Paul Jarley: It’s Space Week at UCF and I’m like a kid in a candy store. So many questions. For one, everyone’s talking about going to Mars, but why? What problem are we solving? What does Mars offer that other planets or the moons don’t? And if the answer is survival or curiosity, does that really require an economy, people trading air, power and data in some kind of cosmic barter system? Or is Mars just a science project? Let’s be real. Most moms or dads did their kids science projects. Nobody ever monetized anything from any of 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? On to our show.

In the past few years, the College has been undergoing a transformation. We’ve been asked to build a Business School that’s a key asset to Florida’s leading engineering and technology university. That’s meant bringing in people who are a little different from our typical pragmatic, data-driven faculty. The ones who teach students to manage people and PNLs. A few of these new faces can fairly be called dreamers. One of them is Zaheer Ali. He, along with Greg Autry is leading our space commercialization efforts, including our space MBA. It’s not a nickname, it’s a space MBA. As we were setting up for Space Week, Z claimed that a Martian economy would really be a thing. Well, he said something like that. I gave him a skeptical look, he countered with a panel of experts.

Listen in.

Zaheer Ali: Well, thank you Dean Jarley. I like to say that, you know, in our business, we turn sci-fi into sci-reality. And one of the people who helps make sci-fi and is now helping make science reality is Danica Vallone of the Making Space Agency. Her path to space is very interesting coming from Hollywood of things like costumes and sets of such high fidelity and accuracy that the space industry said we need some of that. In my time at NASA, one of the things we did was we always built very high fidelity simulators and simulation systems to prepare people and equipment for the challenges of the space environment. So welcome Danica.

Danica Vallone: Thank you very much.

Zaheer Ali: We also have Dr. Pascal Lee of the Mars Institute, of the SETI Institute, one of the leading planetary scientists in the US and indeed the world Co-Chair of the National Space Society Space Settlement Summit and International Space Development Conference. Welcome, sir.

Paul Jarley: So I’m going to start this conversation by asking the same question I ask anybody who pitches me an idea, what problem does this solve? If you’re going to Mars and establishing an economy, what problem does that solve?

Danica Vallone: Mars expert over here should probably have first crack.

Pascal Lee: This is an interesting way to frame the question. I’m not interested in space exploration to solve a problem. I’m interested in drawn to space exploration and Mars exploration in particular because as a scientist, I’m interested in this quest for life. We often say we’re looking for life on Mars. What we fail to specify is that we’re looking for the first example of an alien form of life. And we’re not talking about little green men or some intelligent form of life. We know that Mars hasn’t had that in its history, but we’re looking for another example of life. A different biology from ours. All life on earth is connected and going to Mars would solve possibly that problem, which is how alone are we? Is there some other form of life even within our own solar system? That would solve the problem in the sense of giving us a fuller perspective of what we mean here on Earth.

What are we as a phenomenon in the universe? Are we something really exceptional? Are we common? So that’s the scientific quest that I think would be solved by going to Mars. But in a broader sense, going to Mars to me is also opening a frontier. It’s creating new possibilities. It’s allowing our dream to not just be focused on one planet, but sort of be placed our dreams to be placed in a broader context of a universe where we can do things, where we can thrive. And so maybe the problem we’re trying to solve here is to not be confined to the Earth in our thinking, but to be beyond Earth.

Danica Vallone: I love Pascal with every fiber of my being, but I think that going to Mars is a step in the path to solving the penultimate problem, which is the eventual demise of our species. On a long enough time signature, even if we manage to not blow ourselves up or create some giant nuclear winter or implode the Earth, eventually it will no longer be livable here on our planet. So if we don’t, and we’re talking about millions of years of time signature, eventually figure out how to exist off world and terraform and make other habitable places in the solar system and galaxy and universe as a whole, we will inevitably go extinct. So this is the biggest, fastest, juiciest of all of the problems to solve, and Mars is our second-closest neighbor that is viable.

Paul Jarley: Z, you threw out the economy. It’s on you buddy.

Zaheer Ali: So I’m going to go hardcore here. Capitalism, as we know it is based on continuous growth, right? And you see interesting behavior in the last decade. There was a really good article about competing for talent and things, but the real gem in that article was the statement that, look, we don’t have easy growth markets anymore, right? You’re down to tier five in China, the African disposable income has not increased and India is serving itself to a great extent. So if we’re going to constantly drive the system we currently have, we need to grow populations and we need to grow economies. So I think going to the moon, going to Mars and developing economies off world fundamentally solves the problem of continuing to drive the system we have, should we change the system? That’s a different type of discussion entirely. And secondly, the Earth as far as we know it, in our solar system and certainly within reachable timelines is completely unique.

Are there other planets out there that are Goldilocks-type planets where there’s water and the right temperature and all these other things for our type of life to exist? Yes, we found them. Missions like Kepler and TESS and others have identified some of those. But, they’re not reachable. We do not have the physics understanding to achieve that. So in the meantime, what do we do? How do we protect Earth? Well, I would rather that we completely strip-mine the moon. I would rather that we completely pull asteroids down onto Mars, even if it crashes in the surface, it causes different types of damage. It’s a dead rock. But the only place there’s life that we know it is here and creating these economies off world to serve Earth is in my opinion, one of the ultimate forms of Earth environmentalism as well.

Paul Jarley: Okay, I’m going to focus on Mars here, because that’s how you served it up. We’ll get to this more a little bit. Yes, Mars is a rock. I don’t see that Mars has anything going for it. The moon has some things going for it. It’s close, it has some water, right? There’s some other things there. Mars doesn’t seem to have anything. You are telling me that it would be easier to grow and produce an economy on Mars than it is in Africa. I would ask you to rethink that proposition.

Zaheer Ali: That’s fair. I just think we should do both.

Pascal Lee: I both agree with Zaheer and disagree in some ways. But I think the disagree may be on the timescale over which we would like to see these things happen. Mars is a God-forsaken place right now.

Paul Jarley: It’s hell, let’s be honest,

Pascal Lee: Venus is hell, Mars worse, a little better.

Zaheer Ali: The atmosphere will melt you on Venus.

Pascal Lee: Mars is a little bit better. It’s a place to me that we can explore. Now whether or not we should establish colonies and large settlements of humans, I personally don’t see that. That’s not what drives my vision of the future of humanity and space including on Mars. But there are several things that are really changing here in the landscape. First of all, when we say why spend money in space, why can’t we have more of an economy in space? The answer is that money is not spent in space. Even when we go to space, money is spent here on Earth, the economy is here on Earth. It’s benefiting humans every day on Earth with the things that we’re doing already in space. And to me for quite a while still until, and if we ever have a larger population that’s permanently present on some other world, what we really see the economy that’s based on Mars. But for a long time, even when humans are going to explore Mars and even when we establish a first base there and a resort that tourism might actually want to use and send people to, the economy will still be on the Earth. The money will be made on Earth, the investments will be made on Earth. And, you know, it’s farther down the road that I see that we would really transition into what one might call a sort of a Mars-based economy. But I hope that the day for that will come. It’s just a matter of is this really the immediate future that we’re talking about? And for quite a while still the economy is going to be Earth-centered even when we go to the moon, let alone Mars.

Paul Jarley: Well, the economy requires a few things. The first thing is scarcity. Mars has plenty of scarcity. That won’t really be a problem.

Danica Vallone: Scarcity in abundance.

Paul Jarley: Right? Exactly. Then it needs specialization of labor because scarcity and specialization of labor leads to trade and trade is at the heart of an economy. And that doesn’t necessarily mean that currency has to trade. I mean you could see on Mars or on another planet, oxygen credits might serve as a barter system for trade. But I do think also there’s sort of a stage in the middle. So if you think about on our little world how colonization happened, you would think about things like the Hudson Bay Trading Company, which was given a monopoly for a certain period of time, largely for resource extraction. And here I think we’re talking about a resource extraction scenario, at least in the short term. What I worry about with Mars is there ain’t no resource to extract. I don’t know what it would be.

Pascal Lee: Well, water actually would be a very important resource and we know is abundantly present there. First of all, it can be used as a fluid that we use for hydration solution in general, but also for as rocket fuel, you can break up H2O into hydrogen and oxygen and that’s rocket fuel. So in the context of Mars, actually, this notion of using water from Mars, I don’t know how that translates into an economy, but as a resource certainly that we should tap into that buys you a lot.

Paul Jarley: Something to make a settlement sustainable that would –

Pascal Lee: Buy you a lot to be able to –

Paul Jarley: Yeah, that would buy you a lot.

Pascal Lee: To extract water and have a gas station on Mars.

Paul Jarley: Yeah.

Pascal Lee: Now it’s actually less clear on the moon ironically, because right now we have a lunar program that’s completely obsessed by extracting water ice from the lunar South Pole. If you look at the actual scientific data about this, there is water ice at the South Pole, and even people say there’s the equivalent of 200,000-plus Olympic size swimming pools worth of water at the South Pole, but it’s really scattered over a very vast region. And even in places where you have the highest concentration of water ice, according to the one map that we have for now of the hydrogen in the lunar South Pole, it would take the plowing of 26 football field size of a patch of ground on the moon down to a depth of one meter for you to extract enough water to fill one Starship. Forget about the environmental damage you do to the moon.

There’s no economy there in my view because it’s not just excavating the stuff. You have to confine the water, pipe it, store it, preserve it because it vaporizes, it vents, and then eventually you’d have to fill in your rocket. So you have to take the water to where the rocket is because where the ice is is actually not really easy to land or operate. The bottom line is to me, there’s a pipe dream here with extracting water from the moon economically. And yet we are all focused on getting to the South Pole of the moon right now, which I think is actually a strategic mistake to send people there. The biggest source of water on the South Pole of the moon is the Earth.

Paul Jarley: Can we import it?

Pascal Lee: Yes, we can transport water from the Earth. Any single landing of a starship on the moon can bring in 125 metric tons of water. I think for a long while, the water on the moon should be counted as coming from the earth as opposed to extracted on site. It might take a generation or two here of really prospecting at the South Pole, and if we ever get lucky enough to find a spot where we can really extract water in large amounts and in a way that’s economically viable, we would do that. I’m completely on board the dream and desire of growing an economy in space from local resources, but the bar is very high to make it economically viable for quite a while.

Danica Vallone: There is one factor that we haven’t discussed yet, which is the variability in gravity that exists, whether we are in LEO (Low Earth Orbit), MEO (Medium Earth Orbit), GEO (Geostationary Earth Orbit), on the Moon, or Mars. And Mars has its own very unique gravity signature and we do not yet know what kind of manufacturing can be done in very specific gravitational balance levels. Specifically when it comes to organelles or biology or being able to 3D print organs and things like that. Again, when it comes to reproduction capabilities. Essentially all we know when it comes to our bodies and gravity is one G good, zero g bad. And that’s the extent of our knowledge base. So to have a planet-sized laboratory to be able to explore what is possible inside of those bounds is potentially incredibly advantageous.

Zaheer Ali: One other thing that I would add is it’s about real estate at some level.

Paul Jarley: Well now we’re talking property rights.

Zaheer Ali: And that’s being established. That’s why we have a panel on governance at the Space Settlement Summit because we have to figure that out. But –

Paul Jarley: I seriously doubt there’s going to be sovereignty on the moon or Mars.

Zaheer Ali: It might be like the Alaskan wilderness.

Paul Jarley: Or Antarctica, right?

Zaheer Ali: Antarctica is different because the world’s nations got together mostly and said we’re not going to extract resources. That is exactly the opposite of what we want to do in space. We want people to go extract resources because that fuels investment. If there’s an ROI at the end of this, when my ship comes in or in this case when my spaceship –

Paul Jarley: You and I are going to be dead then, Z.

Zaheer Ali: Yeah, but we do have to set this up. I mean that is one thing that is important to realize in the space conversation is we are in this for the species and between (Carl) Sagan and (Frank) Drake, they laid out the probability that our great great grandkids exist. And it is not a hundred percent. And that is a reality that some of us look at and say the way we can make sure that gets closer to a hundred percent is –

Paul Jarley: This is why you need a space MBA. But keep going.

Zaheer Ali: You know, Phil Metzger, who is a professor here, I’ve been telling him to publish this work, but he’s been tinkering with this model and I think you’ve seen it Pascal, right?

Pascal Lee: Phil is a great researcher, yeah.

Zaheer Ali: But he needs to publish the damn thing, so then the rest of us can start playing with it too and optimize it and 20-year-olds can figure it out, which is probably what’s going to happen.

Pascal Lee: And he does publish good stuff.

Zaheer Ali: Yeah, but this particular model on how much mass and population it takes to actually make exactly what you said, that economy –

Paul Jarley: A minimally viable economy in this case.

Zaheer Ali: Right? It’s not a hundred, it’s not a thousand, it’s not 10,000. It’s tens of thousands of people, but it is not all of them on Mars. It is a spectrum from orbit all the way to Mars and back. And the thing is, when you look at distances, particularly you talk to people like Joel Sercel of TransAstra and others, when we think about what is it really going to take for us to advance to other levels of civilization? That and also where does some of these economies kick in? And to access the asteroid belt at some level, we don’t know how to mine an asteroid, but we do know how to mine in gravity. So if we have to pull stuff down to Mars and then process it there, it could become the giant processing plant for the next level, the type two human civilization.

Paul Jarley: Well, that may bring up some ethical issues that we don’t have time for today. But I’m trying to apply a pretty fundamental economics principle here. I’m not trying to pooh-pooh the idea that there’s going to be an economy that has some basis in space. We need to think in terms of comparative advantage. And I don’t see Mars having one. It ain’t close, it doesn’t have any materials that I think we need. I’m thinking there are probably other prospects even in the solar system that would be better for establishing a civilization than Mars would be?

Pascal Lee: First of all, like I said, establishing a civilization on Mars is not at all something that drives my interest and actions and area of space.

Paul Jarley: And we can stipulate, it’s hard.

Pascal Lee: To me, first of all, Mars right now is still a very attractive and some sense romantic landscape, but the reality of this place is really harsh. It’s completely deadly. If you walk out onto Mars without a pressurized spacesuit, you’re dead within seconds from low pressure and other things will kill you eventually as well. But the key thing here is there really is a potential for there to be life on Mars. Not at the surface, we don’t think anymore, but deeper down, or at least in the subsurface, possibly in caves. And there are many caves, there’s over a thousand caves and pits that have been identified on Mars in this day. And when you’re in a cave on Mars, the harshness of the environment is completely different. Now it’s completely moderated into something that many forms of life on Earth could survive in, even at the low pressure of Mars. So really one of the potential major discoveries we could find on Mars, if you find a form of alien bug or life, is essentially insights into an entirely new realm of biology. And we have to understand what biology means today. It’s an entire industry. It’s an entire economy on Earth, understanding life, how it works, how it doesn’t work, how it could be modified, how it could be adapted. All of these things would be revolutionized by another example of life that we could find. So there’s that huge potential I think that really is looming on Mars, but we don’t know that it’s there. That’s a fact.

The other thing is what’s the worth of a National Park? It is just there preserved, it’s beautiful, it has potential, it’s very attractive. People still go to National Parks. Are we necessarily thinking that one day we’ll have to destroy Yellowstone and turn it into a thermal plant or an electrical plant? No. The answer is there are some things out there that we should try to achieve, go explore and possibly settle a little bit because they are just incredible things for us to think about and dream about. So, I think that once again, if you’re in the business of really making money fast, space is only in a very limited way the place where you want to be. But if on the other hand you are really a long-term thinker and you are interested, you believe in humanity’s greater future down the road, and you sort of are an investor in that sense of into our distant future, then the action, as Zaheer says, needs to be taken. Now we are the people who have the responsibility of taking the first steps to making this happen down the road.

Paul Jarley: So we did find some things right on the sea bed near volcanic vents, which showed us forms of life that we did not know existed before. If I may digress for a minute though, our own human experience would tell us that if life exists, it exists everywhere on that planet. It’s not hard to find. It screams at us in various forms.

Pascal Lee: Let me moderate that. I’ve done 25 years of field work in the Arctic. There is life in the Arctic, but a lot less. It doesn’t scream at you anymore. You go to the Arctic, you’re walking on this desert plane. You have to look for life to find it. It’s not harking back at you. And so, I do think that a place like Mars could have life, globally, but in places that are still niche like underground. And there’s the speculation that somehow if it had life at all, it would have somehow colonized the whole planet and modified it. That’s not necessarily the case. On Earth, even on Earth, in extreme environments, you see that life recedes into nooks and crannies where it can survive, but it doesn’t necessarily have enough oomph at that point to change the planet.

Paul Jarley: So, you used the word romance. So talk a little bit about that, about the power of space exploration and storytelling and romance. People make a lot of money off of that.

Danica Vallone: Yes we do. Yes we do, my friend. People need things that are greater than themselves to believe in and to strive for. That’s a unifying human trait. And to do hard things means that we’re solving for all sorts of other problems along the way. So if Mars is the symbolic end goal, the amount of technology and innovation that’s required to get us there will produce an enormous amount of viable, economically viable offshoots that we can make use of. The more resource constrained the environment, the more difficult our solutions are, but we will get there. And as our Earth becomes less inhabitable, as we treat it increasingly poorly, this will become very, very relevant for us to be able to have access to. But the reach itself is noble and if it exists as little more than a symbol that still has intrinsic value to the species.

Paul Jarley: So if you had a few trillion dollars to invest tomorrow, where would you put it? Z?

Zaheer Ali: A couple trillion, that’s a big number.

Paul Jarley: We’re going to think big here, right? Well, it’s not going to be a small task.

Zaheer Ali: Right. If I had to invest it in a short time span or within a few years, it’s going to be a little nuts, but I’m just going to say it.

Danica Vallone: I’m ready.

Zaheer Ali: The material capability of there for a lunar space elevator, it would eliminate the need for keypad zones and directly enable interaction from the lunar surface to orbit and could be a direct last-mile system to kickstart the lunar economy.

Paul Jarley: You got to tell me more about what a lunar elevator looks like so I understand.

Zaheer Ali: It’s a space elevator like this Arthur C. Clark thing where you’ve got weight on one end –

Paul Jarley: And it’s connected to the Earth?

Zaheer Ali: and connected to the body. The material properties are not sufficient.

Paul Jarley: The material science guys need to do some work. Is that what you’re telling me?

Zaheer Ali: Well, I mean even to get to the lunar one capable, they’ve done a lot of work. That’s 25 years of work.

Paul Jarley: Or ladies, by the way.

Danica Vallone: Thank you.

Zaheer Ali: That’s an impressive development. And the reason I say if I had the money now I would invest in the moon is because I believe this is a ladder. And I don’t think we can leapfrog rungs here. It needs to be done methodically. It needs to be done strategically with consistent effort. The moon enables us to develop all the systems at some level and optimize them to go to the harder environment, which is Mars. And there’s a lot there because the radiation environmental Mars is also worse fundamentally than on the moon. And there’s all types of other challenges. So that’s where I would put the money. I would make lunar happen as soon as possible and I believe that would kickstart this and we would have a sustaining cislunar economy because of the comparative advantages to the moon, you know, crater resources, gravity, helium. I actually don’t think that’s going to be a thing. There’s just no market. I mean the tokamak, the type of fusion that would’ve used Helium three is not the one that is going on grid by 2035. And I know this because I’ve been in the Commonwealth Fusion data room.

Pascal Lee: It’s a maybe later thing.

Zaheer Ali: That’s a whole other podcast, nuclear power. So that’s what I would do first, but I would specifically do it in a method that is not focused on, okay, moon and then stop. But Moon as a rung on the way to Mars.

Paul Jarley: Do you agree with that?

Pascal Lee: Yes. At this point, I think going back to the moon is imperative. I was sort of criticizing Artemis and the plan to send humans to the South Pole earlier, but I’d like to see what the alternative is or what it should be, which is to set up a base on the moon off pole, not too far from it, but in a place where, I mean my favorite spot is Clavius Crater, which happens to be where “2001: A Space Odyssey” had its base, for reference. But at the time they didn’t realize how great a place this is.

Paul Jarley: Hal is echoing in my head right now.

Pascal Lee: It’s turning out to be a fantastic place to set up a base and for reasons that Arthur C. Clark or Stanley Kubrick could not have known, but the reasons they had, which is a big wide open place, are still good. But it turns out that it has caves nearby, it has a direct drivable route to the South Pole, it’s much more pleasant to be based out of, much safer as well, easier to access from Earth, etcetera. But setting up a base is really the imperative. Right now, we are in this contrived, self-inflicted race against China to be first to put humans back on the moon when in fact, I don’t think that’s the real race. That race we won 60 years ago, and we don’t have to re-litigate that. On the other hand, where there is a race, is a race to stay on the moon for permanent presence. And so the Artis program in my view, should be redirected as soon as possible to establishing permanent presence at the surface of the moon. Not in the polar regions, but at Clavius or somewhere similar.

Paul Jarley: But that’s a military imperative as much as it is anything else.

Pascal Lee: Well, it’s strategic.

Paul Jarley: Let’s be honest about it.

Pascal Lee: Strategic, but it also opens the way to our future exploration of the moon for science. It’s a better place for a number of reasons. I don’t know if we’ll get to the AI part, but this –

Paul Jarley: Throw it out there.

Pascal Lee: Well, this particular summit that Zaheer Ali here and Dr. Greg Autry organized at UCF with the National Space Society, I think is really a visionary opportunity because, think about Mars settlement as sort of a farther out frontier here that we’d like to someday achieve and get humans to occupy. But there’s also been talk of the role of artificial intelligence. And humanity, while we continue to explore and push our limits in space, humanity’s really on the verge of this huge revolution here, which is the one that’s associated with the emergence of AI and AI-equipped androids. So it’s not just AI that’s making progress, it’s robotics as well. And very soon, just because we are Dr. Frankenstein’s, all of us, we are wanting to see humanoid robots. You can create robots that don’t look like humans at all and have AI, but somehow there’s this global effort to create humanoid robots that are eventually going to be equipped with artificial general intelligence, meaning intelligence that matches that of our human brains and eventually –

Danica Vallone: Supersedes.

Pascal Lee: artificial super intelligence, which exceeds the human brain. But anyway, once you have a robotic machine that’s essentially like ourselves, that we can relate to completely differently from how we relate to a robot rover on Mars, instead, this is a robot that we essentially can talk to as if they were part of our family. Now all of a sudden you are opening an entirely different realm of possibilities for humanity if you extend that definition to include these AI robots to explore space. So as much as I don’t see, ever, a point where we should be thinking of a million biological human beings on Mars, because I don’t think a place could support it, I could actually see a million Android robots on Mars reproducing themselves, extracting local resources, but turning Mars into this incredible playground.

Paul Jarley: You know how that science fiction movie ends though? Mars revolts.

Danica Vallone: Or they claim it for themselves and we negotiate a treaty.

Paul Jarley: The Martians are never happy.

Pascal Lee: I’m banking on the fact that we’ll be good parents in raising these AI for sure, for sure.

Danica Vallone: And we need better stories.

Paul Jarley: Can you sell that movie?

Danica Vallone: Oh, absolutely. I think we have sold that movie.

Paul Jarley: Probably!

Pascal Lee: The point is, if now you have representatives or human selves who are much more resilient, I mean think of sending Android robots to Mars. You don’t need to feed them on the way there. They don’t need water anymore. They just need power, and there’s plenty of that on Mars. They don’t even need a spacesuit to go out on spacewalks. The ones who will occupy Mars on our behalf and be part of ourselves essentially in this process. And so we’ve even talked about interstellar travel and what that can do to us. So you’re correct. There’s no place in sight right now for us to head out to beyond our solar system. But if you have Android robots, then they’re immortal. I don’t actually think that we will ever terraform Mars. I think we’ll have the ability to reach nearby stars that are already habitable and then if we’re just cared for as humans in the form of DNA all the way there, then we could be replicated there.

Paul Jarley: What should students learn about potential missions to Mars or space exploration or?

Zaheer Ali: One thing that we didn’t actually say, but it’s been implicit in all of our discussion, is that you have to get a business case to close. And one of the things the space economy teaches you perhaps better than any other economy is how hard that is and how tightly you have to pull that thread through and connect it. So many things we take for granted about the way we can build a business in all other aspects of our economy. We have ready markets, people understand the products, it’s easy to communicate all these things. Here? You have to get every aspect of your business. So that’s how I’d answer what I think students should take away.

Danica Vallone: It’s a bit like playing your favorite video game on the hardest setting possible. If you can make it here, you can make it anywhere. So if you’re going to pitch an idea and try to make it work in the space economy, you are set for whatever other endeavors you want to tackle thereafter.

Pascal Lee: I agree completely with both what Zaheer just said and Danica. President Kennedy I think said, I’m going to paraphrase poorly, but he said, we want to do this and the other things not because they’re easy, but because they’re hard. You gain something from doing something that is hard. The benefit is not necessarily out there, it’s here, down here and how you do it and how you get it done. In some sense, even if we couldn’t identify or pinpoint any specific benefit right now, and there has to be a component of everything we do that sort of takes into account this bigger picture out there that’s there. We are just in this tight spot in history where it’s going to take quite a bit of investment to make all this eventually pan out.

Danica Vallone: But this is the most glorious of all pursuits because this is legacy. What greater path to legacy than this?

Paul Jarley: So is the Martian economy going to be a thing or not it when Zaheer?

Zaheer Ali: Yes, a hundred years.

Danica Vallone: Yes. For humans, 200 years. Robots before.

Pascal Lee: Yeah, space economies will be on Earth for the next 50 years until things get going on the moon and then 100 years or so or more for Mars.

Paul Jarley: Well, thank you all.

If you view Mars through an economist’s lens, it’s the least-efficient frontier imaginable. High-fixed costs, negative externalities, no obvious path to comparative advantage. There are way better options than Mars. The moon for one. The only plausible reason to go are psychological and civilizational. Curiosity, maybe the continuity of the species, and the need to prove that humans can live elsewhere. Every generation invents a frontier to prove we’re all still moving forward. Once it was oceans, then continents, then the sky. Now it’s a red dot in the dark. Mars isn’t a business plan, it’s a mirror. It reflects our fear that Earth might be finished, our hope that we can start again, and our stubborn belief that we’re still builders. We don’t chase Mars for its resources. We chase it for its symbolism. A clean slate, a test, a thrill. Maybe we just want to prove that we can bend the universe to our will, even if our will is just for a thrill. Many a Greek tragedy reminds us hubris is a bad investment.

So what’s your take? Check us out online and share your thoughts at business.ucf.edu/podcast. 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.

We’ve all sat through bad slide decks—but what about the ones that change history? In this episode of Is This Really a Thing?, Dean Paul Jarley is joined by Jim Balaschak, Dr. Mike Pape, and Derek Saltzman to explore whether the so-called “billion-dollar PowerPoint” is myth or reality. From Airbnb and Tesla’s iconic pitch decks to the role of storytelling, trust, and investor psychology, they unpack what makes a presentation powerful, what doesn’t, and whether AI or new tools might one day dethrone PowerPoint.

Paul Jarley: We’ve all sat through terrible slide decks, but every so often a PowerPoint does more than communicate. It creates value. Think of the pitch deck that launched Airbnb, the presentation that convinced investors to fund Tesla or the strategy decks that shape billion dollar mergers. So is the billion dollar PowerPoint really a thing? Can a few slides actually change the course of business history, or is it just a fancy way of describing really good storytelling?

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.

To help me figure this out, I’ve invited three guests. Jim Balaschak is an alum of the college, in our Hall of Fame, and a serial investor. Dr. Mike Pape is an Entrepreneur in Residence here at the College of Business, and Derek Saltzman is a former winner of the Joust and is co-founder of a company called Soarce. Thank you gentlemen for being here today. We’ve all seen really bad PowerPoints. Talk a little bit about what makes a great one. Jim, I’ll start with you.

Jim Balaschak: A PowerPoint that catches my eyes shows a big potential market, a problem they’ve identified that they have a solution for that they can make money on. It’s not necessarily always the slides, but the slides can quickly convey the idea of the thoughts. And a lot of times before I meet with a founder, I’m emailed the pitch deck and going through the pitch deck helps me determine do I want to pursue this to the next step, get on the call with the founder, have them pitch it to me? I think it’s a good way to open the door.

Paul Jarley: The quality of the pitch deck tells you something about how serious and well thought out this is, right? So a schlocky one can really close the door, maybe more than a really good one can enhance it. Is that fair in your view?

Derek Saltzman: Yeah.

Paul Jarley: Derek, what do you think?

Derek Saltzman: I think there’s a lot to take into consideration with the audience and the stage gate of when you’re first starting a pitch or when you’re trying to interact. There’s multiple decks for multiple stage gates. So in the first beginning intro, like for instance, how Jim said, when you’re trying to send and get that initial meeting, it’s all about a hook. Can you describe what you do in the most succinct, effective way possible to get the message across of what the problem is, how you’re solving that problem, and what’s the revenue potential like he described? Because that’s what all investors are really looking for. Once you move past that initial stage gate, you have much more detailed decks that go into your financials that go into your true revenue model, your business model, maybe your IP strategy, and a variety of other topics. The overall optics and the overall clear messaging is I’d say the two biggest things.

Paul Jarley: Mike, what do you tell students?

Michael Pape: The way I deal with the pitch deck is treat it as just one element of a much bigger picture. The bigger picture is what is the business plan? Which you can express verbally and in the old days, if you will, back in the 90s and being part of this first company I did, we wrote that 40-page business plan. It was a very static document, but it had all the elements that we teach about what is required. Do you need a compelling problem, you need a solution? What’s the market? How are you going to market it? Who’s your team? What’s your financial model? All those types of things. So the pitch deck, I just see it as neither here nor there, because it is a way to communicate. The way I talk about this is I kind of view things as a trajectory and the pitch deck is purely in my opinion, a consequence of two things, changes in technology over time, and the other is the just madness of the rate of change of the world, and it creates an easy way to change on the fly.

So the first one, if you think about the trajectory of technology, we always have to present your pitch, whether it was to Wall Street or a merger, an acquisition in some form. PowerPoint came out in ’87 I believe, and really didn’t grab hold till the mid 90s. It was clunky, it was terrible. There was no way to show PowerPoints through a Zoom-like thing. All those things never worked when we do a pitch to VCs or whoever You’d have to print out your PowerPoint. You’d have to print, also, a relatively long business plan document and it was just a lot of friction, and that became really problematic and the people could reduce that friction, they kind of won the game. And Microsoft PowerPoint and just from preparing scientific slides over the years, my gosh, what a savior. You’re getting new data all the time. Before we used to have to take photographs, have the slides. If you just look at that progression of things, the PowerPoint as we have it is a value because it’s a very succinct way to bring in all the important business elements that you’ve got to communicate one way or the other.

Paul Jarley: Now the AI can do it for you.

Michael Pape: Well, it’s –

Paul Jarley: To a degree. Let’s talk about that a little bit. Is that a good idea?

Derek Saltzman: Uhm, no. I think there’s a balancing act. I think there’s definitely, you can utilize the tools of AI to get the ball moving, get in the right direction, but AI is not going to build the business for you. You still got to go out and talk to the customers, build the relationships, develop the actual business, and something to Pape’s point. In the kind of more of course, AI age, more modern age things, I feel the investment cycles have gotten compressed kind of how you’re describing where you’d have to develop a 40-page business plan and really describe how you’re going to attack a market that is almost archaic now, where seed rounds are going a $25 million seed round, $30 million seed round because they have 10-to-15 really great slides and they have AI attached and they’re rocket shipping like crazy. So it’s a really interesting dynamic depending on the business.

Paul Jarley: Here’s my real test on the value of a PowerPoint. Tell me the one that you saw that really stuck in your mind without revealing any secrets. And what about it really stuck in your mind?

Michael Pape: There’s two I got in my mind. One is Dropbox. It is not a pretty PowerPoint. However, it was a compelling problem. We didn’t have cloud computing. We had the USB drives, we had the floppy disks, we had all that stuff all over. Nobody would communicate. You’d have to carry the USB drive.

Paul Jarley: You’d forget it.

Michael Pape: You’d forget it. The flash drives, remember? So if you look at their PowerPoint, they’ve got a picture of just a messy desk with floppies and the things all over, and then they came up with their solution and you’re like, everybody I’m sure just stood up.

Paul Jarley: How about you, Derek? Which one do you remember?

Derek Saltzman: One for us being in the deep tech space is a company called Solugen, and to Pape’s point, one of the really interesting things that they do is just, it’s storytelling. How do you take a really complex, difficult topic like chemical refining and distill that down to really digestible information for someone to understand, oh, you use this chemistry or these processes to develop these things and you sell it for X amount of dollars.

Paul Jarley: Jim?

Jim Balaschak: I think one of the ones that caught my eye is recycling of batteries to repurpose like for EVs, because that’s going to be a really big problem. So just seeing how much of an environmental impact this is going to be and how much can be saved if things are recycled. That really impacted me and is a company we invested in.

Paul Jarley: So if you can’t articulate the problem, you’re in trouble. Right?

Michael Pape: The goal of a PowerPoint in front of investors or potential acquisition partner is to get the next meeting. That’s its goal, that’s its role, and then you’ve got to come up with another one and another one. You’re not going to get investment on your first presentation.

Derek Saltzman: No.

Michael Pape: Your goal, if you remember this, I told you guys, your goal is to get the next meeting

Derek Saltzman: One hundred percent.

Michael Pape: Somehow, some way. And sometimes the next meeting will be a lunch, it won’t be a PowerPoint. Sometimes they’ll just be hanging out and having a drink at a conference.

Derek Saltzman: Yeah.

Michael Pape: So, its role has really got to be minimized to some degree just to maintain the conversation so you can build trust and they can perform due diligence in whichever form they deem fit.

Derek Saltzman: Yeah. Every day you don’t get a no is a closer step to a yes. That’s how we look at it.

Paul Jarley: Our Joust is in the 20th or 25th year. It’s been around a long time. I’ve always thought that in that setting and in business plan competitions, generally, the winner is the group that can tell the best story. That the data really doesn’t drive it very much, that it’s pretty much an emotional decision. And I wonder if that is disconnected to what you guys just talked about … getting the next meeting. Because I worry sometimes that a lot of our students are really good at winning competitions. That’s not the same thing actually as attracting investors. What do you think about that?

Jim Balaschak: I agree. It’s the best presentation …

Paul Jarley: … presentation that wins that …

Jim Balaschak: that wins the Joust.

Paul Jarley: Almost all the time.

Jim Balaschak: Yes. It’s not always the best business idea or best team that can execute the idea. It’s a valuable thing for the students to go through. There can’t be that much due diligence done on a company that’s up there pitching for 10 minutes and has 10 minutes of Q&A. I think it’s still a very good thing for the College to have, and it gets a lot of excitement and interest, and I think it sparks quite a few people.

Paul Jarley: It’s a culture building tool for sure.

Derek Saltzman: Yes.

Paul Jarley: Have you ever invested out of any of the companies that were in the Joust?

Jim Balaschak: I have, yes. But –

Paul Jarley: Were they the winners or were they the team that finished second or third?

Jim Balaschak: I have invested in one winner, it was about five years later. They were a very good presenter. They’ve taken their idea and pivoted several times, but the founder is tenacious, so I’m betting a lot on the founder with that investment.

Michael Pape: If our frame of reference is the students and we’re educators. For them to get up in front of a big crowd, and defend is invaluable. And they’re nervous and it’s like, you know this better than anybody because it’s your business. Be confident. I mean, that just goes so far. Most of them never been in front of a crowd like that where –

Paul Jarley: Yeah, you get serious quesitons.

Michael Pape: It’s nerve-wracking. Totally.

Paul Jarley: I remember the one group where one of our judges made the presenters cry in the semifinals, and the final part of that story, not to mention Merrell (Bailey) by name, would be that they came back and won the Joust.

Derek Saltzman: Yeah, a hundred percent.

Paul Jarley: They took that advice to heart.

Derek Saltzman: Right?

Paul Jarley: Yeah.

Derek Saltzman: And as someone that’s kind like trial by fire and walked through that kind of ring essentially with my co-founder. Like Jim said, you’re not going to, at the end of the day, convince an investor to give you an investment on that day. Like Pape said, it takes multiple meetings, multiple interactions, and truthfully, everything is an emotional decision. We’re humans. Whether we want to think we make logical decisions, we’re truly making an emotional decision at the core, and it’s how do I like the person? Do I invest in the jockey? Do I believe in this person to get the job done? And it’s very different when you’re a student, say pitching a research topic, it’s about the science. The science doesn’t lie. It’s like this happened, this happened, this happened. But when you’re going, you’re pitching a business. It’s your idea of what you think you can bring value to the world and extract money from people from. It’s a very humbling experience when you get told no on stage, they grill you with really difficult questions that you may not be able to answer as fast as you’d like, but that trains you to build the thick skin and the nerves necessary that when you’re pitching to a variety of investors, you get pretty used to saying, no, that doesn’t make sense, or move on from here.

Paul Jarley: Derek, what’s your company Soarce? What does it do?

Derek Saltzman: We’re a materials company at the core. So what we do is we developed a process that allows us to take natural feed stocks like basically hemp, wood and seaweed and extract and tune or functionalize specific nano biopolymers such as nanocellulose. So these are tiny little nano fibers that are 10,000-times thinner than in human hair, eight-times the strength of steel. And then we use those and we put them into a variety of different industrial applications. Our goal over the next couple of years is kind of innovate on the overall composite industry.

Paul Jarley: Your degree is in?

Derek Saltzman: Material science and engineering. So background in material engineering. Didn’t start that way. I started off as an aero engineer, then took a couple classes with Pape and we were really into the business side and said, hey, we like this chemistry thing. We should maybe build a business in it.

Paul Jarley: I would imagine describing material science properties to investors is a little tricky.

Derek Saltzman: Oh, yeah. It’s definitely different.

Paul Jarley: I glazed over when you first started for a second.

Derek Saltzman: Yeah, it’s definitely a very different topic. So that’s why we’ve learned there’s different lanes of investors. So there’s investors and investors strictly in SaaS companies where they know how to evaluate a SaaS product. They understand the growth and development cycle, and then you have other individuals that are more into the hard sciences and deep tech sciences, which you have to my right here, a chemistry guy.

Paul Jarley: Exactly.

Derek Saltzman: There are two completely different paths. They all have different outcomes in the end. For us, we sit in more in the deep tech science side where we have to take a really hard chemistry topic and distill that down into really easy, digestible information to then give to investors so they see, oh, that’s the actual value. And to do that, to your point, it’s a lot of visuals. I mean, we deal with nano material, so when you’re saying we deal with stuff that’s so small, you can’t see it. It’s hard to say, “These tiny little things can produce a lot of value for the world.”

Paul Jarley: Ultimately, our podcast is about what we should teach our students. So talk to me a little bit about how you hit the sweet spot between the data and your presentation.

Michael Pape: When I look at the pitch deck, it’s a knowledge framework, and that’s how we basically teach. We teach frameworks. In marketing, we teach the three C’s and the four P’s. We can teach theories like the diffusion of innovation. We’ve got a variety of different frameworks that we teach students in all our classes. Science has the same thing, whether it’s thermodynamics or biochemistry, there’s frameworks and pathways by which we hang new things that we learn as time goes on in undergraduates, basically just to learn the basics. So the pitch deck I have found very helpful because it does provide a framework by which you can hang the data in there. If you’ve got what this slide is, then all the times you’re pivoting and changing, you morph it over time as you get more data. So it becomes the base, and then you just slide in what you need. The other power of the PowerPoint is if you work on it enough, you become a better team because it forces you as a team to actually get something on pen and paper or electrons. Because that makes you more precise rather than just talking about it. And that is a critical piece of it. Furthermore, when you’re talking to other people, what usually happens, I think the good presenters, in their mind, they have their PowerPoint and they rifle through the slides that they’ve already prepared and they know where they are, and that becomes a really powerful framing mechanism by which you can pull out that slide. We worked on that slide here was the main message. You’re not showing them the slide. You are just, it’s so embedded.

Derek Saltzman: Yeah, you do it so many times, it becomes kind of an ingrained pattern in your brain.

Michael Pape: That’s its power.

Paul Jarley: Can you imagine the day that the PowerPoint dies in favor of something more dynamic? Given the tools that we have these days? Are we going to see short movies on business concepts generated by AI?

Derek Saltzman: Actually, I think we’re already there. We’ve actually seen a couple of startups already do that. Startups that we’ve met, that their pitch deck is a mini, one minute skit. I don’t know if they’ve generated investment from it yet, but it’s an interesting concept.

Paul Jarley: Are there companies out there that will help invent do that? I would imagine there are.

Michael Pape: If it will help a company get the next meeting, by all means.

Derek Saltzman: Yeah. Somebody, one of the companies that we’re really close with is a company called Pageport. They essentially automate this process, so they help basically take businesses that are difficult to describe and make it really easy for you to get video updates or this great content from them. We’ve used them, they’re awesome.

Jim Balaschak: I think I like the PowerPoint. I like to spend a certain amount of time on each slide analyzing, okay, let me see the competition slide.

Paul Jarley: Because the investors are old school, right? Let’s be honest about this. I’m not sure how I would react to a short movie on it, right? I might think, oh boy, I am really getting marketed to death here.

Michael Pape: The new school at the end of the day is going to do just what Jim said because they’re going to go through their due diligence and they’re going to have to sit down and go through material if they’re going to be a good investor or if they’re going to do a true due diligence on an acquisition target.

Derek Saltzman: Yeah.

Michael Pape: At the end of the day, you’re only going to be as good as your understanding of business and frameworks and that stuff we teach here, which will not go out of style no matter what the mechanism or the modality is.

Paul Jarley: It’s just the tool.

Derek Saltzman: That’s right. A hundred percent. And I think a great company that also exemplifies that is a company called Potato. No one would think of like, okay, a company called Potato, but they’re doing amazing in one of the top –

Paul Jarley: It’s memorable.

Derek Saltzman: Yeah. It’s one of the top AI research tools that we use in a variety of researchers.

Paul Jarley: What does it do?

Derek Saltzman: Basically it distills research papers for scientists in a much faster, more meaningful way.

Paul Jarley: Yes or no, is the PowerPoint going to stay around and can it generate a billion dollars worth of revenue? Jim?

Jim Balaschak: Yes, the PowerPoint is going to stay around. Can it generate? Not right off the PowerPoint. It can lead to the meeting that leads to a round to another round to another round, another round to another call, and then you’re at a billion.

Paul Jarley: Derek?

Derek Saltzman: I’ll echo what Jim said there. I think the PowerPoint is cemented in for a while here that we’ll continue to use it. I think there might be some new tweaks and tools that get utilized, but at the other core, like you said, it’s going to be to get to the next meeting and have that next conversation.

Paul Jarley: Professor Pape, as is our culture in the College, the faculty member gets the last word.

Michael Pape: Yes, it is important. It is a thing. It’s a powerful framework and you can rapidly change it in an ever-changing, warp speed culture that we’re living in right now, particularly with respect to technology.

Paul Jarley: It’s my podcast, so I get to go last.

My distaste for PowerPoint runs deep. I think it usually gets in the way of stories rather than enhancing them. And storytelling, after all is one of the most powerful tools any leader or entrepreneur has. That’s been true since the invention of the campfire. Yes, there are legends. Airbnb’s 2009 pitch deck of just 14 slides allegedly raised their first $600,000 seed round. The company’s worth over $100,000,000,000 today, and by the way, employs my daughter Maggie. Facebook, Peter Thiel’s deck in 2004, really just a few slides, secured a $500,000 angel investment and set the stage for a trillion dollar company. But let’s be honest, it’s never the slides that make the deal. It’s the power of the idea and the belief in the team’s ability to execute it. PowerPoint just happens to be the messenger and like all tech platforms, it won’t be king forever. One day something will replace it, just like Google replaced Netscape. So is the billion dollar PowerPoint a thing? Yes, but only until the next big thing comes along.

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.

Quarterly earnings reports have been a fixture of American business for more than 50 years … but are their days numbered? Earlier this month, President Donald Trump reignited debate by suggesting companies should only report twice a year, a move he says would cut costs and free executives to focus on the long term. But would fewer reports build stronger businesses, or erode trust in the markets? In this episode of Is This Really a Thing?, Dean Paul Jarley sits down with UCF College of Business Hall of Fame members Paul Gregg and Jim Balaschak, along with accounting faculty member EB Altiero Poziemski, to examine whether the quarterly report is an outdated ritual or a critical safeguard. Could its demise really be a thing?

Paul Jarley: Sometimes things just come together. Last week I read something about the President’s proposal to shift from quarterly to semi-annual earnings reports. That same week I was holding the College’s fall meeting of our Dean’s Advisory Board. The Board is filled with folks who have a direct interest in this debate. So I convened a quick panel to gain insights into the likely death of the quarterly report. Paul Gregg is an experienced CFO, member of the College of Business Hall of Fame and an Executive in Residence in the Department of Finance. He is joined by Jim Balaschak, a fellow Hall of Famer and serial investor, and EB Altiero Poziemski, a faculty member in the Dixon School of Accounting. Quarterly earnings reports have been with us for 50 years. President Trump has floated the idea of going European and cutting back to semi-annual reporting. Would that save money, destroy trust in markets or both? And what happens when AI makes real time disclosure possible? In this episode, we ask whether the cadence of reporting is about efficiency or about faith in the system itself. Could the end of the quarterly earnings report really be a thing? Stay tuned.

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.

EB, let me start with you. Talk a little bit about when the quarterly report first came about and why, and the changes over the years.

EB Altiero Poziemski: The requirement to actually have any financial reporting whatsoever from our public companies started with the Securities and Exchange Act of 1934. So that was the first time that there was a law that said a publicly traded company had to periodically report their results to their investors.

Paul Jarley: This was a response that Great Depression, right?

EB Altiero Poziemski: Yes. Following on that, in 1955, that was when the requirement for semi-annual reports was added to the rules, and so we saw that sometime between the original 1934 act and 1955, there was an increased demand for more timely information about these companies. And then from there, we didn’t see quarterly reporting required until 1970. So in the grand scheme of things, it’s actually a fairly recent development and not entirely a settled one either because we’re here talking about it right now. But Donald Trump also brought this up in 2018, actually brought it to the SEC for comment. It did go out for public comment at that time, and in 2013, the European Union actually abolished quarterly reporting for the companies that they regulate. So it’s been kind of a push and pull over time.

Paul Jarley: Paul, you’ve been in the corporate world for a lot of years, what actually do you need to report?

Paul Gregg: First of all, the report is unaudited, unlike the 10-K, which is an audited report. And you have to report your balance sheet, income statement, cashflow statement, along with selected disclosures. And of course, if there are material events, they typically show up at that point. Although an 8-K is required if there’s a material event between reporting periods. So it’s basically producing your financial statements and it’s kind of morphed into where the analysts are going to meet with the company. After these 10-Q’s are produced, the press release will go out, the company would then go over the results for the quarter. The analysts are tracking the quarterly results against their forecast that are not looking for surprises. Typically, the company tends to guide during this period, what the remaining year will be.

And there’s some pros and cons to reducing the quarterly reporting to semi-annual. The pro would be we can save on audit fees because our auditors come in and review these quarterly reports and it allows the company to think more long term. Having said that, those slides and that data that is shown to the analyst is done every month for the Board of Directors. It’s not like we have to make this stuff up. It’s already there lots more detailed than we show the public, and so it really isn’t that much more work for management to report. The only out-of-pocket cost really is the biggest, the audit fee.

The bigger issue is that by forcing companies to report quarterly, it flushes out information that has to be shown in the financial statements before the quarter end. The way it works in a corporate world, bad news travels very slow, good news travels quickly. So, it’s a way to force out the bad news to make sure we get it into the public arena. You never want to surprise Wall Street with a surprise report. And so if it were to be twice a year, that would basically be six months of perhaps data that should have the actions management problems that should be addressed. So those problems may not be addressed as quickly because they’re not known as quickly. This quarterly reporting kind of forces them out sooner than later, and of course it’s going to create volatility in the stock. It’s going to create bigger variations. When semi-annual reporting is done, that’s going to add volatility, which adds to the cost of capital.

Paul Jarley: Because people are guessing more on what’s going on. Is that where the volatility will come from?

Paul Gregg: Their forecast would be less accurate, just like the company would not know for six months of what’s going on, a lot can happen in a quarter.

Paul Jarley: I imagine, Paul, the typical CEO doesn’t really love the forecast meeting.

Paul Gregg: They certainly don’t like going to Wall Street and presenting the quarterly results unless they’re good, in which case that’s enjoyable. But if they’re not good, they’re going to get a lot of questions. The stock can actually start moving during these quarterly earnings and conference calls. If the information is not really known or worse than expected, better than expected, it is a drill. We would prepare a book and anticipate every question. We give each person, “If this question comes up, this is how we’re going to answer it.” Ours were pretty well orchestrated and we generally did not have problems, although, I’ve seen really good webcasts on quarterly reviews and I’ve seen some that are not so good. So it just depends on the company and how well they’re managed and how accurate their numbers are.

Paul Jarley: And there’s also some game playing right around when to book revenue or is that overstated?

Paul Gregg: We manage earnings, but we manage it within generally accepted accounting principles. So during the quarterly review, if we took some positions on something that affected earnings, I would discuss it with our auditors. During the quarterly review. I was telling EB, our chairman of the Audit Committee was a former Chairman of the SEC. Anything we did, I’d be ready to go tell him why we did it and why it was consistent with GAP and why it was appropriate. Revenue is a common problem though for many companies and revenue recognition.

Paul Jarley: Jim, you’re an investor. What do you think about this?

Jim Balaschak: I like the current system. I like to hear the quarterly earnings. I do my analysis on what is projected for the next quarter and the one after that, and one after that. Usually I’m looking about two years out of earnings and earnings growth. I like to buy growth companies and the economy can change, the sector can change. I’d like to know about that sooner than later. Also, I know that a lot of the European companies, not only do they report semi-annually, their dividends are semi-annually. And I think there’s a lot of income investors out there that count on that quarterly dividend. So I would think that if companies start reporting only every six months, that many of them would start changing their dividends every six months.

Paul Jarley: EB have there been any studies done on firm behavior and investor behavior in Europe when they made the change?

EB Altiero Poziemski: There was a study done on German firms that showed those who opted to go ahead and switch to semi-annual instead of the quarterly requirement, they actually saw a increase in their cost of capital and an increase in the information asymmetry. So basically the investors, again, weren’t as well-informed, weren’t willing to take as much risk. Basically they were demanding a bigger return because they were perceiving a bigger risk.

Paul Jarley: So there might be a signal in choosing six months rather than four months, which might be negatively perceived by them?

Paul Gregg: Exactly, which adds to the volatility of the stock, which adds to the cost of capital.

Paul Jarley: And let’s understand that even if the SEC did relax the rule, a number of firms might not do it anyway, right? So the stock exchange itself could require quarterly reports, right, to list the stock on the stock market?

EB Altiero Poziemski: So in the UK, only 9% of firms actually decided to make the switch. So they were given the option to drop quarterly reporting and they didn’t do it. And so there is the chance that even though the requirement goes away, firms are still going to choose to do this because their investors are demanding this information.

Paul Gregg: All it takes is Fidelity, Vanguard, some of the big shareholders to say, look, we want this quarterly, we’d do it. I don’t care what the SEC says. If our big shareholders are asking for it, we’re going to do it, but that’s our audience. That’s who we want to please.

EB Altiero Poziemski: We do run the risk though of that information being less reliable if it’s voluntary, if there aren’t rules around it and it’s no longer being reviewed by the auditors.

Paul Jarley: I assume that the audit community would be against this. Is that fair to say?

EB Altiero Poziemski: I think that’s fair to say. I think the audit community, generally speaking, always thinks they should be looking at everything. And also it does help with some of the analytic procedures that they do. Some of those work better when they’re done quarterly, especially the fraud detection analytical procedures. There was a study by the Association of Certified Fraud Examiners in 2020 that said that financial statement fraud has a median loss of $1.25 million per case and take up to 19 months to detect even with quarterly reporting in place. So without that quarterly reporting in place, it could take even longer to see the patterns and uncover that fraudulent reporting.

Paul Gregg: I would think the audit committee would want the quarterly reporting just from their due diligence and fiduciary responsibility. You know, they have a lot at stake here, so they’re not likely to want to give up the quarterly reviews even if you didn’t have to.

Paul Jarley: So the impact on cost for the organization would be fairly minimal.

Paul Gregg: Absolute incremental costs would be minor. But if your beta starts to move up because of volatility and your cost of capital goes up 1%, that’s a big cost.

EB Altiero Poziemski: Yeah. It seems more likely that the companies that would be interested in taking advantage of this would be the smaller firms, the ones that are really hurt by those audit costs, those review costs. Financial reporting is expensive. I talked to my class about this. Anytime you add a disclosure requirement, that is a real cost. There is a person who has to write up that footnote who has to collect the information. If you are a organization that operates in multiple jurisdictions, you have to get all of the information, aggregate it, make sure it’s in the same format, and interpret it through U.S. GAAP that costs actual dollars.

Paul Jarley: So with the advent of AI, might all of this be irrelevant? Can you imagine a world in the next decade where all earnings are reported instantaneously for everyone to see?

EB Altiero Poziemski: I mean, I can’t say it’s impossible. I can’t currently see it, only because I think that auditing is one of the things that although we’re going to end up using AI in auditing, I think the audit profession itself becomes even more important in the face of AI because AI is a black box. You put information in, you don’t know what it does, it spits information out. So it becomes really critical to look at anything that comes out of AI with an auditor brain. You have to have that auditor level of skepticism. When you look at that data. You have to have the level of expertise to interpret it and know if what the AI gave you is right if it’s following U.S. GAAP. And so I think it’s going to be a little bit still before we can trust AI to take numbers out of a general ledger system, put them into a financial report, follows all of the rules of the SEC and FASB and is reliably doing so.

Paul Gregg: Yeah, it would seem unlikely, but even if AI could generate perfect financial statements every month, I’m not going to disclose them to the public every month. Because that’s way too much effort for have the public that on top of your business, you do need some maneuvering room and some time to manage the company.

Paul Jarley: Jim, would you want daily reports if you could get them?

Jim Balaschak: I’m fine with quarterly. There’s enough massaging of the numbers as it is. So, I don’t think daily would be any improvement.

Paul Jarley: Can I push back? I mean, we publish stock prices every day. Nobody seems to worry about that.

Paul Gregg: If you’re a mutual fund, your results are published every day, right? You know your gain or loss on your existing securities. But that’s a little different I think.

EB Altiero Poziemski: I do think that gives an advantage to the sophisticated investor who has the computing power to go through all of that information and maybe detect patterns, but maybe not, right? There may be just spurious correlations in there that they’re acting on and it doesn’t really mean anything.

Paul Jarley: Well, there are random fluctuations, right? I mean they happen all the time.

EB Altiero Poziemski: Yeah, accounting data is definitely not meaningful on a daily basis.

Jim Balaschak: I could see AI more estimating sales, but I don’t see on the expense side being able to generate, that being too accurate.

Paul Jarley: Because in the small organization, the person who books revenue could be sick one day sending somebody into it tizzy.

EB Altiero Poziemski: We also have accruals that have, we’re guessing throughout the year, and then we have to fix them when it comes to a reporting date. And so on any point in time actually knowing the true number is sometimes not possible.

Paul Jarley: Why do you think the President recommends it then?

EB Altiero Poziemski: I mean, I know what he said. He said it was to lower cost.

Paul Jarley: Right? He said to lower cost.

Paul Gregg: Some company may be pressuring him or suggesting this to him.

EB Altiero Poziemski: Yeah, he may have constituents who have been talking to him about it.

Paul Jarley: Well, small business to your point, right, might be a place where some gain, some cost savings might happen.

EB Altiero Poziemski: And that’s a place that the FASB and the SEC have kind of always had this push and pull. Where the FASB has maintained forever, that there is one U.S. GAAP, and if you report under U.S. GAAP, everyone should know what that means. Whereas smaller businesses have been arguing, we should have different reporting requirements. You should make it easier for us so that we have a chance. These reporting requirements are too onerous, we can’t do them. So it comes to a point where they have to make a decision to either report wrong, badly, or not do the types of transactions that they want to do because they can’t afford to do the reporting.

Jim Balaschak: Well, that does keep a lot of the smaller companies from going public.

Paul Gregg: It’s very expensive to be a public company.

Jim Balaschak: Very expensive.

Paul Jarley: No doubt, right? Yeah. And perhaps that’s part of the motivation here. Alright, I don’t want, well, two of the three of you EB’s pretty young, to just sound like old guys wanting new people to get off their lawn. Is there a different system that would work better or did 1973 get it right, and it should be the quarterly report forever?

Paul Gregg: I’m certainly happy with the quarterly report. It’s the data itself and how we get accurate data within each month’s financial statements is really the key. Reporting it is a separate issue. How often do we report it to our shareholders? And data will become more accurate with AI. No doubt about it. The real key is forecasting, because that’s where the valuations come in and that’s what everybody’s interested in, not just what you did, but where are you going?

Paul Jarley: Particularly against where you said you would be.

Paul Gregg: Yes. So that gets back to you better know how to accurately forecast.

Jim Balaschak: Yes, that’s more important.

Paul Jarley: So is the death of the quarterly report exaggerated a yes or no? Paul?

Paul Gregg: I don’t think it’s going to happen.

Paul Jarley: Jim?

Jim Balaschak: I don’t think it’s going to happen either. I hope it doesn’t happen.

Paul Jarley: EB?

EB Altiero Poziemski: I’m not as confident, but I don’t think it’s going to happen.

Paul Jarley: It’s my podcast, so I get to go last.

This debate isn’t really about the merits of quarterly versus semi-annual reports. It’s about trust. Quarterly disclosure has become part of the governance rhythm of our capital markets. Boards expect it, investors demand it and exchanges quietly enforce it. That kind of inertia is hard to break, especially in an arena where credibility is everything. I don’t think we’ll be writing an obituary for the quarterly earnings report anytime soon. If change does come, it probably won’t be wholesale. Big firms will keep reporting every quarter because stakeholders will demand it. And moving away from such reporting, will bring suspicion. But small companies, the ones for whom the compliance costs are steepest, might see some relief. The paradox, of course, is that the smaller firms are also the most vulnerable to sudden revenue swings, which means investors may want more frequent, not less frequent updates. Reducing report frequency might also increase the cost of capital for these firms, negating any positives from the reduction in reporting costs.

The future may not be a choice between quarterly or semi-annual. It may be a world of lighter tiered reporting where transparency is preserved, direct costs are contained and trust remains the currency of the system. Or maybe nothing happens simply because humans don’t like change.

So what’s your take? Check us out online and share your thoughts at business.ucf.edu/podcast. And be sure to follow us on social media to be alerted when our next episode airs. I’ll be joined by UCF’s own Carolyn Massiah and pet mom Amber Downs to learn if pet influencers are really a thing, and more importantly, if my dog Sneaky Pete has a shot at becoming one of them.

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.

From Lassie to Grumpy Cat to Ruby the golden doodle, pets have long captured our hearts—but today, they’re also capturing serious market share. In this episode of Is This Really a Thing?, Dean Paul Jarley dives into the booming world of pet influencers with UCF Marketing expert Dr. Carolyn Massiah and Amber Downs, creator of @orlandoodle. Together, they explore why pets are such powerful connectors, how authenticity and branding drive this unique space, and whether pet influencing is just internet fluff or a lasting force shaping consumer behavior.

Paul Jarley: Smokey Bear told us that only we could prevent wildfires. Rin Tin Tin and Lassie became household names. Boo The Pomeranian and Grumpy Cat sold merch. So here’s the question, were these the first pet influencers?

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.

At first glance, it sounds like something new. Dogs in sunglasses, cats with their own merch. But if you think about it, animals have been influencing us for decades. Mr. Ed certainly influenced Wilbur. On today’s episode, we’re asking whether pet influencers are just internet fluff or a real force shaping culture, consumer behavior, and marketing. To help me sort this out and decide whether it’s just hype or real and what lessons we can draw from it, I’ve got Amber Downs, the dog mom, a pet influencer who lives this every day, and Dr. Carolyn Massiah, our resident expert on all things marketing.

Amber, let’s start with you. How did you decide to become a pet influencer? Well, technically your pet. So tell us about your pet and how you got into this business.

Amber Downs: In 2019, I adopted a golden doodle named Ruby. She was six months old. My life was changed forever. At that point in time, as we all know, a couple months later, the world changed. During that point in time, I kind of shifted my Instagram, my personal Instagram content to share ways that we could connect with the community, ways we could support small businesses. And as we stayed in that pandemic state for a while, I realized I had this young dog that needed a way to interact with the world, get out of the house a little bit. So I began sharing both dog-friendly businesses and dog-friendly activities in the central Florida area. So during that period of time, I created this new @orlandoodle Instagram account where I share dog-friendly things to do as well as my favorite dog products and my favorite things in the pet industry.

Paul Jarley: Did you just wake up at night and decide to do this, or was it based on something you were doing before you became a pet influencer?

Amber Downs: I’ve always loved social media. I’ve always enjoyed sharing my favorite things. I had a blog and a different social media account years before, but it really just happened really slowly. I started out, like I said, sharing about things in the community that we could assist during the pandemic ways we could spend our money to help others, and then just slowly shifted to this dog-friendly content.

Paul Jarley: What do you think it is about pets that captures people’s imagination? And is a pet influencer different than a human influencer, and how?

Amber Downs: I think that we connect with the pet part of the account really quickly and we fall in love with this animal, and then we get to know the family and the human around the account and then begin to connect with the account as a whole.

Paul Jarley: So Carolyn’s nodding her head. What does the research tell us about how people interact with pets, Carolyn?

Carolyn Massiah: Let’s go back to brands in general. When we first started in marketing using brands, we stayed away from using humans or individuals or persons in logos or in brands because they could break your heart.

Paul Jarley: Meaning they could misbehave.

Carolyn Massiah: They could misbehave, yes.

And remember, the main goal in marketing is to build a relationship. And Amber was saying those exact words. That’s why I was nodding my head. It’s build a relationship, engage. And so this is why professional sports teams, you see a great deal of animals used in the logos, and now let’s move forward to pet influencers. And we see that jump now to the pets being used in these accounts. It makes sense now to jump from inanimate animals used in the logos to now live pets and pet influencers. It’s that same thing, that relationship. Pets don’t break our hearts.

Paul Jarley: Well they’re certainly authentic.

Carolyn Massiah: They are authentic and we can engage with them. The most followed pet influencing account, Jiffpom, right now has 9.9 million active followers. Do you know that pet passed away in 2019?

Paul Jarley: So what makes that pet so awesome? Why does it have that many followers? Is there something distinctive about it?

Carolyn Massiah: I think it resonates with individuals and particularly in the time period that we’ve gone through. As soon as you said 2019, I knew before you said it what the next phrase was going to be … because then COVID came. Jiffpom passed away 2019, but gained the bulk of the followers from 2020 on when we were looking for something to hold onto, something to connect with that would not disappoint us. And that’s also why I think you see such a major growth in the pet influencing accounts during the 2020 to now period.

Paul Jarley: I just assumed they were cheaper than human influencers. What’s the contract for a pet influencer look like?

Carolyn Massiah: Actually, it’s not that much cheaper. There’s a tortoise right now, it has 3 million followers, and its pet parents gross $400,000 annually from that account. And mostly that comes from the sponsored post and the brand collaborations. The lowest brand collaborations you’re seeing with that tortoise is starting at $1,500 to $2,000, and those are for small mentions, so it’s actually not that much cheaper.

Paul Jarley: So Amber, when did the revenue start coming in? Talk a little bit about that.

Amber Downs: So after 2020, I kind of began doing this account more and more and started connecting with brands. Brands would reach out to me and say, oh, we’ll send you a collar and a leash if you post about it. So I did little very small gifted collaborations like that.

Paul Jarley: So you weren’t reaching out to them, they were reaching out to you?

Amber Downs: At the beginning? Yes, yes. As I got to wise up a little bit, I realized I can charge for this. If I want people to share using my platform and my energy and my time, I need to charge. So then I began working with brands that reached out to me in a more of a paid partnership level. And I’m a smaller influencer in this space, so I obviously can’t charge what the tortoise charges, but there’s still four digit numbers being thrown around in my small account. I had to just do some math there real quick. And so I also began reaching out to brands and kind of pitching just like your human influencers do. So I began pitching as well and reaching out to brands that resonated with me and resonated with my audience that I felt would be a good fit.

Paul Jarley: So what do you think it is about your pet that stood out? Why do you think they reached out to you?

Amber Downs: Well, I’ll be honest, it’s not the pet, it’s the human. My dog is cute, she’s adorable, people love her. But at the same time, I’m the person who’s making sure the photos look good. You can have an adorable dog and post content that’s not great, and it’s not going to sell the same way. In my content, I share high-quality images and videos of my pet, and I include myself in that content because again, while yes, we’re connecting with the pet, the human is oftentimes doing that selling and actually making that final connection later on. So we work together to create content that really stands out.

Carolyn Massiah: That’s the point there. So when people began and say that, okay, I want to be a pet influencer, I have this great Jack Rabbit here, and

Paul Jarley: I have a dog named Sneaky Pete. We’ll come back to that.

Carolyn Massiah: Sneaky Pete, okay, so I have a great dog, Sneaky Pete, and I want Sneaky Pete to be a pet influencer. Well, Sneaky Pete’s not taking his own reels and Sneaky Pete isn’t doing selfies. So it is going to take a pet parent like Amber to take some time to learn about whichever channel they’re on, whichever media they’re using. Also, if I’m the viewer, in order to form that relationship with Sneaky Pete, I also want to see Amber’s relationship with Sneaky Pete so that I can envision myself also playing with Sneaky Pete in that same positive way. It can’t just be, take a picture of Sneaky Pete and post it up there.

Paul Jarley: It seems like a very human-centric approach that you’re talking about here. So look, Sneaky Pete has a pool. He has a swing. He is unbelievably good at catching balls. He believes the entire world was created just for him. So he has some animal magnetism, I would be the first to say that. Now, on the flip side, he doesn’t particularly like other dogs or other people. And I’m not going to be taking reels of pictures of Sneaky Pete. I have other to do. But does personality matter here? Does authenticity matter?

Carolyn Massiah: I think it absolutely does. And actually you just told a great story of Sneaky Pete to tell to others, right? And so it’s going to take, if you’ll allow me to use the pun, it’s going to take a “pawesome” parent here to tell that story. So people can relate to a Sneaky Pete.

Paul Jarley: Could Sneaky Pete get an agent? I’m not really good at this. But could he get his own agent? Are there such people?

Carolyn Massiah: Yes, there is.

Paul Jarley: I assume Mr. Ed had an agent back in the day.

Carolyn Massiah: Mr. Ed had his own agent.

Paul Jarley: How would you go about doing that if that’s what you wanted to do?

Amber Downs: There are actually several people now that are influencer managers for pet families and pet parents. Obviously, you need to build a following with Sneaky Pete on your own and get him to have 20,000 followers on your own first, and then you can partner with an agency that will help you make collaborations in deals. Now, oftentimes, you’re still going to be the number one content creator. Now, you’re bringing in all this money now with these brand deals, you may hire a crew to come in and help with your filming, with your video editing and with that content creation side. But we do have, now I actually know some people that they are an agency that will get those deals. I hate the back-and-forth negotiation process. I don’t like doing that, but I can have somebody else do all my negotiations, say, Amber, here’s the option. Here’s the price. Do you want in or out? And then I can just take that and then do the content creation, which for me is the part that I enjoy.

Paul Jarley: Is there an issue here around the ethical treatment of these pets?

Amber Downs: It’s a good question. I know we see that.

Paul Jarley: Does he get better food? What does he get out of this deal?

Amber Downs: I know for my dog, her quality of life has improved because of our partnerships with these brands. Right now, she’s at doggy daycare that she doesn’t pay for – I don’t pay for it either – because of these partnerships and these brand deals that we’ve done. She eats top-quality, organic, raw dog food. Again, that we have a partnership process, we work with this brand, she gets this great product. There have been times that I’ve stepped away from deals or opportunities that didn’t fit for our dog. I do a lot of hotel collaborations, and I went to a property once, that I did not feel was up to snuff with our expectations. They sold it to me one way, and then I went to do the deal and while the property allowed dogs to stay at the hotel, it was not pet friendly. And I said, nevermind, I’m leaving. And so we do have to advocate for our pets, just like we would advocate for our families or our children, but it is up to the individual at this point in time.

Paul Jarley: Yeah. Carolyn?

Carolyn Massiah: Yeah, and I think that, going back to, what I mentioned about the tortoise, and you think about that pet parent. First of all, you love that pet well enough to establish the social media presence around that pet and then have it come to fruition that it starts to produce this revenue for you and for your household. I believe wholeheartedly that pet is going to be taken well care of.

Paul Jarley: You know, I think the “Tiger King” probably started out with good intentions.

Carolyn Massiah: Well, unfortunately, there are always outliers on there. Yes, there are. Unfortunately, there are always those outliers.

Paul Jarley: Are there animal rights groups that are active in this space? I’m kind of curious.

Carolyn Massiah: Unfortunately, sometimes as always, technology sometimes moves ahead of laws. And this is one case, and I actually was looking at that just recently. So, right now, those animal protection laws do not currently cover pet influencing cases. Do I foresee at some point, probably sooner than we might even imagine, that some case may come up that then we will rewrite a law somewhere along the way? Yes.

Paul Jarley: Let me take you in a little bit of a different direction here. A few years back, we did one of my favorite podcasts on backyard chickens, and you were on that podcast.

Carolyn Massiah: Yes, yes.

Paul Jarley: And we joked near the end of it about whether Kelly could put up cameras and how many people would watch her chickens. And your answer surprised me because you talked about it as a form of meditation. Talk a little bit about that dynamic and whether you think that exists in a lot of these kinds of cases.

Carolyn Massiah: I think absolutely. I think that’s actually why we saw that growth. That’s exactly why we saw, and it’s —

Paul Jarley: The selling of simplicity, right?

Carolyn Massiah: Yes. That’s exactly why we saw that peak start to occur in 2020 of pet influencing. We all went into our home caves and we were looking for something very simplistic and calming. We start to go on the web and skip over the COVID counts and look for something that was calming. And all of a sudden I see a cat or a dog that reminded me of something from another time period. And that period, you can look at the numbers of the growth in pet influencing accounts 2020, 2021. And now as of January 2025, 3.5 million active pet influencing accounts globally.

Paul Jarley: So pets pass on.

Carolyn Massiah: Yes.

Paul Jarley: And I wonder if the influencer stops then or whether they see themselves as lifetime pet influencers. Amber, what do you think? You’re in the middle of it.

Amber Downs: Yes and no. We saw with the Pomeranian, the Pomeranian passed, but they still share a lot of content.

Paul Jarley: It’s a tribute to the Pomeranian to this day. Yeah.

Amber Downs: A very popular account. Hammy and Olivia, I believe Olivia passed away last year, and they still post, and they still share Hammy’s perspective on life. I don’t know if they’ve gotten another Corgi or if they just still have they Olivia in their name, and maybe that’s a tribute to her. But oftentimes, your pet influencers may adopt another dog if they plan to keep on the legacy. I know my dog is six years old. I’m not planning on adopting any dog. My husband won’t let me adopt another dog right now. But I also realize that that may be the end of this chapter, and I’ll have to decide if I choose to adopt another dog to carry on this, to just make this into a tribute page or my plan. I will have to think about that if I want to continue this project.

Carolyn Massiah: So how long is too long to continue the account, the pet influencer account? I want to know your thoughts.

Paul Jarley: Well now AI is bringing back dead people, right? I mean, really. Well, I will say the lawyers are going to get rich.

Carolyn Massiah: Yes.

Paul Jarley: I don’t know if they’ll get rich on pets, but they’re certainly going to.

Carolyn Massiah: Yeah, that’s an interesting, I mean, when I found, I literally did not know, because I’ve watched some of Jiffpom’s videos, I did not know until I was looking into that, that pet had passed away. I did not know that. And six years ago, I did not know.

Paul Jarley: Well, if I recall right, there was more than one Lassie.

Carolyn Massiah: Well, yes.

Paul Jarley: Yeah. So there’s a long history of this here. So how do you decide what to schlep?

Amber Downs: Every content creator has to make a lot of these decisions on what matches their content. I do with partnerships with a lot of hotels and travel aboard type things. Just share pet friendly travel because everybody right now wants to bring their pet. We’ve got the biggest market of Gen Z through Gen X group that oftentimes don’t have children and choose to travel with their pets. We also have the empty nesters now that more and more are spending their time and energy on their pets. So for me, I like to look at my market. And again, that 25-to-45-year-old probably doesn’t have children, probably female. And again, more and more, the 55-plus that is an empty nester that has the disposable income to spend on their dog and the time and energy to focus on them.

Paul Jarley: Ah. So now we’re getting into whether pet influencers are really part of a luxury market.

Amber Downs: I look at brands that are more elevated brands and brands that my followers are interested in. Probably not something you’re going to pick up at Walmart. If a bottom-of-the-shelf puppy chow reached out to me and said, Amber, we’re going to give you $2,000 to do a quick post on our food. I would have to say no, because that doesn’t align with my brand and my product. My followers would consider that whiplash.

Paul Jarley: You would dilute your brand by doing that.

Amber Downs: Exactly.

Paul Jarley: Yeah.

Carolyn Massiah: Amber, I’ve just fallen in love with you. You are absolutely speaking my marketing language.

Amber Downs: I love it.

Carolyn Massiah: Yes, because this is it, right? And I think whether you’re a person influencer or a pet influencer, you need to find your niche. And your niche first needs to be led by a particular segment.

Amber Downs: Exactly.

Carolyn Massiah: Find your segment and then target that segment and find that positioning. And you have found the perfect target market. We call it the DINK, right? Dual income, no kids group, right?

Amber Downs: DINK-WAD, with a dog.

Carolyn Massiah: Right? Right, with the dog. But this is so important that anyone who’s going to be in social media, period, cannot be everything to everyone.

Paul Jarley: Pete’s a little bit of a junkyard dog. I’m not really sure that it’d be appropriate for the luxury –

Carolyn Massiah: We can still tell Sneaky Pete’s story.

Paul Jarley: for the luxury market. So Carolyn, what should students learn?

Carolyn Massiah: So many students want a presence and a future in digital media marketing, or to be influencers of some kind. First and foremost, you cannot be everything to everyone. So find your niche and be consistent with that niche, and then be consistent with who you collaborate with so that it makes sense to the market that you’re targeting.

Paul Jarley: BrandU for dogs?

Carolyn Massiah: BrandU for dogs.

Paul Jarley: Amber. So if I had one of my cute and cuddly students walk up to you and say, I think I would want to be like you someday. I want to be a pet influencer, what would you tell them?

Amber Downs: I would tell them to start creating content. Pull their phone out and don’t be afraid to film the dog, film the interaction, film the walk. Take the content. You can decide later if you’re going to post it, or what to do with it, but the more that you’re practicing and creating now, the easier it’s going to be down the line. It’s not easy to just walk out when you’re 30 something years old, pick up a phone and start filming. Our youth obviously have been filming their entire lives at this point, but practice this, make the content, do the post and see what sticks. And then maybe this pet influencing won’t stick around for them, but they’ve learned so many great skills that they could take into maybe a different type of influencing project or their career.

Paul Jarley: How many hours a week do you put into this?

Amber Downs: At least five, sometimes 10, depending on the week. Between going out and doing activities, editing videos, responding to messages, interacting with followers, editing more content, reaching out to brands, the emails back-and-forth, creating proposals, creating something in Canva to do that proposal.

Paul Jarley: So there’s not a standard pet influencer contract.

Amber Downs: There are many that you can start with, but every brand’s going to ask for something a little bit different. If I work with a hotel, they’re going to ask me to not post any other hotel collaborations maybe a month prior or a month after that collaboration to not dilute their brand.

Paul Jarley: So the final question, is pet influencing a thing? Yes or no, and why? Carolyn?

Carolyn Massiah: Absolutely. It’s a thing. We all want a relationship that’s not going to disappoint us.

Paul Jarley: Amber?

Amber Downs: It’s definitely here to stay. Pets are cute. The internet is a great way to share your cuddly family member and pet influencers, and the industry, is definitely here for the long-term.

Paul Jarley: It’s my podcast, so I get to go last.

Jiffpom, like Elvis, may or may not be dead. But it’s estimated that he pulls down $32,000 a post. Some creature named Tucker Budzyn earns $20,000 a post. Nala Cat gets about $15,000. Her estimated net worth, by the way, is $100,000,000. In this sense, pet influencers are most certainly a thing. But why?

I reached out to a friend who works in the pet business and he told me this. There is an increasing role in companionship that pets are playing, often replacing children as the target of love and adoration for people with busy lifestyles. Especially for generations that postpone housemaking, marriage and such. For professionals, it’s all about connection and connecting to profitable subculture moments that prompt consumption through association. As cars were to many teenage boys in the 1930s to 1980s, so now are pets to millions of teenage girls that, unlike their mothers or grandmothers, are not obsessed with finding potential mates in their teens or 20s. Plenty of time for that later while I snuggle with my cat or pup for now.

That said, for every Jiffpom, there’s some poor pet whose owner just isn’t very skilled with the camera. Maybe, just maybe, someone can eek out a side hustle, but it’s not likely to reliably pay the rent. Fame, my friend, is a fickle mistress. As for Sneaky Pete, honestly, he just wants somebody, anybody, to throw him the damn ball. What do you think?

So what’s your take? Check us out online and share your thoughts at business.ucf.edu/podcast. And be sure to follow us on social media to be alerted when our next episode airs. I’ll be joined by UCF Hall of Famer Jim Balaschak, UCF Entrepreneur in Residence Michael Pape and alumnus and former JOUST winner Derek Saltzman to learn if you can really generate $1,000,000,000 from a PowerPoint. Ehhhhh, this doesn’t sound good. 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.

Is layaway making a comeback—or has it simply been rebranded as “buy now, pay later”? In this episode of Is This Really a Thing?, Dean Paul Jarley sits down with Jim Adamczyk, Chief Strategy Officer at FAIRWINDS, to unpack the surprising history (and psychology) of delayed payments. From Christmas shopping in the 1970s to today’s Klarna and Affirm apps, they explore why consumers keep returning to installment plans, what it means for financial health, and whether AI could reshape how we manage spending and debt.

Paul Jarley: If you’re as old as I am, you know, things come back around. Today, we’re going to talk about an old classic: layaway. Is it back? Is it hiding under a different name? Should you really put your lunch on layaway? Or buy now, pay later. To help me figure this out, I’m joined in this episode by Jim Adamczyk. Jim is a UCF alum, a member of our College of Business Hall of Fame and is the current Chief Strategy Officer at FAIRWINDS. We recorded this podcast live in front of 100-plus students in The EXCHANGE, and we’re bringing it to you now. Listen in.

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.

So when I was a kid, my mother spent half of her annual income on Christmas. I’m not kidding. We grew up with relatively modest means, and so she would start shopping in June for Christmas. And the family didn’t have a huge amount of money, so she would buy things on what was called layaway. Basically, you went in and you picked out your item and you gave it to the store and you promised to pay for it before you would pick it up and you had to agree to a schedule. And I was driving somewhere a couple of weeks ago and I was listening to the radio and I think it was Burlington Coat Factory was talking about their layaway program. Literally, I hadn’t heard about layaway in probably 40 years. And so today Jim and I are going to talk about layaway, what it was, how it differs from Buy Now Pay Later, or rent to own things that many of you might see, why it’s on the comeback and what might replace it after that. So thanks for joining us today, Jim.

Jim Adamczyk: Always happy to be here.

Paul Jarley: What is layaway? Had you ever experienced layaway?

Jim Adamczyk: When I was in high school, I was dating somebody and I remember there was a Montgomery Ward in Altamonte Springs and I put a present on layaway. And by the time I got the layaway, I was no longer with the person anymore, so my first experience was: layaway is not great.

Paul Jarley: Just so you understand kind of the world we’re living in at that time, people didn’t have credit cards, people didn’t have debit cards.

Jim Adamczyk: The main way to pay for it was cash. You took cash out and you went to the store and buy it, but if you didn’t have the cash, your primary means of credit was layaway. And it’s not really credit in the sense that you don’t have the item, so you’re kind of saving each month. It’s like a savings plan to end up eventually buying something. It’s almost like delayed gratification in a world of instant gratification today.

Paul Jarley: Right? And if you missed a payment, the retailer put the product back on the shelf.

Jim Adamczyk: And so the retailers had to have an entire inventory management system to keep track of all the different items that were on layaway, the customers that had them on layaway and then the payment plans that were in place to pay for those items as well.

Paul Jarley: And there would be late penalties, right? I think if you –

Jim Adamczyk: Usually you had to put a percent of the item down upfront, 10, 20%, and then if you were late, kind of like a credit card or a loan today, they would charge you a fee on the late payment. And then if you didn’t actually pay it off or you’d stop paying, they would put it back and they would keep your money pretty much.

Paul Jarley: So fast forwarding a little bit, if you did that today and you missed a payment and they put it back, would it impact your credit score?

Jim Adamczyk: On layaway today, there’s no impact. It’s not credit. So the big difference with layaway is that you don’t own the item yet. You’re almost saving towards, and ended up eventually getting it, so it’s not credit. Whereas today if you buy on a credit card or you buy now with those buy now pay later items, that’s credit. Someone is giving you the item before you actually have paid for it. That’s credit under any definition.

Paul Jarley: So mom was shopping in June, she didn’t really need the item until Christmas.

Jim Adamczyk: Right.

Paul Jarley: This is how this would work. And so she would make a payment on it for a few months so that she could have presents under the tree. That’s really how this developed. Let’s go to a couple of other similar kinds of programs, but in some ways different. How’s it different from rent to own?

Jim Adamczyk: With rent to own, it’s a contract, so you’re entering into a contract to buy a particular item and you’re renting it for a period of time and you have the option to buy at the end. Most of these programs aren’t designed for the majority of consumers. They’re usually for consumers that typically don’t have a good track record of saving. And so unfortunately, the programs do target those that aren’t disciplined in our approach like rent to own or buy now pay later. And the buy now pay later, which is what everyone in here probably sees, and probably more than half of you have used it already, I would imagine based on –

Paul Jarley: Based on the number of apps.

Jim Adamczyk: the number of statistics out there. It is more of the payment in four. So you’ll get the item and then you’ll agree to four payments. So instead of paying $100 today, you’ll pay $25 over four weeks or six weeks is typically the cycle that you’d pay that over. That’s pretty much what has put layaway, away. Because buy now, pay later is prevalent in almost every transaction that you see today. And it’s pretty much a dominated small dollar purchases today.

Paul Jarley: Because that’s about instant gratification to your point.

Jim Adamczyk: Yeah, I mean the psychology behind it –

Paul Jarley: Exactly the opposite.

Jim Adamczyk: is really interesting. You have this bias for having something now because you feel like having it now. You over assume the importance of having the item now and you under assume the value that you have to pay over time and the benefit of that. It ends up hurting I think those of us that struggle with savings just in general.

Paul Jarley: And you end up paying more for it over the long haul than you could have just paid upfront?

Jim Adamczyk: I heard it described once as like a treadmill. You get on a treadmill of debt. Most people that use buy now pay later, 60% of consumers have at least two or more active buy now, pay later going at the same time.

Paul Jarley: I’ve noticed now it’s even on my credit card.

Jim Adamczyk: There’s three big firms that control the whole buy now pay later space, and one of the big ones, they want to replace credit cards in the banking system around credit. That’s their whole goal. The short-term buy now pay later does replace credit cards for small dollar purchases for a lot of people, and it works in a similar way like a credit card. If you pay it off when it’s due, there’s no interest on it. But, like credit cards, most people don’t pay those off every month. In fact, probably more than half of Americans with credit card balances don’t pay them off every month. And so buy now pay later unfortunately follows a similar cycle. It might seem like you don’t have to pay a hundred dollars now and it’s only $25 today, but the reality is more than 40% of people that are in that today have some late payment over that period of time.

Paul Jarley: Why do you think layaway might be making a comeback now? Inflation maybe?

Jim Adamczyk: Certainly the cost of goods has gone up and layaway is still a niche product I would say today because a lot of the bigger retailers have gone away from it and moved to the buy now pay later. I definitely know that there’s a couple out there that still do it like Burlington, you’d mentioned, Sears and some of the older traditional players. But the Walmart’s the Best Buy’s the Target’s, they’ve all moved to the bigger buy now pay later firms. And what they’ve seen is just an increase in sales when they move to it, and that’s part of the reason why.

Paul Jarley: Well, and plus the inventory management part of it, right? Of setting it aside and –

Jim Adamczyk: Just imagine you’re at Walmart and you’ve got to manage all of these layaway programs for different consumers and when they come get it and if they’re late, not late, it’s an entire inventory management system. Versus you move to a buy now pay later infrastructure and the consumer gets their product right away and they have to manage inventory and payments and late tracking. So that’s part of the reason why you’ve seen layaway go away.

Paul Jarley: And you don’t need to have a credit score, right to do buy now, pay later?

Jim Adamczyk: I think a lot of people think that buy now pay later is helping your credit score. It is not actively in a credit score today. But if you don’t pay that buy now pay later at some point, that could go to a collection agency which could show up on your credit report. So there’s no benefit to credit for buy now, pay later, but there could be a detriment to your credit for not paying buy now pay later. So I think it’s important that people understand that there’s some misinformation in there out there about whether or not buy now, pay later can actually help your credit today. Now I will say that there’s a couple of the bigger ones have started to send your data monthly to the credit bureau agencies, but they’re not including it in their scores today.

As a company that lends money, we want to know that information because we make decisions on your ability to repay debt. And so if you’re getting a car loan or a mortgage and you’ve got eight different buy now pay later plans out there, that impacts your ability to repay. And so I think you’ll see some movement probably from the larger institutions pushing to have this data readily available to them. I don’t know if it’s going to impact your credit score anytime soon from a positive perspective.

Paul Jarley: So FAIRWINDS is very big on financial freedom and being debt-free. So would you recommend layaway to anyone?

Jim Adamczyk: We are always a proponent of save now, buy later. Okay? It is so easy to open an account and most banks have a little budgeting tool or a budgeting program or even a budgeting like savings goals or something you can use and just start putting the money into the savings goal in your bank account until you get ready to buy the purchase and then go make the purchase. That’s our recommendation a hundred percent of the time. First, it’s buy cash. Second, if you need to buy it, save for it and then buy it with the cash you saved. One of the worst things you can do is put it on credit if you can’t pay it off.

Paul Jarley: And for people who can’t get credit cards right, it’s an option.

Jim Adamczyk: Absolutely, a hundred percent. It is an alternative for people that cannot get credit cards and typically people with no credit. A bigger lesson for me around layaway is the movement of it to buy now pay later. And the most important thing you can learn about buy now pay later is, it’s credit. You got to know all the rules that come around with buy now pay later are like credit rules and you want to manage it in a way that doesn’t put you in a bad position later on.

Paul Jarley: So this is really all about the importance of cashflow and knowing how to manage it. So what tips would you have for our students on how to manage their cashflow?

Jim Adamczyk: The most important thing you can do is one, have a budget. You should know some idea each month of how much money you have coming in and then you should have some idea of the expenses that you’re paying each month. And then once you have the budget, your next goal is to save $1,000 in an emergency account. Don’t touch that money for any reason whatsoever unless some emergency happens. And by emergency is not like all my friends are going somewhere and so I got to go with them on vacation, which is mistakes I’ve made when I was younger. Emergency is like my car broke down or I need books or something like that. Save that money for a real emergency. So now you have a budget, you have a thousand dollars saved. And then, then I think you think about layaway programs or if you need to actually own something. We don’t say buy now, pay later. We say save now, buy later. That’s our approach to this.

Paul Jarley: You know these numbers better than I do. What percentage of households don’t have a month’s worth of savings? It’s a frighteningly high number, I do remember that.

Jim Adamczyk: It’s anywhere between 50 and 60% of Americans cannot afford a $400 emergency expense, and it’s been that way for as long as I can remember, at least the last 10-to-15 years has not changed. And so the small decisions you make today can influence whether or not you’re part of that statistic or you’re not. Income does not matter a lot because even people that make over $100,000 a year, over 25 or 30% of them are still living paycheck-to-paycheck. The more money you make, the more money you spend is a reality in life. And so the most important thing you can do is spend less than you make.

Paul Jarley: So in today’s world, I got to ask this question. Can AI help you out here?

Jim Adamczyk: Man, I hope so. I’m looking forward to it.

Paul Jarley: A cashflow manager, an AI cashflow manager. Yeah, I think that’s coming.

Jim Adamczyk: There is a future around what AI can do for you, even around managing your money. Imagine that has access to your transactional spend across every platform that you have. It has access to your income coming in, it has access to every expense you’re making on a monthly basis. I see a future where AI is helping you decide what to do next and even telling you, don’t buy that. Or no, no, don’t do that. Do this and here’s how to do it. Or if you’re going to buy it, use this channel because you’re getting better rewards, it’s better behavioral science for you to do that, but it will be your little agent that follows you round and I believe that future is not far away.

Paul Jarley: Yeah. How far do you think, I know you guys are thinking about this and you’re not alone. I’m sure.

Jim Adamczyk: You can see use cases on YouTube and online today where you see people that are uploading all of their transaction data and they’re using it to help – I would never recommend that, by the way – but you can see how the AI is helping them identify and spend correctly. The challenge that most financials have today is most people don’t have just one account. They usually have multiple accounts. For AI to be effective, it needs to know everything happening.

Paul Jarley: That’s called open banking. There’s still some challenge. What are the main challenges with that?

Jim Adamczyk: The main challenges are all the banks having access to the API calls from all the different financial institutions data that’s out there. And then I think you can make a pretty accurate prediction of how you should manage your money. But in today’s world, and I imagine most of you’d say might have five or six different financial apps sitting on your phone, and so having access to that and having financial institutions trust that they can do that –

Paul Jarley: Because options for evil there as well, given what they would know about people and their spending habits?

Jim Adamczyk: You would have to essentially allow access to that. A scale that maybe most people aren’t comfortable with.

Paul Jarley: Yeah, maybe. I don’t know. Younger generation seems to give that away pretty quickly compared to –

Jim Adamczyk: Although I find myself giving away a lot of stuff too, as well as I get older. I want convenience. I think people, want convenience.

Paul Jarley: That’s right. People want convenience.

Jim Adamczyk: Most of you’ll probably grow up in a world, or at least you’ll be in your professional world in the next five to 10 years where it’s going to be totally different than it is today, and you’ll have a tremendous opportunity to make more of an impact than people that have been in the industry for 10, 15, 20 years. Because you’re going to come in at the cusp of all this new tech coming in and you’re going to be able to teach people that have been there for 10, 15 years how to use it probably more effectively than they are using it today.

Paul Jarley: What other advice do you have for students before I open it up for questions?

Jim Adamczyk: Well, as it relates to layaway, my biggest advice is that it’s a better program than buy now, pay later because it’s delayed gratification and I think you feel better when you actually work to save for something and then you buy it. The behavioral science behind this will show that almost half of people that buy something now and they have to pay it later, they end up regretting the purchase, especially the bigger the purchase, the more regret happens. Think of all the stuff you bought over the last three or four months. Did I really need to buy that stuff? And if I didn’t buy it, I’d probably have this extra $500 sitting here. And so my advice really to everyone is have a budget, save a thousand dollars and plan for your spending, and I promise you’ll be in a much better position than most of your counterparts out there if you treat personal finance as the most important thing you do as you graduate.

Paul Jarley: I think the psychology around spending is really fascinating. I think it’s also true, and hardly none of you do this. How many of you have more than $20 of cash in your wallet right now? More than I would’ve guessed. How many of you have $50 of cash? I still think paying for things in cash and watching it disappear from your wallet is one of the strongest incentives not to spend money.

Jim Adamczyk: You know what’s funny, if you asked that question to all the 600 people that worked at FAIRWINDS, probably less than 10% of them would have had $20 in their wallet.

Paul Jarley: I’m stunned that about half of the students raised their hand.

Jim Adamczyk: That was pretty interesting. That is fascinating. Would’ve not predicted that that many would’ve raised their hand with $20. I don’t think I’ve had $20 in my pocket in six years.

Paul Jarley: Yeah, me too. Okay, so last question, Jim, do you think layaway will still a thing 10 years from now? Yes or no, and why?

Jim Adamczyk: I think layaway will be as much a thing as the flip cell phone, and I don’t know if I remember the flip cell phone. You remember the little Razor? Everyone wanted the Razor cell phone. There’s still some people that have it.

Paul Jarley: I know a few guys who do.

Jim Adamczyk: Yeah, that’s right.

Paul Jarley: They happen to be wealthy.

Jim Adamczyk: Yeah, that’s right. Yeah, they do. They don’t want all the tech on their phone.

Paul Jarley: Discipline buying.

Jim Adamczyk: Discipline buying. Yeah, it could make a comeback. I do think with artificial intelligence, though, layaway might change in the future. Maybe there’s a different way of looking at layaway that becomes more consumer friendly and hopefully puts people in a better position, not a worse position.

Paul Jarley: Well, thanks Jim. Always good to have you in The EXCHANGE.

[Audience clapping]

Paul Jarley: It’s my podcast, so I get to go last.

In a world of instant gratification, credit cards and buy now pay later programs pretty much ensure that Layaways heyday is behind it. But it isn’t dead either, in part because it offers a form of inclusiveness for people with modest incomes, difficulty saving and little access to credit. The real question for retailers is whether this boosts their sales enough to deal with the hassles of keeping track of the payments and reserving the goods. It very well might for the Burlington Coat Factory, but probably not for Bloomingdales.

In some ways, the biggest layaway plan of all is sitting right in front of my students. It’s a college degree. Think about it. You put money down semester after semester, making installments in time, effort, and tuition. You don’t get to take advantage of the degree until the very end, and if you stop partway, you don’t get the ultimate prize. A half a degree is no degree. Paying for the entire four years at the start of a college journey would price all but the wealthiest people out of the market. And it’s unlikely that an 18-year-old could get a loan for the entire amount, unless they were exceptionally gifted academically. Even the government isn’t going to take this deal and give you a loan.

So maybe that’s the lesson. Whether it’s a coat at Burlington or a college degree, layaway survives because it’s the only way some of us can afford the things that matter most. We live in a world of instant gratification, but some of life’s biggest rewards still require patience, persistence, and a long string of installment payments.

So what’s your take? Check us out online and share your thoughts at business.ucf.edu/podcast. And be sure to follow us on social media to be alerted when our next episode airs. I’ll be joined by UCF’s own Carolyn Massiah and pet mom Amber Downs to learn if pet influencing is really a thing … and more importantly if my dog, Sneaky Pete, has a shot at becoming one of them. 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.

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!

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.

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 Extended Thing?

Actor Bryan Cranston speaking at a SAG-AFTRA strike rally in Times Square in New York City on July 25, 2023: Uh, we’ve got a message for Mr. Iger. I know, sir, that you look through things through a different lens. We don’t expect you to understand who we are, but we ask you to hear us, and beyond that, to listen to us when we tell you we will not be having our jobs taken away and given to robots.

Paul Jarley: The real issue, Bryan, is whether the AI listens and understands us.

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.

In our last episode, we explored the current writers and actor’s strikes and how the parties might come to some agreement to get everyone back to work and spare us a lot of new reality TV. A key part of that analysis involved the limitations of AI today. It can’t produce a final product without humans. That, of course, is today. AI technology is changing rapidly and its impact on the industry is likely to grow over time. In today’s episode, we look at the long-term implications of AI in Hollywood and ask, could AI depopulate the industry in 10 years? In other words, could it eliminate or substantially reduce the number of people working in Hollywood, especially the writers and actors. To shed light on these topics, I returned to the discussion I had with my group of UCF experts. To just remind everyone, Cassandra Willard is an instructor and program director in our Center for Entrepreneurship and a practicing attorney with extensive experience in entertainment law.

Ray Eddy is a lecturer in our Integrated Business department with an interest in understanding the customer experience. Ray is not just an academic, he has worked as a stunt man, started his own production company and written, directed and starred in several performances. 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 assistance, and AI. And last but not least is Robin Cowie. Rob is a graduate of our Motion Picture Technology program at UCF. 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, and the Dr. Phillips Center for Performing Arts. Today, he is the President and CTO at Promising People, a company that produces training and placement services for people who have been incarcerated. But, you probably know Rob best from his work as co-producer on “The Blair Witch Project.” Listen in.

David, if AI is going to depopulate Hollywood, it’s going to have to produce movies that are more profitable than the ones being created today. What do you see as the main issues here?

David Luna: There are different kinds of costs involved in making a movie, right? One of them would be the creative part, and from what has transpired from the conversations with the writer’s union, it seems like it’s a fairly small part of the process. And the other part is the production cost, right? Which seems to be the larger cost in making movies. So if we think of a commercial success as something as making a profit, you want to minimize one of those two costs. So on the production side, you could think about well, having Harrison Ford play Indiana Jones until the 30th century, for example, through AI. That’s one part of it. Being a professor of marketing, I am also quite sensitive to the issues that stem from how consumers will perceive these products. I have done some work on trust and whether people trust AI interactions.

Paul Jarley: There’s a lot to unpack in David’s comments there. First, let’s tackle authenticity. So my understanding is voice is the easiest thing for AI to replicate right now. Is that true?

Robin Cowie: When we talk about AI, there’s, there’s so many things that we’re talking about. So to narrow it, I think over the last six to nine months, the conversation’s really been about large language models. And large language modules specifically from Open AI, but also Google’s Bard or, you know, some of the older ones from DeepMind, or even the new one that Meta just released called Llama 2. These are all large language models and they’re designed literally to be about language. So I would say the easiest thing for a large language model to process is text, not necessarily audio. But essentially the current premise behind large language models is that essentially it’s about math and it’s about probability. And that pattern recognition is behind everything. And so music especially, you know, we are all very familiar with those patterns, and therefore music comes up a lot because voice synthesis or instrument synthesis or anything like that comes up a lot. It’s maybe one of the easiest patterns to recreate, but I think the real innovation is in, in text right now.

Paul Jarley: So where do you think the most powerful application of AI will be in the next few years? In movie making.

Robin Cowie: I worked at Electronic Arts. We used AI for a lot of the background elements, a lot of the gaming elements back then. And this is, you know, in the ancient days, four years ago and over the last four years we’ve seen exponential development with using AI just in the gaming space. But I think when I started being obsessed with it four years ago, I thought, “Wow, this is going to be as revolutionary as the iPhone was.” And now there are some people that are saying, this is as revolutionary as fire. I’m probably, currently, at the place of “This is as revolutionary as the steam engine.” But there is no doubt in my mind that every aspect of every kind of human job, every form of creativity, every form of task-oriented work, every single aspect of human interaction is going to be changed by AI.

Paul Jarley: Rob is my resident futurist. He’s always the first in line with new innovations. What do you think, Ray?

Ray Eddy: The truth is, it’s, it’s this, I could say this is two iterations of this than I can think of in the past. And one is back in the, in the early nineties when CGI became a much bigger thing, “Terminator 2” kind of changed the game in 1991, and that led to “Jurassic Park” in ’93 and then the Lucas making the “Star Wars: Episode I” and it just got more and more and more and actors started thinking, “Well, they’ll never need us anymore because they can recreate.” And in particular, stunt people also felt the same way because, who needs to jump off a building or get lit on fire when you could pretend to do that with CG and it’ll look just as good. The backlash to that has been that there’s a real push towards what we call practical effects, which is actual real effects.

A real fire, a real explosion, a real high fall. Because as of right now, you can still tell a difference. Now, the technology will keep advancing. There will be a day when you can’t tell the difference. Just like with deepfake videos, you can’t tell the person is the actually saying those lines or not. As of right now, there’s still, I guess, inertia in the industry to sort of make that decision. You go with the CG version, which is safer, or the real practical version, which might be more expensive. Then again, CG is pretty expensive too. But, but the other iteration I’ve just referred briefly is back in the early 1900’s when animation first appeared, and then, you know, in the 1920’s, Steamboat Willie came along and then Snow White got an honorary Oscar award, and so all of a sudden actors back then were afraid, “Well, they never need actors again, because cartoon characters would never complain about the wages. They’ll never complain about working long hours. They never would complain about the danger” and there was a fear that animation would replace actors. So this is kind of happening, as I see it, the third time now, AI is be the next thing that will take over. The first two times there was a lot of, you know, concern, but it hasn’t led to massive loss in income, or in job opportunities. It sort of has shifted the game a little bit, but it hasn’t eliminated anything. AI, it’s hard to say. I, I still feel the same as what Rob was just saying. I think that’s, there’s a lot to the fact that it will change the game as time moves forward.

Paul Jarley: My own take on this is the most vulnerable groups are people like extras that you would think AI would be pretty good at filling those kinds of roles pretty quickly.

Ray Eddy: I, I would agree with it, yeah, completely. That when you need a massive thousands of people, whether they’re in a …

Paul Jarley: Ben Hur, think Ben Hur.

Ray Eddy: Ben Hur, sure. Or any sports stadium or, or, or any zombie movie, you want to have a thousand zombies chasing somebody, you know. You create a few dozen and then just repeat them. That happens already, more with CG than with AI. But AI will allow for natural progressions of activities and reactions and things to be moving forward. So it does change the authenticity of it in a way, but also it could lead to sort of loss of control over what’s exactly happening. If you did CG, you just make it happen. If you make it AI, it’s sort of, there’s some randomness that maybe is good, maybe is bad, but the control factor is, is left open. But in any case, as I said, the technology changes so rapidly, it’s hard to say how authentic this will be. But as of right now, I think there’s still a desire to sort of see real people do real things as much as we can. And certainly for the industry, that’s what the industry wants. The, you know, actors and the stunt performers and people who make a living as extras, they don’t want to lose their livelihood either. So there’s, there’s a lot, a lot of people behind this trying to make sure they can keep it under control as much as possible if they can.

Robin Cowie: I agree a lot with what Ray is saying. Christopher Nolan is a filmmaker who’s famous for doing things real, but even Christopher Nolan is going to put all the extra safety harnesses on and all the safety equipment on in camera that you used to not be able to do. So Christopher Nolan can do magnificent things because you have the ability to use computer graphics and computer technology to remove those safety harnesses so you never see them. And so the stunts are actually raised to a huge level, even with extras, what you’re able to see, obviously with “Lord of the Rings,” again, going back, you know, almost 25 years now to the first “Lord of the Rings” movies there, you’re using massive crowd control using CG. But a lot of that CG is powered by actual real actors. And so again, with computer games, from what I’ve done, we synthesize a lot of things driven by a small collection of humans that actually power massive teams of football players. So I would do a casting where I would have 40 different body types that would actually perform the work of 40 different types of humans, and that would then power thousands of characters in the game. So it’s not quite eliminate extras or eliminate writers or eliminate, it’s really about the human machine synthesis.

Paul Jarley: So is the use of AI though, in those situations that you’re describing, Robin, is it cheaper than just having a human do it?

Robin Cowie: It’s even more than cheaper. It’s really doing things that were never possible. Some of it is cost, right? If you were to rotoscope, you know, a hundred thousand people, it’s not possible, right? You could, like, you could go back to the ’60’s and individually rotoscope every image. You could do it, but it would take you years and years and years. But now, you know, you can do so many things so much faster with the compute that is possible with AI. It’s to the point where they use synthetic humans so much that most movies that you watch have some form of face replacement, some form of this. Anyway, that is kind of different, I believe, than the current writer strike that’s more connected to large language models, which is really that we’ve created essentially some form of alien intelligence that is in the mathematics of these large language models and specifically on a thing called a transformer that is challenging human thought and sequential behavior. So that’s a whole different level than where we were before with face replacement.

David Luna: Rob, are you saying that the audience cannot identify the synthetic human at this moment?

Robin Cowie: In many, many ways, the Turing test is always can you tell the difference between humans and computer interaction? And absolutely we’ve gone way, way past. What keeps on happening with technology, or that test, is we keep on advancing it. You know, like, oh, well, can we tell the difference between computer playing go or chess? Or can we tell the difference between a voice synthesis and interacting? We have crossed all of those boundaries. Can we replicate people in a highly realistic manner that there’s no way you can tell between real CG. In fact, I just want to make the announcement: I’m actually computer generated and no, I’m just kidding. This is something Paul set up. No, no, no. But yeah, we are already androids, we already use digital extensions of our life. We already have digital interactions. It’s just that we’re about to go through an exponential integration of these at a level that people have never seen before in history.

David Luna: So I think that kind of addresses one of Ray’s things that he said in that he mentioned that people want to see real people on screen. We think we’re seeing real people.

Robin Cowie: Correct.

Paul Jarley: So could you see in the next five to 10 years entirely AI-produced products that are being marketed through their own channel that would be viewed outside of what we think of traditional Hollywood and movie making?

Robin Cowie: We already are, absolutely, yes.

Paul Jarley: I could see that in just sort of a product portfolio kind of sense, David, you know, you have real actors and what they’re producing and what AI’s producing and let the marketplace decide, right? Ultimately, it’s the box office that’s gonna tell us where to go here and the production costs.

Paul Jarley: Well, I do think maybe in the short term, the professional sports leagues might want to renegotiate their television rights because I think content is going to be really important. If Robin’s right, and this drags on for a couple of years, you already see Netflix buying a lot of international content.

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 we’ve seen what the echo chamber of TikTok is like, what the echo chamber of social media is like, and basically we tend to serve up to people more of what they love. And can we do that synthetically with computers? You betcha. So I think as humans, we have to really invest in confronting that, educating people, and instilling a love of humans.

Paul Jarley: It’s unquestionably the case that AI’s share of the market is going to increase, if you want to think about it in very broad terms. But the counter example would be Broadway. I know Ray’s done some work on, you know, shaping experiences and Broadway would seem to be the counter example. Thoughts there, Ray?

Ray Eddy: Sure. No, I agree with that. I think there’s a lot to be said, you know, and on my study of immersion and that kind of activities, live performance is different. I think where technologies could intersect here would be something like holograms. There are already some hologram performers, if you look back at it kind of hit the mainstream when they, had a hologram of Tupac Shakur at Coachella, and it looked so real and kind of launched it into a real possibility for future development in the entertainment realm, whether in music or in live performance. And there are some holograms that are on some shows. I saw one a long time ago, sir Laurence Olivier’s face was projected. The play was called “Time” and he was basically playing God and his head was the whole size of the stage, and it was him.

There were live actors who can superimposed their actions and put someone else’s face over them. They had people recreate Michael Jackson’s dance moves on stage, but it has Michael Jackson’s face and singing a song. So these kinds of technologies can exist and allow the technology to advance in a different way than AI. But to your point, Paul, about who wants to see Tom Cruise in 40 or 100 years, well, people want to see The Beatles now, so it might be a retro thing rather than a same person in perpetuity thing, but they come back later as a, as a flashback. Those, there are some thoughts about the live aspect of it.

Paul Jarley: Part of my thought about that goes back to a prior podcast we did on backyard chickens. Carolyn Massiah was on, and at the very end we were joking about the chickens having their own Facebook page and whether people would watch it or not. And Carolyn talked about marketing simplicity in an ever complex world. I kind of wonder if there’ll be a little of that here, that essentially Broadway is that, taking people back to a prior time where the craft was done differently.

Ray Eddy: Sure. And there’s also the element of the potential chaos of a live performance. Things can go wrong. Someone forgets a line, it’s as simple as that. Or a prop fails, or some technological problem that makes it more tangible and real and vibrant maybe to an audience. So it makes it different. Going to a film, you know, you’re going to see it’s done and perfect and it’s out there. In live theatrical productions, or even in like theme park performances, if something goes wrong, some people say that’s why you go to see a NASCAR race. You don’t go to see the race, you go to see the crash. So that element of risk and unpredictability is always going to be there more in a live performance than AI or CG. Then again, if your AI starts going and you know, doing hallucinating during a live performance, then you’re gonna have a whole different story going on. And that’ll be…

Robin Cowie: It could, it could be super, it could be super fun. I think there’s three things. I think there’s suspension of disbelief and then there’s surprise and there’s delight. And those three guiding principles for entertainment, suspension of disbelief, that can be created by humans, it can be created by machines, it can be created by humans and machines working together. And I think that is true for surprise and delight. I think right now, humans are better at surprise and delight, and truly delight is probably the last realm of humanity. I think that Pixar movie Wall-E is actually one of the best depictions of robots and AIs that we have. You know, I think the reason why Wall-E is so wonderful is that he does create that sense of human delight and human satisfaction. And there’s a scene in that movie where you see the fat humans on a cruise ship and they’re all gorged on delight. And hopefully we don’t go that way. But I do think that, at the end of the day, this is simply an evolution of tool. We humans are tool makers, and this is the most sophisticated tool we’ve ever made. It’s just that the tool now actually talks back and has ideas of its own, and that’s something that we are all wrestling with.

Cassi Willard: And I think just to add to the point, when it comes to the live performance side of things, look at how much content had to move in a digital space due to restrictions based on the pandemic. As live events have come back more robustly, you still have individuals who are showing live performances via live feed, or they’re showing recorded, uploaded elements of performances. People are still selling out football stadiums. People are still selling out arenas because as a human being, one of the other things to think about is the community element. You want to be a fan of those people who are in the credits. Working in the industry as long as I have, I sit and I watch the credits, and I also know going to a theater isn’t the same experience as logging in in my home. So I think that’s one element that AI can’t quite find a workaround to just yet.

Robin Cowie: I have a question for Cassi that I’ve been wanting to talk to an entertainment attorney about this question ever since I heard about it. So MIT currently is putting forward a new concept. We all know that there’s copyright, which essentially I own this and if I’m going to copy it, I have the right to do that. But what large language models and transformers are doing is not really copyright. Essentially they’re taking the mathematical value of letters, which make up words, and then the mathematical combination of those words and then predicting the mathematical probability of what comes next. I mean, that’s essentially what these large language models do. So what they have proposed is the idea of a learning right. So that somebody’s actual pattern that they’re talking, so in my book, in my writing, in my math, in my formula, there’s a pattern of logic that underlies that. And now I can grant you the right to learn from my pattern of behavior. And I think it’s a really interesting idea because it does speak on a math level versus a actual copyright level. And I was really curious as to what you thought of that idea.

Cassi Willard: It opens a whole other legal realm here because ultimately we’re now looking at almost like a business method patent that comes into play. Now when you’re in that AI space, it’s the equivalent of the Amazon platform, back in the day, owning the one-,click purchase or the Amazon platform owning certain rights to methods of photography for products that they’ve held over time. So now we’re looking at those processes and methods, which honestly, hopefully, will go through and further advance AI so you don’t have a character get lost in a script that was mentioned earlier that we can further enhance. So we want to try and make AI step as far away from bad automated customer service as we possibly can. Because that’s the analogy I always make. It’s like having bad automated customer service sometimes when you’re in this space. So we want to ensure that we’re providing the best product possible, but that’s part of the push and pull Rob, very much, that we’re seeing in the AI space because those software platforms that exist right now, the software licensing agreements are going through and speaking specifically as far as what rights exist and what ownership you may have, and especially if you’re looking at things in that kind of co-writer brainstorming space, when you start looking at that software licensing, some of them say the intellectual property doesn’t belong to anybody because it’s a combination of a bunch of different ideas.

Because as these platforms are creating content, they’re further evolving their formulation. So you’re now getting this swirl of what you’re inputting as well as whatever else exists in that universe that’s now building on top of, on top of. So this becomes this really massive digital group project that we now are sitting around going, which one of us owns what percentage of what? It’s just we’re entering in for a software agreement, which you don’t see in more traditional kind of well-established software formats.

Paul Jarley: What’s the lesson for students here? I’m ultimately an educator.

Robin Cowie: In my opinion: use the tools, get involved, be creating things with this. I remember one of the things that made made it possible for me to make “Blair Witch” was that digital editing had just come on the scene and we were able to shoot for eight days real time and get 38 hours of footage that we got down” to 87 minutes. And if people ask me what do I think was the best thing that we did on Blair Witch,” in my opinion, it was the editing because we took incredible human experience and crafted it into something that was really unusual and really unique in 87 minutes. So I couldn’t have made Blair Witch without digital editing tools. I know there’s a lot of things that creatives and humans are going to do that wouldn’t have been possible without the AI tools. For me, students should go make cool stuff. That’s literally what I got taught at UCF when I went to UCF. I had this old, crusty film professor and he just said, “Make shit.” And that’s what we did. It was the best advice I ever got.

Cassi Willard: I would say sandbox when you’re in a safe space, learn those skill sets, because every piece of technology, every tool that you learn to exploit is another thing you can add to a resume. It’s another skill set that you can go through and expound on. And you can learn in a tech space a lot less expensively, a lot lower barrier to entry, a lot lower risk than you can anywhere else.

Paul Jarley: Now’s the time to experiment. Last question: 10 years from now, will AI have depopulated Hollywood or not? Yes or no? And why?

Cassi Willard: I’m going to go ahead and boldly say no. I think it’s going to cause people to evolve. I think you’re going to see this technology implemented like every other form of technology. I think it’ll cause it to evolve. I don’t think it’ll end up killing the industry.

Paul Jarley: David, what do you think?

David Luna: I think it will definitely depopulate the industry. And it’s what’s happened in factories, right, with using robots. You just need fewer workers as you partner out with the technology.

Paul Jarley: Ray?

Ray Eddy: I lean more towards what David said. I think I agree with Cassi, it will not kill the industry. If it had been that, I would say no. Will it depopulate? Yes. The question’s going to be how far? I’ll hedge by saying we just don’t know how far it will depopulate, but it will take some jobs away, yeah.

Paul Jarley: Robin, you get the last word.

Robin Cowie: I think it’s going to be exponentially bigger. One thing that humans love and crave is entertainment. And that entertainment, it’s going to come in lots and lots of forms. And this is really a booster, it’s an accelerator, it’s an ability for us to make more customized entertainment, more personal, larger scale, larger volumes at lower costs. So ultimately I think Hollywood 10 years from now is gonna be 10 times larger than it is now and still making us laugh, cry, and have a good time.|

Paul Jarley: It’s my podcast, so I get to go last. AI is going to replace mediocre scripts, mediocre productions, mediocre actors, and if there’s time, mediocre podcasts. Think Hallmark holiday movies, the “Fast and the Furious” installments, Ashton Kutcher and maybe this podcast. What it won’t replace is awesomeness: the first two seasons of “Twin Peaks,” “The Shawshank Redemption,” Jack Nicholson and “Real Dictators,” listen to it. Face it. Hollywood has been in a creative rutt, relying on franchises for big box office numbers for years. The machines have thrown down the gauntlet, and the humans need to respond. IP laws may provide some guardrails, but the creatives are going to have to win this on the basis of talent and imagination. I’m betting that they will. Storytelling is the most human of endeavors, and perhaps all those profits from those low cost generated AI movies will allow the studios to take more risks and find some fresh faces to bring them to life.

I do think Rob is right. AI will increase the total production out of Hollywood, and AI-generated content will get a share of the market. But records didn’t kill live concerts, movies didn’t kill the theater, television didn’t kill movies, and the streaming services haven’t yet killed network TV. We will just have more options and more content. I’m also guessing that some nights people will still complain that there’s nothing on. Will the increase in content lead to enough new opportunities to compensate for the loss of jobs for mediocre writers and actors? Probably not. But it won’t depopulate Hollywood either. If there is a third thing I know about new technology, it’s that when people play with it, they find unexpected applications and create new employment opportunities. In the meantime, go see Barbenheimer. I dare AI to come up with that.

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.

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.

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?

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.

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.

Did the pandemic spark a flurry of innovation or was everyone too busy bingeing Tiger King and Outerbanks and Zooming to endless happy hours to launch new businesses and products? Dean Paul Jarley turns to UCF’s entrepreneurial in-house experts along with an alum whose company helps startups grow and scale to find out the answer.

Caroline Castille: I think we’re going to see a lot of more entrepreneurial people out there who are more hunt-to-kill type of people instead of grazers, just worker bees in the company, which I love. That’s going to make more people, not only in control of their lives, but it’s going to make the economy even stronger.

Paul Jarley: Did I just get called a grazer? When did that become 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: My sense is, in talking to a lot of faculty and editors, that submissions to journals in terms of research were down during the pandemic. And I think part of it was because people didn’t have access to subjects like they might normally have if they were doing certain kinds of research. Some of it, I think, was just the general angst people had. And then maybe third, people didn’t get together in groups, maybe, as much, and to the extent that sometimes ideas come out of group conversations. And then it got me thinking as to whether or not there’s sort of a similar phenomenon with respect to innovation and entrepreneurship.

Paul Jarley: To answer that fuzzy question, I assembled today’s panel of experts. Caroline Castille is a UCF grad, a finalist in the 2014 version of the Joust, and a serial entrepreneur. Cameron Ford is the founding Director of the Center for Entrepreneurial Leadership at UCF, and an associate professor in our Department of Management. Carol Ann Dykes Logue is Director of Programs and Operations at the UCF Innovations District and Incubation Program. And Dr. Michael Pape is the Dr. Phillips entrepreneur and residence in the Department of Management, and serves as the director of the UpStart Student Venture Accelerator at UCF. Mike, let’s start with you. Did innovation go up or down as a result of the pandemic?

Michael Pape: One way that we measure innovation, which is a new way to do things, at least with a solid metric, is patent submissions. So I was interested in this, been reading about this, and if you look at patent submissions, they kept going up and up and up, the USPTO, the US Patent and Trademark Office.

Paul Jarley:

Michael Pape: They publish all these stats every year. If you look through, they started the plateau in 2016, interestingly enough-

Paul Jarley: Before the pandemic, yeah.

Michael Pape: Yeah, and they’ve stayed pretty flat, but that’s sort of a gross aggregate, obviously. And that’s just the U.S. But I did see that in other countries, they had actually an increase in the number of patent applications, depending, again, what’s your point of reference as you try to interpret this?

Michael Pape: But one interesting thing that came out since… I went to University of Chicago, I get some of the publications and read a paper put out by some of the researchers there, they published a paper in American Economic Association Journal. They looked at the number of patents that were filed were related to work from home. They looked at 3.5 million patents from 2010 to 2021, and they used the keywords “remote” “work from home,” et cetera, et cetera. And then they looked at the number of patents per year, and they found that there was an average, like 0.5% of all patents were related to that as the baseline. And then when 2020, 2021 hit, it almost more than doubled. So it was people… So is that innovation, or is it people who were just sitting on those patents? Of course, that’s difficult to know. So was there an increase in innovation, or was it just people moving forward?

Paul Jarley: Carol Ann, what’s your perspective?

Carol Ann Dykes Logue: BC, Before COVID, to me, there was a collective lack of appreciation for the technology innovations and the capability of technologies that we all have at our fingertips before then. We just took it for granted. It was not always incremental, but it just kind of creeped up in our lives and we got used to it, and we learned what we had to learn, how to use technology. So that was one thing.

Carol Ann Dykes Logue: Second, to me, there was a pretty, and it’s human nature, that there’s pretty generally when you look at a problem, or you experience a problem, you see it from a very self-centered, self-focused perspective and with little appreciation for the shared humanity that has the same problem. Pretty often, we just don’t tend to, in general, think about other populations, other countries. People don’t think that way in general. And the incentive and the view that there was great potential, and therefore a motivation to take the risk, we know we’ve always had entrepreneurs, but there was an interesting dynamic, to me, that happened during COVID in the number of people willing to take some risk after a certain time in the pandemic.

Paul Jarley: Do you think it went up or down, Carol Ann?

Carol Ann Dykes Logue: It went down, and then it shot back up.

Paul Jarley: Why do you think that’s true?

Carol Ann Dykes Logue: Think back to what happened in spring of 2020, and everybody, globally, just… We were all thrown into such massive change, massive uncertainty about life as we thought we knew it, that it became about just surviving. And it was hard for anybody… For most, it was hard to feel secure enough to take that risk. Unless you already had a job where that’s what you had to do, you’re working for a company like [inaudible 00:06:01], and you know got a problem and you got the money to pour into it. So this is more of an individual innovator entrepreneur perspective, but even companies too. Because a lot of our companies in the Incubator, we quickly switched our focus to coaching and advising and supporting them in growth, to supporting them in survival. In many cases, that meant downsizing and all of that, and reducing risk even more, not taking risk.

Carol Ann Dykes Logue: But after a point in time, once they got a feel for, “All right, this is our new world. We don’t know how long this is… Clearly, it’s going to go on for a while. We don’t know how long. We’ve right sized. We’ve got our cash flow under control. We’ve found some new opportunities. How do we move forward then?” And we had entrepreneurs coming to us during all this that, all of a sudden, they saw an opportunity for something that they’ve been thinking about and realized, “There’s a whole lot of people that have this problem,” and ideas that individuals had had, or companies had had, for products and services, to Mike’s comment, that related to virtual meetings and work from home, remote workers, offsite workforce, virtual companies, pretty much. All of a sudden, they realized, “Now’s the time.”

Carol Ann Dykes Logue: And I just think the awareness of global population in general of technology was heightened, plus an awareness that we’re all humans. We all had a shared experience. I’ve not seen anything else like that in my lifetime, where truly, it was a global shared experience, and that just changes the way you see things.

Paul Jarley: Well, necessity was certainly the mother of invention during COVID. I remember talking to Lorette on my advisory board, who sits on a number of corporate boards, and she talked about Papa John’s decision to go to contactless delivery. And she said, “In normal times, we would’ve debated that for two years before we entered that in that space,” and we did it in about 30 minutes.

Carol Ann Dykes Logue: Right. Yeah. And that’s the other thing that came to mind. I was thinking about it earlier, but I forgot, it’s that we proved that innovation doesn’t have to take so long.

Paul Jarley: Well, we saw this in our own world. Imagine, Cameron, how much debate we would’ve had in the pre-COVID environment, about having a significant percentage of our courses on Zoom. We’d still be debating that. There’s a real old joke attributed to someone who is on the board of trustees at Duke, who said if he was driving down the road and he heard that the world was going to end today, that he would immediately drive to Durham, North Carolina because everything happens a year later there. Right?

Carol Ann Dykes Logue: Good.

Cameron Ford: Yeah.

Paul Jarley: But I remember being in a meeting with our provost when the pandemic was just starting, saying, “Well, we might have to consider in six or seven weeks that we might have to go to an alternate contactless form of delivery for higher ed.” And that happened a day and a half later. And we just turned a switch, and we just decided to live with that for a while. Now, at the time, we thought maybe it’d be a week or a month, or maybe a couple of months, and it turned out to be a lot longer than that. But yeah, to your point, Carol Ann, I mean, I think things that we thought we couldn’t do, we learned how to do really fast.

Cameron Ford: I think it’s an important distinction, I think that speaks to both with Carol Ann and Mike been talking about, is a distinction in invention and innovation.

Cameron Ford: Because invention is actually coming up with a creative solution. And like Mike said, they came up with the technology for mRNA vaccines quite a while ago. This innovation is usually measured in terms of diffusion and use of inventions. And that’s usually where entrepreneurs contribute. They don’t typically invent something that’s completely new. They’re the ones that help to provide it to the market and make it more available. So I think the dynamic going into COVID probably had less to do with the pace of invention than it did with windows of opportunities slamming down and other ones sliding up really fast. It’s like suddenly, just something just couldn’t happen. Bam, window goes down. And now, it’s like, people are looking around, trying to figure out what innovations are available that we might be able to use to still get stuff done. So vaccinations, almost a miraculous kind of pace of delivery on those. There were existing fairly large scale delivery services. Those things were able to be scaled up even further to help a lot of restaurants stay in business.

Cameron Ford: But the invention part does kind come back again at the back end of that, because when those windows slam shut, Mike referenced some restaurants and stuff that completely had to pivot, and you have to figure out how to make do with what you have. “We can’t do what we used to do, but we have a lot of resources, and we have some skills. What else could we do with those things to still create value?” The pace of invention probably didn’t change a lot in those before times and during times, but the rate of adoption greatly accelerated in certain areas around medical technology, drone use delivery services, software service, things that facilitated people working from home, working on projects together. A lot of things like that, that blew up.

Paul Jarley: Listen to Caroline talk about windows slamming shut and opening with two of her companies bSteps, which sells dance shoes, and Flightpath, which markets a high tech golf team.

Caroline Castille: It was rough for the dance market, let me tell you. On the marketing side, were people actually dancing? Not really. Not in the ways that we used to market too, which was, you could dance anywhere, and people love to go to dance festivals. They love to go to the club, whatever, and you could wear these shoes anywhere. That’s our value prop. It has all the performance features, et cetera. Not a lot of people were buying. So we said, “Hey, we’re going to pivot, and we’re going to offer classes online.” So we have about 30 influencers plus, and we booked a dance class every week with our influencers. And that was one big pivot that did help to bring sales in until COVID resolved itself, and then we started selling a lot of shoes again.

Caroline Castille: Going up, I mean, for Flightpath, one of the reasons why we were able to sell a golf tee and sell so much of it so fast in its first year was because people were playing golf more. There was a huge increase in golf.

Paul Jarley: This is hard for me to say, because I haven’t gotten used to this idea yet, but my grandson… Okay, I actually have two, I still make them call me Dean Jarley, because I don’t want to be called grandpa.

Caroline Castille: [inaudible 00:13:02].

Paul Jarley: Everybody under the age of 18 has to call me Dean Jarley, so that’s what I [inaudible 00:13:07]

Caroline Castille: Oh my goodness. Oh, wow.

Paul Jarley: But Henry is an avid golfer, because, to your point, all kids’ sports were shut down, except for golf. So there’s been this enormous increase in golf among seven to 10 year olds.

Caroline Castille: Yes.

Paul Jarley: It’s crazy-

Caroline Castille: Yes.

Paul Jarley: … how much. So good product at the right time there.

Caroline Castille: Yeah. Exactly. It’s crazy how much any golfer will invest into something that will make them incrementally better.

Paul Jarley: So let me go through four factors that I think have defined a post pandemic environment, and I’d like each of you to comment on whether or not you think they had a meaningful and/or lasting impact. Has the increase in liquidity led to more deals, more deal flow, more encouragement for entrepreneurship? Less? Doesn’t matter? Carol Ann?

Carol Ann Dykes Logue: Absolutely more. Investment groups that never would’ve talked to us before from Nevada, from New York, from Boston, from Atlanta, from Texas, from California… I think part of it is because, all of a sudden, Florida’s this big, bright spotlight out there. Companies are flocking to Florida, brings that, and brings in investment, attention. And we’re getting inquiries from groups that never would’ve talked to us before. And we have a record number of clients, I would say, that are securing investment, cap equity investment.

Paul Jarley: Caroline’s company, Clickable Impact, is even taking equity positions in firms in place of payment for services.

Caroline Castille: So Clickable Impact is a social media marketing agency. One of our top services is email on performance, where we do email and text message marketing for a percentage of revenue for e-commerce stores. So very niche service. And then the only other thing we do is we just do special partnerships or JVs with different companies. We might invest into them, own a piece, or just be a service provider where we have some kind of skin in the game. Maybe it’s-

Paul Jarley: You will take an equity position as part of a service contract?

Caroline Castille: Yes.

Paul Jarley: So Cameron, another source of financial resources for a lot of small business is home equity. Did unrealized gains in the housing market result in more small business start up? Do you think that had an impact or will have an impact over the next year, or not?

Cameron Ford: Over the next years would be hard to say, because, obviously, they’re raising interest rates dramatically, with the intent of trying to flatten out housing prices and make loans more expensive, so that home equity thing may be kind of more of a blip than anything longer term that people can count on. Obviously, the folks that Mike and I are working with are students tend to not be homeowners and have that as an asset to draw from. So I don’t have a lot of insight into that.

Cameron Ford: I did want to just echo though what Carol Ann was saying about the risk capital investment domain. I mean, it really has gone up by a lot. I’m looking at a bunch of charts on my screen right now, and a huge increase in investment funding recently. And also, Blackstone, one of our patrons that supports our students here at UCF, is opening up a huge office in Miami. And they’re making a big investment in our educational efforts here in Florida as well in parallel with that. And I think that’s going to make a huge difference, having an 800 pound gorilla private equity company like that anchored in South Florida, along with a lot of the really good things we’ve seen with the growth of the venture capital community in Florida as well.

Carol Ann Dykes Logue: Yeah.

Cameron Ford: I think from that standpoint, from a risk capital investment standpoint, I think the future there looks pretty bright. Carol Ann, if you would agree with that or not, but-

Carol Ann Dykes Logue: Yeah. Yeah, totally. Totally. Because once that dynamic changes of the investor world nationally and even internationally, realizing that Florida’s not a swamp land, that there really are investable companies here and deals accelerate, it’s picking up speed. It’s not going to slow down anytime soon.

Paul Jarley: How about The Great Resignation? One of the things that’s puzzled me over the last year or so is, where did all those people go? Carol had mentioned labor shortages that we’re seeing now. Did a bunch of them decide to be entrepreneurs and start their own business? Is there any evidence of that?

Carol Ann Dykes Logue: First thought was fortunately not.

Cameron Ford: Yeah. I was going to say the same thing.

Carol Ann Dykes Logue: Yeah. But that’s a true statement, at least where I sit in the world, my little microcosm. I didn’t see this sudden rush of people that, all of a sudden, decided to be an entrepreneur. We haven’t had anybody show up at our door that hadn’t already been thinking about, or hadn’t already started on something.

Paul Jarley: Caroline has a different take on The Great Resignation.

Caroline Castille: We live in the era of The Great Resignation, for now. And I think that’s just because people are now able to see what it’s like being at home, but also what it’s like seeing other cultures, work cultures. I don’t think it’s just because people want to work at home. I think it’s because people just now can see that they were just in a sucky work culture, a sucky company culture. And now, they can see, “Oh, there are other opportunities with these companies. I’m going to go there.”

Paul Jarley: And then finally, changes in the fortunes of companies that are publicly traded. So right now, a lot of the tech companies who were the solution during the pandemic, because everybody was home, think the Netflix of the world, or the meal delivery services of the world, are kind of taking it on the chin. And a number of companies that specialize in experiences are having a good run. Is that likely to change the nature of entrepreneurship and what entrepreneurs look at over the next few years, or do you also think that’s sort of meaningless in this process?

Carol Ann Dykes Logue: Are you asking change whether or not entrepreneurs consider going public maybe?

Paul Jarley: No, no. I’m asking whether or not it’s going to encourage some forms of innovation rather than others.

Carol Ann Dykes Logue:Innovation, oh. Oh, okay.

Cameron Ford:There’s a long-term trend, I don’t know the exact numbers, but that the 10-year churn in the Fortune 500-

Carol Ann Dykes Logue: 500.

Cameron Ford: … it used to be like around maybe 30% would change over a decade [inaudible 00:19:51]

Paul Jarley: Yeah.

Carol Ann Dykes Logue: Yeah.

Paul Jarley: Yeah, yeah.

Cameron Ford: … where now, it’s like 70%.

Paul Jarley: Wow. Really?

Carol Ann Dykes Logue: Yeah. Right.

Cameron Ford: And a lot of that’s because of mergers and acquisitions and other stuff like that. It’s not all that stuff just vaporizes. But the name plates at the top of the companies changes a lot within a decade, so you’re seeing a much more rapid churn in membership in the upper echelons of the corporate world. Which to go back to the point Mike was making earlier, I mean, I think the overarching value of our entrepreneurship education efforts is really to help our students become professionally agile and to be able to move around from various kinds of startups, or small companies, or big companies and then hopefully playing a positive role there, and then maybe moving out of that, and maybe having a side hustle. There are so many different ways, I think, our students are going to have to navigate their career paths that are so different from folks my age, certainly.

Carol Ann Dykes Logue: Yeah.

Cameron Ford: They had a much more linear notion of what that might look like. I think our students are going to be doing a lot more weaving and bobbing, these windows going up and down, like I saying before.

Carol Ann Dykes Logue: Yeah.

Cameron Ford: Trying to be able to sustain a financially and personally successful career. So I think a lot of things that… If you think of entrepreneurship as a method, you can apply to a lot of different kinds of problems. I think that’s one of the things we’re trying to contribute to the world is to empower our students that way.

Paul Jarley: So if I were to summarize the one thing I’ve heard from this conversation that I think might have the most lasting impact was Cameron’s comment about diffusion, and that diffusion clearly excel-

Listen to all episodes of “Is This Really a Thing?” at business.ucf.edu/podcast.

Inflation hasn’t been much of an issue since Jimmy Carter was in office. But—like Mom Jeans and mullets—it’s totally back. This time, though, it feels different. We’re paying more than ever at the pump and in the grocery stores, so what’s to blame? Is it government spending? Supply chain shortages? The war in Ukraine? We’ve got questions, so we turned to UCF economist Sean Snaith for answers.

Want to learn more? Check out Snaith’s latest U.S. Economic Report from UCF’s Institute for Economic Forecasting.

Paul Jarley: Inflation hasn’t really been an issue since the Carter years. That Saturday Night Live skit was Dan Aykroyd impersonating Jimmy Carter. Inflation is definitely not the friend of people who are on fixed incomes. Today’s inflation, though, feels a little different. Some people think it’s not a surprise. We printed a bunch of money during the pandemic, and we’re suffering the consequences to that. Spending was high, particularly government spending.

Some people blame it on supply chain shortages. Some people blame it on the war in Ukraine. Some people believe it’s a government conspiracy. To sort through all of those things, when Sean gets here, we will have a conversation with him that will help us shed some light on where inflation really is today and where we think it’s going in the future.

Well, here he is. I’m assuming you’re in big demand these days.

Sean Snaith: Yeah. I’ve spoken on at least two occasions about inflation over the past year and a half.

Paul Jarley: So you raising your prices, given all this demand?

Sean Snaith: No, competition’s too fierce.

Paul Jarley: Really? Yeah.

Sean Snaith: Yeah. Economists are a dime a dozen.

Paul Jarley: Well, that’s probably true, but you’re the prettiest one I have, buddy.

Sean Snaith: Aw. You’re like my magic mirror. What fairy tale was that? Who’s the fairest economist in the land?

Paul Jarley: Oh, that’s not even close. I mean, it’s a low bar if you’ve met most economists, right?

Sean Snaith: I build a career on low expectations.

Paul Jarley: There’s no GQ for economics. I’ve never seen it.

Sean Snaith: No. We did do a GDP GQ…

Paul Jarley: There you go. Very nice.

Sean Snaith: But yeah, the model was not an attractive man.

Paul Jarley: I would imagine not. So how unattractive is it right now?

Sean Snaith: Well, we’re making the call when our release goes out that we are in or very close to a recession right now. And speaking to different groups and to the media over the past year, all of this can be traced back to the policy response to COVID-19 in 2020.

Paul Jarley: We’ll come to that in a couple minutes.

A few weeks ago I was driving home and when I drive home from the gym, I tend to put on sports talk radio. It’s my time to kind of catch up with. And the guy was railing against the inflation number in the sense that he didn’t believe it, that he thought the reported one was too low. And he was quoting the doubling in gas prices over a period. And yeah. So talk a little bit about how that inflation number is actually put together and what it really means.

Sean Snaith: Many of the variables in macroeconomics have measurement issues. Financial markets, interest rates…

Paul Jarley: Pretty simple stuff right?

Sean Snaith: To the second on the spot. When you start talking about GDP, employment, unemployment inflation, now you’re dealing with something that’s not as directly observable. And especially for something like the price level, we know what the price of individual commodities are. We know much wheat and soybean costs. We know much corn costs, how much a gallon of gas or gallon of milk costs, but the price level’s not observable. So we, the economics profession, the government, comes up with proxies to try to gauge that.

And the most common cited and observed proxy for inflation is the consumer price index. Hopefully people aren’t listening to while they’re driving, because we might have people nodding off and driving on the shoulder. But basically, when I’m teaching introductory students about it, I’d say, just think about you go to the grocery store and you put in a bunch of different items from the shelf and you go to the checkout and they ring it up and they tell you how much it is. Then the next month you do the same thing.

So basically that’s what the CPI is. It’s a basket of goods and services consumed by the so-called typical urban consumer. That basket gets repriced each month. And from that these inflation numbers are calculated. Now within that basket, certain items may be rising much faster than the average of the basket as a whole. And so if you’re looking at used car prices, which were up 40% year over year, if you’re looking at energy prices, which were up much higher than, and driving, really the overall CP numbers in many ways, or some food prices, it’s much higher than the eight and a half percent that gets reported as the headline number. So I think that’s where a lot of the skepticism comes in, that somehow the government’s trying to hide or obfuscate the real inflation rate out there.

Paul Jarley: Because the truth is, the inflation rate is different for different people based upon their purchasing patterns forward. Right? I mean, there isn’t really one inflation rate.

Sean Snaith: Well, one of the biggest sources of economic fallacies and misinterpretations is the notion that we forget. And I mean, we, in the biggest sense that when the rules of the game change, we’ll go back to sports talk radio here, the players play the game differently. So in the NFL, when they start penalizing for high hits to try to reduce the number of concussions, well now we start to see more lower body injuries. And so for the consumer, the rules of the game are your income, the prices that you face each day when you go shopping. And when those things change, your behavior changes. You don’t push that same cart up to the checkout that they use for calculating the CPI.

If the price of chicken wings goes up too high, I eat fewer chicken wings and maybe I substitute pork or beef. And so you that’s what’s happening now. People’s behavior will be altered by that. And so it is, depending on how you respond, how inflation impacts you in a real sense will in part depend on how you react.

Paul Jarley: But what is the inflation rate today?

Sean Snaith: I think the last reading was 8.7%, which was for May.

Paul Jarley: Do you have any reason to believe that’s over or understated?

Sean Snaith: No. I think it reflects what’s happening to energy prices. I think it reflects what’s happened to food prices. I think it reflects what’s happened to the price of shelter. These are the three big items that consumers… 65% of house of household spending for households that make $80,000 or less, 65% is on those three items. And so rent’s been rising. Food’s been rising, and the cost of transportation’s been rising. That doesn’t leave a lot of wiggle room for most people. And I think this is one of the key reasons we’re seeing consumer confidence at levels we haven’t seen since the early 1980s.

Paul Jarley: We opened the podcast with Dan Aykroyd’s famous inflation as your friend skit, impersonating Jimmy Carter. When was last time inflation was double digits? Was it the Carter year?

Sean Snaith: It may have leaked into the early Reagan years as well.

Because that’s when the early eighties, the Fed had to very dramatically raise interest rates. They raised short term interest rates to close to 20% in order to break the stranglehold that inflation had formed on the economy.

Paul Jarley: Okay. So let’s break down that inflation rate. So how much of this do you think is due to the war in Ukraine?

Sean Snaith: I think in Spanish it would be un poco. This was, to put the cart ahead of the horse earlier in the park podcast, but most of the economic problems that we’re currently facing, the labor market shortages, the supply chain problems, the high price of oil and gasoline, the overall high rate of inflation rates was already baked into the cake by, I keep wanting to go back to COVID-19 policies, but Putin’s invasion of Ukraine was the icing on this layer of cake of economic misery. Sure, it caused a spike in oil. Nobody knew. I mean, how’s this going to play itself out, right? We haven’t seen this kind of war in Europe for a long time. And so markets reacted, oil spiked up close to $150 a barrel. And then as the reality on the ground continues to unfold, it’s not the World War III as some were predicting and unfortunately some seemed to want.

And so, we’re kind of back down to where we would’ve been had Russia not invaded Ukraine. We were on this trajectory for a year and a half. Now we’re back around $110 a barrel. Politically, we love to point the figure, nothing like a good scapegoat. Somebody’s wearing a black hat. In this case, it’s Putin, who, I mean, it really has caused more problems for a country with a GDP just a few hundred billion more than the state of Florida. Well, 6,000 nuclear war heads. I’m not going to brush that aside.

But no, that was not helpful. There was disruption, there were problems, and then we added to it. These embargoes were meant to punish Russia somehow, caused further pain for the rest of the world in terms of commodity prices in terms of fertilizer. I mean, this is the hidden cost of high oil and natural gas prices is what it’s done to the cost of fertilizer, which has skyrocketed over a year and a half. And that means that the price of food isn’t going to be coming down very quickly, because there’s another crop of food inflation that, so to speak, is already in the ground.

Paul Jarley: What’s the source of all these labor shortages we’re having. Did everybody retire?

Sean Snaith: No. Again, the labor market is very complex and people’s behavior in terms of entering or leaving the labor market can depend on a variety of things. But some of it is aging. A piece of it is aging. The baby boomers continue to age and more of them are moving into retirement. So that’s…

Paul Jarley: Well, and at the beginning, right, of this, the pandemic and the aftermath, their portfolios were pretty good because the market was still really high. Right? Unlike other slow downs we’ve had.

Sean Snaith: Right. So if you’re the west coast of Florida, Naples and Sarasota and places that tend to attract more affluent retirees, they thrive when financial markets are booming like that. But it goes beyond that and we’re at a university here and I speak to students and ask them, “Were you working before the pandemic?” “Yeah.” “Are you working now?” This was 2021, the situation’s changing. “No.” I said, “Why not?” I know the answer. “I don’t have to.” “What do you mean you don’t have to?” “Well, I got two $1,400 checks when I got laid off from Buffalo Wild Wings, I got unemployment plus an extra $600 a month. I’ve got three roommates. I’ve got enough money to pay the rent. My Xbox subscription is up to date. I’ve got the money for my prescription for my glaucoma. Why am I rushing back to scrub pots in the kitchen of Buffalo Wild Wings? And the answer is, I’m not.”

So that’s part of it, because if you look at the shortages, you didn’t hear Advent Health or Orlando Health saying, since the pandemic, none of the orthopedic surgeons came back to work. No, it was servers, bartenders, people working in retail, gasoline stations. That is the piece of the labor market where the shortages were just really across the board. Now there were labor market shortages, again roll back the clock pre-pandemic, February 2020. But they were specific, not enough nurses, not enough accountants, not enough tradespeople, but it wasn’t, “Hey, I can’t get somebody to make a latte at Dunkin’ Donuts.” That wasn’t the issue. But that became the issue.

Paul Jarley: What about the airlines? What’s going on there? Just because it’s been in the news so much.

Sean Snaith: Labor shortages as well. Pilots, unlike politicians, there’s a mandatory retirement age of 65. And so again, you’ve got the baby boomers, they hit this age, they have to retire. And so there’s, with the explosion of demand that came out of the pandemic that was fueled by $6 trillion of government spending that was underwritten by 0% interest rate, the Fed pump liquidity into the banking system. But all those purchases, and we did this to fight the 2008, 2009 financial crisis. The Fed’s balance sheet went from 800 billion to over 4 trillion. But because of what we did in terms of the pandemic, the Fed had to go back and redo what they did in 2008, cut interest rates to zero. And then the balance sheet grew further to almost 9 trillion.

Now, not all of those purchases end up in circulation in the economy, because banks for a variety of reasons, from dog franks to stress tests to worries about being overextended are not loaning out all that money. They’re sitting on it. They’re holding it as reserve. So that really never makes it into the economy. However, those $1,400 checks, they did get spent. And the other spending that the government did outside of those checks went into the economy and those dollars started to circulate.

Paul Jarley: That gets us to velocity. So is velocity back to pre-pandemic levels/ velocity is the rate of turnover in currency, in the economy.

Sean Snaith: I would say that it’s increased. The Fed’s not reporting some of these monetary measures that they did historically. Monetary policy is very different post-financial crisis than it was pre.

Paul Jarley: Talk about that.

Sean Snaith: Well pre-financial crisis, being a central banker was a fairly straightforward occupation. If you wanted to stimulate economic activity, you would push reserves into the banking system. The banks at that time did not hold excess reserves because you don’t make money.

Paul Jarley: They loaned out the money.

Sean Snaith: They loaned out the money and that money…

Paul Jarley: Circulated through.

Sean Snaith: Right. And so interest rates came down, economic activity went up. If the economy was overheating, you pulled those reserves out. So it’s not as straightforward now. It’s more complex. They have a different set of tools. I haven’t taught money in banking in some time, but I imagine I couldn’t use my old notes to teach that class these days. So it’s a little more complex and it’s a whole different… The structure of the economy and the connections in how monetary policy makes its way to economic activity were all reset and changed and altered in ways that I think the Fed’s still learning.

Paul Jarley: That segues nicely. So the Fed has done a traditional response that moved to raise interest rates. How effective do you think that’s going to be in today’s economy? Because that’s usually a durable goods kind of, right?

Sean Snaith: Right. It affects things that are sensitive to interest rates…

Paul Jarley: Houses, cars…

Sean Snaith: Houses, cars, business investments. Building, buying equipment, building. It doesn’t affect purchases of food, typically. But the Fed is late to the party or late to ending the party, right? There’s the old saying, I can’t remember which former chair of the Federal Reserve said it, but that the Federal Reserve’s job is to take away the punch bowl once the party gets going. You don’t want people to overindulge. But not only did they not take away the punch bowl in time…

Paul Jarley: They filled it a couple times.

Sean Snaith: They went to, yeah. They went to ABC and bought a case of Everclear or alcohol and dumped it in. And well, guess what? People have landscapes on their heads and inflation’s 8.7%.

But the good news for the fed and my view on this has changed in the past three months, I thought the Fed was going to have to act very dramatically. They were trying to do baby steps the way they were doing pre-pandemic.

Paul Jarley: Well, it is an election year as well.

Sean Snaith: Well, supposedly they’re not swayed by politics and goodness knows that President Trump did his best to try to change monetary policy. So that’s a good thing in this country, that it’s not. But they’re going to get a really big assist by this recession. They’re not going to have to raise interest rates as dramatically as they would have if the economy was still pumping the way it was a year ago. I think this recession will be fairly long, certainly by comparison to 2020, which was only two months. I think it’ll be a year, year plus. I don’t think it’s going to be terribly deep, but I think over the course of that time, you’re going to start to see a slow fading or erosion of inflation rates. And so they’re not going to have to repeat 1980 when they just crush the economy because that was the only way to kill inflation.

I think inflation will sort of fade over time without the Fed having to be as aggressive as they would in a different economic environment.

Paul Jarley: Where do you see this recession hitting the hardest?

Sean Snaith: Really, I don’t think it’s going to be… I don’t want to understate or diminish people that might suffer in a recession, but it’s not going to be this dramatic plunge that we saw, certainly not 2020, certainly not in 2008, 2009. I think the unemployment rate will creep up a little bit, but there’s a huge cushion in the labor market. There’s a lot of fat in the labor market that we can cut away before we get into muscle and bone. And that’s the 11.4 million job openings that remain unfilled.

So I’m an Acme anvil company and I’ve got a thousand positions open. Well, I can cut those and nobody is hurt.

Paul Jarley: That’s nobody’s paycheck.

Sean Snaith: Nobody’s paychecks, nobody’s lost a job. So that could be trimmed. And I think that consumers and… When you’re tightening your belt as a household, there’s some things you can cut and there’s some things that you can’t, so that those more discretionary or luxury kind of items I think are going to see the impact. And so, those associated industries. I’ve never predicted a recession. I always felt that that was sort of folly to do so. But I’m pretty sure we’re in one or very close to one right now. When it officially gets announced a year from now, we’ll see if I’m right or wrong, but this is the medicine that I think is going to help cure what ails us economically, from the labor market to the supply chain to inflation to high oil and gasoline prices. It’s not going to be quick, a shot of a adrenaline and your heart’s back. It’s going to, as I said, I think a year, but slowly, this economic fever dream we’ve been living in is going to is going to break.

Paul Jarley: Could anything go wrong here that would make this recession deeper in your mind?

Sean Snaith: If the Fed overreacts. They were slow to start tightening. Are they going to now err further to the side of tightening? I think that remains yet to be seen. I think if we had passed more spending bills. There was some discussion at one point of a $3 trillion in addition to everything else…

Paul Jarley: Infrastructure bill.

Sean Snaith: Infrastructure. Build Back Better. They call it infrastructure, but then they spend it on everything else. But that money would’ve just went in and would’ve further fueled inflation. So in introductory economics course is, introducing the concept of inflation to new students. Often use the terminology that inflation is too many dollars chasing too few goods.

And so this, putting more dollars in is not going to help. I think in California, they’re giving everybody a thousand dollars, excuse me, to help with inflation. I’m like, “Okay.” Let’s put out the fire by throwing gasoline on it. The fire truck rolls up and they’ve got an oil tanker behind them. You might want to leave because the fire’s not going out. And these other notions, going back to Dan Aykroyd and some of the comical nature policy, then these notions of price gouging and trying to put price restrictions on to, or… These failed economic tropes of the seventies, the fact that they’re somehow trying to be resurrected to me is just stunning.

But I don’t think we’ll see those. But you start doing stuff like that. You’re just going to compound problems. I mean, we’ve made our bed here and we got to lay in it here for a year. And I think as we get to the other side of this recession, we’re not going to rocket out of it. It’ll be a gradual rise, but that period is going to allow a lot of these problems to resolve.

Paul Jarley: So bottom line, two years from now, are we still talking about inflation? Still going to be a thing?

Sean Snaith: No. Now will it be back down to 2%? No, it won’t be, but it won’t be 8.8%.

Paul Jarley: You think it’s three, four, somewhere…

Sean Snaith: Three to four. Yeah. Yeah.

Paul Jarley: It’s my podcast. So I get to go last. We have certainly been through the most unusual two and a half years of my lifetime. Fear of a new virus caused us to voluntarily shut down the economy. We kept people from starving by government executing an intergenerational loan. This helped cushion the blow, but it also kept some folks from immediately jumping back into the economy when fear of the virus started to subside. And we looked to start everything back up.

If Sean is right, and I have no reason to doubt him, the weirdest time in my life is going to finally end by the most typical of economic responses as spending slows and a modest interest rate hike brings balance back to the economy. 2024 may very well be the year when we are able to close the book on the economic consequences of the 2020 pandemic.

Listen to all episodes of “Is This Really a Thing?” at business.ucf.edu/podcast.