WEBVTT

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Prof: The dog ate my
homework;

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you guys will understand what
that means.

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We're going to have to postpone
the Rapaczynski case.

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I got back from Washington late
last night and got to the office

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this morning and the SOM server
was down.

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I actually did some of the
filming and visited their

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offices in Warsaw three years
ago, and I would like to divert

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us a little bit today.

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I want to talk briefly about
what I've been doing in

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Washington and how it relates to
what we've been doing here.

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Then you'll remember,
some weeks ago before the

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midterm,
we had a soft schedule to do

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the Mory's Business Plan,
and I brought with me today two

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distinguished colleagues who are
going to help us to understand

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the Mory's business plan as a
challenge.

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Chris Getman,
immediately to my right is the

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president of the Mory's Board of
Governors and an iconic figure

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at Yale.

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He has been the owner of how
many Dapper Dan's?

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Chris Getman:
Handsome Dan's.

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Prof: Handsome Dan's,
pardon me.

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Four, including the incumbent.

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Chris Getman:
Including the incumbent.

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Prof: Jonathan Ingham,
now immediately to my right,

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is a former president of the
Yale Club of New York,

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Yale College Class of 1964--
Jonathan Ingham:  1965.

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Prof: 1965,
and has been one of the

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instrumental players in the
Mory's business plan.

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Before I get to that I want to
talk a little about Washington.

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I've been down there working
for a company,

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but it has brought me into
contact with staff in the Senate

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and the House,
and I thought I'd share a

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little of the texture of that
with you because it relates to

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capitalism in--
or at least to American

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capitalism,
in an interesting way.

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As you know Saturday night at
quarter to midnight the House of

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Representatives passed a version
of the Healthcare Reform Bill by

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the margin of 220 yea,
215 nay.

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The first thing remarkable
about that number is it adds up

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to 435;
very few bills add up to 435.

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This one was one where being
absent would be the sort of

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offense which could cost you
your seat in Congress because

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the intensity is that high.

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The other feature of it,
and I read--

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I can't claim to have read more
than about 20% of the bill,

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but the stunning feature of it
is that the fingerprints of

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lobbyists are all over it in a
degree that is just--

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it was to me pretty disturbing.

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I'm reasonably cynical about
how the world works but the

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number of cases where the bill
will be going along talking

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about one thing,
and then there will be a

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paragraph,
labeled Section 1753,

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and it will require the
services of licensed

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podiatrists,
or it will require a funding

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grant to a certain category of
health providers in a region of

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several western states.

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It's just pockmarked with very
intense lobbying.

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Then when you talk to the
staffs of the two parties,

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you get two very different
kinds of talk.

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Let's leave my politics out of
this.

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Which side do you think would
sound more coherent right now,

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the Republicans or the
Democrats, talking about the

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healthcare bill?

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Have I got a microphone I can
hand somebody?

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Who wants to take a shot at
that one?

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Student:  I would guess
the Republicans since they

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haven't had to have made
concessions to numerous special

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interests to get the bill
passed.

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Prof: Terrific,
you nailed it.

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Are you a political science
major?

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Student:  Yes.

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Prof: Good for you.

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In Washington this year $2.9
billion dollars--repeat that

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number: $2.9 billion
dollars--was spent on lobbying

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the federal government.

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While compared to the cost of
the healthcare bill,

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that doesn't sound like much,
it's an awful lot of lobbying,

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and the majority party on a
bill like this is--

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well how many--let's suppose
they did it as follows:

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Obama brings in fifty wise men
and women from Harvard,

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Yale, Berkeley,
Michigan, Texas,

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and so on and they spend thirty
days working on the best

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possible bill,
to get the most bang for the

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buck for the general public in a
new healthcare plan,

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and then he puts it in an
envelope and sends it up to the

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cap--
sends it over to Capitol Hill.

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About how many votes,
if it were really well done,

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do you suppose it would get?

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Anyone want to take a guess at
that?

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We have historical experience.

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This is what the Clintons did,
right?

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Nearly two decades ago,
and it got shot full of holes

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immediately, right?

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There was just--there was
virtually no support for it

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because all the defensive
interest groups staked out their

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ground,
no concessions,

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or very few concessions were
made,

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and it just sank.

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Does anybody remember how the
Obama people handled this piece

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of legislation?

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What did they say to the
Speaker of the House,

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Nancy Pelosi?

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Anybody--do you guys read
newspapers?

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Tom, do you have any memory of
this?

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Student:  I mean he more
or less gave some broad outlines

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of principles for the bill and
then said,

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"You do it,"
and handed the whole thing over

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to the legislature.

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Prof: Okay,
so he handed the thing to The

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House of Representatives,
and the lobbying process became

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very intense,
and it is an incredibly

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intricate set of,
not--most of it--an awful lot

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of it is like the earmarks for a
bridge in Alaska,

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but it's usually not a bridge
in Alaska,

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it is a podiatrist in an office
spread all the way across the

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country.

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And I really do believe in
markets, and there is so much in

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this bill that would not meet
market tests,

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right?

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If you said we're going to
require the service of

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podiatrists in a certain aspect
of it,

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and you ask yourself,
well would people sign up for

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that if it were not required by
law?

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In an awful lot of cases the
answer is yes of course,

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some would sign up for it,
but the amount spent would be

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billions less than if you do it
this way.

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Now you all can--I voted for
President Obama and I'm deeply

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supportive of his and other
people's goals for the country,

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but this bill,
I can't--I really can't stand

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up for it.

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Does anybody want to take the
affirmative about why it is

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we've just got to get this done?

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I promise to be polite.

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Okay, well we'll go from
something easy to something more

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difficult.

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Mory's is--okay let's first
find out how many of you have

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ever set foot in Mory's?

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Wow, so we have a whole room
full of experts.

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Would somebody like to recap
what they think the last year or

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two of Mory's existence looked
like?

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This could be fun, go for it.

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Student:  There was like
a struggle to be much more

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inclusive,
so there were all these

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promotions so you could get a
Mory's membership for $10,

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you could come in and get $10
off your,

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like, meal and my friends and I
totally made use of that because

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we like eating everywhere at
Yale,

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around Yale.

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So we did go a few times,
but we never got a--

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I don't think we ever really
got a Mory's membership,

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things fell through,
and then we never really heard

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about it again.

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Prof: It closed on the
19^(th) of December.

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Do you want your money back?

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Student:  No, I'm fine.

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Prof: Okay.

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Anybody want to say anything
about what they think the place

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was like from a member or
customer point of view over the

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last couple of years?

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Any complaints?

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We have complaints--did I see a
hand here?

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Here's one back here.

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Student:  The food.

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Prof: The food.

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How was the service?

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Student:  Well--
Prof: Mes-a-mes?

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Student:  Yeah.

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Prof: Mory's lost a lot
of money in the last two and a

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half years it operated;
roughly speaking $1,000 a day.

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Chris Getman here became its
president after the disaster was

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revealed, and has been working
with a group of us to bring it

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back.

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I thought I would start with
Chris and just get him to

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reflect for a minute on what the
task looks like,

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and what we hope to accomplish,
and then we'll talk to

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Jonathan,
and then I'll come back with a

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summary of the business plan.

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Chris Getman:
Well, let me start by

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saying that the--how does this
work?

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Hello?

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Prof: It works just like
that.

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Chris Getman:  Okay.

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The first thing I--like a
Whiffping.

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I'll just--can you all hear me
if I talk like this?

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The first thing I did before I
became president was to get Doug

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Rae to agree to join our board.

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The second thing I did after I
was president was to close the

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place,
terminate everybody in

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management but one person who's
still with us,

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her name is Robin Soltas (sp?)

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and she's a terrific employee,
and then we had to lay off all

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the staff.

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We were going to run out of
money the middle of January,

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we closed on the 19^(th) of
December,

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and actually this is a good
thing because as you said,

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Mory's was doomed given the
quality of the food and the

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service basically.

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That's what makes restaurants
succeed or fail and we were not

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succeeding in that regard at
all.

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I think that when we reopen
it's going to be a place where

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you guys are really going to
want to go.

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We are reaching out to the
students, if you want your $10

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your back, when we're
profitable, we'll get it to you.

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The second thing I did after
that was to get Jonathan to

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agree to work with us.

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In addition to being a great
guy he's also a form of Whiff,

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and as I think most of you
know, the Whiff's are a very

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important constituency of
Mory's,

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along with a lot of others,
the athletic teams,

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political affiliations,
and faculty,

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etc., but the Whiffs were a big
part of Mory's and the reason a

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lot of people go there on Monday
nights.

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We have formed a committee to
raise money to not only make

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capital improvements to the
club,

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it was pretty run down for
structural improvements,

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goes from the wiring all the
way to getting working

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fireplaces in a couple of the
rooms,

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and the cost to do what we hope
to do is going to be something

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in the neighborhood of $2.9
million dollars.

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We're well along the way to do
that and I hope to have good

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news about the fact that we've
reached our goal and can open--

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and we're not going to sign any
long term contracts with

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electricians,
or plumbers,

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or contractors until we know
we'll be able to see the job all

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the way through.

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It's been fun.

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There's an awful lot of--Mory's
is the largest private club in

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the world because in the old
days there were--

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you were a lifetime member and
it would cost $15 to join for

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life,
and so we have 14,000--or

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probably 13,000 members now;
many of them we don't hear from

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but there's an awful lot of
loyalty and a positive sentiment

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about the club,
and we're very confident that

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this is going to happen.

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Jonathan Ingham:
Why Mory's and why Mory's

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as an association as opposed to
an adjunct or some form of open

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house being run by Yale.

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Let me back up a little bit.

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Ten minutes ago,
Doug asked me to come in and

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share some of my thoughts about
Mory's with you,

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and so this is--I'm talking as
I'm thinking and I'm going to

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try and relate it to the purpose
of this class,

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which is capitalism.

15:56.700 --> 16:06.950
First of all, why Mory's?

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I came back to the Yale Bowl
about five or so years ago and I

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was watching the Harvard game,
and I was sitting with some of

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my Harvard friends,
and about halfway through the

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game I wasn't having any fun,
and so I said I'm going to go

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back to New Haven and just hang
out and see what's going on.

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I couldn't find a door that was
unlocked in the entire town of

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New Haven,
and I'm thinking to myself,

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where do people like me go on a
Harvard weekend,

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or any other kind of weekend,
or when I want to show up in

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town there's no place.

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I wasn't a member of Mory's
before I got involved with this,

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because back when I was your
age, plus two or three years,

16:53.370 --> 16:58.350
I didn't have the $25 to--or at
least I didn't think it was a

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good expenditure $25 for a
lifetime membership,

17:02.500 --> 17:04.210
so I kind of ignored it.

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Then I started going back with
a Whiff alumni group,

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and we would sing on occasion
at Mory's,

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on Monday's when the Whiffs
were somewhere else,

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and it occurred to me that this
was a place that deserves to be

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alive.

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But as I looked around and saw
this place, it clearly didn't

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reflect the needs of the
marketplace.

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It was basically a place where
old guys go and have meals

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occasionally.

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I didn't see any students
there, there was no vibrancy,

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no relevance to the place,
and so then I got involved

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because of these guys,
and the whole concept of what

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Mory's should be became
crystallized in my thinking.

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It belongs because it
represents 150 years of

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experience, all the pictures up
there, all the traditions and

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cups.

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Everybody has their own
particular memories about it,

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but collectively,
it is an important part of,

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I think, the Yale experience.

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And, I think,
sadly, it hasn't been an

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important part of your
collective experience.

18:27.410 --> 18:32.100
I think if you do a survey
among the graduate students,

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85% to 90% of them won't
even--or never thought that they

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were eligible for membership to
Mory's.

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I think what we're trying to do
here is to preserve the

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memorable aspects of Mory's,
the iconic nature of the place,

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but also to open it up and make
it a welcoming institution for

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the student body,
both graduates and

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undergraduates.

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And by that I mean
having--expanding things like

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singing group nights,
doing things which we found to

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be successful at the Yale Club
in New York,

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which was to have poetry
readings, discussions of novels,

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and any kind of thought.

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We want to be open to the
student body to be able to say

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come on and let's discuss this
here.

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Then of course we hope that
that sort of activity will spill

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over and include some selling of
drinks and food.

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Prof: Terrific.

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Jonathan Ingham:
But basically--let me just

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finish one thing.

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It belongs--run by market
forces, not by Yale.

19:44.430 --> 19:50.400
The alumni--the Rose Alumni
House is useless as far as most

19:50.402 --> 19:54.172
graduates go,
and a Mory's which would be run

19:54.173 --> 19:57.453
by Yale,
I think would similarly not be

19:57.453 --> 19:58.323
relevant.

19:58.318 --> 20:01.928
I believe an active,
well-run restaurant,

20:01.930 --> 20:05.340
bar and lounge,
which is responsive to the

20:05.337 --> 20:08.617
needs of the student body,
is the way to go,

20:08.617 --> 20:11.887
and that's where I think we're
trying to come out on this deal.

20:11.890 --> 20:13.860
Prof: Okay.

20:13.859 --> 20:14.959
Now let's talk business.

20:14.960 --> 20:20.090
Mory's, in its last year of
operation, did about $900,000 of

20:20.090 --> 20:22.700
bar and restaurant business.

20:22.700 --> 20:28.650
When I say bar and restaurant
you may be confused by the first

20:28.646 --> 20:29.326
word.

20:29.329 --> 20:32.419
Where's the bar at Mory's?

20:32.420 --> 20:35.310
There is none.

20:35.309 --> 20:37.129
Right?

20:37.130 --> 20:42.350
It's founded on drinking songs
and it has no bar;

20:42.349 --> 20:43.939
kind of odd.

20:43.940 --> 20:47.900
It is all about Yale,
and only 7% of Yale's enrolled

20:47.904 --> 20:49.774
students belong to it.

20:49.769 --> 21:00.229
It is a business with an
absolutely natural market all

21:00.234 --> 21:02.214
its own.

21:02.210 --> 21:06.570
Steven Blumenfeld,
who's a junior in the college,

21:06.568 --> 21:09.198
was in this course a year ago
when I got started on this,

21:09.200 --> 21:10.910
and he said,
"Why don't we do a

21:10.913 --> 21:11.653
survey?"

21:11.650 --> 21:14.510
So he did a survey monkey
instrument,

21:14.509 --> 21:18.459
and got 600 student answers,
and the most interesting thing

21:18.459 --> 21:22.819
about it was that something over
200 of the 600 thought that they

21:22.816 --> 21:25.196
were ineligible to join Mory's.

21:25.200 --> 21:28.790
They thought it was
somehow--for all different

21:28.790 --> 21:31.720
reasons,
but a third of our market just

21:31.717 --> 21:34.947
thought,
"Can't go there,"

21:34.946 --> 21:37.586
so that's kind of an issue.

21:37.588 --> 21:42.328
Well the--also in the
background the university has

21:42.333 --> 21:48.313
done some focus groups over the
last five years looking for what

21:48.309 --> 21:53.619
students and a larger Yale
community want in the Broadway

21:53.623 --> 21:55.903
walk part of town.

21:55.900 --> 21:57.950
What do you think comes up
number one?

21:57.950 --> 21:59.890
Student:  Bar.

21:59.890 --> 22:02.510
Prof: Bar,
and a specific kind of bar;

22:02.509 --> 22:05.369
a sports bar.

22:05.368 --> 22:10.938
What we're going to do is in
the back of the building,

22:10.940 --> 22:15.840
facing away from York Street
toward Morrison Styles,

22:15.838 --> 22:20.348
toward the retail block,
we're going to put a bar that

22:20.347 --> 22:24.087
we'll have a walkway,
an indoor walkway into the main

22:24.086 --> 22:27.456
building,
and it will be a kind of--it'll

22:27.461 --> 22:31.751
have characteristic Mory's
memorabilia and a Yale

22:31.751 --> 22:36.291
atmosphere to it,
but there will be plasmas and

22:36.286 --> 22:41.136
you can watch even such
below-the-salt institutions as

22:41.142 --> 22:46.732
Michigan and The University of
Southern California on a plasma

22:46.730 --> 22:47.830
screen.

22:47.828 --> 22:57.028
The--and that slots into the
basic bottom line goal.

22:57.029 --> 23:02.169
Mory's did $900,000 in
business, it had roughly $1.5

23:02.173 --> 23:07.523
million in expenses last year,
and you do the math.

23:07.519 --> 23:13.379
The average labor cost embodied
in each meal served was $31.50;

23:13.380 --> 23:18.950
cogitate that for a second.

23:18.950 --> 23:22.590
I didn't say anything about the
cost of the food,

23:22.592 --> 23:24.112
heat, electricity.

23:24.109 --> 23:28.139
Labor: $31.50--yes.

23:28.140 --> 23:30.760
Student:  I remember you
mentioned in a class earlier

23:30.763 --> 23:32.943
this year that it was because of
the labor unions,

23:32.942 --> 23:34.502
and so is that still a problem?

23:34.500 --> 23:39.860
Prof: One of the reasons
we didn't do this a few weeks

23:39.855 --> 23:44.755
ago is that I can't give a
completely straight answer to

23:44.763 --> 23:49.223
every question,
and that's one of the questions

23:49.224 --> 23:52.164
which is very much up in the
air.

23:52.160 --> 23:55.910
If I said it was because of the
union, I misspoke.

23:55.910 --> 23:59.630
The union is--my assessment is
that the problems with the union

23:59.630 --> 24:02.810
were about a quarter to a third
of what was wrong,

24:02.808 --> 24:06.858
and Chris--you know mostly when
people say,

24:06.858 --> 24:08.848
"We've got a terrible
labor problem,"

24:08.847 --> 24:10.617
the first question you have to
ask is,

24:10.618 --> 24:12.158
"Don't you maybe have a
terrible management

24:12.163 --> 24:12.693
problem?"

24:12.690 --> 24:15.940
And Mory's had both.

24:15.940 --> 24:20.650
Often the trouble--the contract
was onerous, there's no

24:20.650 --> 24:21.610
question.

24:21.608 --> 24:27.708
The tight work rules,
benefits comparable to General

24:27.711 --> 24:33.411
Motors;
it was a bad contract.

24:33.410 --> 24:38.150
But we have a very cooperative
relationship with Unite here and

24:38.154 --> 24:40.564
Local 217,
and we're working on a

24:40.557 --> 24:44.587
constructive agreement that will
include all kinds of things you

24:44.588 --> 24:47.148
don't usually see in labor
contracts.

24:47.150 --> 24:51.010
This is me speaking,
not an official statement,

24:51.009 --> 24:56.579
but it is my hope that it will
include an individual incentive

24:56.577 --> 25:02.327
story where if people work hard
and help us produce profits,

25:02.328 --> 25:05.298
they'll share in it beyond
their wages,

25:05.298 --> 25:08.758
and I actually think we might
get to that,

25:08.759 --> 25:12.129
though nothing to announce but
just an aspiration.

25:12.130 --> 25:17.800
Okay so we eventually come up
with a business plan,

25:17.798 --> 25:22.918
and Mory's has to go from
$900,000 in business to a $1.9

25:22.923 --> 25:26.383
million,
and much under a $1.9 million

25:26.378 --> 25:28.388
it isn't going to work.

25:28.390 --> 25:34.030
Then you ask yourself how many
restaurants in New Haven make a

25:34.026 --> 25:37.626
$1.9 million a year in gross
revenue?

25:37.630 --> 25:43.270
Anybody got a guess?

25:43.269 --> 25:47.479
There are MBA's in the room;
you guys are good at guessing.

25:47.480 --> 25:48.880
Igor what do you have?

25:48.880 --> 25:49.620
Student:  How many
restaurants?

25:49.618 --> 25:52.398
Prof: How many
restaurants make a $1.9 million

25:52.402 --> 25:53.902
a year gross in New Haven?

25:53.900 --> 25:56.050
Student:  Zero.

25:56.048 --> 25:58.208
Prof: Zero,
you're not too far off.

25:58.210 --> 25:59.640
Richard, what do you have?

25:59.640 --> 26:00.790
Student:  A handful.

26:00.789 --> 26:03.179
Prof: A handful.

26:03.180 --> 26:05.580
You nailed it,
two is the answer.

26:05.578 --> 26:10.808
There are exactly two such
restaurants, and they're both on

26:10.807 --> 26:15.137
the edge of the campus,
and therefore potentially

26:15.135 --> 26:17.475
competitors to Mory's.

26:17.480 --> 26:21.430
Can you name them?

26:21.430 --> 26:23.040
Student:  Union League.

26:23.039 --> 26:24.469
Prof: Union League.

26:24.470 --> 26:26.660
Student:
>

26:26.660 --> 26:27.930
Prof: Say again.

26:27.930 --> 26:29.050
Student:  Miya's.

26:29.049 --> 26:30.489
Prof: No.

26:30.490 --> 26:33.350
I think I heard the right
answer.

26:33.349 --> 26:34.479
Student:  Zinc.

26:34.480 --> 26:37.140
Prof: Yeah,
and those are guesses on my

26:37.144 --> 26:37.564
part.

26:37.558 --> 26:40.028
They're rather well educated
guesses.

26:40.029 --> 26:44.519
It's not as if these
restaurants gave me their books,

26:44.519 --> 26:46.679
but they're my guesses.

26:46.680 --> 26:49.110
That's the competitive
standpoint.

26:49.108 --> 26:57.408
Mory's--what drives the
business?

26:57.410 --> 27:01.170
What's the first driver you
have to think about?

27:01.170 --> 27:05.250
Well the--we all know it has to
do with food,

27:05.253 --> 27:09.433
drink, service,
quality of experience in every

27:09.431 --> 27:14.631
way but why don't more people
walk through the door?

27:14.630 --> 27:18.080
Well partly because all those
things are not very good,

27:18.078 --> 27:21.528
but partly because they don't
think they're invited.

27:21.528 --> 27:25.128
Because they don't think
they're invited,

27:25.134 --> 27:28.204
it never occurs to them to
come.

27:28.200 --> 27:33.920
Now what--if you were going
to--let's name a demographic by

27:33.920 --> 27:38.060
how old they are,
how much money they make,

27:38.061 --> 27:40.431
and where they live.

27:40.430 --> 27:46.400
Who should we think of as the
people who can make Mory's into

27:46.396 --> 27:49.676
a $1.9 million dollar business?

27:49.680 --> 28:01.500
Yale alumni living in
California?

28:01.500 --> 28:10.660
Okay, hands up for that;
okay so that's not--so the fact

28:10.656 --> 28:13.776
that Yale has 160,000 living
alumni,

28:13.778 --> 28:19.008
and that the vast majority of
them have handsome incomes,

28:19.009 --> 28:22.529
does that solve our problem or
not?

28:22.529 --> 28:27.379
Not;
is there a subset that might

28:27.377 --> 28:29.757
help solve our problem?

28:29.759 --> 28:32.259
Yes.

28:32.259 --> 28:33.699
Student:  Well,
those within driving distance.

28:33.700 --> 28:37.030
Prof: Okay,
good, it's a thirty mile

28:37.027 --> 28:39.877
radius, and there are about
7,800.

28:39.880 --> 28:44.260
Yale alumni in a thirty mile
radius, and we're not

28:44.257 --> 28:46.577
getting--almost nothing.

28:46.578 --> 28:51.758
Can you think of another market
segment that you might want to

28:51.757 --> 28:53.367
pay attention to?

28:53.369 --> 28:56.769
It's already been mentioned.

28:56.769 --> 28:57.549
Student:  Current
students?

28:57.548 --> 28:59.888
Prof: Yeah,
I'm holding up a mirror,

28:59.894 --> 29:00.514
it's you.

29:00.509 --> 29:09.729
Now let's start--may I presume
to start with you?

29:09.730 --> 29:22.080
This is a sales call;
I'd like you to join the

29:22.078 --> 29:23.478
restaurant.

29:23.480 --> 29:28.150
Student:  What does that
entail--or how much do I have to

29:28.153 --> 29:28.603
pay?

29:28.598 --> 29:30.778
Prof: How much do I have
to pay?

29:30.778 --> 29:33.648
You have to pay $15--what year
are you?

29:33.650 --> 29:35.210
Student:  I'm a senior.

29:35.210 --> 29:36.760
Prof: You're a senior.

29:36.759 --> 29:39.189
Well you're not going to get
the best deal,

29:39.192 --> 29:42.552
because the price is for the
duration of your years at Yale

29:42.554 --> 29:43.544
as a student.

29:43.538 --> 29:47.738
The price is $15,
and we're going to give you a

29:47.741 --> 29:50.301
$10 food and drink credit.

29:50.299 --> 29:51.279
Are you 21?

29:51.279 --> 29:51.429
Student:  Yeah.

29:51.430 --> 29:56.620
Prof: Okay,
so a $10 drink and food credit,

29:56.619 --> 30:02.229
so the net cost to if you like
to either drink or eat,

30:02.233 --> 30:05.733
and we have good stuff is $5.

30:05.730 --> 30:10.560
Student:  Do I pay $5
dollars flat?

30:10.558 --> 30:15.668
Prof: Yeah you're going
to have to write a check for $15

30:15.669 --> 30:17.069
for the rebate.

30:17.069 --> 30:20.039
Are you going to do it or not?

30:20.038 --> 30:21.938
Student:  I'd have
to--it depends on if other

30:21.944 --> 30:23.444
people I know are going to do it
also.

30:23.440 --> 30:25.250
Prof: That's a really
good answer.

30:25.250 --> 30:28.670
It depends on if other people I
know are going to do it.

30:28.670 --> 30:34.940
I think you're exactly right,
but tell me how you got--what

30:34.936 --> 30:36.986
are you thinking?

30:36.990 --> 30:39.910
Student:  Well I've
never been to Mory's before,

30:39.910 --> 30:43.120
and I don't want to just go in
and sit by myself if none--

30:43.118 --> 30:44.818
no one else I know is going to
be there.

30:44.818 --> 30:47.458
Prof: That's absolutely
the right answer,

30:47.460 --> 30:53.970
right, because restaurants and
clubs are a so-called network

30:53.967 --> 30:56.607
good,
and the value of going by

30:56.608 --> 31:00.338
yourself and sitting in the
corner is not very high.

31:00.338 --> 31:05.028
It's meant to be friendly,
so there's a huge insight

31:05.025 --> 31:05.755
there.

31:05.759 --> 31:06.959
Let me try a couple more people.

31:06.960 --> 31:13.010
Jennifer how about you?

31:13.009 --> 31:18.919
This is a sales call.

31:18.920 --> 31:20.070
You already know the price.

31:20.068 --> 31:21.768
Student:  All right,
well I would want to know what

31:21.766 --> 31:23.776
kind of food they serve,
because if I have--if I'm a

31:23.780 --> 31:25.500
picky eater,
maybe I wouldn't even enjoy

31:25.498 --> 31:27.108
going there because I'm not
twenty-one.

31:27.108 --> 31:29.088
Prof: Okay,
you're not twenty-one,

31:29.086 --> 31:30.466
and are you a picky eater?

31:30.470 --> 31:32.630
Student:  For these
purposes yes,

31:32.630 --> 31:33.350
today I am.

31:33.348 --> 31:37.028
Prof: Okay,
what are you--what are your

31:37.029 --> 31:37.929
criteria?

31:37.930 --> 31:41.640
Student:  Let's say I'm
a vegan, would I even want to

31:41.638 --> 31:42.078
join?

31:42.079 --> 31:44.699
Prof: You're a vegan?

31:44.700 --> 31:48.050
The 3/4 pound hamburger that we
plan to serve,

31:48.048 --> 31:49.388
that's not good.

31:49.390 --> 31:50.460
Student:  No.

31:50.460 --> 31:53.520
Prof: Okay so you're
going to want to have--you don't

31:53.519 --> 31:56.269
insist I--you insist that we
serve only vegan food?

31:56.269 --> 31:58.809
Student:  No,
but I want to know that if I go

31:58.813 --> 32:01.163
there I will enjoy my
experience, so if you have

32:01.155 --> 32:03.595
options that I would eat that
would be great.

32:03.598 --> 32:08.568
Prof: So vegan options
and we're going to be open a

32:08.567 --> 32:09.087
lot.

32:09.088 --> 32:11.528
It used to be we were open
thirty-nine hours a week,

32:11.528 --> 32:14.378
we're going to be open 65.5
hours a week,

32:14.380 --> 32:17.390
and a lot of that extra time is
pub time,

32:17.390 --> 32:20.610
where the restaurant will be
closed but the pub will be open,

32:20.608 --> 32:25.698
and the idea is to come in and
meet your friends for a drink

32:25.696 --> 32:27.936
and have a vegan burger.

32:27.940 --> 32:30.300
Student:  That sounds
great.

32:30.298 --> 32:31.328
Prof: Am I getting
anywhere with you on that?

32:31.328 --> 32:33.318
The vegan burger or that
doesn't--

32:33.318 --> 32:35.098
Student:  Yeah,
and you know most things served

32:35.096 --> 32:36.466
at a bar are vegan,
so I think I would.

32:36.470 --> 32:40.180
Prof: So your--did you
sign up or not?

32:40.180 --> 32:42.040
Student:  I haven't.

32:42.038 --> 32:44.748
Prof: Still in doubt,
okay, all right.

32:44.750 --> 32:55.870
Let's go right here,
so $15 minus $10?

32:55.868 --> 32:58.488
Student:  Yeah,
I mean, I actually--

32:58.490 --> 33:01.170
I thoroughly enjoyed going even
before the--

33:01.170 --> 33:06.260
before it shut down but I
never--see I never went to eat,

33:06.259 --> 33:07.869
was the thing, though.

33:07.868 --> 33:10.538
We always went for cups with a
group of friends or something

33:10.537 --> 33:12.707
along those lines,
so I'm definitely attracted by

33:12.707 --> 33:13.247
the bar.

33:13.250 --> 33:15.880
Prof: Do you actually
like cups?

33:15.880 --> 33:19.730
Student:  It was more
just sort of the experience,

33:19.732 --> 33:22.282
which was what was being
discussed.

33:22.278 --> 33:24.598
Prof: I actually think
there's this peculiar thing

33:24.601 --> 33:25.141
about cups.

33:25.140 --> 33:30.280
I know lots of people who do
cups and don't like them,

33:30.278 --> 33:34.428
and it's--what they're doing,
and it's your point,

33:34.430 --> 33:36.300
it's the social thing,
it's with your friends.

33:36.298 --> 33:38.218
Chris, do you claim to like
cups?

33:38.220 --> 33:42.640
Chris Getman:
If you put a cup on the

33:42.641 --> 33:46.961
menu as a drink,
and served it by the glass,

33:46.961 --> 33:48.671
probably not.

33:48.670 --> 33:51.350
It's the experience,
quite frankly.

33:51.348 --> 33:53.628
Prof: Yeah,
it is the experience.

33:53.630 --> 33:55.510
Jonathan, I think I remember
that you don't much care for

33:55.505 --> 33:55.735
them.

33:55.740 --> 33:58.120
Chris Getman:
And I like to drink.

33:58.118 --> 34:01.668
Prof: We have that in
common;

34:01.670 --> 34:03.310
all three of us have that in
common.

34:03.308 --> 34:09.978
It's a pretty diverse student
market, but it turns out that

34:09.981 --> 34:16.311
the students are the drivers,
the biggest driver for the

34:16.309 --> 34:18.149
whole thing.

34:18.150 --> 34:25.410
The reason is that the ambience
of the place is geriatric,

34:25.414 --> 34:28.734
and geriatric is boring.

34:28.730 --> 34:31.660
For example,
I got my mother to move into an

34:31.657 --> 34:34.767
assisted living home a year ago,
and she said,

34:34.773 --> 34:38.113
"Promise me you'll get me
out of here after a year if I

34:38.106 --> 34:40.646
hate it,"
and after a year she said,

34:40.650 --> 34:42.300
"I hate being around these
old people,

34:42.300 --> 34:44.670
get me out of here,"
and she's out.

34:44.670 --> 34:49.220
So we've got to get you
involved to get other people

34:49.217 --> 34:50.197
involved.

34:50.199 --> 34:57.359
Now the faculty are also--it
turns out the faculty are the

34:57.362 --> 35:05.282
biggest spenders on a per capita
basis at Mory's but we're still

35:05.277 --> 35:09.937
way short of enough--
what I've talked about now so

35:09.938 --> 35:11.928
far is about enough to do a
million,

35:11.929 --> 35:13.919
$1.1 or $1.2 million.

35:13.920 --> 35:16.590
Where else are we going to go
looking for customers?

35:16.590 --> 35:23.270
Anybody got a thought?

35:23.269 --> 35:31.509
In the back--
Student:  Tourists and

35:31.512 --> 35:36.362
visitors to New Haven.

35:36.360 --> 35:40.580
Prof: Okay,
tourists and visitors,

35:40.581 --> 35:43.221
what do you think guys?

35:43.219 --> 35:46.199
Jon do you think that'll work
or not?

35:46.199 --> 35:47.709
Chris Getman:
Tough in the club model.

35:47.710 --> 35:49.630
Prof: Yeah,
the trouble with that is that

35:49.626 --> 35:50.236
we're a club.

35:50.239 --> 35:53.139
Now it can be the people who
have reciprocal agreements with

35:53.139 --> 35:55.299
the Mory's club,
and there are how many clubs

35:55.300 --> 35:55.990
like that?

35:55.989 --> 35:57.739
Jonathan Ingham:
Right now there's only one but

35:57.735 --> 35:59.215
there are going to be several
when we reopen..

35:59.219 --> 35:59.809
Prof: Okay.

35:59.813 --> 36:01.393
Jonathan Ingham:
That's one of the things

36:01.394 --> 36:02.454
we're going to focus on.

36:02.449 --> 36:05.439
Prof: Okay we,
our--our business plans counts

36:05.440 --> 36:07.260
on no business from tourists.

36:07.260 --> 36:10.760
Anybody else got a thought?

36:10.760 --> 36:15.290
Student:  Making members
or new members annually,

36:15.289 --> 36:18.199
so even if they're not actually
coming into the restaurant they

36:18.195 --> 36:19.645
still pay the membership fee.

36:19.650 --> 36:23.030
Prof: Okay,
turns out that the membership

36:23.027 --> 36:25.317
dues are--
they're a nice little add on,

36:25.315 --> 36:28.265
but they're in the neighborhood
of the last couple of hundred

36:28.266 --> 36:32.556
thousand dollars,
and that's not chicken feed for

36:32.563 --> 36:36.253
us,
but it's not foundational.

36:36.250 --> 36:40.400
In the back--
Student:  One of the

36:40.400 --> 36:44.090
previous barriers for Mory's was
the perception of exclusivity,

36:44.090 --> 36:49.490
and if you opened up membership
to the larger Yale community,

36:49.489 --> 36:51.579
broadly defined,
that would open new revenue

36:51.583 --> 36:53.903
streams,
so not just the students but

36:53.900 --> 36:55.620
faculty and staff as well.

36:55.619 --> 36:57.659
Prof: Okay that's huge.

36:57.659 --> 36:59.929
First of all,
the entire staff of the

36:59.934 --> 37:03.924
university becomes eligible for
membership, whatever the rank or

37:03.916 --> 37:05.176
job description.

37:05.179 --> 37:08.309
Chris Getman:
That's already been voted

37:08.309 --> 37:08.649
on.

37:08.650 --> 37:13.090
Prof: Second,
the subway alumni are a very

37:13.090 --> 37:16.330
important part of any
university.

37:16.329 --> 37:21.259
Like Notre Dame has about six
million subway alumni,

37:21.260 --> 37:25.900
people who identify with the
school and do all the stuff and

37:25.896 --> 37:29.586
never set foot on it in the role
of student,

37:29.590 --> 37:33.200
and Yale has some of that too,
quite a lot of it.

37:33.199 --> 37:39.709
Where do we go looking for
people who obviously love the

37:39.706 --> 37:46.926
institution but don't show up on
our record of alumni and such

37:46.925 --> 37:47.985
like?

37:47.989 --> 37:50.469
Student:  Parents
associations.

37:50.469 --> 37:52.339
Prof: Say again.

37:52.340 --> 37:53.970
Student:  Like the
parents of the students.

37:53.969 --> 37:55.389
Prof: Parents?

37:55.389 --> 37:59.279
Yes, student parents are one
segment of subway alumni,

37:59.280 --> 38:03.600
and we think we probably get
400 or 500 of them to join

38:03.599 --> 38:08.759
annually,
and so that's not

38:08.760 --> 38:12.960
inconsequential.

38:12.960 --> 38:14.490
Student:  Donors to Yale
University.

38:14.489 --> 38:23.409
Prof: Okay anybody who
has ever given $100 to Yale,

38:23.409 --> 38:29.199
alumni or not,
is clearly eligible.

38:29.199 --> 38:31.249
Anybody else you might think of?

38:31.250 --> 38:33.480
Student:  Yale sporting
events.

38:33.480 --> 38:36.410
Prof: Yale sporting
events, very good.

38:36.409 --> 38:45.179
How would we go about finding
the right list there?

38:45.179 --> 38:49.319
Student:  A club.

38:49.320 --> 38:52.460
Prof: It's--first of a
club--we're not Joe's Bar &

38:52.458 --> 38:55.798
Grill,
so we can't sort of walk around

38:55.798 --> 39:01.258
at halftime at a football game
with a sign come to Mory's.

39:01.260 --> 39:02.950
Student:  Doesn't it
come down to the way you enter a

39:02.952 --> 39:03.442
sporting event?

39:03.440 --> 39:06.640
If you're affiliated with the
university either just kind of

39:06.641 --> 39:10.111
take it or get it for free using
your student card or whatever it

39:10.114 --> 39:11.784
us,
you want to have a list of the

39:11.777 --> 39:12.757
people that are paying.

39:12.760 --> 39:15.970
Prof: Okay so we want
actual paying customers,

39:15.969 --> 39:19.609
and the people we would aim at
are season ticket holders.

39:19.610 --> 39:24.230
Season ticket holders for Yale
athletics--are there any other

39:24.226 --> 39:27.146
groups like that you might think
of?

39:27.150 --> 39:34.900
Let's talk about your parents
and not about them being members

39:34.898 --> 39:38.398
of Mory's,
but what would trigger them to

39:38.400 --> 39:41.300
be members of Mory's if they
lived near Yale,

39:41.300 --> 39:43.960
and were not Yale alums?

39:43.960 --> 39:46.690
Want to take a shot at that?

39:46.690 --> 39:51.850
Not really, okay that's fine.

39:51.849 --> 40:05.669
These MBA's know it all.

40:05.670 --> 40:09.020
Student:  Well I guess
as parents coming to visit your

40:09.016 --> 40:11.216
student--
or your son or daughter as a

40:11.221 --> 40:13.051
student,
you may not necessarily be able

40:13.054 --> 40:15.344
to spend all the time that
you're on campus with them,

40:15.340 --> 40:18.620
and you want somewhere you can
go and just kind of kill some

40:18.621 --> 40:20.181
time while you're waiting.

40:20.179 --> 40:22.759
Prof: Okay,
so that's the parent niche

40:22.760 --> 40:23.230
again.

40:23.230 --> 40:27.550
How about people who have
already shown a propensity to

40:27.550 --> 40:30.430
spend money in things like
Mory's?

40:30.429 --> 40:35.999
How about the membership roster
of the New Haven Lawn Club?

40:36.000 --> 40:39.940
How about the membership roster
of the Quinnipiac Club or The

40:39.940 --> 40:43.390
Graduate's Club,
or The New Haven Country Club,

40:43.393 --> 40:47.513
or any one of twenty other
comparable clubs in the thirty

40:47.507 --> 40:48.607
mile circle?

40:48.610 --> 40:50.920
What do you think?

40:50.920 --> 40:54.630
Who's got an intuition one way
or the other about that?

40:54.630 --> 41:01.660
Let me give you another hint
about that.

41:01.659 --> 41:07.329
The dues at most of those clubs
is measured in the low thousands

41:07.329 --> 41:08.319
per year.

41:08.320 --> 41:12.820
The dues at Mory's,
no one will pay more than $100

41:12.820 --> 41:18.210
a year for Mory's,
and if you are a member of the

41:18.206 --> 41:21.356
Lawn Club--
the Lawn Club has food that is

41:21.356 --> 41:25.066
better than Mory's but a hell of
lot worse than Union League,

41:25.070 --> 41:33.310
and if I came to you and said,
$100/$2,000 I might get you to

41:33.309 --> 41:41.549
switch clubs but more likely
what I'd get you to do is to add

41:41.548 --> 41:43.058
Mory's.

41:43.059 --> 41:49.739
Yes, Jim.

41:49.739 --> 41:52.229
Jim Alexander:
Aren't you leaving out the

41:52.231 --> 41:55.141
all-important potential drinking
business of the grad and

41:55.139 --> 41:56.489
professional students?

41:56.489 --> 41:59.039
Prof: We are,
and I should point out to you

41:59.036 --> 42:01.466
that Jim Alexander,
whom you all know well,

42:01.474 --> 42:05.384
not just from his Enron days,
is, in eight days from now,

42:05.376 --> 42:09.206
assuming office as president of
the Lawn Club,

42:09.210 --> 42:12.090
and I was talking about
stealing his members sort of

42:12.094 --> 42:13.684
just to have fun with him.

42:13.679 --> 42:20.109
Do you think he can keep that
membership list secret from me?

42:20.110 --> 42:25.890
I was president two years ago,
plus there's a membership

42:25.887 --> 42:29.037
directory that is published.

42:29.039 --> 42:33.749
Now would I want to harm the
Lawn Club?

42:33.750 --> 42:37.550
Not at all, but would I like to
get in on a little of the

42:37.548 --> 42:38.158
action?

42:38.159 --> 42:39.879
Absolutely.

42:39.880 --> 42:42.860
Now--
Student:  I have a

42:42.862 --> 42:47.172
question about your--
Prof: Does it follow

42:47.166 --> 42:49.026
this line of--
Student:  Yeah,

42:49.029 --> 42:49.819
it's on this line of talking.

42:49.820 --> 42:52.030
Just a criticism,
I guess, are you a bit

42:52.034 --> 42:55.394
concerned that if you open the
net too broadly to Quinnipiac

42:55.387 --> 42:57.287
institutions,
Yale Lawn Club,

42:57.286 --> 43:00.496
etc., that you may be diluting
what was the value of the

43:00.503 --> 43:03.593
institution in the first place,
which is what we mentioned

43:03.592 --> 43:05.962
before, which was the history of
being a Yale institution.

43:05.960 --> 43:10.090
Prof: Okay,
that's a good question.

43:10.090 --> 43:14.990
Let me--let's turn--let's go
back to Jonathan and Chris about

43:14.987 --> 43:15.557
that.

43:15.559 --> 43:21.879
If we let too many non-blues in
the door, does the value of it

43:21.878 --> 43:25.088
for the blues begin to erode?

43:25.090 --> 43:27.160
Jonathan Ingham:
I don't think so.

43:27.159 --> 43:31.739
I don't think you can tell a
Yale graduate from a non-Yale

43:31.739 --> 43:36.239
graduate quite frankly out in
the general marketplace.

43:36.239 --> 43:42.729
I believe that the nature of
Mory's is going to be self

43:42.731 --> 43:49.221
selecting and people who are
interested in joining will

43:49.224 --> 43:51.994
naturally go there.

43:51.989 --> 43:55.189
Those who might not fit what
you consider the mold,

43:55.190 --> 43:58.070
or even the diluted aspect
probably would say,

43:58.072 --> 43:59.932
"Who needs it?"

43:59.929 --> 44:02.429
Prof: Okay,
I actually think there is a

44:02.434 --> 44:04.444
little bit of a dilution
problem,

44:04.440 --> 44:08.030
and there's a little bit of the
kind of Groucho Marx thing,

44:08.030 --> 44:09.240
where you say,
"I don't want to be a

44:09.244 --> 44:10.494
member of a club that'll take
me."

44:10.489 --> 44:14.779
The--but the segment of
students that we think we're

44:14.778 --> 44:19.318
going to get quite a great
change from that is starting

44:19.320 --> 44:23.780
from zero are graduate and
professional students.

44:23.780 --> 44:28.700
Leslie's a Ph.D candidate in
the political science

44:28.699 --> 44:33.319
department, what are our
prospects with you?

44:33.320 --> 44:37.470
Student:  I'd say
they're fairly good,

44:37.474 --> 44:43.054
but you've already pitched it
to me as an upscale version of

44:43.045 --> 44:43.985
GPSCY.

44:43.989 --> 44:46.389
Chris Getman:
Is she writing a

44:46.393 --> 44:47.373
dissertation?

44:47.369 --> 44:49.259
Prof: No.

44:49.260 --> 44:55.250
The--one of the things--well
how about MBA's?

44:55.250 --> 45:00.450
I'm hoping we're going to get
about an 80% response rate from

45:00.454 --> 45:03.234
MBA's, what do you think guys?

45:03.230 --> 45:05.460
Student:  Yeah.

45:05.460 --> 45:09.610
Prof: What is it--and
other than trying to please me

45:09.614 --> 45:12.694
at the moment,
what are you going to get out

45:12.693 --> 45:13.413
of it?

45:13.409 --> 45:19.639
Student:  I think that
for an MBA,

45:19.639 --> 45:22.179
there's also a lot of benefit
in the connections with other

45:22.184 --> 45:24.294
alumni that are willing to pay
and come back,

45:24.289 --> 45:26.559
as far as networking and future
job opportunities,

45:26.559 --> 45:29.009
and just getting to know people
in specific areas.

45:29.010 --> 45:31.450
Prof: Yeah,
and one more to the back.

45:31.449 --> 45:35.689
Student:  Also I don't
know of another place aside from

45:35.688 --> 45:39.858
GPSCY that has a patio where we
can just share a pitcher,

45:39.860 --> 45:43.410
and I think there's real value
in just being able to have an

45:43.407 --> 45:47.137
anchor institution that's close
to the center of the university

45:47.137 --> 45:47.797
campus.

45:47.800 --> 45:53.800
Prof: Absolutely,
so Chris, we've got five

45:53.800 --> 45:59.050
minutes left,
and I'll actually circle back

45:59.052 --> 46:06.432
to this later in the course,
but let's hear your pitch.

46:06.429 --> 46:12.859
Chris is a born salesman;
he is the best fundraiser I've

46:12.862 --> 46:15.352
ever been close to.

46:15.349 --> 46:21.019
We've raised--what was the
number determined this morning?

46:21.019 --> 46:22.609
Chris Getman:  $1.7.

46:22.610 --> 46:27.420
Prof: $1.7 million
dollars so far and Chris pitch

46:27.422 --> 46:28.562
this thing.

46:28.559 --> 46:31.889
Chris Getman:
Well I think--pitch it to

46:31.885 --> 46:35.145
the students or to--
Prof: Pitch it to

46:35.152 --> 46:35.822
everyone.

46:35.820 --> 46:37.840
Chris Getman:
Well what--first of all as

46:37.836 --> 46:40.406
Doug said right now the food at
Mory's is worse than the Lawn

46:40.413 --> 46:40.803
Club.

46:40.800 --> 46:43.840
I happen to be a longtime
member of the Lawn Club,

46:43.840 --> 46:48.590
and I ate there yesterday,
only because I couldn't go to

46:48.594 --> 46:51.364
Mory's,
but I think that in the future

46:51.360 --> 46:54.700
the food at Mory's is going to--
this is our hope anyway,

46:54.702 --> 46:57.472
the food and the service is
going to be something that

46:57.471 --> 46:59.301
people will want to go back too.

46:59.300 --> 47:02.590
We had a lot of people who
would go there for the first

47:02.585 --> 47:04.525
time and say,
oh this is so cool,

47:04.530 --> 47:06.600
because it was a unique place.

47:06.599 --> 47:11.299
But their dining experience,
both food wise and service wise

47:11.298 --> 47:14.638
was mediocre,
so they didn't become regular

47:14.643 --> 47:15.763
customers.

47:15.760 --> 47:18.880
So our first hope is that
all--everybody--

47:18.880 --> 47:23.140
the bar in the back we think
with the pub is going to be

47:23.139 --> 47:27.559
ideal for students and grownups
for that matter and I just

47:27.556 --> 47:30.806
wanted to add to what Doug was
saying.

47:30.809 --> 47:34.449
A couple of other groups that
we're going to target are

47:34.449 --> 47:38.609
subscribers to The Yale Rep,
subscribers to The New Haven

47:38.608 --> 47:41.888
Symphony Orchestra,
subscribers to Longworth,

47:41.885 --> 47:44.735
The Schubert,
who are people we feel won't

47:44.740 --> 47:47.540
really dilute the character of
the place,

47:47.539 --> 47:54.999
and we're very optimistic that
people are going to think that

47:54.998 --> 48:00.318
Mory's is a good value,
it's fun, and they're going to

48:00.324 --> 48:04.144
want to go back there,
and we're very optimistic about

48:04.139 --> 48:06.209
this $1.9 million in revenue.

48:06.210 --> 48:08.430
I just--I think that's a slam
dunk.

48:08.429 --> 48:15.239
Prof: We'll be
recruiting a marketing team in

48:15.239 --> 48:22.849
the spring term to help us hit
the numbers we have to,

48:22.849 --> 48:27.399
with new student enrollments,
and I hope one or two of you

48:27.396 --> 48:30.346
will take an interest in that
task.

48:30.349 --> 48:33.979
It's actually a really
interesting set of business

48:33.983 --> 48:34.803
problems.

48:34.800 --> 48:45.880
First let's thank my colleagues.

48:45.880 --> 48:50.730
On Monday next please read the
Goldman Sachs IPO,

48:50.728 --> 48:55.878
which we'll take apart,
and we'll have the help of a

48:55.878 --> 48:57.898
Goldman partner.

48:57.900 --> 49:03.000