To the McCombs Classes of 2021:

First, congratulations to all of my students and all graduates of the Houston MBA, Dallas MBA, Evening MBA, Executive MBA, iMPA, tMPA, MSF and MSTC Programs on your journey here at the University of Texas's McCombs School of Business. It was a crazy year and I thank you for your efforts, perspective and insights.

Last week, I had the honor of being selected as the faculty speaker for the final classes for our Fulltime MBA Program’s Cohorts 3 and 4. The following is the speech that I gave during these classes (with some minor changes and extra comments).

Good evening everyone.

First, let me truly thank you for the honor to offer some thoughts tonight.

[Student-specific shout outs to individuals attending omitted.]

We started out together with our first class on August 12, 2019 as a cohort, so it seems fitting that we end together tonight with the last class as a cohort.

[For the class of 2021 I filled in for Brian White who was on a research sabbatical and taught the Financial Accounting class… as well as Financial Statement Analysis, which is an elective taken by most FT MBAs.]

8 am. It was far too early that first day, but it’s never too early to dig right into the meat (or plant-based protein), so on that day we noted that:

• WeWork was one of the biggest cons of our times,
• How scooters will usher in an apocalyptic pandemic; and
• How our insistence on focusing on labels and hype may lead to even the most prestigious among us to overlook reality in markets and life.

Directly challenging the con artists, scooters, fantasy metrics and labels? We’ll do the same tonight, although with an M. Night Shamalan/Philly-style twist, so…

Djeet? [Did y’all eat?] I hope youse guys [all y’all] are ready.

Before that and given how frighteningly well these projections played out, it might be important to offer one more:

The doggycoin is a hustle!

[Fumbled for notes]

Maybe it’s, Dogecoin to the moon!

I’ll never get the hang of these me-me’s.?[I still believe this is pronounced me-me.]

Covid has been crazy, but has also offered new perspectives, opportunities for reflection and a return to fundamentals. Recently, we shared the commencement speech of one comic, Charlie Berens, and I wanted to repeat his main point tonight:

Be a skeptic, not a cynic.

Bubbles are built with lies, but bridges are built with truth and truth can only be found in healthy skepticism.

The cynics rant and rave on Slack or Twitter or wherever, but the skeptics do the work.

Skepticism, it turns out, is focused on putting in the hard work, not getting complacent, not latching on to labels and only tearing something down with the obligation to build it right.

But, there’s more: we all have an obligation to be and to seek out the those who dig deep, value those who put in the work and to refrain from idolizing the cynics with their negativity, empty catchphrases and useless labels.

Consistent with this, on that first day of class in 2019, I shared my deep desire to graduate the first MBA class without a single #cashflowbro… not one person fanatically devoted to useless jargon and parroting terms and catchphrases …

But, even last night a classmate of ours shared that they did not need FSA to help understand and assess financial and business performance as all one needs in their desired career is …

mumble mumble EBITDA, jargon, ALL CAPS, mumble, acronyms!

So. I. Failed.

?...

?

But, there’s still tonight and I’m not quitting!

In FSA, we begin the class noting a fable The Three Little Pigs is not only a timeless lesson of hard work and grit over arrogance and immediate gratification, but also lays the foundation for considering sustainable competitive advantages.

So, I offer another fable that ties together our FSA class, the past two years and our reflections tonight:

The Fable of the Farmer

[Various versions exist, specific origin unknown.]

Once there was a farmer whose horse ran away. That evening, all of his neighbors came around to commiserate. They said, “We are so sorry to hear your horse has run away. This is most unfortunate.” The farmer said, “Maybe.” The next day the horse came back bringing seven wild horses with it, and in the evening everybody came back and said, “Oh, isn’t that lucky. What a great turn of events. You now have eight horses!” The farmer again said, “Maybe.”

The following day his son tried to break one of the horses, and while riding it, he was thrown and broke his leg. The neighbors then said, “Oh dear, that’s too bad,” and the farmer responded, “Maybe.” The next day officers came around to conscript people into the army, and they rejected his son because he had a broken leg. Again all the neighbors came around and said, “Isn’t that great!” Again, the farmer said, “Maybe.”

The mania of the crowds is not new.

Acceptance into McCombs, but then a yelly professor in Financial Accounting… an incredible community of friends and opportunities at McCombs, but then a global pandemic. Zoom classes, but then way more time for trading crypto! (Not sure if that last one is good or bad).?

Facebook, Twitter, GameStop, Slack, Robinhood, NFTs, Crypto, Delis and SPACs…

The mania of the crowds is not new.

Life is complex and we cannot control what happens, whether immense good fortune or terrible misfortune. Change is the only constant. Don’t get caught up in the mania.

Which brings us to another lesson from FSA. [As a disclaimer, listening to this speech does not remove the * after McCombs MBA if you skipped FSA…convinced that a cheat code from trash can banging was superior to hard work]

CAGRs: We didn’t only challenge mindlessly using CAGRs in forecasting as they lack empirical validity, logical or theoretical soundness, we challenged them for their seductive narrative, how they trap us in the status quo bias and push us to operate in a bubble and ignore the context of our decisions.

Change will always happen… things will get familiar, but then the familiar with be disrupted…don’t get complacent.

Which naturally brings us to EBITDA [earnings ignoring core recurring operating expenses that require cash outflows like depreciation, amortization and taxes]: We didn’t only challenge EBITDA, Adjusted EBITDA and other mindlessly parroted metrics as they lack empirical validity, logical or theoretical soundness, we also challenged them for their seductive narrative:

Labels that give the aura of authority and feel sufficiently good on the surface.

But labels aren’t substance. Labels are shortcuts.

As we focus on those labels, we overlook reality, whether it is the true intent or character of a person or business fundamentals. Worse still, the shortcuts, much like scooters, ignore the journey, the lessons, reasons and experiences along the way.

There will always be labels and catchphrases to distract us. Don’t let them. Seek truth. Seek and provide substance.

Don’t take a shortcut and miss the journey.

On Friday a few of us had the chance to meet Joel Neeb [as a part of his challenge to do half the Murph Workout each day in May]. I would refer to him as my former student from our Executive MBA program, but that seems as woodered [watered] down as referring to Elon Musk as a guy who likes to talk about cars and dogs:

Joel’s a decorated Air Force fighter pilot, cancer survivor against all odds, dedicated father, accomplished adventure-seeking athlete, motivational speaker, CEO and many other things.

Joel has many messages, but one that resonates for our times and tonight is Survivor’s Obligation: We’ve all been challenged in different ways, as we make our way through those challenges and begin to see the light, we have an obligation to do the best we can, to live our best lives and to focus on three aspects: Growth, Giving and Gratitude.

·??????How can we constantly grow and learn through our challenges;

·??????How can we give of ourselves; and

·??????How can we express awareness and gratitude for what we have?

The MBA is a challenge. Covid has been a massive challenge and all of this is on top of the countless other challenges each of you have faced … It was tough, it sucked, but

We’ve survived. We’ve all survived.

I won’t offer congratulations on your graduation, but I will offer the deepest congratulations as you progress on your journey... as we have only just begun.

The world will offer good and bad fortune and even times of chaos... it’s not what happens to us, but the substance of who we are and what we put in.

• Put in the hard work.
• Be a skeptic, not a cynic.
• Build it right.

So, as even WeWork relaunches as a SPAC and the Philadelphia accent and Philadelphia-adjacent delis finally become all the rage, we can end where we started

Scooters… to the moon!

[To be clear, I do not actually endorse scooters; rather offered concerns during 2018-2019 that as scooters convince us that short cuts are good and walking is bad, they may lead to the de-evolution of humans and other terrible consequences. I hope I am not right about this.]