Invest Like the Best with Patrick O'Shaughnessy
· Patrick O'Shaughnessy, Reed Hastings
[00:00:00] S0: How did you approach it from the beginning, in terms of the original vision and plan? So it's a distressed asset that you go in and buy. How do you determine the initial vision? And then, what were the first couple steps to execute against it? [00:00:00] S1: It was a series of transactions to gain control. So it took six months to buy out a majority of the company, of the shareholders, to have control. Everyone wants the billionaire to pay a lot. And being clear with them that this thing could collapse if I don't come in. That was stage one. Then stage two was figuring out, okay, this is a great mountain, but if half of it were private, like Yellowstone Club, and half stayed public as it was, then it could be a real win-win where they share operating costs and are more efficient. And we can then have a very uncrowded resort on the public side, which gets to something that's gone on in the ski industry, which is high crowds. So it gets to compete with that. And then, on the private side, it's building a 650 home community of ski lovers, where they get their, basically their own enormous ski resort, the size of Heavenly or Vail, just for the 600 homes. So it's pretty spectacular. [00:00:00] S0: In terms of what drives the ski business, what — aside from the real estate stuff — what are the most important variables or considerations that you've figured out in your studying of its history?
· Patrick O'Shaughnessy, Reed Hastings
[00:00:00] S0: In terms of what drives the ski business, what — aside from the real estate stuff — what are the most important variables or considerations that you've figured out in your studying of its history? [00:00:00] S1: Yeah, skiing is about one-eighth or one-tenth as big as golf in terms of number of people and playing. So I'd love to close some of that gap. You know, it's cold, but it's very family-oriented, you get outdoors, it's social with your friends on the lift. It's got some of those same properties. Interesting that there are 25,000 golf courses in the U.S. And about 20%, 4,000 are private golf courses. And private golf courses, you get better tee times, the nice clubhouse atmosphere, social, you get to know people. And that's really what it is for private skiing also. There's about 500 ski areas instead of 25,000, but only three are private: Yellowstone Club, Wasatch Peaks Ranch, and Powder. So it's a very underserved market relative to golf. [00:00:00] S0: What's most fun about it to you, the whole project? [00:00:00] S1: That it's very right-brained. Everything at Netflix was very strategic, logical. A lot of big competitors. In skiing, the competitors are very cooperative. It's, I think, because you have 20 or 30 miles between you. And so it's a lot more collegial. And it's aesthetic. The big wins we've done have been building up the art at Powder Mountain. So there's a lot of outdoor land art that's incredibly beautiful to ski through. So if you've had the good fortune to go to Storm King, north of Manhattan.
· Reed Hastings, Patrick O'Shaughnessy
[00:00:00] S1: That it's very right-brained. Everything at Netflix was very strategic, logical. A lot of big competitors. In skiing, the competitors are very cooperative. It's, I think, because you have 20 or 30 miles between you. And so it's a lot more collegial. And it's aesthetic. The big wins we've done have been building up the art at Powder Mountain. So there's a lot of outdoor land art that's incredibly beautiful to ski through. So if you've had the good fortune to go to Storm King, north of Manhattan. [00:00:00] S0: It's beautiful, yeah. [00:00:00] S1: Okay, so think of Storm King on a ski mountain. [00:00:00] S0: Skiing through it. [00:00:00] S1: Yes, and skiing through it. [00:00:00] S0: Tell me about that part of it. So how did you conceive of that, and how did you execute it? Like, how does one acquire Storm King-like art?
· Patrick O'Shaughnessy, Reed Hastings
[00:00:00] S0: Tell me about that part of it. So how did you conceive of that, and how did you execute it? Like, how does one acquire Storm King-like art? [00:00:00] S1: The conceptual part is the key, which is we wanted to have a ski resort and to differentiate. So what are we going to do in summer? Well, you could do zip lines and mountain biking, but it's like, it's all been done over and over. And frankly, it's high adrenaline and it's like, okay, but it's not that great a match for real estate sales. But most importantly, it's conventional, it's been done. So what's like, interesting and scalable and fantastic, but hasn't been done? And that's the art part. And, you know, I'd been to Storm King, but Storm King is a level 600 acres. So it's not like on a mountain, but it is outdoor sculpture and incredibly stunning. So again, it was that synthesis, of then trying to do that on a mountain. Then it was building in the curators and getting the work going. And now we've got dozens of pieces already in and a lot more coming. That side's really coming together as the heart of our summer-fall experience. [00:00:00] S0: How did you decide to focus so much on education as one of the buckets of your time? We talked about Powder Mountain, but education, charter schools, et cetera, is a huge chunk of your time and philanthropy as well. What was it about that sector that drew you? And I'm just curious for you to riff on the problems that you see in the space.
· Reed Hastings, Patrick O'Shaughnessy
[00:00:00] S1: Yeah, it's interesting. I spend probably a third of my time on Powder Mountain because it's a joy. And then, on the education side, I was a high school math teacher. It was my first job out of college. And so I've always cared about K-12. And I've done a lot of philanthropy in that sector over the last 25 years. And then the new big thing is AI. So it's easy to then put those together. And how are we going to apply AI? The core vision, and it's super well-articulated by your prior guest around Alpha School, is kids should be taught individually, as opposed to having a teacher stand in front of a class and lecture to them. And that industrial model of the teacher, the sage on a stage, we call it, needs to be replaced with individualized tutoring. And prior to AI, individualized tutoring would cost you $100,000 a year per kid. So out of reach of everyone. And so now, with software, we can have individualized instruction. And the teachers become more like social workers, where they're helping on discussion, social-emotional learning, a lot of the more human and emotional factors. But the content transfer — what were the roots of the civil war, how to do fractions, that's all becoming software. And hopefully as quickly as possible, because then it's very global, and because kids will learn more. [00:00:00] S0: What do you think we can do to speed that up the most? It could take decades because of the regulated nature of schools. Things move slowly. What could we do that could speed that up?
· Patrick O'Shaughnessy, Reed Hastings
[00:00:00] S0: What do you think we can do to speed that up the most? It could take decades because of the regulated nature of schools. Things move slowly. What could we do that could speed that up? [00:00:00] S1: It's focused on the apps that really help kids learn more. It's helping parents see that — they all wonder, hey, with AI coming, when my kid's six or sixteen, what's going to happen to them in the workplace? And they need more and better skills than ever. And, you know, every 16 year old is learning things on AI, anyway. So it's having them be more focused on that and less on traditional classrooms. When you think about classrooms, we use it in K-12, we use it in college. And then, like in the workplace, we never use it again. You did all this classroom learning and it has like, no bearing in your working life. And so again, it's really driving the percentage of kids' time that's not in classroom. And as Joe says, it's helping kids really love school because then they'll continue to love learning. And the classroom, and the boredom and frustration of that, is at the heart of it. [00:00:00] S0: I'm curious, as you think about the future, just broadly, across all your interests, you've got a cool purview on the world. What most worries you and what most excites you about the future?