Disney’s wildest ride: Iger, Chapek and the making of an epic succession mess

This article from CNBC tells the inside story of the absolute mess that was CEO succession at Disney. Bob Iger was CEO of Disney for 15 years, from 2005 to 2020. After pushing back his retirement four times, he finally stepped down on 25 February 2020. Less than two years later he was CEO once again, retaking the role on 20 November 2022.

That two year period, with the COVID pandemic as a backdrop, was marked by infighting, petty turf wars and as the now-ousted CEO Bob Chapek described to a friend, an “unrelenting fear that Iger wanted his job back”.

Since retaking the CEO reigns, Iger has reportedly told friends and colleagues he had to return to correct one of the biggest mistakes of his career - appointing Bob Chapek as CEO.

Clearly there isn’t a lot of love lost between the two Bob’s. And this article from CNBC lays it out in all its detail. From the personal disagreements that soured the two Disney leader’s relationship just days after the transition to the changes that Bob Chapek tried to implement and how Iger worked against them. It is a fascinating story, and will quickly become a business school case study about how not to manage leadership succession.

The biggest irony of all, Bob Iger wrote about the risks of dysfunctional relationships at the top of a company in his 2019 autobiography, The Ride of a Lifetime.

Except Iger wasn’t describing his relationship with Chapek. He was writing about former Disney CEO Michael Eisner and his relationship with his deputy Michael Ovitz in the 1990s.

History may not repeat, but it certainly rhymes.

The people paid to train AI are outsourcing their work… to AI

A new study published in the MIT Technology Review has found that a significant portion of people paid to train AI models are themselves outsourcing their work to AI. Irony aside, this practice makes it likely to entrench AI mistakes and hallucinations, because mistrained AI will then be compounding that misinformation by training other AI models.

To take a step back, training artificial intelligence requires huge amounts of human intelligence, and labour. Workers are paid to complete mundane tasks - identify objects in images, tag and annotate text, label data - which is then fed into large models to train these AI.

Workers can sign up to complete these tasks on platforms like Amazon’s Mechanical Turk. So the Swiss Federal Institute of Technology hired 44 people to complete work and then analysed their work for telltale signs of using ChatGPT. They estimate that somewhere between 33% and 46% of the work had been done by AI.

This is just your latest reminder to be skeptical of AI’s answers. As we all play around with AI and find new ways to incorporate it into our working lives it is critical to check your work. There are way too many of examples of AI hallucinating and getting it wrong, and studies like this suggest that isn’t going to be changing any time soon.

Howard Marks: Fewer Losers, or More Winners?

Legendary investor Howard Marks has released his latest investing memo. The co-founder of Oaktree Capital Management has become known for his memo’s, dispensing investing wisdom one PDF at a time. In this memo, he writes about the concept of risk in investing and how he has trained his team at Oaktree to think about risk when building portfolios.

Oaktree’s motto sums up their approach to risk management: If we avoid the losers, the winners will take care of themselves.

This is particularly relevant for Oaktree’s roots in fixed income investing (bonds) where the name of the game is to avoid companies that will default. As Marks explains, if you have 100 bonds all paying 8% a year, you don’t get paid more by choosing the excellent companies. Your only risk is the downside risk of choosing companies that will go bankrupt and won’t be able to pay their debts.

Marks also writes about the idea of risk in the sharemarket and how avoiding losers is the name of the game there. So much of a company’s future is uncertain. And the most successful companies often take surprising turns - Apple’s invention of the iPhone, Netflix’s hard pivot to streaming. The name of the game is to avoid the losers that will go out of business and ensure your portfolio is full of potential winners that can innovate and grow over time.

Risk is the price we pay as investors to access the opportunity to earn outsized returns. There are plenty of different ways to define it and try and manage it, but no way to avoid it completely. Marks’ focus on avoiding the losers - those companies that will go bankrupt and lose your money - is a great place to start.

Nearly half of Americans aged 18-to-29 are living with their parents

This was a surprising stat to come out of the United States, 48% of young Americans are living with their parents.

The United States isn’t alone. In Australia in 2016, 43% of those aged 20 to 24 lived with parents, compared to 36% in 1981. And in the UK, 30% of 25-to-29 year olds still live at home with their parents. But the United States appears to be the most extreme.

The drivers of this trend are both social and economic. Socially, increasing rates of higher education and later average age of marriage have been driving this trend. Economically, housing affordability and the skyrocketing price of rent has been the biggest driver of young people staying at home longer. The United States has one additional factor - the financial strain of enormous student loans. Nothing delays getting a mortgage like struggling to pay down existing student loans.

And this isn’t just a western phenomenon. A similar story is emerging in China, as young adults give up their careers to become ‘full time children’. We recently covered the rise of ‘full time Children’ on The Dive as part of our exploration of China’s youth unemployment crisis - where more than 1-in-5 young adults are unemployed.

It seems wherever you look around the world, the economic picture is looking bleak for young people entering the work force and the housing market today.