🍋 MBAs are Useless

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"The only thing useful banks have invented in 20 years is the ATM." — Paul Volcker

Good morning! Jeff Bezos and Indian billionaire Mukesh Ambani are set to battle over media rights to the country's cricket matches. This may seem odd to you, because Americans don't really watch cricket, but clearly other people do. The bidding war could drive the price past $7 billion. Opposite to the increased interest in cricket, people have lost interest in Trump's social media venture. The SPAC that merged with Trump's Truth Social app is down 31% as downloads dropped to 8,000 a day from 170,000, a 95% decrease. Google is also seeking the truth these days, as they've added a "highly cited" label to search results, signifying where information is being pulled from.

With on-cycle private equity recruiting in full-swing, see some resources below to help with your interviews:

For y'all looking to manage your deal-flow, check out today's sponsor, Affinity, and save time, work smarter, and close more deals.

1. Story of the Day: MBAs are Useless

This might be tough for an ambitious bunch like y'all to read, but research shows that CEOs with MBAs aren't necessarily making companies any better. In fact, the data suggests that employees at companies run by an MBA do worse, and the companies themselves aren't clearly outperforming.

The NBER working paper comes from Daron Acemoglu of MIT, Daniel le Maire of Univeristy of Copenhagen, and Alex He of the University of Maryland. It suggests that when a CEO with formal business education, undergrad business major or MBA, takes over a US company, wages fell 6% over the next 5 years. The share of income paid out fell as well, by 5%.

What you can see is that professionalized management really just shifts the allocations of the company's "economic pie." It makes slices for shareholders bigger, rather than those of workers, and doesn't really make the whole pie bigger at all.

Metrics like revenue, investment, and productivity show no change compared to peer institutions where an MBA didn't takeover. This goes against the theory of modern corporate governance, where the trend is for tough execs to come in and make a company operate more efficiently. You PE folks know this model all too well.

Even though this would theoretically create a leaner, more agile business and economy, the last couple decades have shown lower productivity growth than in the pre-MBA era. The first group of MBAs apparently created a system where managers win big, leaving the business and economy behind as afterthoughts.

Short Squeez Takeaway: If you already have your MBA, are currently getting one, or are considering it, you may have mixed feelings about this. Did I really just spend $200k for nothing? I'm here to tell you the answer is a resounding NO! The system is helping managers do better, so y'all are golden! Who cares if employees don't benefit..... right? And if you had the more altruistic goal of saving the world with your degree, well you may not save it.... but at least you got to see it on the 25 trips you took each semester!

Source: Axios

2. Markets Rundown

Markets dropped like it's hot, even though lower energy prices are on the horizon. Eyes are on a well known recession indicator - the 2s and 10s Treasury spread - which flattened slightly.

Movers & Shakers

  • (+) Longeveron ($LGVN) +105% as the company announced a phase 1 trial of its Alzheimer's drug met its primary endpoint.
  • (+) Integrated Media Technology ($IMTE) +38% on increased volume, and was halted 3 times throughout Thursday for volatility.
  • (–) UiPath ($PATH) -26% after the robotic-process automation company shared a larger than expected loss in Q4 and a lower revenue forecast for Q1.

3. Top Reads

  • How the pandemic and GFC affected venture funding (CB)
  • Will rising mortgage rates actually slow down the rise in home prices? (NYT)
  • Does a downturn in private markets signal systematic risk? (SS)
  • Chief raises $100 million and becomes a female focused unicorn (CB)
  • GameStop seeking a share split (Reuters)
  • Biden to tap oil reserves in hopes of bringing gas prices down (NYT)
  • High-rolling real estate "gang" caught up in China's debt debacle (BB)
  • The Great Resignation, unlike employees, has not gone anywhere (CNBC)
  • US targeting Russian tech in latest sanctions (MW)

A Message from Affinity: The Relationship Intelligence Platform for Dealmakers

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4. Book of the Day: Don't Wear Shoes You Can't Walk In: A Field Guide for Your Twenties

Michelle Douglas asked and answered this question almost every day for ten years, writing down one thing she learned each day from ages twenty-one to thirty-one. In these pages, she shares her experiences and learnings from the adventures that lie ahead for young adults—moving, working, loving, losing, quitting, building, and more, all while attempting to maintain a strong sense of self. 

Written for anyone just starting out or suddenly starting over, this field guide—part advice book, part journal—will help you discover the very important yet not-so-obvious lessons to be learned in your own life right now.

Don’t Wear Shoes You Can’t Walk In equips twentysomethings (and beyond) with powerful tools to enrich their lives and take their next steps forward with confidence.

“Don’t wear shoes you can’t walk in.”

5. Short Squeez Picks

  • Gemini – the one stop shop for all your crypto needs. Buy, sell, store, and earn bitcoin, ether, and over 70+ other cryptocurrencies with Gemini. You can also earn up to 8.05% APY on your cryptocurrency portfolio every day. Use code WALLST20 and get $20 of bitcoin after you trade $100 or more within 30 days
  • Four things to never refer to yourself as
  • Why are Americans still acting so weird?

6. Daily Visual: Profits are Peaking

US pre-tax corporate profits

Source: Axios

7. Daily Acumen: Know What You Don’t Know

“Confucius said that real knowledge is knowing the extent of one’s ignorance. Aristotle and Socrates said the same thing. Is it a skill that can be taught or learned? It probably can, if you have enough of a stake riding on the outcome.

Some people are extraordinarily good at knowing the limits of their knowledge, because they have to be. Think of somebody who’s been a professional tightrope walker for 20 years – and has survived. He couldn’t survive as a tightrope walker for 20 years unless he knows exactly what he knows and what he doesn’t know. He’s worked so hard at it, because he knows if he gets it wrong he won’t survive. The survivors know.

Knowing what you don’t know is more useful than being brilliant.”

Source: Charlie Munger

8. Crypto Corner

  • OpenSea is struggling to keep up with user growth
  • Wall Street estimates crypto could be a $13 trillion market
  • Russian Finance Ministry could support individual Bitcoin mining
  • Jack Dorsey briefed Congressional Democrats on Bitcoin
  • SEC says exchanges should treat customer crypto holdings as liabilities
  • Instead of cashback, get crytpoback

9. Memes of the Day

                           

                            

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