Royce Yudkoff

And we asked students, what is the implication of cutting price 10% to profitability? What is remarkable is after a year and a few months of business school, our students are mesmerized by this question. It never occurs to them that, well, let me see if my cost of goods sold is unchanged and my SG&A is unchanged, but I cut price 10%. wow, all that money is just coming out of profits.

And we asked students, what is the implication of cutting price 10% to profitability? What is remarkable is after a year and a few months of business school, our students are mesmerized by this question. It never occurs to them that, well, let me see if my cost of goods sold is unchanged and my SG&A is unchanged, but I cut price 10%. wow, all that money is just coming out of profits.

And my profit margin was whatever it is. And so, boy, I've just taken out my entire profit margin. And then Royce will go on and say, and if you're 70% debt, what does that do to the equity holders? And they say, wow, I've just destroyed all the equity value with this one decision. Now, there's a lot of theory in that discussion, but it's an interesting example.

And my profit margin was whatever it is. And so, boy, I've just taken out my entire profit margin. And then Royce will go on and say, and if you're 70% debt, what does that do to the equity holders? And they say, wow, I've just destroyed all the equity value with this one decision. Now, there's a lot of theory in that discussion, but it's an interesting example.

So some other things that I think have really been helpful. First, Royce and I have a fabulous partnership. We really enjoy working together. Interestingly, our students think Think about us as perfect substitutes for each other, where I'm the pointy-headed academic who got his PhD at 25 and hasn't really left academia, and Royce is the super successful consultant and private equity founder.

So some other things that I think have really been helpful. First, Royce and I have a fabulous partnership. We really enjoy working together. Interestingly, our students think Think about us as perfect substitutes for each other, where I'm the pointy-headed academic who got his PhD at 25 and hasn't really left academia, and Royce is the super successful consultant and private equity founder.

And so we have very different backgrounds. We have a lot of mutual respect. And I think when our teaching works really well, We are bringing the best of both of our backgrounds to it. So that's really important. The other thing that's really important, I don't know how this will sound. I truly believe it. We really like our students. We have fabulous students. They're accomplished. They're clever.

And so we have very different backgrounds. We have a lot of mutual respect. And I think when our teaching works really well, We are bringing the best of both of our backgrounds to it. So that's really important. The other thing that's really important, I don't know how this will sound. I truly believe it. We really like our students. We have fabulous students. They're accomplished. They're clever.

They're thoughtful. They're hardworking. They're serious. They're great. We can go years before we cold call a student and find them unprepared. It just doesn't happen. So we really respect and like our students. That is really helpful. We also think, at least I'm pretty sure I speak for Royce in this, We're really diehard capitalists.

They're thoughtful. They're hardworking. They're serious. They're great. We can go years before we cold call a student and find them unprepared. It just doesn't happen. So we really respect and like our students. That is really helpful. We also think, at least I'm pretty sure I speak for Royce in this, We're really diehard capitalists.

We really do believe that if you go out and you run a small business better, you're making the world a better place. We really believe that. And for us, we feel like it's not evangelism by any means, but we feel we're really helping the world and we're really helping our students. We're showing them a new career path and they're going on and doing wonderful things for their workers and communities.

We really do believe that if you go out and you run a small business better, you're making the world a better place. We really believe that. And for us, we feel like it's not evangelism by any means, but we feel we're really helping the world and we're really helping our students. We're showing them a new career path and they're going on and doing wonderful things for their workers and communities.

And it's super fulfilling for us. I've been at Harvard Business School for a long time, nearly 38 years now. Before I did this course, I taught everything in corporate finance, and I could go decades without somebody saying, you really changed my life. Thank you so much. You know, just teaching this kind of cash flow just doesn't evoke that kind of emotion in people. I don't know why. Doesn't me.

And it's super fulfilling for us. I've been at Harvard Business School for a long time, nearly 38 years now. Before I did this course, I taught everything in corporate finance, and I could go decades without somebody saying, you really changed my life. Thank you so much. You know, just teaching this kind of cash flow just doesn't evoke that kind of emotion in people. I don't know why. Doesn't me.

But I don't know that we hear that every day, but we hear it quite often. And we see it in our students. And we see students coming back over and over again saying, your class was pivotal in my life. And we hear it in our podcast.

But I don't know that we hear that every day, but we hear it quite often. And we see it in our students. And we see students coming back over and over again saying, your class was pivotal in my life. And we hear it in our podcast.

I mean, the nature of small business is that they're generally undercapitalized and have to ration capital. And by the time they go to make capital investments, usually those decisions are pretty apparent. I have demand for another technician. That technician needs a new van. I'm going to buy a new van. There's a lot of that. One of the things we do talk a lot about, Royce, is IT investment.

I mean, the nature of small business is that they're generally undercapitalized and have to ration capital. And by the time they go to make capital investments, usually those decisions are pretty apparent. I have demand for another technician. That technician needs a new van. I'm going to buy a new van. There's a lot of that. One of the things we do talk a lot about, Royce, is IT investment.

And we're generally negative on it.

And we're generally negative on it.