by being able to create money, which is a significant amount. Paul Jarley:                         But, what about using bitcoin on a day-to-day basis? Honghui Chen:                  From the time it started, initiated to it really is completely verified is an hour of wait time. Paul Jarley:                         That’s Honghui Chen, UCF finance professor and leader of our emerging Fintech program. Hong is explaining that your typical bitcoin transaction takes about an hour to process; too long to pay for gas at the pump or your groceries in the checkout line. Paul Jarley:                         He goes on to note that bitcoin has other draw backs as a medium of exchange, especially for small transactions. Honghui Chen:                  The transaction cost is too high, because the cost to recall a transaction … doesn’t matter whether it’s one bitcoin or a Satoshi. Right? Paul Jarley:                         By the way, a Satoshi is named after the alleged founder of bitcoin. It’s the smallest unit of bitcoin, it’s 100 millionth of a single bitcoin. Honghui Chen:                  It’s the same record, same amount of work. I think maybe in the future if it happens it will be for large transactions, not for small transactions. Paul Jarley:                         I just don’t see bitcoin becoming such a common medium of exchange that it’s going to worry the US treasury or the Federal Reserve. It’s more likely to be a niche product reserved for very large transactions, but even here price volatility may limit its usefulness. Honghui Chen:                  There’s huge volatility. Another thing is people’s willingness, of business willingness and individuals’ willingness to accept bitcoin as payment. Paul Jarley:                         Case in point, over drinks the other day two of my friends talked about the guy who mowed their lawn. He had worked for a person a few years back who had paid him in bitcoin, he later cashed that bitcoin into the tune of 250 thousand dollars. Paul Jarley:                         Those turned out to be really expensive lawns to mow. Imagine the windfall or loss that might come from a much larger transaction, but where there is price volatility there is also speculation. I sought out a few of my investor friends to ask them what they think of bitcoin and whether they held any as part of their investment portfolio. Jim Balaschak:                   Well, bitcoin is highly speculative. Paul Jarley:                         That’s Jim Balaschak, principle at Deanja LLC and a hall of fame member. Jim’s not buying bitcoin. Jim Balaschak:                   I think that it’s been driven up by a lot of people just following the trend and there’s no real, underlying earnings factor. No PE, no forward growth that you can measure, and I think that just makes it too speculative to me. Paul Jarley:                         Is there another kind of crypto currency that you prefer that you think is a worthy investment of one kind or another because it’s backed by something? Could you give me just some sense of what that is? Jim Balaschak:                   I haven’t really looked at detailed … There was one that came out from Oscar Mayer a few weeks ago called “Bacoin”, backed by bacon. That seemed to at least have something- Paul Jarley:                         Like, linked to the commodity market for pork? Jim Balaschak:                   I think just linked to … I think it was just really a promotion thing. Paul Jarley:                         Now, bitcoin backed by bacon. That’s something I can get behind, but Jim’s main point is that without something tangible backing bitcoin it’s just too speculative for his blood. Paul Jarley:                         My friend Mike O’Donnell on the other hand does invest in bitcoin. Mike, like Jim, is a member of our college of business hall of fame and is a serious investor. Paul Jarley:                         Mike, why invest in bitcoin? Why not just invest in gold? It seems like a lot of work. Mike O’Donnell:              Well, the reason I invested in it really was because there was a guy who was one of the original people in Facebook and a really smart guy. I think the longest executive and he’s now maybe one of the top experts if not the top expert in the world in cryptocurrency. Mike O’Donnell:              He said it took him 18 months to understand it and he said, “I don’t know for sure …” Because, nobody does, “Whether or not it’s gonna succeed or not succeed, but I’m recommending that anybody with wealth invest 1% of their assets in this asset class.” Because, it had a high potential for a massively high return in these early stages. Paul Jarley:                         Mike’s willing to devote a tiny part of his portfolio to a speculative investment and let it ride. He’s not worried about whether people can predict day-to-day or even annual fluctuations in price, but other people like David Metcalf are. David Metcalf:                  There’s been two [inaudible 00:06:47] that I’ve watched. Paul Jarley:                         David is a senior researcher for the institute of simulation and training here at UCF. David Metcalf:                  Of course, just general supply and demand and hype being put on something like Gartner’s Hype Curve and kind of see where it falls in the now. But, the other thing that I’ve watched closely is when there’s been currency destabilization. David Metcalf:                  Like right after Cyprus and right after the austerity movements in Greece where there was flight of capital. Safe places for some people to put and store their wealth, versus the fee at currency. That was one of the main uses for other cryptocurrencies. Paul Jarley:                         In this sense, cryptocurrency may act a lot like gold, which is also seen as a hedge against currency risk. This flight to safety is also emphasized by Alexander Golding, a serial entrepreneur and thought leader on crypto currency and social enterprise. Alex Golding:                    A safety play, I definitely see that. I think that the 10% daily price range we see here in bitcoin is much less than the devaluation of the Zimbabwean dollar or the Venezuelan bolivar or some other currencies. Alex Golding:                    Furthermore, in terms of how do we measure and devaluate the price of bitcoin? There are some people who are trying to do that and they produce institutional grade research. They’ve figured out how some of these scientists are modeling the price of bitcoin and how people are coming to these price forecasts. Alex Golding:                    I personally think that a lot of it is driven by hype, I don’t think anyone can deny that a lot of it’s driven by hype. But, I still believe in it though. I still think that the acceleration of wealth that has happened because of cryptocurrencies will inspire a huge amount of innovation, and scientific, and entrepreneurial experimentation. Paul Jarley:                         Alexander’s faith in bitcoin as a source of inspiration strikes me as a very long play. Bitcoin’s not the sort of investment I’m planning on including in my retirement portfolio. Paul Jarley:                         If bitcoin isn’t likely to be a significant medium of exchange and it’s too speculative for most investors, what problem is bitcoin really solving? Back to Honghui. Honghui Chen:                  The main problem it solves is the trust problem making a transaction. Usually when two parties are doing transaction, if they are not face-to-face usually they need an intermediary. Honghui Chen:                  With bitcoin you do not need the intermediary, because it has a shared network. The system can provide the trust that we usually need to find from an intermediary. Paul Jarley:                         We’ve heard a little now about blockchain, it’s the technology that powers bitcoin. But, what exactly is it? Jim Balaschak had a pretty good explanation. Jim Balaschak:                   Block chain is a distributed ledger that goes back to verify a transaction publicly across many computers, no one person can- Paul Jarley:                         Erase things from the ledger. Jim Balaschak:                   … erase or validate all by themselves. It’s a distributed ledger. The blockchain technology is good, it eliminates a lot of middle men, it could save more fees for transactions in the futures that are needed for bankers or lawyers to let’s say, transfer a title of a house down in the future. Paul Jarley:                         It has applications outside of finance? Like voting? Jim Balaschak:                   Yes. Paul Jarley:                         For example, in voting systems. That you could verify that people voted and there wouldn’t be questions about who voted and did they vote multiple times and what not? Jim Balaschak:                   Right. The company I’m invested in, their blockchain technology that they’re using is on facial recognition. So that they will have an algorithm for everybody’s face that buys a token and that can be used to validate their ID for different transactions. Paul Jarley:                         If bitcoin promotes transparency, why is there this perception that bitcoin protects anonymity and that it was used by drug dealers to mask their transactions? Honghui Chen:                  I think there’s some misconception of the bitcoin. Actually, it can be traced. If I were a drug dealer I don’t want to use bitcoin, because they’ll trace. Honghui Chen:                  In the bitcoin network, every money goes into an address, public key. Every transaction where the money goes in the future, you can trace out. There is a tree. Paul Jarley:                         It’s actually more transparent? Honghui Chen:                  Yes. Very transparent. While you do not know exactly the identity that is behind each so called public address, but with Big Data I’m sure it’s very easy to figure out who is doing what. Paul Jarley:                         Mm-hmm (affirmative). Security, transparency, trust, elimination of the middle man. There’s a lot to like there, but even sophisticated technology like bitcoin and blockchain can’t save people from themselves. Paul Jarley:                         As Honghui explains, there’s the issue of keeping track of your 64 digit random key that gives you access to your bitcoin wallet. Honghui Chen:                  You can write it down. It’s silly. You can store in a digital wallet. You have to have a wallet to access your bitcoin. It has to reside on a computer or your smartphone. Have a disk failure could cost loss as well. So, yes. Honghui Chen:                  But, I think for many individuals it’s really, how do you remember your private key? Paul Jarley:                         Does that explain … I thought I read an article, maybe it was a month or so ago about the first theft of bitcoin. That somebody had engaged in a bitcoin heist. Honghui Chen:                  Yeah. So- Paul Jarley:                         They must have stole their key. Is that- Honghui Chen:                  Yes. Stole your key and they hack into your- Paul Jarley:                         Computer or cellphone? Honghui Chen:                  Yeah. Yeah. Exchanges can be hacked, because with lots of exchanges you just … For us, we just store our wallet remotely and if they have a … To access the wallet you have to have some password. Right? Paul Jarley:                         Right. Honghui Chen:                  Maybe some people store it in your email account. The email is not so secure. Right? Paul Jarley:                         Right. Honghui Chen:                  You get into your email account, your computer, and then it can be gone. Paul Jarley:                         And then, there’s this warning from Sean Snaith. Sean Snaith:                       You have a bitcoin purse and their exchanges, but one of those disappeared in Japan and guess what? All the bitcoins are gone. There’s no FDIC for bitcoin, your deposits are not ensured. Paul Jarley:                         We’ve covered a lot of ground in this podcast and it’s time to get to the bottom line, is bitcoin really a thing? Will students need to know something about bitcoin and block chain to be considered financially literate in today’s world or can they just skip it? Honghui Chen:                  In two or three years I think, “Hey, you are a finance major. You don’t know FinTech?” (laughs) Paul Jarley:                         Sean agrees. Sean Snaith:                       I think bitcoin and the technology that’s behind it is something that students should learn about. Paul Jarley:                         From Jim Balaschak. Jim Balaschak:                   I do think that it is a thing, because there are a lot of people who are putting their money it. Paul Jarley:                         From Alexander. Alex Golding:                    I’m a longterm believer in bitcoin as an investment. Paul Jarley:                         From Mike O’Donnell. Mike O’Donnell:              I don’t want to learn about cryptocurrency at this point in my life. You’re gonna have to, because it’s happening. Paul Jarley:                         From David. David Metcalf:                  We’ll see if they still know the name bitcoin, but I think they’ll definitely know blockchain and cryptocurrencies in general. Paul Jarley:                         It’s my podcast, so I get to go last. Let’s be clear, bacon is most certainly a thing, bitcoin on the other hand might be to blockchain what Netscape was to the internet. Paul Jarley:                         In the early days, if you wanted to get on the internet you used Netscape. It was the browser, but Netscape couldn’t keep pace with upstart competition and was eventually replaced by better browsers. I suspect the same will be true for bitcoin, it’s an early adopter of blockchain that will likely give way to more sophisticated cryptocurrencies and platforms. Paul Jarley:                         Blockchain most certainly appears to be a thing, bitcoin? Not so much. What’s your take? Check us out online and share your thoughts at business.ucf.edu/podcast. You can also find extended interviews with our guests and notes from the show. Paul Jarley:                         Special thanks to my producer Josh Miranda and the whole team at the Office of Outreach and Engagement here at the UCF College of Business. Thank you for listening. Until next time, charge on.  

“Is This Really a Thing?” is an all new podcast created and hosted by Paul Jarley, dean of the College of Business at the University of Central Florida. With the help of local experts, enthusiasts and all-around interesting people, Paul takes a look at up-and-coming concepts and ideas that have the potential to reshape the business landscape. How do you separate fly-by-night management tactics or money pits from legitimate innovations? What will students need to learn about to be successful over the next decade? Is Bitcoin a thing? How about eSports? Paul decided to chase down the answers to these questions that keep him up at night and pose the question… Is This Really a Thing? Coming to your favorite podcast app in mid-September.