Making the Right Bets

Upoma Dutta, Editor-in-Chief

Upoma Dutta (MBA ’21) speaks with Kevin Mayer (MBA ’90) about the leadership philosophies and self-discoveries connecting his past, present, and future.

By many measures, 2020 has so far been an unprecedented year—a year in which even the best-laid plans went awry and even the most grounded of us were pushed off-course. Some experts say that Covid-19 might have at least one lasting impact—our perceived loss of control might pave the way to an increased, almost irrational, sense of risk aversion. Even within the sparsely populated Aldrich Hall, indicators of our newly-ingrained risk aversion lay abound. (How many of us have not seen a friend drop their fervent startup plan this summer in favor of a role in a “stable” company?)

As the fallouts from Covid-19 remain freshly etched in our memory, does it make sense to give in to the availability bias and hedge our bets for the future? 

The answer might depend on the individual and their unique circumstances, but a lot could be learned from the sense of optimism and resolute determination of Kevin Mayer (MBA ’90), for whom the year could not have been any more unpredictable.

Previously touted as one of the most successful dealmakers at Disney, Mayer ended 2019 proving his mettle in running operations as well. After all, in his role as the Chairman of the Direct-to-Consumer & International (DTCI) segment in Disney, he led Disney’s biggest strategic priority of recent years—its foray into streaming—with the launch of new streaming services, Disney+ and ESPN+. He was reportedly one of the frontrunners in the race to succeed then-CEO Bob Iger (before the role went to Mayer’s counterpart from Parks, Experiences & Products segment, Bob Chapek).

In May, Mayer surprised the world by leaving Disney and choosing to run TikTok as its CEO. (“I did not leave Disney because I did not get the CEO job,” Mayer insists.) He also became the COO of TikTok’s Beijing-based owner, ByteDance. Many heralded the move as game-changing for the viral video-sharing app. However, over the summer, TikTok’s prospects took a dramatic turn as the Trump administration began to mount its pressure to ban the app in the US over national security concerns unless it was sold to an American buyer. Faced with geopolitical forces beyond his control, Mayer resigned from his roles at TikTok and ByteDance—in just three months after his appointment.

Does Mayer regret the decision of taking the bet on TikTok in the first place? Would the experience make him re-examine the risk-return tradeoffs when choosing his future leadership role?

“I caution myself and others to not take too much from a ‘black swan’ event like that because nobody could have foreseen the series of unprecedented events and because the chance of something like that repeating in future is quite low,” Mayer tells me in our recent Zoom conversation. “I’m happy I took the bet because it was the right bet to take at that time.”

At the same time, Mayer draws on resilience from his long résumé of accomplishments and his strong industry reputation developed over the years. “I don’t know what’s next but I’m excited about the future. When you build up the résumé and the confidence in yourself, you develop other people’s confidence in you, and that allows you to thrive no matter what happens.”

The Formative Years in the Industry

With undergraduate and master’s degrees in engineering, Mayer spent his early career in “hardcore” engineering involving radar systems, high-frequency microelectronics, and signal processing. He came to HBS to pivot from the technical side to the business side.

“HBS was very formative for me. The general management curriculum—including the classes in finance and strategy—was enormously important in my transition from a practicing engineer to a well-rounded business person. I also learned a lot just by observing and interacting with my classmates. It was an incredible opportunity to meet leaders from all walks of life and professions.”

Despite having lived and worked in LA, Mayer never considered a post-MBA career in the entertainment industry. In the early 1990s, after a few years in management consulting, Mayer was attracted to the opportunities emerging from the intersection of technology and entertainment. He was soon hired by Disney to bring in a technology perspective.

For decades, Disney has been one of the leading employers of MBA graduates. However, unlike Mayer, not all MBA graduates are able to climb to the top echelons of Disney. While looking back at his own meteoric rise at Disney, Mayer notes the value of hard work. “Nothing puts you in a better winning position than simple diligence and hard work. It might sound trite but putting in your best focus, your best energy and your most prodigious effort requires you to find a job that you really love doing and feel passionate about. All three elements—the process, the product, and the people you work with—must come together for you to love what you are doing.

“I was also careful in making sure that I took only roles that I thought I could succeed at. To use an extreme example, I would not be a director on a movie set—I would not know what I was doing. But I did put myself in a position to assess and negotiate the purchase of a movie brand like Marvel.”

The “Karma” in Dealmaking

At Disney, Mayer came to be known for his dealmaking prowess. He was the architect of a series of high-profile deals—Pixar (2006), Marvel (2009), Lucasfilm (2012), BAMTech (2017), and Fox (2019)—that transformed Disney, expanded its content portfolio and accelerated its shift to streaming.

It is difficult enough to do one multi-billion-dollar deal in the media and entertainment industry. Negotiating a number of such deals, often with founders who are not necessarily in the market to sell, is a completely different ball game. Mayer acknowledges that much of his success in serial dealmaking comes down to “karma” and his reputation as an “honorable deal guy.”

“If you are going to do more than one deal, it is important to demonstrate an extremely high level of integrity and an extremely high level of fairness,” Mayer explains. “Always do what you say you are going to do. When you make a promise to the counterparty and then don’t follow through, you lose credibility. And that makes it extremely hard to do the next deal.

“Don’t be afraid to fully pay for an asset, especially if you are buying an asset where you want the seller to be part of your enterprise going forward. Don’t take the last penny off the table. That’s a mistake a lot of people make. You need to make the deal as win-win as possible.

“Lastly, the most important thing in a deal is not knowing what to ask for but rather knowing what to give. Always look for asymmetrical opportunities where the other party wants something and values it more highly than you do. Focusing on these asymmetrical opportunities is crucial in getting the deal done.”

While the actual act of negotiating a deal with a seller like George Lucas was remarkable in its own way, Mayer was most energized by what came before and after the deal—identifying strategic assets to acquire and successfully integrating those assets, respectively. When it came to integration, he was hesitant to take a one-size-fits-all approach. For example, with the Fox deal, it was important to realize the promised cost synergies and eliminate redundancy. However, with deals like Pixar, Disney was not afraid to leave the acquired entity relatively intact.

“Before Pixar’s acquisition, Disney did everything but make the movies for Pixar. After the acquisition, nothing changed: Pixar still made the movies, and we handled marketing, distribution, and consumer products. We even had Pixar executives [Ed Catmull and John Lasseter] run Disney Animation Studios. To preserve the culture, we agreed to a number of organizational demands, like letting the entity keep the ‘Pixar’ name on the building and letting Pixar employees keep their email domain.”

Mayer’s Leadership Philosophy

At the height of Mayer’s career in Disney, some 25,000 employees in the DTCI segment were working for him. When reflecting on his leadership philosophy, Mayer points out the common tenets: being motivational (“People do a much, much better if they understand the ‘why’ behind the ‘what.’”), leading by example (“Expecting a lot from your own people requires you to exhibit the same behaviors and put in the same level of effort.”), and having high integrity.

In addition, Mayer highlights the importance of being direct while being respectful. “I don’t think people like to be coddled. People like to be told exactly what you think. If you are giving someone feedback, they should leave the session having absolutely no doubt about what you think.”

Taking a Leap of Faith

Under Mayer’s leadership, Disney+ proved to be one of the most successful product launches—if not the most successful product launch—of the last decade in the media and entertainment industry. The product amassed more than 28 million subscribers in less than three months after launch, far exceeding Wall Street analyst estimates.

Mayer’s impact on shaping Disney’s future, especially when it came to the company’s streaming ambition, was apparent in Bob Iger’s book, The Ride of a Lifetime (2019). In the book, Iger writes, “When Kevin Mayer came onstage to demonstrate how the app [Disney+] would work—on a smart TV, on a tablet, on a phone—it was impossible not to recall Steve [Jobs] standing in my office in 2005, holding out the prototype of the new video iPod.”

Leaving Disney to run TikTok—especially when Disney+ was just getting started—required Mayer to make difficult tradeoffs. “It was a hard call,” Mayer recalls. “I loved Disney and I still love Disney. It will always be a part of me. However, there were very few opportunities like running TikTok. It was an incredible product. The founder [Zhang Yiming] was a genius entrepreneur. The team was awesome.”

Although leading a large organization was nothing new for Mayer, there was one important difference between being the Chairman of a Disney segment and being the CEO of TikTok. “When you are at the top, the future of all the people working for you rests on your shoulders, and it gets a little lonely. At Disney, if I had a really tough decision to make, I could always go to Bob Iger and ask, ‘Hey Bob. What do you think?’”

Over the years, Mayer had found not only a sounding board but also a mentor in Iger. “I could not have achieved half of what I achieved without Bob. I cannot repay Bob for the way he took an interest in me and let me flourish by giving me opportunities. The only thing I can do is pay it forward by mentoring other people. That’s the ongoing cycle of mentorship and menteeship. I would really advise everyone to find some people they are willing to make bets on and make those bets.”

The Future of Technology-Media Convergence

The technology-media convergence, which drew Mayer to the entertainment industry in the 1990s, continues to play out to this day. When asked about his outlook for the future, Mayer admits, “It’s utterly impossible to predict what the future will be like.”

“The only thing that I know is that there will be a massive amount of change,” he adds. “In particular, over the near term, there will be a real rise of artificial intelligence and machine learning in the consumer space, especially around personalization and hyper-targeting.”

Given the impossibility of predicting disruptive technological shifts, how can businesses in the entertainment industry position themselves for continued success? The answer may partly lie in the blockbuster strategy that has come to shape Disney’s movies on the screen.

“At Disney, in the mid-2000s, we made a conscious decision of investing more and more in fewer and fewer projects. That was always a better strategy than making a lot of things and trying to align the portfolio. We were always focused on building a must-have product—a product that is of the highest quality and that the largest number of consumers simply cannot do without. In the entertainment industry, when you have the highest-quality product under the brands that really matter to consumers, you put the business in a position to thrive, even in the event of any technological disruption or shift in the underlying business model.”

Upoma Dutta (MBA ’21) came to HBS after spending roughly four years in the media and entertainment industry in New York, where she helped two media companies (HBO and Disney) transition into the streaming era and build on new strategic growth opportunities. Originally from Bangladesh, she also worked for the International Finance Corporation (World Bank Group) early on in her career to promote financial inclusion and financial sector stability in South Asia.