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Hi friends 👋,

Happy Monday! Last Monday’s email sparked some really great conversations, and the message they all had in common was: writing now is a good start, continued action is more important.

One thing that the protests have made clear is that we expect more out of companies than ever before. Silence isn’t acceptable, and companies who have been doing the right things before it was trendy have been shown to be on the right side of history.

There’s a reason we care more than ever what our companies say and do. That’s the subject of today’s essay. Let’s get to it.

Business is the New Sports

🎧 If you prefer listening to reading, you can listen here: Business is the New Sports audio

Are you constantly refreshing your Robinhood account instead of your DraftKings? Watching more CNBC than ESPN? Reading Not Boring instead of The Athletic?

You’re not alone. It’s a thing: Business is the new sports.

Sportsless and homebound, we’re picking up all sorts of hobbies: sourdough making, watching Netflix (or really any streaming service but Quibi), Zoom happy hours, virtual Zumba classes. The stock market is perfect for right now - on all day, the news cycle continues into the night, and if you follow it even casually, you never have to be bored.

But this business as sports thing is different from the rest of those hobbies. It isn’t new, and it’s here to stay.

Jonathan Libov spotted the trend in 2013, when he wrote, “Consumers now seem as interested in the business of Media & Entertainment as they are the Media & Entertainment itself.”

Consumers have long treated the products and companies to which they feel a deep emotional attachment like they treat their favorite teams.

Steve Jobs kicked off the shift in 1997 with the first of the now-famous Apple Keynotes. Instead of reading about product releases or waiting until they hit the stores, consumers and developers watched along with the insiders and journalists, in real-time. “Stevenotes” generated all the anticipation and buzz of a sporting event.

Elon Musk took the torch from Jobs. The Tesla Cybertruck unveil was the product launch that launched a million memes. And as Garry Tan said:

(There it is again. Even a casual Not Boring reader gets that reference. Own your own demand or get stuck handing all of your venture dollars to an aggregator.)

Now, it’s more pervasive. If business was polo a few years ago, it’s basketball now.

Business infiltrates more of my conversations than it has in the past. When Joe Rogan signed his deal with Spotify, everyone I knew had a take. The WallStreetBets subreddit has jumped from 400k to 1.2 million members in the past year. When I was talking to my dad a couple of weeks ago, he pointed out that my brother and I “talk about business like my friends and I used to talk about baseball cards.”

We treat our favorite companies more like our favorite teams, and our favorite business leaders more like our favorite athletes -- with all of the passion, frustration, and booing that implies. COVID accelerated the trend, but the five main factors that make business more like sports have been brewing long before the virus hit the US.

Software is Eating Facelessness. Consolidation creates recognizable and discussable companies and leaders.
Business Celebrities. Business leaders and their decisions are more public and human than ever before.
Peter Lynch’s Dream. The biggest companies are now the companies that we use the most.
Scoreboards and Playbooks. New tools enable stock trading to reach more people, and new media makes complex decisions more legible.
Everybody loves an underdog. Startup Cinderella stories dominated the headlines over the past decade.

As someone who writes about business strategy and loves sports, I’m a huge fan of their intersection. Magic happens when you mix business, pleasure, and learning.

Software is Eating Facelessness

Which landlord do you think is handling Covid best? Name your favorite local taxi company. Who’s the top pizza delivery guy? You can’t. They’re faceless.

Marc Andreesen’s 2011 observation that software is eating the world has come true. Today’s tech (or tech-adjacent) companies consolidate and disintermediate previously fragmented industries and their participants, leaving us with one or two companies to interact with for everything we need to do.

Spotify replaced trips to Sam Goody or the record store to flip through CDs for hours. Netflix ate West Coast Video, Blockbuster, and that local video rental spot. You can open Uber instead of calling ten taxi dispatchers. Amazon replaced… everything.

Leaving aside the many questions about whether this is net positive for society, aggregation of demand by a few, sophisticated players makes business look a whole lot more like pro sports by giving us a handful of visible teams to root for (or against).

Local taxi companies were like Little League teams. They did the best they could with the local talent at hand, but none changed the game. A bunch of grown adults engaging in a serious discussion about a Little League team’s performance would be unusual at best, just like we wouldn’t expect smart people to discuss the strategy of any particular local taxi company.

Uber, on the other hand, is like the Yankees: big budgets, high-priced talent, high-stakes games. Many serious people spend a lot of time talking about the Yankees, just as many serious people spend time analyzing Uber’s every decision. They even have what every team needs, the Red Sox to their Yankees, a rival: Lyft.

Uber has Lyft, Amazon has Shopify, Facebook has Twitter, WeWork has unit economics.

Rivalries between titans make commenting, debating, and picking sides even more fun. Being a Facebook person or a Twitter person says a lot about who you are, now more than ever; it becomes a part of your identity.

Because of consolidation, millions of people nationally and internationally have a shared experience of interacting with the same companies, and those companies’ decisions have an impact on those millions of peoples’ lives. People can pick sides and say something about who they are based on the companies they support.

Picking sides isn’t a new phenomenon. Before Facebook v. Twitter, there was iPhone v. Android, Coke v. Pepsi, and Ford v. GM. Our neighbor in upstate New York even has a sign in his driveway that says “Parking for Ford Fans Only.”

Today, though, social media amplifies our fandom and allows us to talk about, and even with, our favorite companies and their leaders.

Business Celebrities

Before Twitter, business leaders were like NFL players. Sure, people knew who they were and some of them were really famous, but their personalities were hidden under corporate communications helmets. Social media unmasked CEOs. Now, they’re more like NBA players, able to form direct connections with fans and skeptics alike.

Twitter democratized communication between CEOs and their fans. A couple months ago, I tweeted about Slack’s stock performance, and the company’s CEO replied:

Twitter’s CEO, Jack Dorsey, regularly engages in conversations with users through his company’s platform. Spotify’s CEO, Daniel Ek, and Shopify’s CEO, Tobi Lutke, have both gone on Patrick O’Shaughnessy’s Invest Like the Best podcast over the past few months to discuss the nuts and bolts and strategies of their companies in a refreshingly unfiltered way. (Ek here & Lutke here) Lutke even livestreams himself playing video games, during which he holds casual Q&As with fans.

CEOs’ direct connections with fans humanize them and their businesses in a way that wasn’t possible before. It makes us more likely to root for them.

It also means that the negative reaction is swifter and louder when they mess up. As a Philly fan, I know how quickly the tides can turn against an athlete when they err; in Philly a cheer and a jeer are millimeters apart. Mark Zuckerberg’s shift from hero to villain is familiar to me.

The level of familiarity we gain makes businesses look more like teams, and CEOs look more like famous athletes, with all of the good and bad that comes with that. It also means that we’re able to make a lot of money by following Peter Lynch’s advice.

Peter Lynch’s Dream

“Invest in what you know.”

Peter Lynch advised retail investors to look at the products that they use and love as a starting point for their investment research. Love your new shampoo? Buy the stock.

Lynch is one of the most successful fund managers in history. In his thirteen years at the helm of Fidelity’s Magellan Fund, he produced eye-popping 29.2% annual returns while increasing the fund’s assets under management from $18 million to $14 billion.

The biggest companies when Lynch took over Magellan look much different than the biggest companies today, though. Today’s biggest companies are the ones with which we interact every day.

The market has rewarded us for “investing in what we know.” An equally-weighted basket of the green companies in the 2020 column would be up 937% since 2010. That’s a 26% annual return, right in line with Peter Lynch himself.

If you found yourself playing video games against Shopify’s Tobi Lutke five years ago and decided to invest in his company, you would be up even more - 2,597%!

Consumer software companies’ market dominance means a couple of things:

First, those that have "invested in what they know” like software companies have become super fans. Success deepens interest and fandom in the same way for businesses as it does for gamblers who pick the winner of March Madness. Early fans of software businesses have ridden that wave from amateur investor to seeming genius.

Second, we now care about companies’ strategies because strategy dictates both the returns our holdings generate and the products we use. Strategy guides product decisions, and product decisions guide our interactions - how long we stay on an app, how much we pay, how we speak to each other.

Sports have casual fans and die-hard fans. Some people like watching dunks, some like understanding the implications of salary cap changes. Some are content knowing their team scored, others need to understand the X’s and O’s behind the scoring drive.

Similarly, in business, consumers/shareholders/fans can go as shallow or as deep as they’d like in their understanding while still feeling that they have something to add to the conversation. Want to yell about Facebook being evil for not policing Trump’s posts? Go ahead. Want to have a deep and nuanced conversation about the differences between the Facebook and Twitter user bases, how each approaches privacy more broadly, and the implications for the growth of each company’s long-term prospects, and write a 3,500 word Substack post on the topic? That’s cool too.

Investing in what you know allows more entry points into business-related conversations and broadens the spectator base.

Scoreboards and Playbooks

Sports wouldn’t hold the same place in our collective consciousness that they do if no one kept score. The beauty of sports is that each match produces a winner and a loser, as does each season. All-time records provide a thread tying all of the discrete games and seasons together.

Business is unique in that it has a continuous, common scoreboard across decades and industries. All companies aim to maximize profits, and public companies compete in a real-time, global competition every day. There are real issues with the system - short-termism and negative externalities among them - but it makes winners and losers abundantly clear.

People have been trading stocks for a long time. The first stock exchange, the Amsterdam Stock Exchange, opened its doors in 1602. Today, though, we have constant access to market fluctuations, and the market provides the two things most able to grab our attention: dopamine-generating notifications and money.

When I was a kid, I had to look up stock prices in the newspaper or wait to hear how the market was doing whenever the TV or radio news hit the business segment. Just ten years ago, I logged into a clunky online interface to trade.

Today, I can pull out my phone, fire up my Robinhood account, check price movements, and make a trade in under 30 seconds. And I’m not alone. Robinhood hit the 10 million user mark in December 2019, and in early May, announced that it had added an additional 3 million users since the start of the year.

Further, Robinhood forced incumbents to provide zero-cost trades, which, combined with the introduction of fractional share purchases and COVID, increased the number of market participants and how actively they trade.

A startup called Public, backed by top VCs like Accel and Greycroft and celebrities and athletes including Will Smith and JJ Watt, built a product that makes investing social and community-forward, allowing people to build followings based on their investing acumen.

Public grew customers 80% during the peak of COVID-related market volatility. Unlike Robinhood, 72% of Public’s users are long-term investors. The company recently introduced Long-Term Portfolios, allowing investors to identify the companies that they’ll stick with through thick and thin… like their favorite teams.

The net-net: investing is becoming more accessible, there are more people trading, and they’re trading more frequently. In his 2013 piece, Libov pointed out that when his cousin started playing fantasy football, his fandom suddenly expanded from just his Redskins to every team his fantasy players played for. Similarly, trading makes people care about businesses they may have never even heard of otherwise. Nothing teaches you to read an earnings report like having your wallet riding on its outcome.

Profit is the ultimate scoreboard. Now everyone's looking for a playbook.

On the most comical side, Barstool’s Dave Portnoy has filled the void left by sports gambling by creating a new persona, Davey Day Trader, who makes or loses hundreds of thousands of dollars per day, live on camera. Millions of Gen Z and Millennial viewers have tuned in to watch on Twitter and YouTube.

On the more-serious-but-still-approachable side, a wave of business-related Substacks have popped up in the past 6-12 months to provide business news, education, and analysis to subscribers. Four of the top six free Substacks are business-related, and Not Boring subscribers have nearly quadrupled in the two months since I’ve started writing more deeply about business strategy.

There’s big money in reaching this new audience of business fans, too. Ben Thompson makes millions per year writing prosumer business analysis in Stratechery.

More business content also makes business more legible to a group of casual fans. You don’t have to read strategy textbooks and case studies to have a basic understanding of how businesses work; instead, you can read an essay that analyzes Slack and Zoom through a game of F, Marry, Kill.

More accessible content will lead more casual fans to become die-hards, further cementing business’ place as the new sports.

Everybody Loves an Underdog

In business, like in sports, nothing is more exciting than an underdog.

Over the past 30 years, and particularly over the past 10, the tools have become cheap enough and knowledge democratized enough that small groups of people have been able to take down large incumbents in record time. That same speed and reach means that consumers begin interacting with a company much earlier in its life.

Today, there’s as good a chance that your razor or toothbrush comes from a small, scrappy team as from an established conglomerate like Procter & Gamble.

The rise of successful, fast-growing startups over the past decade has increased our business fandom. In addition to watching the giants battle for supremacy, we can root for the little guys and gals to come from nowhere and overtake them.

We marveled at the fact that a Harvard dropout could build something that millions and then billions of people relied on to connect every day, and cheered as he turned down takeover offer after takeover offer. We loved hearing stories about Uber taking on and fighting a corrupt taxi industry. We were enamored of this weird concept called co-working and cheered on its champion, WeWork.

We cheered for the Warriors, too, when they beat the Nuggets in the first round of the playoffs as the underdog 6 seed in 2013. We rooted for anyone else after they signed Durant and began dominating the NBA. Similarly, when those underdog companies become the dominant teams themselves, we root for the new wave of incumbents fighting to unseat them just as hard.

When Amazon took on the book sellers, we rooted for Amazon. Now that Amazon is the behemoth it is, we root for Shopify and its army of small-business rebels. Already, Elliot has a group of fans rooting for it to beat Shopify. And one day, we might root for the company coming after Elliot.

As new entrants come on to the scene, business, like sports, provides us with an unending stream of underdogs to root for.

Why does it matter?

Understanding business as sports is important to your wallet. If current trends persist, and retail investors (you, me, and everyone else on Robinhood and Public) continue to move the markets, then stock prices will be impacted more by fandom than fundamentals than they ever have before. You will need to understand both the strategy behind decisions that companies make, and the way that investors as fans will react to those decisions.

Viewing businesses as teams and CEOs as athletes allows for a new framework for analyzing a company’s productivity and longevity and creates new signs of success.

Can they lodge themselves in customers and investors’ brains? Remember, you want to become a meme.
How do they construct their roster? All all-stars means some people don’t get the ball as much as they’d need. A good roster has the right mix of experience and young talent, all-stars and role players.
How are they connecting with investors, customers, and fans? Product launches like Apple’s and Tesla’s serve to both rally the fan base and provide free marketing.

We will be returning to these questions in future posts and using them to analyze businesses.

It’s also crucially important that businesses build broader-based fan bases than they currently have. Sports unite people across race, generation, profession, and socioeconomic status. A parking lot during a pre-game tailgate is as melting pot as America gets.

For business to capture the same place in the American imagination as sports, it needs to be something that we can all rally behind. And currently, that’s not the case.

According to the Fed’s 2016 Survey of Consumer Finances, 61% of white families have stock holdings while only 31% of black families do. The median white family has $51,000 in stock holdings, compared to only $12,000 for the median black family.

Companies like Public are working to narrow the gap. Co-CEO Leif Abraham said, “Investing traditionally has not felt inclusive for everyone. We want to change that.”

To that end, as VC Brianne Kimmel tweeted, Public raised money from influential Black investors, features Black users on the home page, and builds features - like following, DMs, and groups - that bring people together and help more people learn.

They are even introducing a theme “that spotlights companies with racially diverse leadership teams.”

Companies can’t just pay lip service to inclusion for a few weeks and then go back to the old way of doing things. It’s bad business. Businesses should want to be more like sports teams, earning passionate loyalty from fans who have a vested interest in their long-term success, and who will let them hear it when they get things wrong.

Business won’t replace sports - I cannot wait to watch the first Sixers or Eagles game after all of this - but we increasingly view companies like we view teams, and CEOs like we view athletes. That presents tremendous opportunities, and puts even more responsibility on companies to make the right moves. The world is watching.

Thanks to Tommy Gamba, Connor Hale, Jonathan Libov, and Dan McCormick for editing this piece!

I would love to hear from you in the comments. What are the biggest implications of business as the new sports? What will change about how we analyze businesses?

Leave a comment

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