Mellody Hobson: When investors head for the exit, run to the fire

Transcript from https://podmenti.com/t/3e72bdd387c281ff

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Women's sports are the small caps of sports. We're sitting here right now, front row C, where we're seeing this inflection point that is going to financially manifest itself into real value for teams and emerging leagues and junior sports.
And when I start to study the data and see this, I literally I just said wow.
That's Melody Hobson, co-CEO of Ariel Investments, board member at JP Morgan, and former chair of Starbucks and DreamWorks. With investment markets on a roller coaster amid conflict in the Mid East and widening economic uncertainty.
I wanted to ask Melody about how she stays steady as an investor with so much influx.
As she explains, Melody doesn't just tolerate the volatility, she welcomes it.
She shares a string of financial and life lessons, including a counterintuitive admonition against making decisions based on money. She also talks about why she's making a big bet on women's sports, what bravery looks like for business leaders in 2026, and more. So let's get to it.
I'm Bob Safian, and this is Rapid Response.
I'm Bob Safian. I'm here with Melody Hobson, co CEO of Aerial Investments, accomplished board leader and a longtime friend. Melody, always great to uh to be able to chat with you.
Great to see you. Yes, we've known each other forever.

We we are talking now amid some pretty
Intense uncertaint in twenty twenty six. W war in the Mid East, energy prices up.
Tariff battles, AI anxiety, inflation.
Ariel's always positioned itself as a long term investor. Your symbol is the the tortoise, slow and steady wins the race.
But chaotic moments like this.
It can be so unsettling. Does does anything about
Right now make
Make you uneasy?
I know it's gonna be crazy. I I tell people it feels uncomfortably familiar.
And what I mean by that is it never feels great when you're in these moments of unrest or chaos.
But there's a familiarity to it that we go back to that calms us in these moments. So there's nothing particularly worrying me. It's always something new and different, but I always stay focused over the long term.
the US economy works itself out, these things work themselves out, and you see an upward trajectory in the stock market over time. That's what I stay focused on.
Yeah, I mean vo volatility is like it's part of investing.
It's also increasingly
sort of everywhere in our society. Are there things about the way you deal with
Volatility in investing that you apply to your life or that that you know that folks here, whether whether they're looking at the investment markets, but really their their lives or their businesses, like is volatility something you defend against, something you lean into? Like how do you think about that? We lean into. We say volatility is our friend.
Uh if we are not selling
We are getting the opportunity to buy value.
And at more of a bargain price. And so we will look at the fundamentals of the company and we'll say, Did anything really change besides the chaos around it? That chaos took the shares down. Let's buy more. Because when they recover, we will be rewarded.
I wrote a letter last year to our clients and I said, We've become firefighters. Most of the time a firefighter is sitting
Around the firehouse training.
And then when the alarm goes, they run into the burning building. That's what we do. Most of the time we're just looking for opportunity. We're training, we're getting ready. The alarm goes like Liberation Day or the alarm goes like the Iran War. All terrible events. So please, there's no joy in that.
Well, it it takes down good businesses and we run into the burning building to get them. I think about that a lot in life. I think in those moments of great stress and anxiety, I always ask myself some very basic questions. What am I supposed to be learning from this? So I lean into it from the perspective of, can I get the learning out of it?
Even though I will be the first to admit there are those times when it feels terrible.
the risks of things like people talk about bubbles, you know, whatever, AI bubbles, there's things like that.
You don't particularly worry about that.
Either. It's it's as long as there's discipline about
when you're buying and when you're selling.
I don't wanna be in that bubble. So we avoid them.
That would be the way that I would think about it. All birds, you know, the shoe company that was just the hottest rage. It was the thing. And then this the company just crashed. I mean, literally fell off of a cliff in terms of sales, started closing stores, et cetera. And now they've reinvented themselves as somehow AI.
uh related and the stock is up three hundred percent. That is classic bubble territory. We would never be in that story in terms of actual real money being invested. We would avoid that like the plague.
I investing is such a a counterintuitive in some ways because
When prices are down
Mostly that's when you wanna buy things, but in the investment markets, people get nervous when prices are down. And if you're gonna be a net buyer over time, you actually want prices to be down, right?
Everyone calls investing in the stock market or many people.
A roller coaster. And I said, Okay, let's now be literal about a roller coaster and how it makes you feel. We all feel better on a roast roller coaster when it's down towards the bottom, and we feel scared and terrible when it's at the top and it's about to drop.
But for whatever reason for the stock market, it's just the opposite. Yes. We all feel great at the top and we feel terrible when it's at the bottom, but I'm like an actual roller coaster, it's the reverse feeling. That's actually what you should use as your investment.
Strategy. The bottom is where you should feel more comfortable. The top is you where you should feel more afraid.
It it's so hard for us to um to understand
And and apply all these things. I mean, you have you have long been a champion of financial literacy. You wrote a best selling children's book, Priceless Facts About Money.
Uh but Americans at every income level say they're anxious about money. And it's been that way even before the sort of latest, you know, external shifts. Like
Is that just
Part of the human condition?
It's education.
We don't learn about money in school, and as a result of that, that lack of knowledge leads to a great deal of anxiety. And I see that across all income levels. We learn about a lot of things in school.
But the Dow, the Nasdaq, the SP, your 401k plan, planning for retirement, the the
com compound interest, which Warren Buffett calls the eighth wonder of the world. These are things that are not really taught. And the older you get, the more embarrassed you are about I can't ask anyone this. Part of the reason I wrote a children's book was
was one I wanted to write a children's book. It's a 10,000 white word children's book about money. This is not three words on a page. It really is a uh in-depth discussion of money in a fun and and creative way, I think.
But
It's also I wanted to use the book as a gateway to get to parents.
I thought if k parents would sit down and read this book with children, they'd be learning alongside of them all the things that they've been too embarrassed to ask.
I I mean I I've had conversations with my kids even
as they've grown up and become adults, where th they'll ask me questions like, Well, dad, I don't really understand like, how does a credit card really work? Like what's happening when I'm using my ATM?
If you think about something as
As
Basic as an ATM
For a small child, it does not make sense. Yes. And ATM is this magical machine that just spits out money. And so it creates a great deal of mysticism around money and it makes it much less concrete.
And now your money is this, right?
I mean it's not even the it's not even cash. It's not even in ATM.
That's correct. A phone. So you have to explain all of this. I tell people it's like teaching a language. It's easier to learn a language the younger you are. If you live in an African village or Chicago, money is a part of your life. It's like oxygen. There may be degrees of difference.
but it is fundamental to living. And so as a result of that, getting that fundamental understood early, the earlier the better. And the apprehension and the anxiety that most people have with money.
Is fundamentally tied to the fact that they just weren't taught.
You often say math has no opinion.
Um
And and I'm wondering whether that is a particularly helpful mantra in times of volatility like right now, sort of a way to filter out the noise and make decisions.
My math has no opinion line, which is one of my favorite lines. I it is not original to me. I borrowed it from Fabricio Freda, who was the CEO of SC Launter when I was on the board. I was on the board there for 15 years, and he always said math has no opinion. I love that line so much because there's no massaging.
Numbers in terms of just fundamentally what happened. So if the Dow goes down, Dow Jones goes down 500 points, there's no
Editorializing around it. It happened. And then you ask yourself, what do you do about it? Your bank account is your bank account. Unlike some of the other things where people can create stories and myths or whatever it is, it is what it is. If the if the stock price did drop and nothing changed.
Then we'll say the math is just inviting us in.
I think it really does help um anchor us in a reality.
Та хепс нас на тюразі.
You were talking about how important money is.
Um
But for someone who's in the financial services business, you've also said don't make important decisions based on money.
And so can you square that for us? What like where where does that come in? It is so counterintuitive. I learned this one from John Rogers, who started my firm, Arial Investments, when I was very young. He said to me, Melody.
Don't make big decisions based upon money. And I looked at him like you're an investor and you're telling me not to make decisions based upon money. And he said, I've seen this time and time again.
You'll have a young person.
They've got a job. They love the job.
They love their boss.
They leave and go to another company for an extra five thousand dollars.
Where they don't love the person, the job, or the gun, and so they're miserable for five thousand dollars. He's like, that's a bad decision.
And so they're making a financial decision, which is a decision about their life.
You want to start with what are you trying to accomplish and
How does the math, which have no opinion, how does that shape your decision?
And if math has no opinion and the number is the number.
On
A job decision.
There are probably some other factors that you should consider.
As an example and put some value around them. And and even investment decisions shouldn't be based
Always solely on money.
The reason that I say no, which is gonna be shocking, it shouldn't just be based on money.
Sometimes it's much easier to save yourself from yourself.
And that's why like doc dollar cost averaging.
So with dollar cost averaging, you've decided I'm gonna invest a hundred dollars a month.
in this mutual fund or ETF or my four one K plan.
So sometimes the market is high.
Sometimes it's low.
And over time I'm going to average a better price.
And so that is a good
way of not making an investment decision based upon money because you're trying to time something that you probably can't get right, especially both sides of it. That's why I'm very much against market timing. People say, Well, I got out of the market right before it fell. And then they don't go back in.
You don't know we're gonna wake up to a war in Iran. You know, someone who tells me that they did, they got lucky. And I'm I'm sure Calci or some one of these predictive markets will say they predicted, but but I'm but that's that's extremely hard. When you're trying to optimize always for money.
You know.
Decisions around greed.
Decisions around risk, all those things get muddled in the in the middle of it, and and sometimes your wisdom about it drops away.
This is behavioral finance 101. Human emotion takes over, which is why I tell people, for example, do not make big money decisions in times of great emotional stress.
If you're on some kind of medication and they say don't drive heavy machinery, it's exactly the same concept. You don't want to be making big decisions because emotionally, your mind can't do it.
Mm.
I I wanna I wanna ask you a bit about uh an investment area that you've leaned into lately. How much how much it's about money, how much it's about other stuff, and that's um sports.
You were you were part of the group that bought the NFL's
Denver Broncos in twenty twenty two. And then last year you announced project level and an investment fund focused on women's sports. Um it's it's not too late to get into women's sports. Valuations are up sharply. Your your your emotion isn't getting the better of you.
Women's sports are the small caps of sports. We are at an inflection point in sport.
Once in a generation, we're sitting here right now.
front row seat that is going to financially
manifests itself into real value for teams and emerging leagues and junior sport. And I when I started to study the data and see this, I literally
I just said wow.
Today.
Версис фав єржа.
How much more are you aware of women's sports from the hockey team that won the gold, men and women's, right? To the CBA negotiation that just happened for the W with new salaries for the team to the draft that just happened for the W.
Women's sports is much more a part of our lexicon than it was before. And we will see that actually translate into media rights, sponsorship, higher revenues, which will be value.
That will be created for sports assets. We've already seen it happen in men's sports. Women's sports are going to go on that same trajectory.
The most valuable men's sporting team in the world is Real Madrid, worth sixteen point five billion dollars, supposedly, according to Forbes and Sportico. The most valuable team in America, Dallas Cowboys at twelve and a half billion. The most valuable women's team.
New York Liberty, supposedly five hundred to five hundred and fifty.
million dollars, the likelihood of a women's sporting asset doubling or tripling in value.
is higher than the likelihood of the
Real Madrid doubling or tripling from here. The WMBA.
receives right now about three percent of the
the media rights of the NBA's contract because they're owned by the NBA partially.
That contract that the NBA has is seven point seven billion a year, the WMBA gets two hundred and twenty million dollars of it.
Three percent.
But they have fifteen percent of the viewers.
Hm.
This is arbitrage.
Eventually.
that those media right numbers will go up.
Project level has announced three investments so far, not in the W MBA, as you've been talking about, but NWSL team in Denver, the Denver Summit.
Uh League One Vleball, which I guess they call love, right? The women's professional volleyball league. And then most recently the sort of NFL backed flag football league, which is nascent in this
Not just women focused, although is women focused, I guess, f for you.
Coed s uh league. Flag twin twenty million people play flag in the world.
Four point one million of them are youth.

And fast part of the growth in flag for the obvious reasons. You're 12, your mom probably doesn't want you playing tackle football, but you might love football. Flag is really popular in America, and this is what we call a league expansion. The NFL is the anchor and they're expanding. The owners own the league as well.
volleyball four hundred and ninety thousand girls in high school today play volleyball
More than boys play soccer.
Or baseball.
And then when you get to the Denver summit, we just had our first home game in Denver.
63,000 people came to our first child game. We shattered every record of attendance at a women's soccer game in America. The previous record was 49,000. So the fandom is there. We I'm I'm telling you, we're just watching it come alive in real time.

From financial volatility to investing in women's sports, Melody has a way of making it all sound straightforward and logical. So how is investing in sports different than TV and movies, where her husband George Lucas made his name? And what does bravery look like for business leaders in 2026?
We'll talk about that and more after the break. Stay with us.

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Before the break, Aerial Investments co-CEO Melody Hobson talked about building financial literacy as a life skill and why she sees women's sports as the next great investment opportunity.
Now she talks about Taylor Swift's impact on the sports business, her frustration with the diversity dialogue in America, and what it takes to be a brave business leader in 2026. Plus why storytelling may be the most underrated skill in business.
Let's jump back in.
Sports is uh it's an entertainment business, right? Which is an arena you have experience with. You're on the board of DreamWorks for media for for a long time. You you and your husband George Lucas are active in the industry, but i investing in sports.
It's gotta be different though than
T V and movies. Like
sports has held up TV. So if you look at the top one hundred TV shows, I mean the NFL is
It's a lot of the list. My husband always says to me, We don't want sports fresh frozen.
We want it fresh.
And so because we don't want to hear about the score, it kills the game for us. We actually watch sports when it happens. Then streaming realize we want sports too. That's Apple, that's Netflix, that's Formula One going to Apple for that big five year contract,$150 million. The NBA wants to go to Europe.
They went to Africa.
They're also looking at women and you know quite
Honestly, a great example of this with the NFL.
Taylor Swift did actually affect women watching football.
It was first about her dating this football star.
And girls watching, then girls and women really loving the game. And that's been fantastic.
It also sticks because girls are playing more youth sports. That builds the future fandom. And those families are used to paying for those girls to play sports. So then they'll be used to paying for tickets to go and watch women play sports.
one of the things that about sports it sort of reminds me of other things about about
entertainment and media overall, which has often been thought of as being like protected in times of economic uncertainty.
Is that
Part of the calculation like is th is that make sports a particularly
I I don't know, appealing asset class right now?
So one of the things I would say to you is that one of the things we like about women's sports is the tickets are less expensive.
And it gives more families more access to the games. We love that. I think our average ticket price for the summit was somewhere in the neighborhood of$50. So that's very different than trying to go to a major league men's game these days. I think it's worth it. So please don't.
see that as a negative, but there's this this opportunity here that we think is really great.
The name of
Project level.
Um, it reminds me of a of a venture you launched several years back, Project Black, with the aim of scaling minority owned.
businesses and narrowing the wealth gap. How much do you see project level
As more than the financial investment, you know, looking for cultural impact for for women in that way.
In a big way, ninety five percent of women in the C suite.
today played sports, high school or college.
Sports effects.
A girl's leadership skills.
We know it.
And so to the extent that we are a part of developing those leadership skills.
And making that
Girl.
you know, who's twelve years old on the field, on the pitch, on the court, more confident, more secure in who she is. I have a twelve year old girl, and so I can see it.
And so this is not just about the investment and the financial return that I think.
Um, and expect to be very compelling. Again, because math has no opinion. I'm just giving you the math. Uh-huh and the stats around the leadership development issues are just as compelling as the financial stats that I have seen.
I want to ask you about
Project Black and and how it's going. I mean there has been um
culturally kind of a pushback against diversity based efforts, particularly since you know Donald Trump returned to the White House. Has that impacted
Project Black.
Sure. The conversation around diversity has taken a turn that
Has been
Extremely surprising.
And I will tell you, very disappointing.
Um, at the same time, I will say that our goal is to invest in great businesses.
And that is what we will continue to
Prosecute as an investment thesis.
The enthusiasm for this idea of opening up opportunity.
Has
Ben.
affected.
By the
Political narrative.
Because of fear.
People are afraid.
of engaging in these conversations because they think that it will bring um some form of negative attention
Or perhaps legal attention.
That
They just don't want.
Even if they from a values perspective.
Completely agree.
This has been for me.
A painful moment because it's so much about
Who I am and what I believe, and project level is another extension of that. So much of my life's work has been about inclusion. And that inclusion I think leads to better outcomes.
Of who's sitting around the table, who's making decision, what information you use to learn and to know and to grow.
to how you think about
the world so that you can be tolerant of others and therefore diminish
Acrimony, all of that, I think again, the data speaks to this being the right thing to do. But for whatever reason, we've taken a step back. That has affected the
the context of project black, but has not affected the long term investment outcomes that we will deliver.
Mm.
I had a discussion off the record recently with a
a business leader about some of these topics.
And she was saying to me, Listen, as
A woman of color.
Who was born in another country
Like, I can't talk about this stuff right now.
She just felt like
The environment
was to
Punitive.
You gave a really memorable commencement speech at USC in twenty fifteen where you talked about bravery.
I'm curious what
What you think bravery looks like.
in twenty twenty six for business leaders.
I always tell people, courage is not the absence of fear. We know that. It's just overcoming it.
When I think of these moments, I have a vizual.
image.
That
I used to
Pull myself together.
John Lewis on the Edmund Prettus Bridge.
And I can see him in the raincoat with the backpack.
And he is facing
Police officers and people holding batons.
And they are going to hurt them.
He put himself in harm's way for me.
Mm.
For us.
He knew he would be hurt.
And so the question is, you know, we can all go through life with the easier.
you know, more comfortable outcome.
and not put ourselves in harm's way, but there are times when we're going to have to do that. And I don't mean you have to throw yourself in front of a train, but I do think we have to stand up for our values. And this is when we have to be brave. So I won't shy away from the conversation around diversity because I believe it.
I don't have to be combative.
I can just
Be logical.
And authentic in my perspective.
And
If that makes you feel uncomfortable, that's on you.
Hm.
I mean, i in the time we've known each other, you've never been shy. You always have a high conviction about about
you know, where you stand on things.
Do you know when your conviction is sort of like
r risk becoming stubbornness, that sort of balance between when conviction is wisdom and when, you know
the human part of us is sort of pushing us to go a little too far.
I try to have people around me that will tell me the truth.
And I asked them.
And sometimes people, you know, they hit me really hard.
So
If you ask, you've got to be ready to receive.
And it's not always what you want to hear.
The issue that I have is I live with rebel.

You know, George is a rebel.
You know, he's not an overlord, he's a rebel. His friends are rebels. Sean Rogers did something that had never been done before when he started Ariel.
Howard Schultz in starting
Starbucks, like there are people that I've just, you know, Jamie and how he shows up in the world, Jamie Diamond. I just am very comfortable in those environments. I must self-select them. So clearly they embolden and empower me. I'm not trying to be a hammer, but I'm also not.
Afraid, if that makes any sense. I do want to congratulate you on the um upcoming opening of the Lucas Museum of Narrative Arts. September
Twenty second in LA? I hope I have that right. Yes, we're in a sprint. I mean
I it's I I wouldn't say ask you, because narrative and storytelling, like it's often viewed as like squishy for business, you know, it's not about math, it's not about data.
Are are there business lessons in storytelling? Like are there things that narrative
Does that numbers can't do?
Um
Yes, I think narrative is is foundational to life. And so when you look at even great CEOs.
They tell a story about their business backed up by facts and data.
But it's compelling.
I remember Bill Gates, he sat on a panel with a doctor who talked about saving one baby. And he said everyone in the audience was in tears. And he said
At the you know, the Gates Foundation, we've saved millions of children, and I can't get anyone to cry. The Gates Foundation has done amazing work. I'm just saying that the the the narrative can help.
Mm.
Advance an effort. Warren Buffett is an amazing storyteller. Yes, but he's also the greatest investor of our modern day.
He can do both.
Is there
A thought.
Or a lesson about
Finances and financial literacy that you would
Encourage.
People here to
To take away with them.
I think my um takeaway would be
You can actually
lean in a way.
That you can get the information you need.
to know.
It's just making sure you ask questions.
Again, using a story.
Very simple. If you have a child, you go to a doctor, and the doctor says, Your child broke their tibula in three places. It's your child.
You are concerned about their health, you don't know what the doctor is talking about, you would say,
What does that mean? And then the doctor would of course say, Your child broke their leg.
I want people to go to that financial advisor and when they get the jargon or the acronyms or the language that they don't understand, they think I need to understand this to the degree that I need to understand the health of my loved one. I need to make sure I do the exact same thing when it comes to my money.
Be it at the bank with interest rates or the mortgage documents or the investment portfolio.
Meldy, this was so great. Thank you, um, thank you so much for doing it.
Thanks for having me.
Melody and I first connected years back about the power of financial literacy and the power of narrative to drive change in business and in life. She has a gift for demystifying what can seem like complex topics. What this conversation reinforced for me is how her investing philosophy
Reflects a larger philosophy about focusing on long-term values and long-term outcomes. At a moment when many business leaders are shy about what they believe, Melody is betting on women's sports, standing behind Project Black, and reminding us that bravery isn't the absence of fear.
It's the willingness to move through it anyway.
Math may not have an opinion, but Melody certainly does. I'm Bob Safian.
Thanks for listening.

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