Today, Big Dave’s Cheesesteaks is serving up the Philly classic to millions of hungry customers all across Georgia, North Carolina, South Carolina, and Georgia. But the multimillion-dollar operation is far from being the first hustle of its founder and CEO, Derrick Hayes. Growing up in Philadelphia, the entrepreneur made ends meet by selling bean pies and newspapers as a kid.
“I was in survival mode my whole life, from being a kid to high school,” Hayes tells Fortune. “I was always a hustler. I was a serial entrepreneur even when I was younger.”
“When [I was] 12 years old, I was selling Philadelphia newspapers and bean pies…I would go to the suburban neighborhoods and shovel snow when there was no snow on the ground in Philly. I never liked to ask my parents for money. I always wanted to have my own, and [it] made me feel good about myself.”
Hayes is now a long ways away from his teenage years shoveling driveways, and his early career as a postal-service worker. In 2014, the Philly native finally pursued his passion after his ailing father wished for him to start his own business—so he opened Big Dave’s Cheesesteaks, named after his late father, in a Shell gas station in Dunwoody, Georgia. Ten years later, the chain has exploded across the U.S. with 12 locations, and four new restaurant openings completed in just four months of this year. Two of Big Dave’s hotspot locations in Atlanta brought in around $1.1 million to 1.8 million in net sales last year; and the chain sells a cheesesteak, ranging from the basic $11.99 sandwich to $46.99 specialty choices, every 58 seconds, with more than 1,500 of the iconic sandwiches sold every day.
With 100% of Big Dave’s franchise owners identifying as Black or BIPOC, Hayes is pouring money back into underserved communities, spreading his entrepreneurial spirit beyond the suburban sidewalks where he once sold bean pies.
“As I’ve been able to be an entrepreneur and [in] growing this business, I learned that my gift is not even making the money. My gift is actually giving people opportunity,” Hayes says. “I’m able to lift people through my dream. I’ve got 400 employees right now, and everybody has an opportunity to be able to spread their wings inside of Big Dave’s Cheesesteaks.”
Leaving the U.S. postal service to pursue his dad’s wish
Even though Hayes embodied an entrepreneurial spirit from a young age, his first job after high school in Philadelphia was a classic nine-to-five. During his early 20’s, the CEO was working for the postal service, making good money with health benefits. But everything changed when his father fell ill—he was battling lung cancer, and needed support during his final years. Hayes’ employer wouldn’t let him take time off to be at his side, so Hayes was forced to walk away from his stable career.
“When I got in the postal service, I thought that that would be the career job that I would probably retire off of,” Hayes says.
“I went to my boss and I said, ‘Hey, I’ve been working here for almost four years, never taking a day off. I need time off for my father so I can be there with him.’…And my boss told me, ‘I’m sorry, it’s the holidays, I can’t give you off.’ I said, ‘Listen, I’m gonna get another job, I’m not gonna get another father.”
Spending those final moments with father would reshape both his personal life and professional life forever. Not only was it life-altering to see his father and best friend pass away from the harrowing illness, but his dad’s final wish also changed the trajectory of his entire career. Hayes said he promised his father he would have something to show for his hard work. Five years later, Big Dave’s Cheesesteaks—named in memory of his father—would be born in an old Shell gas station.
“My dad gave me principles and morals that’s instilled in me today…When it comes to Big Dave cheesesteaks, I always think about how my father would do it. Because watching your dad die in front of your face is something that you’ll never forget,” Hayes says. “I wouldn’t say I was forced into this career, but it was something that I felt like was needed, and it was something that I felt like I wanted to honor my father.”
From buying an abandoned Shell gas station to opening 12 locations across the U.S.
In 2014, Hayes finally decided to fulfill his father’s wish and put his business plan into action by opening up his own joint. And he found the perfect place to do it: at a 700-square-foot Shell gas station in Atlanta, Georgia, near where some of his family members lived. Although the serial entrepreneur is now known for his cheesesteaks, he actually started out slinging Italian ices.
“It was called Dave’s Philly Water Ice. Nobody was supporting me—I thought when I opened this business up, I’d have lines down the block. And people used to be like, ‘Are you selling cups of water?’” Hayes reminisces. “I’m telling my mom, ‘This is not gonna work. It worked in Philly, but they are just not adapting to us.’ My mom was like, ‘Listen, do the thing that you really wanted to do, put the cheesesteaks in there.’”
Hayes quickly pivoted the restaurant to serve up the iconic Philly sandwich: a bread roll stuffed with seasoned halal beef, onions, mushrooms, peppers, and cheese. Despite the menu revamp, hungry customers still weren’t flooding into his restaurant until a couple years later when rapper, actress, and TV host Eve popped into the store. The Philly-native was in town shooting comedy-drama film Barbershop: The Next Cut, hankering an authentic cheesesteak. Her support came in the nick of time.
“My ego, my pockets, my business, everything is falling apart because I’m not making money. I don’t have people supporting the brand. And then life taught me, ‘If you keep chasing, something will happen,’” Hayes says. “Later on that week, she popped up…She just posted [on social media], and it went viral. Next thing you know, I got lines out the gas station—it was more traffic than I could handle.”
The success didn’t stop there. In 2018, Hayes was invited to represent Georgia at a sandwich competition in Alabama. With no prior experience working in professional kitchens as a chef—he learned how to make good food with his grandfather, cooking up meals on Sundays—Hayes took seventh place and beat out 1,500 trained professionals. At this point, Hayes and his restaurant chain were getting more and more attention; the brand opened two locations in Georgia in 2020, and three inside the Mercedes Benz Stadium. In 2022, Big Dave’s flagship location in downtown Atlanta generated over $2.3 million in revenue alone.
Even though thousands of cheesesteaks are now flying off grills and into customers’ hands daily, Big Dave’s multimillion-dollar success was anything but meteoric. It took years of steady hard work and incremental wins for the business to stand where it is today—and Hayes wouldn’t have it any other way.
“Everything in my career has stages, where I’m blessed to say that I didn’t move too fast and move too slow,” Hayes says. “I moved at a good pace.”
Netflix’s $72 billion play for Warner Bros. is as much a bet on the future of artificial intelligence (AI) and chips as it is on movies and shows, according to a top Wall Street analyst, who said in an interview with Fortune the deal cannot be understood without looking at Google’s technology ambitions.
Amid cries from the jilted Ellison family about a “tainted” sale process and indie producers and theater owners of the “death of Hollywood,” Melissa Otto, Head of Research at S&P Global Visible Alpha, sees a different game being played. Otto said she thinks the tech angle of the industry is being overlooked.
“I think there’s this much bigger conversation that is being missed,” she said: Google and its TPU chips.
A key question for the future of entertainment, Otto told Fortune, is control over premium video at massive scale in an era when generative AI will increasingly create, remix, and personalize moving images. (Otto called it the “video corpus” that will train and power the next generation of AI models.) Over the long term, Otto added, that is a key part of the mystery behind why Netflix, long a builder rather than a buyer, would make Hollywood history by taking out one of its biggest rivals and one of the town’s prestige legacy studios.
Co-CEO Greg Peters was asked a blunt question about that same thing this morning on the call with analysts about the historic merger. Rich Greenfield of LightShed Partners cited Peters’ own previous statement at a Bloomberg conference about how there’s a long history of failed media mega-mergers, so he questioned: “Why is this going to end differently than every other media transaction essentially of this scale and history?”
Peters, while clarifying his remarks at the conference were a bit more nuanced, acknowledged “historically, many of these mergers haven’t worked, some have, but you really got to take a look at this on a case by case basis.” Still, Peters argued most previous big deals showed a lack of understanding about the underlying business, and Netflix understands these assets and has a “clear thesis about how the critical parts of Warner Brothers accelerate our progress.” He also acknowledged Netflix isn’t expert at doing large-scale M&A.
After all, this is expensive. “We are surprised that Netflix felt the need to spend $80bn+ and pay a premium for something Netflix disrupted,” Barclays analysts wrote in reaction to the deal, “and it is not clear what problem or opportunity Netflix is solving for that couldn’t have been achieved organically.”
In a statement emailed to Fortune, Dave Novosel, a Gimme Credit senior bond analyst, said the deal looks expensive to him as well, with Netflix assuming nearly $11 billion of debt.
“While the WBD assets bring an amazing amount of attractive content, NFLX is paying a steep EBITDA multiple of more than 25x, which seems extravagant,” Novosel wrote. Once it reaches the advertised synergies, he added, the resulting multiple of closer to 15x seems more reasonable. While those are pending, “the huge amount of debt that Netflix will need to raise to fund the deal will take leverage to well more than 4x initially.” Novosel wrote investors may need to be patient. Bloomberg’s credit team, meanwhile, reported the $59 billion bridge loan being taken out to finance this deal is among the biggest in corporate history.
Here’s what Otto sees happening in Northern California, far from Tinseltown, where the Warner deal is all anybody can talk about, and why Netflix took such a big swing.
Is the future of entertainment Northern or Southern California?
Part of Netflix’s thesis, according to Otto, is that it’s a tech company at heart and it recognizes Google’s rapid advancements in AI, particularly its advancements in TPU chips.
“What TPU chips do really, really well is in the modality of video in generative AI,” Otto said, as they essentially turn mathematical representations into moving pictures in much the same way GPUs revolutionized natural language AI by tokenizing and modeling text. Instead of ChatGPT and text, think Gemini 3 and YouTube videos.
Netflix already trails YouTube in total share of streaming time, with Bank of America Research recently citing Nielsen data showing YouTube held 28% of U.S. streaming, versus Netflix’s 18%. Otto said this threatens to go up another notch when and if Google’s TPU chips turbocharge content made with generative AI.
“I’m sure that it’s feeding into the strategy,” Otto said. “If I were Netflix and I knew that Google, one of their formidable competitors, had this chip technology and was essentially plowing billions and billions of dollars into developing the infrastructure so that they could carve out the corpus of the video modality in generative AI, I would want to build a moat around my business.”
On the surface, Netflix is buying a legacy studio with a deep library, beloved franchises, and a global brand—and paying up to do it. The combined streaming and studio business generates about $25 billion in revenue and roughly $4 billion to $5 billion in EBITDA, but margins on streaming remain thin, making the economics of the deal look tough in the near term. Executives have emphasized overlapping subscribers, obvious cost cuts and an expected $5.5 billion in efficiencies, the kind of “low‑hanging fruit” that can occupy management for the next 12 to 24 months, Otto said.
But in a world where TPUs can make high‑quality video “basically for free,” any player lacking both the chips and the content could find itself outgunned as AI reshapes how entertainment is produced and consumed. That makes Netflix’s big splash for Batman, Harry Potter, and the like a different kind of moat, and a different kind of game than the classic Hollywood rivalries of yore. Otto said it was plausible generative AI entertainment could be seen as an extension of the recent IP wars that saw Hollywood deluged by floods of superhero movies and sequels, with Disney’s Marvel Studios ushering in a computer generated revolution in the 21st century. “I think that’s not an outrageous assumption.”
By absorbing Warner Bros., Netflix increases the volume and diversity of content it can feed into recommendation systems, experimentation and, eventually, its own AI‑driven video tools. Otto also noted the deal potentially gives Netflix more exposure to advertising, an area in which Alphabet has dominated and where Warner Bros. still generates $6 billion–$7 billion in ad revenue. While the ultimate destination of that ad talent remains unclear, as they may go to the spinco that includes WBD’s cable assets such as CNN and TNT. (Netflix has only been active in ads since 2022, having been a premium subscription service since it pivoted from DVD rentals to streaming in the late 2000s.)
Imagine a world, Otto said, where you could create your own versions of the crime classic Columbo starring an AI-generated version of legendary actor Peter Falk, who died in 2011. (Columbo had several homes on TV on neither Warner Bros. nor Netflix, as it was first an NBC property in the 1970s, and then an ABC property from the late ’80s onward.) “In this day and age, boy, wouldn’t it be interesting?” Otto asked rhetorically.
In many ways, she added, this moment is remarkable because Netflix may end up neither a subscription nor an advertising business, but an AI-based one that doesn’t quite exist yet. “It’s kind of exciting because it means that it’s anybody’s game,” Otto said.
Otto also raised the spectre of TikTok, the social media giant partially under the control of Larry Ellison.
“They’re a formidable competitor as well,” she said. What’s likely, she added, is the future will be unpredictable. The rise of AI “could provide some really amazing innovation over the next couple of years.” She agreed it could create a bonanza for show business lawyers who wrangle over the rights of things like the likeness of Falk, which was a major issue in the recent Hollywood strikes.
“That may be the real story,” she said.
[Disclosure: The author worked internally at Netflix from June 2024 through July 2025.]
Netflix Inc. agreed to buy Warner Bros. Discovery Inc., marking a seismic shift in the entertainment business as a Silicon Valley-bred streaming giant tries to swallow one of Hollywood’s oldest and most revered studios.
Under terms of the deal announced Friday, Warner Bros. shareholders will receive $27.75 a share in cash and stock in Netflix, valuing the business at $82.7 billion including debt. The total equity value of the deal is $72 billion. Warner Bros. will spin off cable networks such as CNN and TNT into a separate company before concluding the sale of its studio and HBO to Netflix.
Media mergers of this scale have a rocky history and this one is expected to bring intense regulatory scrutiny in the US and Europe. The deal combines two of the world’s biggest streaming providers with some 450 million subscribers. Warner Bros.’ deep library of programming gives Netflix content to sustain its lead over challengers like Walt Disney Co. and Paramount Skydance Corp.
The acquisition, which confirmed a Bloomberg report Thursday, presents a strategic pivot for Netflix, which has never made a deal of this scope in its 28-year history. With the purchase, Netflix becomes owner of the HBO network, along with its library of hit shows like The Sopranos and TheWhite Lotus. Warner Bros. assets also include its sprawling studios in Burbank, California, along with a vast film and TV archive that includes Harry Potter and Friends.
“I know some of you are surprised we are making this acquisition,” Netflix co-Chief Executive Officer Ted Sarandos said on a call with analysts Friday. He noted that Netflix has traditionally been known to be builders, not buyers. “But this is a rare opportunity that will help us achieve our mission to entertain the world.”
Netflix shares were down 3.5% Friday afternoon in New York. They have declined about 17% since the streaming leader emerged as an interested party in October. Some investors and analysts have interpreted this deal to mean Netflix was worried it couldn’t expand its current business, a theory co-CEO Greg Peters dismissed.
Warner Bros. stock was up about 5.2% midday in New York. It has almost doubled since reports of deal talks with Paramount emerged in September. Play Video
The news concludes a flurry of dealmaking over the past few months that began with a series of bids by Paramount. That prompted interest from Comcast Corp. and Netflix, who were both chasing just the studios and streaming business. All three submitted sweetened bids earlier this week, with Paramount ultimately offering $30 a share for all of Warner Bros. Discovery, arguing that its proposal offered a smoother path to regulatory approval. Netflix won out in the end although significant hurdles remain before the deal can close, which the company expects it can do in the next 18 months.
Paramount could still try to raise its bid, take its offer directly to shareholders or sue to try and block the Netflix deal. The company had no comment.
California Republican Darrell Issa wrote a note to US regulators objecting to any potential Netflix deal, saying it could result in harm to consumers. Netflix has argued that one of its biggest competitors, however, is Alphabet Inc.’s YouTube, and that bundling offerings could lower prices for subscribers. Netflix accounts for between 8% and 9% of TV viewing in the US each month, according to Nielsen. It accounts for closer to 20% or 25% of streaming consumption.
Analysts at Oppenheimer said platforms such as Reels, TikTok and YouTube competing for viewers’ time should help the deal pass antitrust review.
It was 15 years ago that Time Warner CEO Jeff Bewkes, who oversaw Warner Bros. and HBO, shrugged off the threat posed by Netflix, comparing the then fledgling company to the Albanian Army. As Netflix began to invest in original programming, Sarandos declared that Netflix wanted to become HBO before HBO figured out streaming.
Sarandos succeeded and Netflix led the streaming takeover of Hollywood while HBO struggled to respond to the rise of on demand viewing and the decline of cable. Bewkes agreed to sell Time Warner to AT&T in 2016, the beginning of a decade of turmoil for HBO and Warner Bros., storied brands that are about to have their fourth owner in a decade.
Warner Bros. put itself up for sale in October after receiving three acquisition offers from Paramount, which were rejected, opening the door for Netflix and Comcast. Peters said he didn’t see the logic of these big transactions at Bloomberg’s Screentime conference in October, but Sarandos privately pushed for the deal.
The bidding got contentious, with Paramount accusing Warner Bros. of operating an unfair process that favored Netflix. The Netflix offer topped Paramount’s when combining the money for the studio and streaming business with the estimated value of the networks. The two sides agreed to the deal Thursday night.
Under terms of the agreement, Warner Bros. shareholders will receive $23.25 in cash and $4.50 in Netflix common stock. Moelis & Co. is Netflix’s financial adviser. Wells Fargo is acting as an additional financial advisor and, along with BNP Paribas and HSBC Holdings, is providing $59 billion in debt financing, according to a regulatory filing, one of the largest ever loans of its kind. Allen & Co., JPMorgan Chase & Co. and Evercore are serving as financial advisers to Warner Bros. Discovery.
Netflix agreed to pay Warner Bros. a termination fee of $5.8 billion if the deal falls apart or fails to get regulatory approval. “We’re highly confident in the regulatory process,” Sarandos said Friday.
In addition to streaming overlap, regulators will also likely look at the impact on theatrical releases, which Netflix has traditionally eschewed in favor of prioritizing content on its platform.
Netflix said it will continue to release Warner Bros. movies in theaters and produce the studio’s TV shows for third parties — two major changes in how it does business. The company was a little short on details of exactly how it will integrate the different businesses, but Netflix said it expects to maintain Warner Bros.’ current operations and build on its strengths.
The deal will allow Netflix to “significantly expand” US production capacity and invest in original content, which will create jobs and strengthen the entertainment industry, the company said. The combination is also expected to create “at least $2 billion to $3 billion” in cost savings per year by the third year.
Warner Bros. Discovery CEO David Zaslav was the architect of combining Warner Bros. and Discovery in 2022, a deal he hoped would create a viable competitor to Netflix. But the company’s share price tanked in response to a series of public miscues and the continued decline of the cable network business.
While performance rebounded a bit over the last year, the company never quite became the streaming dynamo Zaslav envisioned. He’ll continue to run the company through its spinoff and sale. The two companies haven’t yet agreed on him having any role at Netflix.
The traditional TV business is in the midst of a major contraction as viewers shift to streaming, the world that Netflix dominates. In the most recent quarter, Warner Bros. cable TV networks division reported a 23% decline in revenue, as customers canceled their subscriptions and advertisers moved elsewhere.
In 2021, Mark Zuckerberg recast Facebook as Meta and declared the metaverse — a digital realm where people would work, socialize, and spend much of their lives — the company’s next great frontier. He framed it as the “successor to the mobile internet” and said Meta would be “metaverse-first.”
The hype wasn’t all him. Grayscale, the investment firm specializing in crypto, called the Metaverse a “trillion-dollar revenue opportunity.” Barbados even opened up an embassy in Decentraland, one of the worlds in the metaverse.
Five years later, that bet has become one of the most expensive misadventures in tech. Meta’s Reality Labs division has racked up more than $70 billion in losses since 2021, according to Bloomberg, burning through cash on blocky virtual environments, glitchy avatars, expensive headsets, and a user base of approximately 38 people as of 2022.
For many people, the problem is that the value proposition is unclear; the metaverse simply doesn’t yet deliver a must-have reason to ditch their phone or laptop. Despite years of investment, VR remains burdened by serious structural limitations, and for most users there’s simply not enough compelling content beyond niche gaming.
A 30% budget cut
Zuckerberg is now preparing to slash Reality Labs’ budget by as much as 30%, Bloomberg said. The cuts—which could translate to $4 billion to $6 billion in reduced spend—would hit everything from the Horizon Worlds virtual platform to the Quest hardware unit. Layoffs could come as early as January, though final decisions haven’t been made, according to Bloomberg.
The move follows a strategy meeting last month at Zuckerberg’s Hawaii compound, where he reviewed Meta’s 2026 budget and asked executives to find 10% cuts across the board, the report said. Reality Labs was told to go deeper. Competition in the broader VR market simply never took off the way Meta expected, one person said. The result: a division long viewed as a money sink is finally being reined in.
Wall Street cheered. Meta’s stock jumped more than 4% Thursday on the news, adding roughly $69 billion in market value.
“Smart move, just late,” Craig Huber of Huber Research told Reuters. Investors have been complaining for years that the metaverse effort was an expensive distraction, one that drained resources without producing meaningful revenue.
Metaverse out, AI in
Meta didn’t immediately respond to Fortune’s request for comment, but it insists it isn’t killing the metaverse outright. A spokesperson told the South China Morning Post that the company is “shifting some investment from Metaverse toward AI glasses and wearables,” pointing to momentum behind its Ray-Ban smart glasses, which Zuckerberg says have tripled in sales over the past year.
But there’s no avoiding the reality: AI is the new obsession, and the new money pit.
Meta expects to spend around $72 billion on AI this year, nearly matching everything it has lost on the metaverse since 2021. That includes massive outlays for data centers, model development, and new hardware. Investors are much more excited about AI burn than metaverse burn, but even they want clarity on how much Meta will ultimately be spending — and for how long.
Across tech, companies are evaluating anything that isn’t directly tied to AI. Apple is revamping its leadership structure, partially around AI concerns. Microsoft is rethinking the “economics of AI.” Amazon, Google, and Microsoft are pouring billions into cloud infrastructure to keep up with demand. Signs point to money-losing initiatives without a clear AI angle being on the chopping block, with Meta as a dramatic example.
On the company’s most recent earnings call, executives didn’t use the word “metaverse” once.
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