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Happy Friday, future bankers!

You’ve almost made it to the weekend. Congrats! 🎉

Stocks have been all over the place this week, and Friday was no exception. The jobs report was released and blew out expectations, leading to big gains in most all of the major U.S. indexes. Also, Joe Rogan signed an extension with Spotify, leading to their stock finishing up 1.6% for the day.

🚀 Let’s get into it.

🔢 Technical Question

“You have a company with an EV/Revenue of 2x and an EV/EBITDA of 10x. What is the EBITDA margin?”

First up, EV stands for Enterprise Value. Think of it as the total price tag of a company, considering both investors who own stocks (equity) and those who lend money (debt). This is different from "Market Cap," which only considers stock investors. Basically, EV gives you a broader picture of how much the whole company is worth.

Now, what if a company has an EV/Revenue multiple of 2x? This means the total value (including debt) is double its yearly income. Is 2x good or bad? Well, it depends! In some industries, it's low, while in others, it's amazing. To help you understand, we analyzed data from NYU and made a cool graph (check it out!).

Next, let's talk EBITDA. This might sound fancy, but it just means Earnings Before Interest, Taxes, Depreciation, and Amortization. It's a shortcut to estimate how much actual cash a company makes after normal expenses. Revenue is important, but EBITDA gives you a clearer picture of the cold, hard cash a company can keep.

Finally, what's EBITDA margin? Imagine it as a percentage of your income that's left as "pure profit" after expenses (EBITDA). So, if a company makes $100 million but has $10 million left after expenses, their EBITDA margin is 10%.

So if we know that a company has an EV/Revenue multiple of 2x and an EV/EBITDA multiple of 10x, we can use these to figure out the company’s EBITDA margin (EBITDA/Revenue). To do this, we can simply flip the EV/EBITDA = 10 equation upside down, giving us EBITDA/EV = 0.1. Then, we mulitply our EBITDA/EV by EV/Revenue, which ends up canceling out the EV’s. This leaves us with EBITDA/Revenue, or 0.1 × 2, which equals 0.2 or 20%. Therefore, the company has an EBITDA margin of 20%.

🗣 Behavioral Question

"Tell me about a time when you made a mistake."

This is a tricky interview prompt. When responding, remember it's not about dwelling on the error but showcasing your growth and problem-solving skills. Here's how to tackle it:

Structure your response:

1. Set the scene: Briefly explain the situation, your specific role, and the overall task.

2. Acknowledge the mistake: Be direct and honest about what went wrong without blaming others.

3. Analyze the cause: Briefly explain what factors led to the mistake. This shows self-awareness and avoids repeating it.

4. Highlight your response: Describe the steps you took to rectify the mistake and minimize its impact. Show initiative and problem-solving abilities.

5. Emphasize learnings: Share what you learned from the experience and how it improved your skills or approach. Demonstrate growth and adaptability.

Example response:

"During my previous internship at [Company name], I was tasked with preparing a pitch deck for a potential client presentation. Due to my eagerness to impress and tight deadlines, I overlooked a crucial data input error that was being displayed on one of the slides of the deck. Thankfully, during a final review with my supervisor, I caught the mistake before the presentation. While embarrassed, I immediately owned up to it and explained the cause - my overzealousness and overlooking double-checking procedures. We quickly corrected the data, and I double-checked all other inputs to ensure accuracy. We ended up pitching and winning the deal, and the client is still actively working with the firm today.

This experience taught me the importance of meticulousness, prioritizing quality over speed, and the value of proactive communication. I implemented a double-checking system and learned to manage time effectively to avoid similar situations."

🗞 Industry News

Joe Rogan inks ~$250 million extension 💰

Spotify just hit the jackpot, locking in podcasting kingpin Joe Rogan with a new mega-deal. This means more of "The Joe Rogan Experience" goodness, exclusively on Spotify for a while longer (but fear not, podcast fiends on Apple, Amazon, and YouTube, Rogan's will be appearing there soon too!).

Why the big bucks? Rogan's got the magic touch, pulling in listeners like nobody's business, and Spotify wants to continue having a piece of that pie. They're hoping this podcasting powerhouse will lure in even more listeners and advertisers.

It's no secret Spotify's been podcast-obsessed lately, snapping up studios and stars left and right. But this new deal, rumored to be a multi-year contract in the ballpark of $250 million, is taking things up a notch. It’s yet another sign that Spotify has recognized the need to differentiate themselves from other audio streamers by providing exclusive content.

So, what's the takeaway? Spotify is continuing to bet big on podcasts, and Rogan's the golden ticket to podcasting paradise.

You can learn more about the deal below.