Numbers As Plot Elements In Financial Reporting | Stats + Stories Episode 12 / by Stats Stories

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Alex Blumberg is a radio and podcast producer who has launched the podcast 'Startup' - a "series about what happens when someone who knows nothing about business starts one." He had a long a celebrated public radio career at Planet Moneyand, while there, produced the award winning episode Giant Pool of Money about the housing crises and Wall Street reaction in the late 2000s. He joined the Stats+Stories regulars to talk about reporting financial stories and other stories with strong numeric foundations. 

+ Full Transcript

Bob Long: If you’re like most Americans, you probably wish there was some magic way to invest your money and know you’re going to have enough income to guarantee a very happy, fun-filled retirement, right? Well sadly, most of us don’t possess the skills to understand the whole complex world of economics and in today’s multimedia world, where do you go to get reliable information and stories that you can actually comprehend? I’m Bob Long. We welcome you to another edition of Stats and Stories; it’s a program where we look at the statistics behind the stories and the stories behind the statistics and our focus today basically is on economic journalism and story-telling. If you’re a fan of public radio, I know you’ll definitely know our guest, but before we talk to him, Stats and Stories reporter Reis Thebault has a story to get us ready for our discussion.

Reis Thebault: Miami-bred entrepreneurs have found success in starting businesses, from coffee shops, to non-profits. They’ve also found homes at some well-known companies, like Uber and Twitter. Assistant Director of Miami’s Center for Social Entrepreneurship Brian Bergman says the department prepares students by forcing them to think about the most important aspect of starting a business.

Brian Bergman: Have a problem. Have a real problem. Often times, we have somebody who comes in and has an idea, and ideas are great. But the fact of the matter is it’s got to be a problem. And I think that the degree to which that problem is felt by society is really a question that most people don’t think about when they first come in, right? So I have this idea…blah, blah, blah blah. We’ve already jumped straight to the solution. We haven’t really talked about the problem and how we’re going to solve the problem.

Thebault: Miami teaches three areas of entrepreneurship — social, corporate, and startup. But Bergman says they all have the same foundation.

Bergman: I think the process is the same, right? Again, you’ve got very clear questions you’ve got to ask and answer: What’s the problem and what am I trying to solve and how am I solving it for them? A lot of the back end stuff of are we going to be an online platform? Are we going to be a mobile application? Are we going to be a brick and mortar, you know, factory? Those are all things that kind of evolve over time, but I think the process is still the same.

Thebault: Director of the Institute for Entrepreneurship Brett Smith says, even though the basics are the same, starting a tech company can be very different from a traditional, brick and mortar startup. He says it’s all about the money.

Brett Smith: I think one of the things that has really changed in terms of the landscape of business start-ups is trying to prove some level of viability much earlier, with much less cash. I think you really see that play out in the tech business where you actually can build a scalable business with relatively little money. So I think there are differences between industries that do significantly affect the entrepreneurial process.

Thebault: And Smith says this has made the world of startups more accessible.

Smith: Now anyone can create an app, and again, you don’t have to be a business major. You don’t have to know a tremendous amount about technology. That’s why you see more people moving in because it has become more attractive, more interesting, but the barriers have been lowered. It has become easier to do it without risking a gazillion dollars, without having this tremendous investment of time or money.

Thebault: However, he says, just because you make an app, doesn’t mean you’re an entrepreneur.

Smith: Anyone can do it. Anyone can build something. It doesn’t mean it’s necessarily a viable business opportunity. That’s the only issue.

Thebault: At the end of the day, Smith says, it all comes back to the basics of entrepreneurship.

Smith: I think too often people just go out and start something, right? And they don’t identify me. They don’t identify something that is some value to someone before we raise money, before we try and do anything about getting it out there and distributing it in the market. And we’ve got to figure out whether or not anyone cares and will they actually pay you for it.

Thebault: For Stats and Stories… I’m Reis Thebault.

Long: Thanks Reis. Our special guest today on Stats and Stories today is Alex Blumberg, and he is an entrepreneur. Alex also is a radio journalist and co-founder with Adam Davidson of the This American Life/NPR co-production Planet Money. Alex and Adam co-produced the Giant Pool of Money, which the Arthur L. Carter Journalism Institute named one of the top ten works of journalism in the past decade. He has launched his own for-profit podcast that focuses on narrative journalism and story-telling. Also joining us on Stats and Stories for our discussion of economic journalism are Miami University Media, Journalism and Film Chair Richard Campbell and Statistics Department Chair John Bailer. Alex has a host of other top journalism awards, so Alex we welcome you today.

Alex Blumberg: Great to be here; thanks for having me.

Long: Richard Campbell, I’m going to turn it over to you to start.

Richard Campbell: Alex, it’s good to have you here and Bob mentioned Giant Pool of Money and this…

Blumberg: In a beautiful radio voice, I might add.

Campbell: Yes. So this is a program and a series that we’re very fond of and it goes back to when John and I taught an honors class together called “News and Numbers” and we used Giant Pool of Money and I have continued to use it ever since. I use it as an example of how you take something that’s very complicated and tell a story about it that’s comprehensive. The other thing about that; it came out about five months before the economy collapsed and I tell students all the time, “If you had listened to that, you could probably predict what was going to happen.” Could you talk a little bit about where that series came from and how you got your hands around telling a story that complicated?

Blumberg: I mean for me it came out of just a personal obsession. I’d been working in public radio for a long time so I hadn’t really had much money and I had graduated during a recession, during what I now realize was a particular moment in American financial history where interest rates were very high and it was very hard to get a loan; I sort of thought that was real life. And I hadn’t really paid much attention to it because I didn’t have any money anyway, so I wasn’t going to get any loans and I didn’t have that much credit card debt and I wasn’t going to buy a house because I didn’t have enough money to buy a house. So I hadn’t really paid attention to it for a long time and then all of the sudden I finally have a good job and I’m making a little bit of money and one of my colleagues was like, “Oh, I just bought a house.” And I was like, “How’d you buy a house?” because the last thing I had heard about buying a house was about a decade old. Sort of like they run you through the wringer, you’ve got to have a huge down payment, and I knew this woman; I knew she didn’t have that much money saved away and I was like, “Did you put a down payment down?” And she was like, “No, they didn’t need a down payment, we went and just bought it.” And I was like, “Oh you can just do that now?” and she was like, “Yeah.” And also everybody I knew had huge credit card debt and there was all this money being lent and when I started looking around, I realized that they world had changed dramatically since the last time I had ever sort of paid attention which was when I was graduating and there was all this news about interest rates and stuff. That became sort of my obsession, what’s happened, what’s changed, and why are people all of the sudden, why are banks all of the sudden lending all this money to people that they wouldn’t have lent money to before? So that was my obsession, sort of looking into it and as I tried to unpack the answer, that was in maybe like 2005 that I first became aware of that, and as I started unpacking the answer I became aware of this whole community of people that were sort of watching this rise with alarm. There were all these blogs and there was this blog that I really loved call “Calculated Risk,” which was a housing/finance blog that became sort of my guide. It was written by this guy with a background in real estate and he was really smart and it had a huge, great community. So I just started learning about all this stuff and I was like, this is crazy, what’s going on. It’s officially crazy now, there’s a guy on a blog who says so. That was sort of what got me into it. And then it was just a matter of once I fully understood it for myself, it was how do you tell that story back to people?

Long: John Bailer, we’ll go to you next.

John Bailer: One thing about that story is that there’s just such a tremendous amount of numeric information that you were trying to wade through. What were some of the sources that you had to dive into and how did you find yourself getting your head around that?

Blumberg: It was really complicated and I think one of the things; I think when you’re talking about trying to, how do you tell a story that involves a lot of numbers? First of all, you can’t. You have to figure out what you can and what you can’t tell and there’s a beautiful structure to the CDO, when you actually break down what it actually looks like, how it works, the waterfall structure; it’s a pretty amazing…some really smart people came up with this way of spreading risk in a really cool way. And so there’s a beauty to it that I really, once I understood it, I was like oh, we have to talk about that. And there was just no way, it resisted explanation on the radio. So part of it is just trying to figure out what you can and can’t say. But then I think the main thing is just, especially in financial journalism, I think there’s a huge tendency to pretend like you know what they’re talking about and to not appear dumb. And I think you have to just ask dumb questions over and over again and when I think back to some of the sort of ridiculously naïve questions that I was asking really, really smart people in the very beginning. It’s sort of embarrassing to think back on it knowing now what I know, but you have to do that. You have to be okay with looking dumb and asking dumb questions and asking super basic questions because sometimes people are like, well that’s a stupid, basic question and I’m not going to answer that question. And then sometimes people are like, you know what, I’ve never thought of it because we’re too advanced to even think about this question, but it’s actually a really good question. Like, why is this considered not risky? Just because the way historically it has been, but what happens if this, and they’re like, I don’t know, what happens if that? So sometimes the dumb question is the right question.

Long: You’re listening to Stats and Stories where we talk about the statistics behind the stories and the stories behind the statistics and today we are talking about the whole field of financial journalism. I’m Bob Long; our regular panelists are Miami University Statistics Department Chair John Bailer, Media, Journalism, and Film Chair Richard Campbell, and radio journalist and entrepreneur Alex Blumberg is our special guest. Alex has now launched his own for-profit podcast focusing on narrative journalism and story-telling and we’ll talk more about that, I’m sure, after a bit. One point you just made that I know from being a journalist, I think everybody in the room, if you’re in a room of ten journalists, you’re always afraid of being the guy asking the dumb question all the other nine people have in their head. Another thing I found out is sometimes trying to get people who have all this information but they don’t know how to explain it on a common level for people, is that another difficult part of it, too?

Blumberg: Absolutely. So for me, what that meant was finding people I could have these off the record conversations with who at least could explain it to me. So there was a guy who was sort of a source for that story who was the first person- he worked at a hedge fund and he was a friend of a friend who I had found through the ways you find people and over the course of several weeks, he spent probably three hours with me on the phone, just explaining what a CDO was and how it worked. At first he was like, he was sure it was the housing market, it was going crazy, the way these things are being repackaged people think it’s not risky at all and in fact it’s concentrating the risk. So he was making that bet, but more than that he was willing to just sit with me. For him, he was involved in sort of the same process I was, from a financial standpoint, but basically he was like this seems really weird and it seems like people are mispricing risk. And for him that was an opportunity, if people are mispricing that risk and things go the way I think it’s going to go, I’m going to make some money. But it was the same project, something looks weird here and I want to figure out what’s going on. So he had been on the same project that I was and he explained to me how it worked.

Long: John Bailer.

Bailer: So in the spirit of asking naïve questions, I’m going to represent someone who, I think about risk in lots of contexts, but I want to ask you to kind of clarify; you said risk and about shorting the market. You talked about certain financial instruments that were being considered or being employed in this story. So that’s pretty complicated to think about this, so could you give, for the folks that are listening to this that may have never thought about this, what do you mean by risk and what do you mean by shorting the market?

Blumberg: Right. This is something at Planet Money every time we would talk there were certain words that were banned and there were certain words that are just jargon, but they’re not like, I’m not even talking about sort of convex yield curves, I’m talking about super basic like investor. We wouldn’t have people say the word investor because in a lot of the financial press they say, investors are worried about this, and for most people who don’t -- what’s an investor? What does that even mean? Does that mean my grandpa who has savings bonds? Does that mean you as a mutual fund? What are we talking about? So risk is one of those and bonds are one of those. So risk, when you talk to a lot of financial people and they’ll say, there’s no way to make money without risk. So basically the way you make money in finance, very basically, is you have some cash that’s yours or somebody else’s that you’re managing and you give it to somebody else in the hopes that they’re going to do something productive with it and give you more back later. And sometimes that’s really simple like me this money and I’m going to buy you a house and I’m going to pay you back year over year. Sometimes it’s like give me money and I’m going to create a new invention that’s going to make us all really, really rich and the reasons people give for being able to give you your money back, that’s risk. Some people are like, I have a great job, I’m never going to lose my job, I have a little bit of money to buy a house and I am definitely going to pay you back because I’m good for it. Here’s my credit history; here’s the kind of job I have, and that’s low risk. So you give them money and they don’t give you back that much because they’re low risk. Some people are like I haven’t had a job for a long time, but trust me, I kicked my crack addiction and I’m going to get myself back soon, can I have some money? They are high risk, so you demand more money to give them back. So that’s risk.

Bailer: We sometimes talk about it in another context as probability of adverse outcome. The adverse outcome is that you don’t get your money back.

Long: Richard.

Campbell: So John is the numbers guy and I’m the narrative guy here, but you brought up the word investor and this reminds me of your new podcast Startup where you used the word investor a lot.

Blumberg: That is when we’re using it for specific people.

Campbell: That’s right. But there’s a moment in the first episode where you’re talking to this guy and he tells you to tighten up your story. So here you have the investor who’s talking about narrative and the importance of story and your pitch to him, you’re trying to get money from him to start this new business, so what have you learned from that experience? And you were in this odd situation, you’re the storyteller, you’re going out to get money and this guy’s telling you to hey, tighten up your story.

Blumberg: Right, it was a humbling experience. It’s both humbling, but also it shouldn’t surprise me because essentially, I’ve never done a story, even in a field where I know what I’m doing where it’s been right the first time. Essentially somebody is always telling me to tighten up my story, that’s what an edit is and I’m a huge believer in editing, nothing is ever right the first time. And I’ve seen it now, I’ve worked with some of the fanciest writers.

Campbell: I hope you’re telling that to all our students, never right the first time.

Blumberg: Right, and their first drafts sucked just as much as anybody’s. So I hadn’t really thought about it until you just mentioned that, but essentially that pitch was a first draft. And it was a first draft to somebody who perhaps it should have been a second or third draft to. I should have tried it on other people. That was sort of swinging for the fences, he was a big-time investor. But it’s not surprising that he was telling me that. Obviously it was really humbling. The other thing that I realized, though, doing this is that talk about the importance of narrative. I thought getting into business that it would be way more numbers, it would be way more stats professor and not very much media professor and it turns out it’s way more media professor and not very much stats professor. Like the numbers are there purely as plot elements. They are there purely as this is a realistic detail, but they are not the story and the story is what you are telling and how you use those numbers.

Campbell: One of the things I liked about it that in your new podcast you reveal so much of the process that you’re going through and you sort of lay yourself bare here and you’re not afraid to be humble and to act stupid and learn from this guy, which is really good. And he gives you your pitch, right?

Blumberg: Well I have one correct; I am very afraid.

Campbell: But you do it anyway.

Blumberg: We haven’t done one episode where we haven’t been like, are we going too far? Is this too much? Are we revealing too much? Because I know when you make yourself vulnerable it connects with an audience. I know that and I like when people do that, when they’re opening up a door and they’re being honest with you, you respond to that as a listener. But one of the big fears is that we actually are trying to start a business and we are actually trying to get investors and we are talking about things that you don’t talk about with your investors like your own fears, maybe fears that you’re not dreaming big enough, maybe that you don’t want to dream big enough, maybe if you dream bigger it will ruin your family. Those are not things that people talk to their investors about. Your job to an investor is to say, I’m going to be the Google of blah blah blah. I’m going to be the Uber of whatever. But once we open this conversation, the crazy thing is that, I’ve found out since then that so many entrepreneurs having been writing to me telling me this is something we wrestle with all the time, the issue that you’re talking about, we talk about all the time and that’s what I was hoping. I can’t be alone feeling these feelings and it turns out that was true.

Long: John Bailer, we’ll go to you next.

Bailer: I’d like to follow up on, I love the quote, “Numbers as plot elements.” And I would also suggest that you can be effective as a statistician if you can’t translate. You have to be able to translate a complex story into some representation that you can understand and then once you’ve done that work, if you can’t communicate it back out then you’re not going to be successful in any work that you do as well. I love the image of numbers as plot elements and I want you to know that I will employ that frequently with proper attribution.

Long: You are listening to Stats and Stories today. We are talking about economic journalism and narrative reporting and our regular panelists are Miami University Statistics Department Chair John Bailer and Media, Journalism and Film Chair Richard Campbell; I’m Bob Long. And we’re of course very, very pleased to have with us entrepreneur and radio journalist Alex Blumberg. Alex has launched his own for-profit podcast, as you can tell, focusing on narrative journalism and story-telling. Richard, I’ll go to you for the next question.

Campbell: Let’s talk about stepping away from public radio and deciding that podcasting was the future, although I think that’s up for grabs in the first two episodes of Startup that I’ve listened to, why did you walk away? People know you; we follow you; are there some things you felt like you couldn’t do?

Blumberg: Well it was really a hard decision and it was a decision that I sort of didn’t -- like if somebody else would have done this thing, I think I wouldn’t have done it. It was one of those things, in the beginning at least, now I’m really excited. We have a little office now; we built a studio, it’s just an unbelievably exciting feeling. In the beginning, I had a great job in public radio, I loved public radio, I still do. And I love that tradition and I think the best audio journalism in the world is on public radio. And the reason that I left was really that I wanted more of it and I felt like there wasn’t , to me it just felt like okay, you’ve got Planet Money, you’ve got this American life, the world wants it. We’ve seen it shoot to the top of iTunes. The crowd of people is growing who listen this way, let’s make more, we should make more. People are telling us we want more.

Campbell: There’s a moment in the first episode where you’re investor is telling you things that are the downside of what you’re trying to do and one of the things is you’re working upstream. In a technological world where our attention spans are shorter and shorter and stories get shorter and shorter, you’re doing long-form journalism. So how do you go against the current that way?

Blumberg: I think that’s not true. Basically, I think if you look at the way now there’s all different kinds of media and all different ways to consume it. So if you look at reading, there’s lots and lots of stuff being written so at the same time, for every Buzzfeed, I give you an online forum devoted entirely to fan fiction that’s epic books where lots and lots of people are reading them. And for every YouTube video that’s three minutes long, I give you Game of Thrones and Mad Men that are essentially hours long sort of massive novels on television. So I think both things exist. In the world of podcasts, especially, I was just talking to a group of students here and we were talking about this and we were talking about Spotify and she was talking about how this is Spotify for songs, but it’s hard for podcasts and I was saying, part of it is because generally, podcasts are really long. Most podcasts are an hour and a half or two hours long, some of them are four hours long, they go on forever and some of them are great at that length. Dan Carlin does this podcast, Hardcore History, and it’s got this huge following and those are three, four hours long. Some people can sustain it, but a lot of them could use some editing so we’re actually doing them shorter than most of them. I think for me it’s about fifteen to forty-five minutes long and so I was actually comparing to one of the students, there hasn’t really been a pop song of spoken word and we’re essentially the pop song, we’re trying to make it hooky. We’re trying to catch you in the beginning. We’re trying to have things that keep you listening all the way through. We’re thinking about this in the same way that a great pop songwriter thinks about how do you craft a great pop song, we’re trying to think about keeping it engaging.

Long: I know, of course, the public radio audience. Often times people in their late-20s, 30s, 40s. Do you see, because you mentioned the younger people, to me the internet is like to them, they watch TV on the internet, they do everything on the internet. So do you see that as the future in journalism, that everything is going to tend to go there and is that part of why you think the younger audience will be the future for you too?

Blumberg: Absolutely, and I think audio in particular has been spared the fate that has hit a lot of other media and it’s about to end for audio. So television, cable comes along and all the sudden a gazillion choices. Networks will never see the numbers they saw during the farewell of MAS*H. They’ll never see that again, that’s gone. Newspapers, you will never see that funnel of money that they had when they had classifieds and subscriptions and all the advertisers. All that stuff has been dispersed. Radio, for a long time, it was still AM/FM band in your car. Most listening happens in your car, but now with streaming cars, connected cars, that’s about to go away. Most people still listen to the radio, but that’s starting to change and it’s going to change faster and faster and faster and that’s going to be the thing that hits so there’s no question that ten years from now, fifteen years from now, most people will probably not be listening to the AM/FM band. They’ll probably be listening to some version of streaming something, I would imagine. It’ll happen slower, people replace their cars slowly, but that future has to be coming.

Long: John.

Bailer: We pitch this idea of Stats and Stories. The idea of stories behind statistics and statistics behind stories, are there particularly hard stories to tell that have a strong data content? The financial ones are ones where there’s a lot of complexity and a lot of jargon that goes there, are there others that come to mind for you? As well, are there secrets that you might share in terms of trying to paint these pictures that have these complex, numeric foundations to the stories?

Blumberg: Yeah, a lot of math stories are really, really hard to tell. And part of it is knowing there are some stories that you just can’t, there’s a reason when you’re teaching stats you have a blackboard, you need to see it. Imagine trying to teach your course without visual references, it would be impossible. So there’s certain things that it’s hard for. What I try to do is I try to keep the numbers out of it as much as possible and keep it to the principle. What audio is really good at is telling stories with human drama; telling stories. And so to the extent that you can connect the number and put it at the heart of the story. Actually I think, when it comes to telling stories about statistics, my proudest work was the story I did for This American Life called “What’s In a Number?” it was during the Iraq War and this guy did some study in the lancet about how many civilians, how many people were killed by the war. And there was Iraq body count that was trying to count people but it was literally just counting news reports and this guy had been a mortality researcher, he had researched the effects of war in I think it was Congo and a couple other wars. So he had this method of how he did it and he released this report on the Iraq War and it blew up in this firestorm because people were taking attest for all these things. And it turned out the main focus of the ire was his confidence interval. So this is like how you come out with a number and there’s a confidence interval around that number, like how. Like if the number is five, how close is it, you can tell me. But it’s like five, then it could be zero or it could be ten. And so his confidence interval was very wide and so people took him to test for that.

Long: Richard, we have time for one more question and I’ll give that to you.

Campbell: So we’ve got this show, Stats and Stories, that’s a podcast, so do you have some advice for us and should John and I quit our day jobs and follow you? What do you think?

Blumberg: Well you guys do a nice job, you keep it moving; I like that. I feel like it’s got a nice rhythm to it. I’m a big believer in trying to find a story attached to something and that has been what’s worked for me and if I can tell a place where it begins and you’re introducing the topic through some personal story, that’s what I always try to do. And to me, that’s a way of sort of hooking people is if there’s a plot; I like a plot. And most of our radio stories have plots, there’s a beginning and then there’s a middle and there’s an end and you can sort of lay out what that is. So I always feel like that helps.

Long: I always like what we’re doing because it doesn’t have the exact time clock that you do when you’re on NPR. If we wanted to go thirty-two minutes, we can make it go thirty-two minutes.

Blumberg: Yeah, your only signal is your gut.

Campbell: Your Startup episodes are different lengths.

Blumberg: Yeah, it’s a wonderful thing.

Campbell: So should we keep our jobs or do we have a future in this? I want an answer.

Blumberg: That is a good radio moment. I would not advise anyone to quit a good paying job.

Long: Alex Blumberg, thank you very much for sharing all your insights on journalism and story-telling here with us on Stats and Stories. And if you’d like to share your thoughts with us on our program, you can just send your email to . Be sure to listen for future editions of Stats and Stories were we try to focus on the stats behind the stories and the stories behind the statistics.