DealBook: Sycophants and ‘General Weirdness’ at SoftBank Vision Fund
A venture capital firm known for making huge bets on Silicon Valley ventures has a toxic culture and an exceptionally high tolerance for risk, a report says.
December 18, 2019
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Masa Son, the SoftBank founder and C.E.O. Kim Kyung Hoon/Reuters
A toxic culture at SoftBank’s Vision Fund
Masa Son, the Japanese billionaire, instilled a hard-driving work ethos at his venture capital firm, SoftBank Vision Fund: Go big or go home. But the fund has also been described as an environment of sycophancy and harassment, reports Bloomberg Businessweek.
The workplace is “steeped in vintage Wall Street macho belligerence,” according to Bloomberg: “Current and former employees of the fund and SoftBank describe an environment of sycophancy toward Son, internecine political rivalries, harassment, compliance issues and an abnormally high tolerance for risk — all wrapped in a casing of general weirdness.”
The fund is known for making outsize bets on tech start-ups, which helped it take in more than $21.2 billion on investments in 2017. But its practices have raised skepticism from outsiders.
“The strategy that Son and his all-male phalanx of managing partners followed seemed less about any specific technology than about placing large bets on the buzziest start-ups,” Bloomberg writes.
The plan seemed to be working, until the fund’s most prominent investment, WeWork, spectacularly fumbled its I.P.O.
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Today’s DealBook Briefing was written by Andrew Ross Sorkin and Stephen Grocer in New York, and Gregory Schmidt and Sharon O’Neal in London.
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The Shijiachi residential complex in China. Data from the complex was stored on an unprotected server. Gilles Sabrié for The New York Times
The Chinese authorities are melding old and new technologies — including phone scanners, facial recognition cameras, and face and fingerprint databases — into tools for authoritarian control, according to private and police databases.
The tools can help identify people walking down the street, find out whom they are meeting, and determine who does and doesn’t belong to the Communist Party. In the United States and other countries, some of these techniques are used to track terrorists and drug lords.
The rollout in China has come at the expense of personal privacy. The authorities stored the personal data of millions of people on servers that are unprotected by even basic security measures, The Times found. Leaks of online data is a major problem.
Signs of a backlash are brewing: In Shanghai, residents pushed back against a police plan to install facial recognition cameras in a building complex, and in Zhejiang Province a professor sued a zoo after it required mandatory facial recognition scans for its members to get access, Mr. Mozur and Mr. Krolik write.
Fiat's chairman, John Elkann, left, and Carlos Tavares, the C.E.O. of PSA. Marco Bertorello/DPA, via Dpa/Afp Via Getty Images
Fiat Chrysler and Peugeot forge an auto giant
Fiat Chrysler and PSA, the maker of Peugeot, agreed today on a merger in a deal that would create the world’s fourth-biggest auto manufacturer, write the NYT’s Jack Ewing and Liz Alderman.
The carmakers signed a formal agreement for a 50-50 merger, which had been announced in October. The combined company will be led by PSA’s C.E.O., Carlos Tavares. The Fiat chairman, John Elkann, will hold the same role at the new company.
The new entity would surpass Volkswagen as the market leader in Europe, with more than 400,000 employees and worldwide sales of 8.7 million vehicles.
Integrating the companies could take many months, including the process of choosing a name for the new company.
Analysts regard the union as an imperfect match: “They share some weaknesses, including a dependence on the declining European market and the lack of a strong presence in China,” the reporters write.
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Russian tech firms are a target for state-sponsored trouble
Russia’s tech sector has a wealth of talent but is often hurt by the country’s stumbling attempts to market its developers’ skills, the NYT’s Andrew Higgins writes.
The $670 million sale this year of Nginx, a Russian company that developed web server software used by more than a third of the world’s websites, to F5 Networks of Seattle, sent a clear message: Russian programmers can create valuable products.
But that was before Russia’s capricious and aggressive law-enforcement system got involved.
Police officers with automatic weapons last week searched the homes of the company’s founders, Igor Sysoyev and Maxim Konovalov, and their company’s Moscow office, and also took the two men in for questioning.
The case, essentially an intellectual property matter that the authorities escalated to a criminal case, has turned one of Russia’s biggest IT success stories into an example of why the country has so much trouble developing its economy beyond natural resource extraction, Mr. Higgins writes.
A 2017 California wildfire. Mike Eliason/Santa Barbara County Fire Department, via Associated Press
PG&E clears a $1.7 billion bankruptcy hurdle
Pacific Gas & Electric reached a $1.7 billion settlement with California regulators for deadly wildfires started by its equipment in 2017 and 2018, the NYT’s Lauren Hepler and Ivan Penn write. The deal resolves one of several obstacles that the company faces in its bankruptcy petition.
The utility is trying to win approval in U.S. Bankruptcy Court for a separate multibillion-dollar settlement. Two weeks ago, the utility appeared to have cleared a big hurdle by reaching a $13.5 billion settlement with wildfire victims.
But Gov. Gavin Newsom objected to the company’s proposed restructuring last week, as hedge funds vying for control of the utility seek to change the settlement with victims.
The results of those battles will shape how fire victims are compensated for lost homes and loved ones. It will also determine how California fixes and updates its strained energy system.
California law creates confusion for gig workers
Many independent contractors in California are caught in uncertainty by a law that focuses on gig-economy workers. The legislation takes effect on Jan. 1, but many employers and workers say it is unclear how it will affect them, write the WSJ’s Christine Mai-Duc and Lauren Weber.
• Many workers will be reclassified as employees rather than independent contractors under the law, known as AB5, “giving them access to minimum wage and overtime laws, workers’ compensation coverage and paid sick days” the reporters write.
But confusion over who will be affected is driving some to take precautionary measures, while others hope a court will clarify the matter soon.
Other states are watching closely: “How the outstanding questions about AB5 get resolved in the coming months could have national implications, as lawmakers in other states including New York and New Jersey consider similar legislation,” the reporters write.
“We are going into uncharted waters,” one small-business owner said.
• Carlyle and other investors are reportedly taking a stake in American Express Global Business Travel, in a deal that values the company at $5 billion, including debt. (WSJ)
• JAB Holdings is combining the coffee brands Jacobs Douwe Egberts and Peet’s Coffee with the aim of raising as much as $3.3 billion from a European listing. (FT)
• Daimler is seeking to buy a majority stake in its Chinese operations at a time of heightened tension between Berlin and Beijing. (Reuters)
• Beike Zhaofang, an online property brokerage platform, is considering an I.P.O. that could raise at least $1 billion. (Bloomberg)
• The E.U. has opened an investigation into the merger of two major South Korean shipbuilders. (FT)
Politics and policy
• Senator Elizabeth Warren is escalating her attacks on private equity. The industry is ready to fight back. (WaPo)
• The E.U. outlined comprehensive “green” guidelines to regulate finance-industry claims in a thriving sector. (WSJ)
• President Trump sent a six-page letter to House Speaker Nancy Pelosi in which he called the impeachment inquiry a “perversion of justice” and invoked the Salem witch trials. (NYT)
• A majority of House members support the articles of impeachment. (NYT)
• Senator Mitch McConnell said he would decline to call four witnesses, including Mick Mulvaney and John R. Bolton, all of whom have firsthand knowledge of Mr. Trump’s dealings with Ukraine. (WaPo)
Brexit
• The pound slumped as Prime Minister Boris Johnson’s plans to set a deadline for Britain to leave the E.U. by the end of next year, with or without a trade pact, renewed fears of a no-deal Brexit. (Bloomberg)
• Britain’s exports of financial services rose to $106.5 billion last year, with the E.U. still the biggest customer. (Reuters)
Trade
• President Trump’s China and North American trade pacts reverse a trend of opening markets that was decades in the making. (NYT)
Tech
• As the effects of holding tech platforms accountable for sex-trafficking on their sites take hold, some experts and politicians say the results are not all positive. (NYT)
• The technology behind Bitcoin was once seen as a challenge to internet giants, but they now think it could help them solve many problems. And some cryptocurrency investors, unable to retrieve their money, want the body of an executive exhumed to prove that he is dead. (NYT)
• Peter Thiel, the billionaire investor and Facebook board member, is advising Mark Zuckerberg not to bow to public pressure as the company tries to address criticism of its effect on U.S. politics. (WSJ)
• Amazon has said it is not liable for what its third-party merchants sell, but those products might literally be garbage. (WSJ)
• Another Google employee added her name to a list of workers who say they were fired for legally advocating labor rights inside the company. (Bloomberg)
• A California law mandating that public companies have at least one woman on their boards by the end of the year has brought in many people who don’t fit the traditional mold. (NYT, sign-up)
• Jane Fraser’s promotion to Citigroup president has come at a critical juncture for the bank. (FT)
• More homes on 57th Street in Manhattan were sold for over $25 million in the last five years than on any other street in the world. (Bloomberg)
• A bubble in marijuana stocks has burst as the reality of a difficult regulatory landscape has sunk in. (Bloomberg)
• Congress moved closer to approving a one-year extension for a popular tax cut that benefits certain alcohol producers. (NYT)
• Credit Suisse is further reviewing its business practices after a second accusation of surveillance against a senior executive at the bank. (FT)
Thanks for reading! We’ll see you tomorrow.
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