Springtime Recommendations from Wine Club

By Chicago Booth Wine Club

As Spring approaches, Boothies are excited about emerging from their Loop centric confines and exploring more of what Chicago has to offer. The Chicago Booth Wine Club is tasked with improving knowledge of wines, beers, and spirits in a social environment. Wine Club co-chairs sat down to give their recommendations on wines and venues to help get Boothies in the mood for Spring.


Wines

Name: Bench Pinot Noir

Price: $20

Where Can You Get It: Whole Foods, Binny's

The Bench Pinot Noir is a smooth, high value red wine still great as the weather begins to warm, It pairs well with a variety of foods but is drinkable on its own as well

Name: Kendall Jackson Chardonnay

Price: $13

Where Can You Get It: Costco, Trader Joe’s, Binny’s, Mariano’s

The Kendall Jackson Chardonnay is perfect is you’re trying to “pretend like you’re on the Real Housewives and channel my inner middle age suburban mom vibe” says co-chair Katie Fox


Name: Pool Boy Rose

Price: $16

Where Can You Get It: Whole Foods

The Pool Boy Rose is a dry rose made for summertime sipping. It is sold in an recyclable container which makes it perfect to take to the pool or summer concerts.


Tapster in Wicker Park is a completely self-service bar

Tapster in Wicker Park is a completely self-service bar

Locations and Venues

Name: Tapster

Location: Wicker Park

Drink highlight: Craft cocktails

Tapster is a completely self-service craft tasting experience with a mix of beer, wine, cocktails, kombucha, and coffee


Name: Pacific Standard Time

Location: River North

Drink highlight: Cocktails and great wine list

Pacific Standard Time is a new restaurant and great date spot. You can grab a table or sit at the bar and order a flatbread or pita (also available gluten-free!)


Name: Celeste

Location: River North

Drink highlight: Craft cocktails

Celeste is a beautiful multi-level bar and restaurant. The highlight is the rooftop garden which overlooks River North while you are surrounded by walls of flowers and plants


I keep my phone in black and white

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I field the same question at least a couple times a week – “Alan, what’s wrong with your phone?”  I usually respond by saying something to the tune of, “Oh, there’s nothing wrong with it. I just keep it in black and white.”  A confused stare typically ensues.

“Why?” is the usual follow-up – to which I usually reply: “Well, it’s supposed to help make your phone less addicting.”  If the conversation doesn’t end there, I usually end it by saying, “Yea, a little odd I know.” Thankfully, we usually part with a laugh.

While those benefits are rumored to be true, my reasoning is a bit of a coverup. My real reasoning is much deeper. When asked if I’d like to write an article for ChiBus, I didn’t envision writing an “Opinion” piece (although I’m sure it reads like one). Instead, I was hoping to share a story of a decision I made at a pivotal point in my life.

Early in my career, I was fortunate enough to stumble across a handful of books that changed the way I thought about living my day-to-day life. Namely, I began to read Stoic philosophy – in particular, Marcus Aurelius, Seneca, and Epictetus. At the time, I was struggling at my job and was generally anxious about my future. I was unhappy with my circumstances, both personally and professionally, and I wanted to make significant changes in my life. These books gave me tremendous guidance.

Each stressed the fact that life is relative. It’s easy for us as individuals to lose sight of the bigger picture – to fail to see the forest from the trees. We often become accustomed to certain habits and luxuries and can’t envision a life without them. As I read more, I saw another theme arise again and again – those with the least are often the most content. Seneca, in Letters from a Stoic, went as far as to recommend that readers fast for days on end and refrain from even the most basic amenities.

I honestly thought that it was all a little crazy at first, but I decided a “Stoic Bootcamp” was worth a try. The next day, I set my phone to black and white, deleted my social media, started taking cold showers and began fasting for twelve to eighteen hours at a time.

It was not an easy transition. I often sat at my desk at work (starving at that point) and felt anxious impulses to pick up my phone and hop on Facebook. But soon the impulses began to wane and I began to see some benefits. I began to feel as though I was more present, particularly when I engaged with friends and colleagues I saw on a daily basis. I looked at my phone less and began to enjoy the sights around me more. Even my bachelor cooking tasted great after a day of fasting.

I always believed that life was relative, but, as I began to experience it, I knew I needed to strike a better balance. I knew that refraining from certain luxuries – in my case: technology and social media – would make me a more content person. At the same time, I’m pragmatic about the fact that modern life is almost impossible to live without some technological luxuries. Not to mention, attending business school has afforded me an incredible opportunity to make dozens of new friends, travel extensively, and live a life with few responsibilities.

A couple of years after taking the plunge, I’m still seeking that balance. As my circumstances change, my balance changes. After endless nudging from my friends, I finally got an Instagram (@AlanGotAnInsta for those interested – follow for a follow, I promise). That said, I strive to always be conscious of my life. As is human nature, I still feel anxious and discontented at times. When I do, I lock my phone in a drawer and go out for a long run. Afterward, I almost always realize that whatever worried or upset me wasn’t nearly as big of a deal as I made it out to be.

If you’ve made it this far, thanks for reading. If you have any questions, comments, or would like to tell me I’m crazy, feel free to email me at afelix0@chicagobooth.edu.

Uber will not be worth $120B when it goes public

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by Simon Tiu, Class of 2020

Uber will not be worth $120B upon IPO. Uber is the highest-valued private startup in the world. With initial analyst estimates ranging from $90 – 120B, its hotly anticipated IPO is the next major chapter in the battle for transportation market share. Lyft, Uber’s primary competitor in the United States, recently completed its initial public offering with mixed results. As of this writing, Lyft’s share hovers around $58.26, an unfortunate 17% decline from the $72 IPO price. With two class-action lawsuits and a myriad of questionable assumptions in press releases and the S-1, Lyft’s public problems are just getting started. What does this all mean for Uber?

While we await Uber’s final offering price and share count, here’s what you should know from the massive 285-page S-1, which is surprisingly readable (kudos to the folks at Morgan Stanley and the other underwriters).

  • According to the prospectus, Uber is in the “personal mobility business” with an estimated total addressable market of $5.7 trillion. If you’re gawking at that number, join the club.

To be fair, these TAM estimates are always sky-high. The idea here is to work your way down to something more relevant, while using the TAM and SAM to justify higher valuations. Top-down approaches are widely prevalent in Venture Capital and can lead to some huge numbers. On balance, though, this estimation seems like a pretty big stretch.

To be fair, these TAM estimates are always sky-high. The idea here is to work your way down to something more relevant, while using the TAM and SAM to justify higher valuations. Top-down approaches are widely prevalent in Venture Capital and can lead to some huge numbers. On balance, though, this estimation seems like a pretty big stretch.

  • Uber’s growth has been pretty incredible. From 2016, we learn that gross billings are up 160%, net revenue is up 211%, riders are up 102%, and trips are up 187%. The fact that Uber exhibits a higher growth in trips book relative to riders could be used to argue that Uber is on its way towards realizing some scales of economy.

  • Uber is losing a ton of money. Last year, Uber reported an adjusted EBITDA loss of $1.847 billion. Ouch. Professor Aswath Damodaran, a well-respected finance professor at NYU Stern, further adjusted this number by adding back depreciation and amortization and undoing adjustments from stock-based compensation to get an adjusted EBIT loss of $2.445 billion. While recent evidence may suggest otherwise, company profitability, at least on the unit level, was historically expected before going public. As Uber says in the S-1, “it’s a new day.”

  • Uber has been able to upsell riders on additional services; however, its billings/trip is decreasing, suggesting shorter trips on average. Riders, by the way, are defined as users who used an Uber service at least once a month. On balance, the most efficient way for Uber to grow is by upselling existing customers rather than obtaining new ones. While both will be necessary in the future, unit economics are better as existing customer LTV increases.

  • Uber Eats is growing well, but margins in the Uber Eats business are relatively low compared to the core business.

This is just the tip of the iceberg. The prospectus is filled with great facts and interesting perspectives on the world from Uber’s point of view.

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When all is said and done, Uber will likely be priced relative to Lyft. Since we have Lyft numbers now, it should be fairly straightforward to estimate an enterprise value for Uber. I should note that Lyft and Uber are not directly comparable, especially due to Uber’s ambitions in Uber Eats (see Professor Yannelis, I was paying attention!).

On almost every metric, Uber is a much, much larger company than Lyft:

As of this writing, Lyft’s stock price is $58.36, giving us the following multiples. After applying these same multiples to Uber, the following enterprise values were calculated:

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So on a multiples basis, we can expect anything from 28 – 103B. Yes, that’s a ridiculously huge range, but even so, I feel comfortable saying 120B is out of reach. Don’t feel too bad for the VCs who invested last round though, they’ll still do well. Here are some other things you can mention to impress your VC friends:

  • TV analysts, especially CNBC, have been making a huge deal about a small statement on page 27 of the prospectus: “we may not achieve profitability.” While not meaningless, it’s not something to really be worried about. This is a legal document after all.

  • Uber has been losing abroad. In fights with Singapore-based company Grab, China’s Didi, and Russia’s Yandex Taxi, Uber has conceded market share, settling for revenue share or departing completely.

It’s an exciting time to be watching the IPO market! Please feel free to contact me if you’d like to add additional commentary or disagree with me.

The opinions expressed in this publication are those of the author. They do not purport to reflect the opinions or views of my employer or university.


Indian Election: The BJP Government Deserves Another Term

by Shiv Ganesh Sankara Bagam, Class of 2020, FT MBA and Anant Bansal, Class of 2020, FT MBA

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Figure 1: India’s real GDP growth (2005–17) [ Note: Calculated as (1+Nominal GDP growth%)/(1+CPI Inflation%) – 1

Figure 1: India’s real GDP growth (2005–17) [ Note: Calculated as (1+Nominal GDP growth%)/(1+CPI Inflation%) – 1

The 2019 Indian elections are upon us: pitting the ruling BJP against the opposition Congress party. The BJP stormed to power in 2014 after a ten-year Congress regime ran out of steam. The previous Congress rule was marked by economic stagnation, high inflation and myriad corruption scandals that conservatively totaled $300bn, and one of them, the Telecoms scandal was recognized by TIME as the second-worst abuse of power. Against this backdrop, Narendra Modi led the BJP to power, promising corruption-free, good governance. After nearly five years, we find that his government has stayed true to most of his core promises.

On the economic front, the government instituted a series of structural economic reforms, chief among which were the Goods and Services Tax and the Insolvency and Bankruptcy Code. The former streamlined India’s complicated taxation system and created a single market for goods and services, while the latter created a bankruptcy framework to protect banks and minority shareholders from India’s notorious ‘promoters’.

Figure 2: Communal incidents in India (2005–17) Source: Ministry of Home Affairs (Government of India), RTI response to Amit Gupta; Minority Rights Group International

Figure 2: Communal incidents in India (2005–17) Source: Ministry of Home Affairs (Government of India), RTI response to Amit Gupta; Minority Rights Group International

Further, the BJP government prioritized infrastructure investment, with an eye on sustainability. For example, alongside investments in power generation and electrifying India’s villages, the government has been internationally recognized for leading solar power initiatives (overtaking the US to become the world’s second largest solar energy producer). The construction of roads has been another priority for the government, building 20,730 miles of roads in 4.5 years (2014–18) against the Congress’ tally of 20,530 miles over 7 years (2008–14).

Unsurprisingly, these efforts have translated into significant improvements in India’s macro-economic indicators, yielding high real GDP growth (see Figure 1). India’s score in the World Bank’s Ease of Doing Business Index also rose from 52 in 2014 to 67 in 2019 (US has a score of 83 for reference). Impressively, all of this has been achieved while reducing India’s fiscal deficit from 4.5% in 2013 to 3.4% in 2018.


We are also encouraged by the government’s initiatives to improve human capital and alleviate poverty. Key policies in this domain include: (i) its push towards complete financial inclusion—the World Bank’s Global Findex data finds that the proportion of adults with bank accounts increased by 27% percentage points between 2014–17 to 80%; (ii) providing 30 million poor households with cleaner cooking fuels to reduce the nearly 100,000 people that died annually from smoke from biomass-fired stoves; (iii) introducing legislation to improve customer protection in the housing market; and (iv) rolling out a landmark National Health Insurance Scheme providing medical cover to the poorest.


Given this record, its opponents turn instead to its secular credentials, alleging a rise in violence against religious minorities under the BJP. We find this critique to be fueled by perceptions, but unsupported by evidence. Data on communal incidents shows that violence against minorities has been in line with the previous governments, instead of the rise purported (see Figure 2).

The balance of evidence thus suggests that the BJP has outperformed the Congress on multiple fronts. Undoubtedly, it has had some missteps—such as the ill-thought demonetization policy—and needs to spend greater effort in translating economic growth to employment growth and better managing the implications of controlling inflation on farmers’ incomes. However, we are encouraged by the policies conceptualized by the government in relation to these issues (for example, minimum food prices for farmers and income support), and remain of the view that this government deserves another 5-year term.


Indian Election: The Election that Decides Who We Are as a People

by Nadeem Khan, Class of 2020, FT MBA

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“Our ability to reach unity in diversity will be the beauty and the test of our civilization”
– Mahatma Gandhi

It is this very unity that is at stake in the upcoming elections in India. Over the next month, 900 million voters will select 545 elected representatives out of 8251 candidates, to ultimately elect the Prime Minister of India. While this celebration of democracy happens every five years, many see this as a pivotal moment in our country’s history- never have elections left a country of 1.3 Billion people so divided on caste and religious lines.

The election is a direct battle between the ruling right-wing Bhartiya Janata Party (BJP), led by the dynamic yet controversial Prime Minister Narendra Modi, and India’s oldest political outfit, the Congress Party, led by Rahul Gandhi, son of ex-PM Rajiv Gandhi.

Modi’s tenure as Prime Minister has been characterized by gross mismanagement of the economy, attacks on independent institutions, allegations of mass corruption, and deliberate attempts to decay the social fabric of India by pitting one community against the other.

Under his watch, the government has adopted disastrous economic policies, such as the infamous demonetization of currency bills, that have slowed down growth to a four-year low of 6.7%. In addition, the government has proved incapable of creating jobs, with unemployment at a 45-year high at 6.1%[1], and 11 Million people losing jobs in 2018 alone[2]. Furthermore, a poor roll-out of the Goods and Services Tax adversely impacted small businesses, further stifling growth. As damning these numbers might be, the ground reality is worse, with experts (such as Prof Raghuram Rajan[3]) doubting the legitimacy of the data published by the current government.

The BJP has also left no stone unturned to establish supreme control over the country, by systematically dismantling key democratic institutions- the Central Bureau of Investigation (CBI), Judiciary, and the Election Commission. The government removed the head of the CBI overnight, as he conducted an inquiry on corruption allegations against an officer close to the Modi Government. In an unprecedented move, four judges of India’s highest court publicly raised concerns about judicial appointments and distribution of cases to judges, citing undue government influence[4].

Despite these gross misadventures, what is most worrisome is how blatantly the party has used communal hatred to divide the population to win over the conservative Hindu voter. For example, in one shocking incident, the party’s “educated and progressive” face, HBS grad and the country’s Civil Aviation Minister, Jayant Sinha publicly garlanded eight men convicted in a case of a mob lynching a Muslim man. Above all, what is most telling of BJP’s divisive agenda is this statement made by none other than the party president- “We will ensure implementation of NRC (National register for Citizens) in the entire country. We will remove every single infiltrator from the country, except Buddha, Hindus and Sikhs”[5]. While communal hatred is a proven strategy for Modi to win over the electorate, it will have lasting consequences on the social fabric of the country.

On the other end of the spectrum, the Congress party has focused its attention on development, releasing a detailed and well thought-through manifesto. The flagship promise of the party is the Minimum Income Support Scheme- a promise to give INR 72k to 50 million families. To rejuvenate the rural economy and provide employment, the government has promised MNREGA 3.0, guaranteeing each person 150 days of work in a year, focusing the scheme on addressing issues of water security, soil quality and other issues that aggravate farmers' distress. To promote clean governance urban areas, the party has come up with an important new reform- directly elected city mayors, enabling greater transparency and accountability in the system. These are only a handful of innovative ideas that the party has promised to implement in a holistic and realistic manifesto.

In summary, with the elections underway, the voter in India has an important decision to make, and I strongly hope that my countrymen stand up for equality and hope, in the face of hatred and division. If each of us is enabled to live our lives without fear, we thrive, India thrives.

[1] https://www.washingtonpost.com/world/2019/02/01/indias-job-crisis-is-worse-than-people-thought-its-government-tried-squelch-data/?fbclid=IwAR3itETa5EidVlLZxQcVcFXu_Y95wdjBs8kxU3fJ6gBqWitNjnJimt0v9NA&noredirect=on&utm_term=.92b8105c1f41

[2] https://www.cmie.com/kommon/bin/sr.php?kall=warticle&dt=2019-01-08%2009:28:37&msec=666

[3] https://thewire.in/economy/raghuram-rajan-raises-doubts-about-india-growing-at-7

[4] https://www.reuters.com/article/us-india-supremecourt/four-judges-criticize-indias-top-court-in-rare-public-spat-idUSKBN1F10LT

[5] https://twitter.com/bjp4india/status/1116246724119371776


Games of Thrones: The Last Great Communal Viewing Experience?

By Aanika Patel, Class of 2020

On April 14th, HBO’s Game of Thrones will premiere its final season after first airing eight years ago. For some this moment has been years in the making while for others it’s something they know they’ll be forced to watch with friends, significant others or possibly anyone they find themselves next to that evening. No other show since possibly the series finale of Mad Men or Lost has a show dominated the cultural moment than Game of Thrones. Even if you don’t watch the show you may feel like you do with words such as “Shame” and “Red Wedding” seeping into Monday morning conversation. The lead-up to the event has spawned elaborate watching guides and countdowns with sites from Vulture to the New York Times dedicating banner space on their sites to curated content on the show. In an era where there is possibly too much quality content and not enough hours in the day, how did Game of Thrones become the show we all watch together?

The experience of watching TV has evolved dramatically in the modern era. When the Friends finale aired, the DVR was just emerging. We had no choice but to watch cultural moments as they were happening. As the DVR became more prominent the length of time from original airtime to viewing time began to spread. With the advent of streaming platforms, that distance has continued to grow with people choosing to digest entire seasons of shows in one sitting.

Despite Game of Thrones beginning its run in the era of streaming TV, HBO’s big budget and the elaborate size and scale of the franchise has made watching this program in particular feel more like installments of a movie rather than the traditional multi-camera sitcom or hour-long drama on network TV. Game of Thrones has set itself apart by being the kind of show where each episode has the potential to have the shocking and buzzworthy moments that you don’t want to be spoiled. While traditional programming builds to a midseason or full season finale, Game of Thrones has those moments sprinkled throughout every episode. With multiple interweaving plotlines, showrunners David Benioff and D.B. Weiss as well as writer George R.R. Martin have created a story and viewing experience that forced us to pay attention at every moment.


Other media conglomerates have or are trying to replicate the Game of Thrones formula and to fill the vacuum the franchise will leave behind. Amazon with its $250 million rights deal with the Tolkien estate and commitment to produce within two years on Prime Video is the biggest player on this path.  As we change the way we consume content and talk about cultural moments, however, Game of Thrones is the last vestige of the era before the domination of streaming TV that brought us together once a week in quiet rooms to share the experience week over week. The series finale of Game of Thrones will air on May 19, 2019.