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Zero Hour with James Poulos
Ep 93 | Did Stallone Just Give Hollywood a KNOCKOUT Punch in New Film? | Dick Boyce
00:57:51
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- [00:02]
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- [00:30]
James Polis
From turning around J. Crew to cheering Burger King and co producing now a film with Sylvester Stallone, Dick Boyce knows how to shake up industries. And his investments prove it. I'm James polis. Welcome to Zero Hour.
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Dick Boyce
LA.
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James Polis
Dick Voice is an investor. Former CEO of J. Crew. Later founded the TPG operating group, growing its assets from 1 billion to 75 billion. That's a B dollars. He's chaired Burger King, Del Monte Foods and advised major corporations like hp. If that is not enough, he's also co produced this film. We're going to talk about it. It's called Lost on a Mountain in Maine with Sylvester Stallone backing. Welcome, Dick.
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Dick Boyce
Great to be here.
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James Polis
Lots of stuff. Lots of fingers and lots of pies. You're doing this movie right now. So let's talk about film and then we can sort of broaden out from there. This is. This is a film about a kid in the woods. You know, timeless. This is something that someone you know 2000 years ago would understand. Why is it so hot right now? Why is this the movie that you wanted to make first time out?
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Dick Boyce
There's probably two pieces to that, James. First, there's an actual history to it. In 1939, this boy did get lost in a remote mountain in Maine. His story and effort to rescue himself inspired a nation, including my father, who was 12 years old at the time. And he read the book in 39. He read it to me in the 60s and then I read it to my boys in the 90s and something clicked in my head. If you played a Boyce bingo life game, you'd never say, I'm sure there's a movie somewhere in that bingo card. But I decided in the early 90s the story was too important, had to be told and inspire people nationally. I tried to buy the rights in 94 and failed. They ought to have been sold in perpetuity of no conditions. So I thought I was never going to get another crack at it. And after I retired in 2018, I tracked down the current owners. They did not have the financial wherewithal to make the movie. And after a couple of years of back and forth climbing the mountain with them a couple of times, we were able to ultimately get to work with CAA in Los Angeles. And that got us to Stallone in the rest of his history. We were able to make a great movie. So that was sort of the original genesis was to build off something that inspired my father generations ago. But the other piece really was, as I looked at all the movie fair that was out there, I just found there was an opening to do a movie like Disney used to make. Timeless values of family, faith and grit that people could relate to. We talk about how people leave the movie first. Almost all parents grab their kids on the way out and say, wow, hold on, right? But there's another piece about how do you want to raise your children safe or strong? And this raises a really good debate about that today in the world of helicopter parenting. And in this case, a boy spent nine days without food or shelter and survived. And a lot of parents come out of the movie saying, I don't think our kid could do that.
- [03:41]
James Polis
Yeah, it's tough. I mean, it's tough for adults to go that long out in the wilderness. What I really like about this angle is the multi generational aspect of it. This is a story that goes back to generations for you and your family, and then now forward, forward in generations. I've been looking at the way technology changes, the ways that generations interact with each other. Some people see, you know, the obvious, which is this big tech gap sort of, you know, the older you are, the more clueless you are, the younger you are, the more digitally native or whatever. And of course there's some truth to that. But I also think at the same time, you know, it's, it's become interesting seeing how different generations, the, the gap becomes less important in some ways. And that it's, it's. It's almost as if we're div into sort of two chunks. And one chunk is sort of passive, and you can be passive at any age. And another chunk is looking at what technology is doing to us and saying we need to be more proactive. And if we're proactive, then this is something that we can, you know, we can find a way to kind of navigate this new world. And so to tell stories to remind people that there is this continuity that despite the fact that we're going through all these iterations of really, you know, head snapping change, in many cases, there's still a thread that's stronger than that. And it might not not be super obvious, but family is part of that. But it's really what you do with your family and how you keep that through line going.
- [05:02]
Dick Boyce
Yeah. I find myself torn because I love technology and I happen to live in Silicon Valley. And I'm blown away, just as a marketing guy, how easy it is to get to the right people with the right message in a targeted way, authentically through the tools that are available today. Not just the social media, but the targeting as well. It's fantastic. That said, the flip side of it, I'm sure you're familiar with Jonathan Haidt. I've become one of those curmudgeons that says kids shouldn't have phones until a certain age because you're missing part of life when your head's stuck on the screen the whole time. So I was at a basketball game the other day, happened to be on national tv and I get a ping from somebody saying, hey, put your phone down. And it's like, yeah, come on, stop. You're right. At a game, you have to be looking at your phone right now. So I'm torn on the whole thing. I think there's some intelligent pushback on the intervention, on the impact of technology, on particularly people as they grow up, that they aren't growing up in a way that is the best way, I think, to have a fulfilled, open, engaged life. So I don't know if you're going down that path, but that does concern me about the evolution of technology. And my sense is you've written a bit about that.
- [06:06]
James Polis
Yeah, well, it's, you know, it's trade offs and there's, there's, again, for obvious reasons, there's always been a lot of focus on the potential harms of technology. And those can be real, as with anything, as with fire. You know, these, these things, tools, you know, you can always use them in the wrong way and it can harm you. But I think the real question is, you know, what are you missing out on if you disappear into the phones? You know, what are you running away from? What are you afraid of? That kind of temptation to willfully step back from real life? I think that's where the real hazards can be because, you know, you might find yourself in the woods one day, you might find yourself, I mean, you know, unable to get in contact with friends and family.
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Dick Boyce
And all of a sudden the VR thing isn't the same as actually being there with no food or something.
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James Polis
Not the same. And it is weird to live in a world where Even adults, you know, if you don't hear from someone in 15 minutes, like, oh, what happened to them? What's going on? You know, why aren't you picking up? Like, why aren't you answering? Don't leave me unread. Like the panic sort of comes, comes to the fore so quickly. And so, you know, just, just to kind of get, get back to the movies. I think this is a moment where so many people are so saturated with constant communication that's really driven by words. It's a very wordy time. We're living in a lot of talking. Here we are on a talk show, you know, guilty. We're all, we're all guilty to a degree. And there's just so much more in how human beings can communicate with each other. And so while some people look at movies and they think like, well, this is an old technology, it's all being surpassed, you know, who really wants to just sit there in the theater? Well, it turns out a lot of people actually do. And, and why is that? Is it because they're worshiping the screen? I don't know. Maybe in some cases, you know, you go Back to, to 2001, you know, when the guy dropped acid in the movie theater and ran down the center aisle and said, I see God and smash it. You know, that's not really the way it is for, for, for people today and, and even for rising generations. You know, I have a son. He doesn't confuse movies with reality. It's, it's. There is a bit more of a distance and I think that's, that's healthy. But, but I do think that what people are absorbing is on screen through cinema, through film. There's non verbal communication. You can communicate so much information, so much emotion, so much feeling, so much spirit through the image and through silences. And that's something that, you know, as much as I enjoy doing this, you can't always do that when you're just talk, talk, talk, talk, talking about things.
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Dick Boyce
Yeah, I'd say a couple things. One, just a general learning. I am very much a left brain person. And so if I have a scene, one of the compelling scenes in the movie is when they figure out that he's actually alive and the father's actually in a hospital bed. Unrelated accident or related to the search. Mother runs in. And you know, Dick Boyce would write, hey, he's alive, which is just too obvious and isn't what you write. And instead their eyes meet and they both sort of shiver and then you just know and you can feel their emotion. And so to your point, the silence is golden. There's so many things in the movie that I watch with smarter people than me construct to have silence really be the message is. And the expression in the face. And I would also say that a lot of the movie is about introspection and retrospection. The father is alone in a hospital. He's poked his eye out in the woods trying to find his son. And he's there stuck with his thoughts. What could have been, what should have been. Why did I let him go up on the mountain? Why did I not make sure that we had a signal system to come back down? How did I tell him more about the trails? We didn't have a backup plan. We didn't have food, we didn't have water. And the sun, meanwhile, was thinking, why did I run away? I really am stubborn and unnecessarily stubborn. So a lot of the movie, it's hard. When I first tried to make this movie, people said this was before 127 hours came out. This is before the Tom Hanks FedEx guy came out. People said, you can't have a kid alone in the woods. It's not a movie. And we found a way for him to be lost in his thoughts in a good way. And we introduce faith in a really constructive way. It's a small F faith. But he prayed several times. And it's true because we have all his diaries. And we talked to him. We talked to him before he passed away. He prayed. He says on record the thing that really saved him was faith. And in today's world, sometimes that doesn't play so well. But I love playing it the way because it's just the truth. We didn't have to make it up. So I think there's some good retrospect in that. You're not with a phone. You're just alone with your thoughts. And there's some merit to being alone.
- [10:42]
James Polis
With your thoughts sometimes absolutely something that you should not run away from. And that's, you know, that's another reason that the phones can be a problem. You know, it's. They're. They weren't created so that to, to, to, to lure people away from their thoughts. But that's, that's a consequence. And when it's sitting there right in front of you, you know, why, why suffer? Why fight through a moment of self doubt? You know, why confront the things that you don't want to confront about your own responsibilities in your life when you can just go, you know, Turn, turn to the infinite scroll and lose your thoughts. Let's talk about Sylvester Stallone's role in this film. He's been, he's been tapped, at least via, via X post by, by President Trump, along with Mel Gibson and John Voight to make Hollywood great again. It's, it's a tall order. You know, Hollywood is probably in worse shape than it's ever been, really. So, you know, to see him take an interest in your film, just talk a little bit about what it is that, that lit up for Sly when it came to this movie. And if you think, you know, that this is kind of a prototype or an example of how to rediscover what I think is still a big audience.
- [11:52]
Dick Boyce
Out there for film, I'd say a couple of things. One truth in advertising. All my work was with his right hand guy, Braden Aftergood. I would say, and I don't know how well this will translate, his comment upon seeing our story and our idea behind it was, you know, Braden, that's his right hand guy. We've been making movies about what man can endure for decades. Never did one about what a kid can endure. This is that kid that summarizes sort of his mindset. There's a handful, a small number of values that he thinks are important to celebrate and understand and explore. And we happen to overlap with him. It was luck. I obviously did not write it for him. I think to your broader question of the role he can play in this administration, the first interesting thing is that he's been quietly conservative for decades. So he doesn't wear it on his sleeve. People just know that's his general mindset. I think now he must. I'm just reading. I don't have any personal knowledge. He's reading the tea leaves that it's okay to be out and be part of this thing. And he celebrates what some of these things stand for. It's always a menu. When you say you like certain things, it doesn't mean you like the whole package. But I think the idea of a more resilient America, America that's more merit based, that's what Rocky's all about. That's what Rambo's all about. So. And it's individualism too. So I think there's some. I don't want to pull the thread too far, but I think there's a lot of merit to the connection you're making, that he's sort of stepping into this new world of how our culture is going to evolve. I think, I don't know how far and how fast. But I think there's going to be some cultural changes here. You're seeing some of them with some things we've talked about, like DEI in fairly short order.
- [13:33]
James Polis
Yeah, we'll talk a little bit more about that in short order. This is a film, you know, it's an indie. It's got some. Some support from. From some serious seasoned people. So you get. Get a boost there. It's done really well on a limited run. It's expanding to more theaters. Right. Are you going to make more movies? Have you caught in the bug?
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Dick Boyce
You know, it's funny because my first quick reaction is, and you alluded to this earlier, there's some real challenges in the movie industry that bother me. I mean, I start with the whole union presence and I have no problem with people being in unions, but the union leaderships are by definition not aligned with management or investors. I don't see how you can have a business work that way. That's why the auto industry moved south many, many years ago and have been hamstrung by union rules. The entire rug and apparel industry all had to move out of the country because of union presence. So I think movies are like the last vestige with the DGA and sag of control over your. I mean, I had. The boy was going to jump into a pond for like 10 seconds. We had to have like a frogman there. And we had to check the water for E. Coli. And they said, the E. Coli level's too high. And I said, can I just ask a question? We're in a rural stream. Is this unusual? No, all streams have E. Coli. So why are we even doing this test and the kid. We sort of lose sight of reality when you have all these rules constraining yourself. And frankly, I had to spend several hundred thousand dollars just on COVID protocol for an indie movie. That's sort of crazy. And we all face that. So those kinds of things put a pause on it for me. But as a vehicle for storytelling, there just isn't anything better. I mean, I love the idea of quibi, the short form, but there's always going to be a role for long form where you have time to think about it and see a story evolve and a character evolve. You can't compress that. Like, a lot of things get compressed today. So to answer your question, the way I would answer it is not that I want to make another movie, but I have another story that I think needs to be told. And I love film as a vehicle for that. And the story is about Teddy Roosevelt. And a short version would be the governor of North Dakota, a good friend who's now the Secretary of the Interior, actually, guy named Doug Burgum, found out that Teddy Roosevelt was never going to have a presidential museum or library in New York for a variety of reasons. I can do a sidebar on reasons like they tore down the Teddy Roosevelt statue or wanted it to eventually moved it in front of the Natural history museum. But TR4 and 5, so the two most direct relatives, I think about 40 years old and about 70 years old, really liked the idea of having it somewhere. And turned out Teddy Roosevelt found his footing to become president in North Dakota. A little known fact, but in July, on Valentine's Day in 1885, his mother and his wife died on the same day in the same house. You know, the story traumatic. He gives his.
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James Polis
He was crushed.
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Dick Boyce
He was crushed. In his diary, he wrote, the light is gone from my life. And he, like in a movie, got on a train and said, I'm going far west till the train ends. It wasn't like he got off in Maduro, North Dakota, and he could have gone on to Montana. That was actually end of the line in those days. Got out, met some people in a bar, started forming a life, developed a ranch, became a cowhand, went through all the rough, scrabble stuff that you had to do when the frontier still existed. There were still Indians there, there were still cops. I mean, there were still robbers, there were sheriffs covering entire counties. It was a hardscrabble, tough life. And he did that for five years. He would go back east periodically, but largely he did that. And he would say that experience made him president. The toughness, the roughness. And also in an election, he had more western states he had appealed to. And he was no longer this elite snob that went to so real character builder. And some of the rough Riders that came with him to San Juan Hill, where he got the Medal of Honor, are people he met in North Dakota. So anyway, we're building a museum there. It's about halfway done right now. We raised over $300 million. It's going to be spectacular. It's the site of where his ranch was and it's the site of the only park named after our president, Theodore Roosevelt national park on the edge of the badlands in central North Dakota. And yes, we're working. I'm talking to the folks at Wonder Project, very preliminary right now about doing our version of a movie they're doing now called Young Washington, where we take A slice of his life, probably that slice of North Dakota. And help Americans understand how this spectacular guy came from this crucible of growing up in the frontier and became the man that he became.
- [18:01]
James Polis
It's an incredible story of resilience. And you know, there's been some documentary stuff here and there, but you know, how do you go from that kind of well bred Atlantic seaboard guy to being the guy who's out there, you know, in chaps and yelling get action. And that sort of becomes is life's motto. That's the kind of resilience, you know, that's the kind of frontier vibe that, that I do think is sort of like haunting the public imagination. I mean, it's just been, it really has been such a grueling 20 years for so many people and even people who have, you know, quote unquote done well. It's been a lot of ups and downs, a lot of turbulence, a lot of instability and just sort of a feeling that, you know, we just, every year we kept sort of creeping in the wrong direction a little bit more and a little bit more. You talked about, you know, the impact of unions driving, driving productive economic life out of, out of, out of states and out of the country. You look at Hollywood, I mean, you know, the unions, they haven't been able to keep that industry up on its feet. They've tried to protect their people and I understand that, but, but gosh, you know, the headwinds have been so bad and you look at the consolidation of the industry and you know, you don't have to be anti corporate person to look at sort of, what is it? NBC? Comc? Universal? You know, the name is like sprawling around the top of the building and thinking like, okay, so they're, they're, they're taking finished movies and they're not releasing them because it pencils out better to take the tax loss. This is dysfunctional. You know, it's very dysfunctional. And I think Americans have seen that kind of dysfunction. Counterintuitive decisions, you know, things that seem to be destroying more value than it's creating just kind of creeping through, you know, all of the industries that have consolidated, whether it's, whether it's pharma or ag or you know, food service or Hollywood. There's been so much of it. You've, you've sort of seen kind of every angle of, of corporate America and investing. What do you make of this? Can it be unwound? Is, is technology just going to sort of sweep all this stuff away and we're going to have to figure out how to start from scratch.
- [20:10]
Dick Boyce
Well, if you can't, let's set aside what AI at one level of technology is going to change things for sure. But what I find most interesting, I think you've had Jeff Harmon on in the past. I think so. The angel story is a great example of someone who's created a real discontinuity in the whole system.
- [20:28]
James Polis
Yeah. Guild instead of union.
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Dick Boyce
Yes. And I'll say something slightly different. Guild instead of five homogeneous guys in a room. In Hollywood picking movies. I mean, the thing that I would, I guess I'd cite in terms of bringing in technology. I've always been a huge fan of research to make better decisions in marketing. And if you can crowdsource anything, it's always better. One of the best ads we ever did at Frito Lay was a crowdsourced ad for a Super Bowl. Like two 19 year old kids came up with the ad. We have all these agencies over here, but if you give 1000 people a chance to have a national ad, you're gonna get some really clever stuff. Let's take some of the funny stuff on Twitter. It's not from comedians, it's from. So I think there's a real way for this and for your audience, basically. Angel Studios has a guild of hundreds of thousands of people who watch their movies and then rate them. If you get a certain rating, you can be either produced or collaborated or distributed by Angel. I mean, Hollywood's got to wake up to this. You can't be five or six guys in a room green lighting movies because their track record, as you know, is terrible. The market caps of these companies, all but one of the six major studios has been flat. When the market is up 50% in the last five years. The indies, the world that I lived in, 80% of them don't even get to the theater. And the vast majority don't make any money or recover capital. So there's something not quite right. A lot of stuff is getting greenlighted that isn't profitable.
- [21:54]
James Polis
Yeah, it's wild. I mean, this was, you know, Sundance. I think this is going to be the last year that Sundance Film Festival is in Sundance. They're starting to realize that maybe something needs to change. I don't know if the location needs to change, but you know, people are chewing over this and sort of fretting about it and they've, they've done the research, they've sort of gone out there and pulled people. I think it's, you know, at least 40% of, of people polled said that they would actually like to see more indie films in theaters. And when you're trying to identify, you know, like, what is the disconnect, you know, why aren't the movies being delivered to the audience that wants to see them? It's, it's got to be, you know, what you've described. There are filmmakers out there who are, have. Have complete auteur visions of, of what it is that they want to say and how they want to say can be done. It's getting cheaper to do. Yeah, you still, you know, you got to raise a couple million here or there, depending, but, but there is money out there and, and when there's a compelling message and it's presented in a compelling way, it is, at least on paper, you know, you have more ways to, to sort of to, to bite the apple than ever before. You've got streaming, you've got sort of the path that you took. You know, it is still possible to get a major theatrical release out of a, out of a studio. It happens from time to time. So what's, you know, how do you get that flywheel turning again? Is it just a matter of, like, allocating capital correctly? Is it a matter of, of recruiting talent, surfacing talent? Do you think the angel guys figured it out? You know, how, how would you, how would you un fubar Hollywood?
- [23:37]
Dick Boyce
Well, I think one other element, and they would be much better than myself at describing, although I am an investor in angel, one of the key elements of the whole element, and you understand how the waterfall works. But the waterfall tends to provide a lot of money to people who have monopoly control over things like the distributors or the theater owners. Big part of the economics has gone right from there. They flipped that model to create much more value for creators. It's still on a performance basis, but the creative community, whether it's the writers or the actors or the directors and producers, they get their cut of the waterfall after all. The other expenses often, sometimes could be inflated. Expenses flow through the P and L. So I think that is going to be one change that's going to get more successful. Creative people are going to move toward that kind of model rather than the current model. I think, I think this idea of crowdsourcing ideas and then green lighting off, that is going to shift the model as well too. I mean, my movie did fine Critically, I think, 60% rotten tomatoes from the credits, but I got 92 from the audience. Someone's got to say, look, we want to produce movies that have a 92 from the audience. If you look at the Sundance and other movies, most of them aren't commercially successful. That's almost not even their mindset. They don't have to imagine if you said a Sundance, you have to try to predict now what movies will be the most successful commercially. That's not their M.O. a movie like mine, if you just gave the sound bite family and faith and grit, Young boy lost on a mountain, ultimately rescued by himself. They're gonna say, we don't have any now. Sour grapes. But they have. No, I don't think they have any interest in the storyline I just gave you. So the whole system of evaluating the movies is based on something that isn't really commercial. That's fine if you wanna just call it art or push a social agenda, but it's not commercially driven. That's the biggest shift that has to happen, I think. Angels on that cusp. But other people can try to do what Angel's doing.
- [25:34]
James Polis
Yeah, I don't know. I mean, to me, it's remarkable to hear, and I sympathize to a degree. When you've got kind of these Hollywood people sitting around going, like, why aren't the dogs eating the dog food? Why won't they watch our movies? And it's like, maybe it's because of your character and what it is that you're choosing to put on screen. Obviously there are, you know, there. There are sort of economics involved and. And shifting business models and everything, but at the end of the day, like, what people want out of film is they want a representation. This is, you know, this is me talking, but I think, you know, I think about this stuff. They want to see what happens to people they can relate to. When the eternal penetrates into the present moment, when you have that moment of reckoning and it shows up in. In, you know. Yeah, Something that happened 100 years ago might be cool. Something that's going to happen 100 years from now, that might be cool. There are going to be movies about the past and about the future forever. But really where the rubber hits the road is when you have that experience where you're. You're seeing the eternal intersect with your own life right here in the present. There's so much going on in the world right now that is worth making movies about. There are so many stories, so many characters, so many problems that people are chewing over in their everyday lives, and they're looking for something outside of their own head that they can enter into a sort of spiritual exchange with, and that's really what Artists are supposed to be able to do is present people with those kinds of opportunities where they can see themselves in the experience of a character, where they can see their humanity in the experience of a character. That kind of stuff. Maybe it can be crowdsourced, maybe it can be workshopped. Maybe a handful of guys in suits can figure it out. But I really think it has to come from the artist. And when your artists are captive to a worldview and a sort of spiritual understanding that is. That is mistaken, it's gonna hurt the art. And it's gonna make normal people think of artists as weirdos who are out of touch, when really artists are supposed to be the people who are so well attuned to what it is that's happening to us right now that what they bring before their audience leads to a kind of a communing experience.
- [28:08]
Dick Boyce
I'd say just to build a bit on what we were talking about, because I think you're saying there's a yearning for better material out there that can really resonate and touch your soul. If I could. One of the things I've been struck by is one of the reasons I think so many movies don't make money. Is that a trivia question for you? How many indie movies are completed per day in America?
- [28:31]
James Polis
That's a great question.
- [28:32]
Dick Boyce
A little over 2. There's over 800 movies that are indie movies. What that means is someone had a passion project, but it wasn't relevant to the rest of the country. And so he doesn't make money, but he wanted to get. Or she wanted to get their story out there and take a gamble and roll the dice. So there's some element of that. There's not that much filter, because someone can almost always. Well, not. It's hard to raise money, without a doubt, for films, but you have to find some other person has a passion for your story. That doesn't mean there's passion commercially for it, I guess. And obviously you've seen some of the. There's an ebb and flow on the spiritual side. There are a lot of movies that have a spiritual tone to them that have a much bigger audience than people realize. The major studios could have done the Chosen and David and these other movies, and they didn't. I mean, Disney sat on the Sound of Freedom, which is not a religious movie per se, but it's a movie that has a faith element to it. And it turns out to be the biggest blockbuster indie almost in history. Right. So people. I think they don't. I don't. I Don't even think they have their filter set right, and some other people from the outside are, are doing it. If we had fewer movers made, I think there'd be higher quality, but I think there's a real yearning need to have better quality no matter what, of, of what people can relate to and enjoy.
- [29:48]
James Polis
Yeah. Yeah. Well, you know, like you said, it's, there's, there's really no better way to communicate to a large number of people at the same time with some degree of, of nuance, of sophistication, you know, communicating through image and silence and everything. But for all of it to come together, you know, you really do need trained professionals. You need people who know exactly what they're doing from the inside out, who have competence, who have vision, who are focused. And what we've seen happen to Hollywood since COVID whether it's Covid coordinators or, you know, trying to just DEI everything and, you know, make sure that you're going down the identity checklist that takes the eye off the ball of just the simple competence, not to mention the charisma that you need for this capstone art to all come together in all of its, all of its facets. All right, that said, there's a whole other world of, of, of. Of finance and economics out there, and I sure that we tie it all together since you have, you know, you've, you've blazed the trail through, through just about all of it. Part of that feeling of kind of just continuously creeping in the wrong direction for, for decades that many of Americans have felt, I think, you know, it's, it's got something to do with corporate consolidation. It's got something to do with private equity where people think like, oh, here's this business. It used to be quaint. It used to be a neighborhood business. Then it got run out of town by this chain, and then the chain started to get worse. And then private equity comes in and quality goes down and prices go up. I mean, it's stereotypical, but this is the narrative that's built up over time. And I don't think, you know, I don't think anyone from Mitt Romney on down has really been able to kind of get another narrative out there that says, like, hey, you know, sometimes it doesn't work out, sometimes it works out really well. Here are the success stories. Don't be afraid of this. And so it's become kind of this boogeyman, you know, these. It's a room. Five or six faceless guys making these decisions. Excel, you know, Excel Brain decisions without regard to communities. So just unpack this for us. You know, how are Americans supposed to assess kind of where we are in terms of private equity and financialization when it comes to small businesses, medium sized businesses, it's controversial, but a lot of people only experience it from the outside. They don't really know how it works. And so they draw these conclusions. What do you have to tell them?
- [32:24]
Dick Boyce
A few things. It's a broad topic, obviously. James. I guess the starting point is that people think about private equity as another asset class, like real estate or bonds or where else you can invest. I start by thinking that private equity is really an attitude class. We are doing the same thing other people are trying to do. They don't call it private equity, but they're investors. But we come in with a mindset that we have to set better goals, we have to change things about the company to make it more successful if we're doing our job right. Although I hear you that people have a perception that quality is going to go down. If you're a long term investor looking to sell the business, you can't have customer service go down, you can't have quality go down. The legendary first deal we did. And by the way, I should say private equity PR does suck, because people do have this impression that we're all raiders when less than 10% of the deals are hostile deals. These are deals in a partnership where we're providing capital to a willing seller in an auction. So there should be, in theory, nothing wrong with that. But when we bought Continental Airlines right here in Texas, our first real big deal, we had a CEO that was on the COVID of Fortune magazine as the toughest boss in America, which was not meant to be a compliment. We were 10th rated out of 10 on the dot, on time service, on customer satisfaction, on baggage handling, the whole litany of things. We brought in a new management team. We went through a pretty tough couple of years working with unions to have better collaboration and good economics for everybody. And at the end of the day, which took about three or four years, we ended up. There was a book written about us called the Worst to First. We were number one rated on all those elements. So one of the things we did that was quite smart, we said, we're fundamentally a business airline, so we will be everything we can to be polite and helpful to families traveling on vacation. We want to be the business airline people that have a connection that has to happen and the luggage has to get through and has to be easy for me to do as A business person. And we got focused on that sort of simple thing and then did it really well and then really executed on the baggage claim and so forth and did simple things. Like one of the ways we improved our online on time flights is we never held up a flight for another flight that was late. Most of the system does that which cascades through your entire system. We bit the bullet on the flight that was late and on annoying the people to keep the other flight on time. And that forced us to get much better. If you say we're always taking off on time, the other airline, other connectors all had to figure out with us how to solve that. So we did a series of things that culminated in people being proud to wear the Continental badge again. So that for me is an example. You could have talked to any of the tens of thousands of employees at the time saying we change this company for the better. I really want to work here. I'm proud of working here. So there can be really good outcomes from private equity. But I start with just saying it's no different than any other investor other than we have an attitude, an attitude about trying to be the best and creating long term value, which means you have to build a business that someone else ultimately wants to buy. And I think the proof is in the pudding. When I joined TPG, we had a $750 million fund. It's quarter of a billion, 250 billion. Today Blackstone has a trillion dollars under management. Money doesn't run to all these run to this class unless it's getting good results. Another piece, I would say if there's a challenge is that part of the way the returns are achieved is by borrowing more money than a typical company would borrow. Private equity is also called leveraged buyouts. You always have to strike a balance where you put more debt on that. Actually investment models would say the company should be able to handle. But if you have an underperformance, then it makes it tighter on the company and then you introduce that as part of the structure of your deal. Hope I'm not making it too complicated.
- [36:05]
James Polis
I'm sorry.
- [36:06]
Dick Boyce
I think there are some negatives. Some of these companies don't turn out well because of the bets that private equity made. But that also happens when you're buying companies that have real problems and oftentimes that's what we are doing. Sometimes you don't always work out of them. But the net of it is with all the capital spend attracted several trillion now to this sector. It says this sector is a good way in the US Economy to improve our businesses and improving productivity is what our economy is all about.
- [36:33]
James Polis
Yeah, I mean, the thing that's interesting to me is there are a lot of failing businesses and they're not just failing because they're not being run right. There's a more macro thing going on where because of financialization, because of the way that the government for so long has said, we're just going to press this button, says magic money, and there's going to be a lot of it, there's going to be as much of it as we say that we need. That has created this kind of perpetual, you know, of valve sucking talent and competence out of that kind of small to medium sized business, you know, regional business, hometown business, local economy. And it sucked it toward the coasts and it sucked it into, into, you know, spreadsheet industries. And when that happens, you're just, you know, if, if you're trying to run one of those businesses, it's, it's probably likely that it's going to be harder to keep it in the family. It's going to be likely that you're going to have to pay more for sort of, you know, less skilled workers. It's going to be harder to just keep the enterprise going. And especially if, you know, you grew it in decades past and then you enter into this new era and it's, it's gradually becoming more and more difficult for you to, you know, to grow much less, you know, to just keep the lights on. Then you do need to pull that lifeline and you do need to sort of pick up the phone and say, hey, you know, guys from, you know, whatever, whatever firm, whatever outfit, you know, I just can't make this thing work anymore. Right. I don't want to just walk away. Can you, you know, can you help me out? And private equity can say, yeah, you know, we maybe, you know, we maybe we can do that. And then local folks get bent out of shape and it's like, well, okay, but you know, what's the alternative? And in, in a political economy where there's so much magic money and where so much of economic activity is being pulled out of manufacturing and out of, you know, just kind of classic American economic productivity and put into these kinds of, you know, these, these more abstract and more just kind of numbers on a screen screen industries, it seems like it's just going to be very hard to get away from, from a growing share of, of economic life being kind of these slow motion train wrecks of failing businesses, family businesses where the family's dried up, stuff like that. So when you look at it that way, you know, ideally we have a better balance, right? Where the government isn't spending so much magic money, where young people aren't incentivized to just go get a spreadsheet job, where, you know, there, there's more parity between people who are just kind of sucked into the Wall street orbit and people who stay in that kind of Main street orbit. True? False.
- [39:27]
Dick Boyce
Well, I guess I could give a couple other perspectives, James. One, on the inevitability of this. I'm with you. That boy, that little hardware store in a little town that I grew up in, it's gone now. And I sort of. Why is that? Because they were good people, good family business. But you can go back to the 1800s when the average farm was 5 acres and it was uneconomic. And then there were 10 acres and there were 100 acres, there were a thousand acres. And then John Deere figured out how to automate the whole thing, both sprinkling and harvesting. That turned out to be a good thing for America. All of a sudden, we became the breadbasket, not just for the central United States, but for the rest of the United States and then for the world. So there's real value that was created largely through scale. Economics, then warranted the investment in equipment and fertilizer and everything else they've done to make these. These farms extremely productive. The same thing has happened now, let's say in retail, and there's an expression called roll up. I don't know if you've heard of her expression called a roll up, But a roll up is when someone spots their four or five regional businesses that individually are working well, but they're not collectively working well. And there's ways to consolidate the marketing and the cost structure to make a national brand out of them. And they're called rollups. It's a very common thing, that private equity. So that contributes to the same thing that you're saying. I'd say a couple things. There always has to be a willing seller. So the mom and pop that we all want to say, gee, it'd be great if that business lasts. They've been offered something better than grinding and grinding for the next 10 years against Walmart. That's a mile, two miles down the street that has much better economics than they do. There's a time and place for all these businesses and evolve, just like the small farm, I think, the small hardware store. The flip side, though, is, you know, there's still millions of businesses created every year. So it's not like those, those businesses. The death of a small hardware store in your town does not mean the death knell for something getting started. Someone's going to create something better, different. Now there's a guy called Thumbtack and he sort of plays the role of people used to go to the hardware store and diy. Well, now you can go to Thumbtack and they'll send a guy who's a perfect guy to do DIY stuff for you now in your house, whether it's home repair or whatever it might be. So the economy continues to evolve. So, I mean.
- [41:40]
James Polis
And sure enough, those jobs are starting to tick back up again. Pay is getting better. Absolutely, yeah.
- [41:44]
Dick Boyce
So I think there's. I think innovation always creates more jobs, even AI. I'm not smart enough to figure that out, but I'm going to believe that AI is going to end up creating a lot more jobs, just different kind of jobs.
- [41:55]
James Polis
Interesting. So you're not worried, just sort of big picture that it's going to wipe out the working class or even, you know, I was looking at Y Combinator, sort of the big, the biggest Silicon Valley kind of startup, incubator or accelerator, whatever you want to call it. And their request for startups this year was like, we are trying to automate jobs at the 100k level. That's what we want to do. And it's like, man, all right, lots of guys out there got that computer science degree and thought that they were going to be golden, and now maybe not. And the market's a dynamic thing and American life is full of second acts, but if these things happen too fast, there's going to be a lot of dislocation.
- [42:40]
Dick Boyce
Without a doubt, there are going to be dislocation. It's a whole other conversation which I'm qualified to talk about the evolution of AI. I would say if you look at Microsoft, the early stages of Microsoft, where it's going to change the workforce, there's going to be no work for people to do because people sat with spreadsheets and spent all day to do one scenario. When I first got Lotus 1, 2, 3, I could do 20 scenarios in five minutes. That allowed me to make better decisions, move faster, build things bigger, which created other opportunities. So I'm always focused on things that improve broadly rid American productivity will grow, the economy will create more jobs, jobs I can't predict right now. And also make us a society that's better able to take care of those who can't take care of themselves. So anything that adds to productivity, to me, is a plus. Same with our population growth. I mean, our population growth is. We're below replacement fertility right now. So the immigration is a very sensitive issue right now. But for us to continue to be a great nation that grows and has productivity, we have to have either higher fertility rate or more immigration or both.
- [43:42]
James Polis
Yeah, I mean, I think it's just very hard to argue with all this stuff. I know there are folks in the space who look at the trend lines for AI and all the rest, and they're just scared. And, you know, well, what's to stop us from just destroying our humanity and turning into this big insect? Borg. And the answer is, you know, not much. The answer is our spiritual fiber. And it's, you know, it's like George Washington said about our liberties. You know, if you want to squander them, no one is going to stop you. It's the same thing with our humanity. And when Donald Trump gets up there and he talks about a new golden age, and that excites a lot of people, other people get a little freaked out. Hey, if we can't bear the responsibilities that we create for ourselves through our ingenuity, then that's on us. And if you're looking for someone to ride to the rescue, I don't know. That's being an adult is about riding to your own rescue, right?
- [44:46]
Dick Boyce
Absolutely, I think so. I don't have an apocalyptic view of technology at some point making it difficult for people to find great things to do. I mean, this whole left idea of universal basic income is, I think, just insane. I mean, the whole purpose of life is to have earned independence if you can. If you have ability issues, that's a different thing. And we always have to find ways to help people that don't have the ability to do work. But other than that, earned independence is what makes your life free. And so I think people will be always motivated to do that. I mean, when the guys came up with Uber, I mean, now they imply, whatever, a million people in the United States that drive cars. Those jobs didn't exist before they had that.
- [45:26]
James Polis
Well, you know, this is interesting because coming out of this election, there was a reasonable concern that things might get a little spicy in the streets. Especially after, you know, the past four years where, you know, every. Every year or so, there was another mass protest marched through the streets, riots, cars on fire. But it didn't happen. It didn't happen. And people are sort of kind of taking a breath and going, okay, so why didn't it happen. And what it looks like is, is all those people who are so super angry about Donald Trump who really got riled up year after year, whipped into this state of panic. Finally their nightmare came true. And guess what? The world didn't come crashing to an end. But there are millions and millions of Americans who are very worn out spiritually, mentally, physically, just kind of pushed to the breaking point. Whether it's just through ordinary hardship, but even more just through, like the propaganda war, through all the fear mongering, through being sort of psyoped into thinking that every day that Donald Trump drew another breath was a spiritual attack on them personally. It's hard to see how those folks bounce back. And there are a lot of them and we can't just pretend that they're not there. If we're going to get this country back on track, you know, we can't be looking at 30, 40% of the country as just kind of dead weight that we don't know what to do with. I hope that we can figure out how to solve that problem. Rising generations, they don't want to work at Chipotle. A lot of them don't want to work anywhere. A lot of them look around and they say, why bother? What are you offering me? This is the world that I'm supposed to inherit. What's the role for me? What do you say to those kids?
- [47:28]
Dick Boyce
I mean, it's a very tough question about this disaffected group. I can't define any better maybe than you can. I think first, and you alluded to it, if you tell someone that Trump is going to be Nazi for year and year out, it turns out he's actually not Nazi. Even those people have calmed down a bit and said, okay, that was actually not true what they said. If they see that taxes, their actual taxes are going down, that sounds good to them. If they see that the immigration that they were not comfortable with is changing and being more disciplined and thoughtful, I think a lot of people are going to say it feels like the country is going to be getting run better. That's a separate issue about the attitude about a guy not wanting to go work at Chipotle. I mean, the number of people who had first job was in fast food is insane. People running major corporations all over the world started at those jobs. So I hope we never get to the point where the entry level job is beneath our kids to work. We have to maintain that work ethic. But we also have to have a culture, a culture that retains merit. I mean, it's sort of sad that Trump had it to say to people, we're going to bring back merit to our culture. If you believe in merit, then you sort of realize, I got to take that Chipotle job because I want to get to become the Chipotle manager because I want to run Chipotle someday. We can't lose that aspirational attitude of people and have feel that these things are all dead ends. And I'll go back, I'm sorry for bouncing, but back there's a real hole that you've alluded to on the spiritual side. A lot of people have the spiritual and I'm the last person to profess on this. I'm not a religious person, but I believe religion is fundamental to our country. And I think the problem with Europe, one of the biggest ones, they've just gone completely secular. And so sometimes the way you fill the gap of things aren't perfect is that you have a faith in things that are bigger than you or your job. And we need that to come back. But it has to be natural. It can't be forced on people. They have to start believing. And I hope we start seeing a shift back toward a more spiritual country and a more faith based country and it doesn't have to be religion in your face. And there's many ways. I grew up Unitarian and that just meant you believe there's something bigger than yourself. You believe in intelligent design, but you don't have to believe necessarily the same thing that someone else does. But there's something that fills your heart and your soul. And I think we do need some of that in times like we have right now.
- [49:41]
James Polis
Well, yeah, you know, I don't think you can separate out the Chipotle debate from the question of the spiritual trajectory of the country. I think you're right that things start improving and people come around. We saw this, the sort of hippie to yuppie pipeline, you know, some of the most, the most patriotic, normie, middle class folks in 80s America. You know, you go back 10 years before that and they were, you know, riding around on Harleys and growing out their mustaches or whatever. That was definitely a thing. And I think, you know, probably going to see a version of that again this time around. But, you know, as nice as prosperity is, you know, that's not going to be filling that spiritual hole that you're describing living. And if you're starting out and you're like, well, you know, I don't really want to work at Chipotle, but I'm raising a family, you know, I need to make a buck. This isn't this. It's not going to be my last job. It's going to be my first job. Or maybe it'll be, you know, maybe I'll do five years. Maybe I'll go up to management, whatever. The whole question of how you make your money and how you.
- [50:46]
Dick Boyce
How much money you make.
- [50:47]
James Polis
Yeah. How you meet the needs of the day is just going to feel different and read different, and it's going to lead you in different directions if your spiritual life is stagnant or absent or it's been replaced with some kind of political ideology.
- [51:00]
Dick Boyce
Arthur Brooks, you may come across other books. He has some very simple.
- [51:04]
James Polis
He blurbed my first book.
- [51:05]
Dick Boyce
Oh, did he really? All right, there you go. Bring it in. That's a good deal. He's a good guy.
- [51:11]
James Polis
One more time.
- [51:12]
Dick Boyce
Yes, there we go. There we go. He has a simple equation, like the definition of happiness. Your wants divided by your haves. I'm sorry, they're wearing. Your haves divided by your wants. And you have to have those in balance, because if your wants are higher, higher and higher, then obviously your satisfaction number gets lower and lower. It's a simple way to say, hey, get your wants in line with what your haves are. And for example, gee, I really don't like that. I want to have a bigger job, but my family is more important to me, and I'm going to make that my real want. Well, I have a good family because I have this job, and I shouldn't worry that much about what the job is right now because it helps me do the family thing. That is more important to me. And I think there's a whole. One of the problems we all know about social media is you see what someone else is doing that looks better. It's sort of crazy. And all these people post stuff that is a better view of their life than even they live, and people say, why can't I go on a vacation? Like that. Well, that person probably isn't doing that either. There is a whole comparative thing. We have to get a bit away. I guess envy is one of the deadly sins, and it's a tough one. A lot of people. One of the reasons you don't like the Chipotle job is you think other people just like you, have better jobs. Maybe they don't.
- [52:26]
James Polis
Yeah, oftentimes they don't. You know. Do you think DEI is done? Do you think that whole kind of esg, dei, all the Alphabet sort of ideologies it's seems like it's not quite dead yet. There's. There's always that temptation among an entrenched elite to try to come up with some new, new credential or qualification to thin the herd even more and protect, you know, protect their, their rents, as the, as the economists like to say. But there's no denying that. You know, I think there was a huge push to get this stuff to stick, and the graft just really didn't take. You know, they tried to graft this thing onto the American people and it kind of got in a little bit, but. But I think the host body has kind of rejected the graft. What do you think?
- [53:13]
Dick Boyce
I'm concerned that it won't go away just by edict. Princeton is my alma mater. They're up there saying we're doubling down because it's such a good thing. I think we have to get to the more fundamental route. So beyond the edict, you have to sit down with people and say the most fundamental element of anything great, whether it's a family or community or company, is unity. You have to have agreement on a common purpose. Well, if you start with diversity, then you don't have unity and you have to have unity first. So, number one, I say the diversity thing doesn't play for me as a manager. I want people to agree on what we're trying to accomplish as a company. We respect different views and want them, but we can't lead with that. And then on. Obviously, the equity thing is completely wrong in terms of America's culture. It's got to be equality, and it has to be equality of opportunity. It's quite obvious. I don't mind having an E out there, but it's equality of opportunity. Equity, as you know, measures outcomes, which doesn't work for anybody. And the last piece is inclusion. Well, if you're not running your company well and including people, you're going to lose people. So I'd like to think ultimately the glass doors of the world which rate satisfaction of employees, people are going to get further and further elevated because they do a great job with unifying their company on a common mission and have an equal opportunity for everybody. And they don't have to have a separate initiative called inclusion. Just do it. If you don't do it, you're going to lose your people. So I'd rather have the efficient market ultimately take the edict, but make it come alive in the sense that this is just not a good way to run a company. Not to say the most important thing is you can't say you're merit based. If you say you have these rules around diversity and equity and inclusion. I'm part of some companies that have more affinity groups than they have profit.
- [54:53]
James Polis
Yeah, yeah. Well, I think that's, you know, that goes to show how much of the justification for this, I think internally was to fill the spiritual hole, you know, where there really isn't an economic justification and there really isn't, you know, even like a sort of, you know, a class based analysis. It really comes down to the fact that, that there is that spiritual hole in a lot of people's lives. And they've been trying to figure out if there's some kind of newfangled way of filling it. And I guess something to fight for, something to care about, you know, that's, that's. But if it's, if it's just an ideology, then then it's, and it's off target for a business in a capitalist society. If it's just an identity, then. Well, the Internet showed us that any group of freaks can find each other and hoist their freak flag. But that doesn't mean that you're entitled to tell everyone else how to live their lives. So it's never really been clear what the foundation of all that stuff was other than kind of an attempt to create a new religion. But again, you know, in America, if you're going to do that, there's a big country out there where you can go do that and see how it works for you. It does not give you the right or the entitlement to dictate how social and economic life is going to be structured.
- [56:12]
Dick Boyce
And I think it wasn't. The whole idea of spirituality is to be uplifting and di often was not. It created winners and losers. That's not an uplifting spirit. It's not a spirit that's fulfilling. I don't think ultimately, even if you're on the winning side of the diversity equation, you can look at it and say, well, for me to feel good about myself, I have to demean someone else. There's oppressors and oppressed, you know, the whole drill they go through, it's just completely flawed. And it's become evident that Ibrahim Kennedy, just his entire school of diversity equity at Boston College just got closed down.
- [56:43]
James Polis
Yeah, he's out, Party's over.
- [56:45]
Dick Boyce
Yeah, and all the BLM folks, the proven to be frauds largely. I mean, the leaders, they spent the money injudiciously and never accomplished really anything. So I think maybe some of these three letter agency things are going to go away with some other ones.
- [57:00]
James Polis
Well, maybe that golden age is right around the corner. But until then, we'll watch the movie and I hope you do the TR thing. It's ripe for it. Dick Boyce, thanks so much.
- [57:10]
Dick Boyce
Great. Thank you, James. Great talking to you.
- [57:12]
James Polis
All right. And thank you for watching. Meanwhile, if you're on YouTube, give us that, like, smash the subscribe button. Just smash it. It subscribe to BlazeTV. Until next time around. This is Zero Hour. I am James Paulus, and may God have mercy on us all.