Big Cat Finance → Effable Studs → High Middle Digits

Hey Neighbor. True story. Two dads huddle at a shaded table on the Soho House rooftop overlooking the West Loop. “We finally joined the pool this year,” says the first. “Naturally, Hazel now only wants to swim in the lake.” The second one takes a long sip of his spritz. “Show her Jaws.”

“I think she’d root for the fish.”

➺ Thanks to “Midwest Niece” for the anecdote above. If you’ve had a similar close encounter with the Upper Middle, please share. It’s hugely appreciated.

➺ Profuse apologies to all those locked out of the paid beauty study last Thursday on Upper Middle Research. I know that’s frustrating and I have a list of clickers. I will find a way to make it up to you.

➺ The city feels different when the corner officers head to their second homes. It’s like when Mom was out of town and Dad made waffles for dinner.

Upper Middle’s “BIG FIGHT” Survey is our investigation into how members of the Oat Milk Elite get into with their partners. Extremely anonymous esults will be shared with survey participants and, as always, with members.

MONEY ❧ Intrusive Thinkers

Having been broadsided by piratical private equiteers, Greenwell, now the Editor-in-Chief of Wired, decided to figure out what the men and women (but mostly men) of America’s most circumspect industry were up to. The result, Bad Company: Private Equity and the Death of the American Dream, sifts through what trickles down when P.E. takes over businesses. It’s a book about debt – who winds up really paying it off – and what happens when capturing value takes a backseat to creating it.

Upper Middle spoke to Greenwell about what extreme financialization means for workers, America, and dinner party guest lists. The conversation has been edited for length and clarity.

Your book is about an industry hiding in plain sight. How can private equity be everywhere and nowhere?
P.E. likes to fly under the radar. That’s not hard. Most normal workers focus on the name on their paycheck, not their company’s debt load. By the same token, many financially literate people don’t do the legwork to figure out who owns their dentist or daycare. It’s too much to ask. But it does make a difference. The bankruptcy rate of companies owned by private equity is 10x companies under other types of ownership. 

My son’s daycare is owned by P.E. and I honestly don’t know which firm.
If he’s at The Learning Experience, it’s Harvest Partners and Golden Gate. 

Nailed it. How can a firm like that justify that kind of fail rate for businesses? And, given that fail rate, how can they justify leveraged buyouts that allow them to purchase companies with borrowed money then take 2% annual management fees and 20% profits shares?
P.E. execs say they take on companies at risk. That might be true, but it’s disingenuous. They don’t take on risk because they don’t take on the debt. The question I have put to many people in private equity to which I have never received a satisfying response is this: Why can't you share responsibility for the debt? On some level, the only answer it that it would break the business model. But that's not a defense. If you think you can turn around companies, put your money where your mouth is.

You spoke to a lot of P.E. guys for this book. Did they defend leveraged buyouts or were they just matter of fact about being coin-operated?
I talked to a lot of guys, but the only like high ranking person willing to talk on the record was Pete Stavros from KKR. When asked why he couldn’t raise salaries at Simon and Schuster, he said: ‘Well, it's not my money.’ Because P.E. works with pension funds, they fall back on the idea they’re doing everything they can for firefighters and nurses. But that assumes that capitalism is a zero sum game. We're in real trouble as a society if we grant the premise.

Stavros also likes to talk about small businesses. I generally agree that P.E. works well in a lot of those cases. But that’s not the bulk of the business. The bulk of the business is leveraged buyouts and the truth – I experienced this personally – is that these firms often have no idea how to run the business they buy. They treat everything, including healthcare, as a widget to be financially engineered. That indifference is worrying.

Those of us who invite friends in finance over to dinner tend to treat P.E. guys as just another breed of finance guy, but that’s not really fair to the other finance peeps. If P.E. guys profit from job loss and bankruptcy should we be inviting these dudes into our homes?
I don’t think we need to shame them, but I do think we should be honest about what they’re doing – specifically at the top. Stephen Schwarzman of Blackstone has his name all over every museum in New York. That's the opposite of shaming and I’m not sure it’s appropriate.

You’re one of the most successful journalists of your generation, was it odd talking to mid-level and maybe even junior P.E. employees making more money than you?
I mean… yes. I recently had an old student working on Wall Street who gently pointed out that he makes so much more money than me. But money isn’t the only form of privilege. We should all just walk around with signs indicating our various levels of privilege.

Isn’t that basically what P.E. guys are doing when they wear those vests?
Once, when I was a kid, I asked my parents why all big cats look basically the same. They told me, ‘You know when someone looks like you – even if there are subtle difference.’ It’s important to be able to recognize your species in the wild.

Bad Company: Private Equity and the Death of the American Dream is available now via Amazon and better places to buy books. It’s not hilarious, but Greenwell is a propulsive writer. Gripping stuff.

➺ Can Lululemon monkeywrench the Costco dupe machine? ➺ Do we even want it to? ➺ The trouble with professional financial advice is that not many people actually want it. ➺ “The second-highest income decile had an even greater share of income from wages, but substantially less from businesses, dividends and capital gains.” ➺ Polymarket is beating futures. Ruh roh.

TASTE ❧ F1 Sauce

Hollywood never fails to learn the wrong lesson so Apple execs in Culver City will credit the box office success of F1 to Brad Pitt or whip pans rather than the underlying I.P. Ostensibly an original story, F1 is actually – the director admits as much – an adaptation of Netflix’s covid-era hit Drive to Survive, a reality show that turned on MacBook-toting commuters by inverting the genre. F1 hit because Drive to Survive hit because those of us who still pay for culture hornily crave the effable.

Most reality shows – like most non-Tony Gilroy movies and all commercials – mystify their subjects, obscuring how things actually work^[1]. An obvious example: Love is Blind, which obscures the importance of physical attraction^[2]. A less obvious example: America’s Got Talent, which obscures (reread that title) hard work. The ultimate counterexample, Drive to Survive demystified the ineffable cool of open-wheel racing by getting granular on tire strategy, downforce, and the laughable FIA rulebook. A fantasy for people alienated by the abstraction of their own work, Drive to Survive portrayed a world of cause, effect, and mastery.

Like the early seasons of Drive to Survive, F1 isn’t about a McLaren or Ferrari driver. It’s about an old driver in a shit car who, like Cpt. James T. Kirk, “doesn’t believe in no-win situations.” That (undeniably wacky) belief system – predicated on a near-religious conception of competence – is prevalent among the well-educated and well-paid, a group overrepresented to the tune of 50%^[3] in the line for popcorn on opening weekend. The lesson for filmmakers? Vroom-vroom is fine, but we want tire strategy.

➺ Move over “Jesus is my Homeboy.” PacSun is now selling a Met collab tee that says: “European Sculpture and Decorative Arts.” ➺ Selling furniture in discounted bundles is really smart. ➺ The Bear had almost precisely the same arc as New Girl. ➺ The case against the Premier League.

STATUS ❧ Unzipped

On July 1, 1963, the USPS debuted the “Zone Improvement Plan,” assigning every burb and hood a five-digit identity crisis. Zip codes streamlined mail delivery, but they also pissed people off—especially in fancy towns and, fairly predictably, San Francisco^[4]. The New Yorker called them “a considerable advance in the regimentation of life.”

Regimentation is often a necessary evil – there are 344.8 million more Americans now than there were colonists in 1776 – but it runs contra to the American ethos. The story of American independence is a story about individual freedoms and individuals. And there’s the rub: When people who care about individuality are subject to deinviduation, they don’t riot – they act out. Frequent fliers abuse TSA agents. Volvo XC60 drivers go Mad Max at the DMV. Attempts to order Americans invariably inspire disorderly behavior. 

Crime stats suggest that July 4, the day we celebrate freedom, is the most violent day of the year. All the more reason to crack a cold one on July 1 and toast the code-loving Sisyphi who quietly try (and fail) to keep a nation of ungovernable libertymaxxers from going fucking postal.

➺ Is Soviet sociology responsible for The Traitors? Probably. ➺ “Curiosity is now not just intellectually important—it might be the make-or-break quality if we’re gonna save the country.” ➺ Will AI turn humans into the new dogs? ➺ Don’t take stats about college-educated professionals getting laid off at face value. (They went to different colleges).

[2] This is an insane premise. As responses to our current “Big Fight Survey” clearly show, sex is profoundly predictive of relationship quality. Pretending otherwise is weirdo shit.

[3] A weird quick of box office reporting is that the first weekend matters most and wealthier, better-educated people are far more likely to turn out early for something they want to see (presumably because they consume an absurd amount of media and are hyper-aware of release schedules). This creates… specific and unexpected incentives.

[4] There were small protests in San Francisco largely because zip codes came shortly after telephone area codes and there was a feeling among local luddites that this all sucked very much. Now, San Francisco is all in on blockchain. Go figure.