Business: SoftBank May Tighten the Reins on Start-Up Founders

12-16 minutos - Source: NYT

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SoftBank may have a plan to invest more safely
After the near-collapse of the office space company WeWork that it’s heavily invested in, SoftBank may be set to clamp down on the freedom afforded to the founders of companies it backs through its Vision Fund.
It’s not just WeWork causing headaches. Other investments made by SoftBank’s nearly $100 billion Vision Fund are also causing problems. “After a sizable bet on online car-lessor Fair, that company is struggling to stay afloat,” the WSJ reports. And the dog-walking app Wag “is for sale, people with knowledge of the companies say.”
Masayoshi Son, the SoftBank C.E.O., defended the Vision Fund’s approach at the Future Investment Initiative conference in Riyadh, Saudi Arabia, last month, the FT reports. He said it would continue offering capital to start-ups so they could “grow much bigger and quicker.” He added: “We identify the entrepreneurs who have the greatest vision to solve the unsolvable.”
But SoftBank may impose new standards to keep founders in check, according to another report by the FT:
• “The Tokyo-based group is expected to outline tougher governance standards and restrictions on dual-class share structures on Wednesday.”
• “The new governance standards will apply to future investments made by SoftBank.”
• “Its Saudi Arabia-backed Vision Fund is in discussions about how it can adopt some or all of these measures.”
“The guidelines that SoftBank are now introducing echo the steps WeWork was forced to take to address investor anxiety in the run-up to its IPO, as well as after it received a $9.5bn rescue package from its Japanese backer to avert bankruptcy,” the FT notes.
It’s rare in negotiations to get anything without giving a little in return — and that’s something the Trump administration may be realizing. According to the FT, the White House is considering scrapping existing tariffs on Chinese goods in an effort to seal President Trump’s “Phase 1” trade deal with China.
“The White House is considering rolling back levies on $112 billion of Chinese imports — including clothing, appliances and flat-screen monitors — that were introduced at a 15 percent rate on September 1,” the FT reports, citing five unidentified people briefed on the discussions. A senior administration official also told the WSJ that a deal would include tariff rollbacks; Politico previously reported that China had asked for the removal of such tariffs.
The U.S. is also seeking concessions from China, the WSJ notes, “including purchases of American farm goods, rules to deter currency manipulation and some provisions to protect intellectual property and open up Chinese industries to U.S. firms.”
China’s concessions were expected to be in return for the U.S. holding off on enacting a new wave of tariffs on Dec. 15.
But a tariff rollback could change American demands. “Washington would probably expect something in return,” the FT writes, potentially including beefed-up versions of the existing desires, or perhaps “a signing ceremony for the agreement on American soil.”
More: President Xi Jinping of China yesterday praised free trade during a speech at the second annual China International Import Expo in Shanghai — but didn’t mention trade negotiations with the U.S.
The Trump administration formally notified the U.N. yesterday that it would withdraw the U.S. from the Paris Agreement on climate change, Lisa Friedman of the NYT reports.
It starts a yearlong countdown to America’s exit, which would officially pull the U.S. out a day after the 2020 presidential election. (It would make the U.S. the only nation on the planet outside of the agreement.) American participation would ultimately be determined by the outcome of the 2020 election, but re-entry wouldn’t necessarily be straightforward.
The administration cited “unfair economic burden imposed on American workers, businesses and taxpayers” as the reason for the withdrawal. And it argued that the U.S. had “reduced all types of emissions, even as we grow our economy and ensure our citizens’ access to affordable energy.”
But the economic argument may be short-termist. “Economic damages of unchecked climate change will be astronomical,” MIT Technology Review notes. “In the U.S. alone, climate change could add up to at least hundreds of billions of dollars per year in lost labor productivity, declining crop yields, early deaths, property damage, water shortages, air pollution, flooding, fires and more.”
Other nations are braced for the exit, as the global economic shifts required to overcome climate change will be difficult without the world’s largest superpower on board. And some diplomats fear that Mr. Trump “will begin actively working against global efforts to move away from planet-warming fossil fuels,” Ms. Friedman notes.
More: Over 1,100 Google employees signed a letter demanding that the company commit to eliminating its carbon footprint by 2030.
Saudi Arabia’s giant state-owned oil producer announced plans on Sunday to go public in what could be the largest initial stock offering ever. But questions have risen about the company’s value, writes the NYT’s Stanley Reed.
What we know:
• Crown Prince Mohammed bin Salman, the kingdom’s main policymaker, set a $2 trillion goal for the company’s valuation more than three years ago.
• The prince wants to use proceeds from the sale to help overhaul the Saudi economy so that it is less dependent on oil.
• The company will be listed only on Riyadh’s Tadawul stock exchange.
What we don’t know:
• How much of the company will be sold, or for what price.
• When the I.P.O. will happen.
Expert valuations vary wildly, from around $1.2 trillion to $2.3 trillion. Bernstein analysts estimate that “a fair value range” is $1.2 trillion to $1.5 trillion. Some people are more conservative: Anish Kapadia, the head of London-based independent oil and mining advisory Palissy Advisors, says $1 trillion is more realistic.
The uncertainty stems from questions hanging over the I.P.O. — including recent drone attacks, concerns about the future of fossil fuels, and the optics of investing in a repressive state like Saudi Arabia.
The prince may accept a valuation of about $1.8 trillion, according to a person familiar with the offering who spoke to the NYT. But investors may ultimately require a much lower price tag, forcing Riyadh to choose either price or credibility.
Apple’s $2.5 billion housing plan is a response to the increasing pressure that Silicon Valley’s tech giants are under to play a more active role in the region’s housing crisis, write Jack Nicas, Kevin Granville and Conor Dougherty in the NYT.
The crisis is fueled by the tech boom. As Silicon Valley companies have prospered, they have flooded the region with hundreds of thousands of highly paid employees. But the supply of housing has not kept pace and prices have soared.
The solution, as Apple and other companies see it, is to dig into bank accounts — and tap existing real estate — to help address the problem. Google and Facebook have recently pledged $1 billion each toward the goal.
But the amount of housing allowed under state and local laws is not enough to accommodate rising demand. Without an overhaul to zoning rules, that cash might not be enough.
The American public is energetically engaged in a spendathon. American businesses, by contrast, are not. What happens when they eventually meet could send the economy in one of two directions, Patricia Cohen of the NYT writes.
Outlooks of businesses and households usually align, but in recent months the two seem to occupy opposite ends of a teeter-totter. Consumers continue to spend while business owners cut back.
The economic expansion has extended its record run despite this divergence. The question is how long it can continue.
“They will catch up with each other,” one expert said. And when they do, if consumers are in the lead and businesses respond in kind, the economy will keep growing. But if business anxiety spreads to households, the risk of a recession looms.
More: The Dow Jones industrial average climbed to a record on Monday, the latest example of investors’ faith in the economy powering U.S. stocks to fresh highs.
McDonald’s top human-resources officer, David Fairhurst, is leaving the company, a day after the company fired it C.E.O., Steve Easterbrook.
Jimmy Fallon’s producer, Jim Bell, will leave NBC amid a rating slide on the network’s “Tonight Show.”
WeWork is reportedly cutting up to 25 percent of the staff at Meetup, a start-up it bought for $200 million two years ago.
Two managers of a Buffalo Wild Wings restaurant in Illinois have been fired after reportedly asking black diners to move.
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• The medical device maker Stryker said it would buy its smaller rival Wright Medical for about $4 billion. (Reuters)
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Trump impeachment inquiry
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Politics and policy
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Best of the rest
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