To say Batista overreached would be to seriously undersell what has happened in the 18 months since that self-regarding presstravaganza of hubris and magical thinking. In what is shaping up to be one of the largest personal and financial collapses in history—if not the largest—Batista may be nearing bankruptcy. On Oct. 1, OGX missed a $45 million interest payment on bond debt it had racked up during its rise. Batista has sold his planes and his helicopter, and creditors are arguing over the remains of his companies. He’s no longer on the Bloomberg Billionaires Index and has become the butt of jokes in Brazil. One suggests that Pope Francis plans to return to Brazil soon and will again be visiting the poor, including Batista. … Brazil’s securities regulator has started an investigation into Batista and OGX after an investor alleged that Batista dumped 126.7 million OGX shares just before the company scrapped projects and warned that it may stop pumping crude next year. In a July op-ed for Brazil’s Valor Econômico newspaper, Batista said he would honor all of his obligations. In that same article, he put some of the blame on his auditing firm and executives for unreasonably building shareholder expectations. The company has denied it gave faulty advice. Once a staple on the airwaves and in print, Batista has mostly gone silent.
In the days following Lee’s surrender at Appomattox Court House, word had spread that Union troops were seizing good horses. Garland had hidden Don Juan at a farm in the woods on behalf of its owners, but another freedman told the soldiers where to find it. ... For 150 years, it has been public knowledge that Custer owned Don Juan, but not how he acquired it. His many biographers have written that Union troops seized it during a wartime campaign, as they confiscated every horse in Rebel territory; that was Custer’s own explanation. Until now, the truth has remained hidden in the open, told in correspondence and affidavits archived in the library of the Little Bighorn Battlefield National Monument and the National Archives that have aroused little curiosity among those biographers. But the truth raises important questions about the man and his place in American history. ... And 16 days after Lee’s surrender, ten days after Lincoln’s death by assassination, with all fighting at an end east of the Mississippi River, George Armstrong Custer stole a horse. ... Was it greed that corrupted him? A passion for fine horseflesh—common to most Americans in 1865, but particularly intense in this cavalryman? Was it power—the fact that he could take it? As the military historian John Keegan memorably wrote, “Generalship is bad for people.” Custer was only 25, an age more commonly associated with selfishness than self-reflection, and perhaps that explains it. But the theft was not impulsive. It had required investigation, planning and henchmen. It may help explain his self-destructive actions in the months and years that followed.
All told, the company spent more than $600 million. In its brief time in operation, it generated $2.3 million in revenue; when it filed for bankruptcy it listed assets of $58.3 million. ... The next generation of biofuels, made from plants and biowaste (so-called cellulosic materials), which have lower carbon emissions than oil, were a particular passion. Khosla invested hundreds of millions of dollars in about a dozen biofuel and biochemical companies. ... His ambitions were audacious. Khosla declared “a war on oil.” As he wrote in 2006, “I believe we can replace most of our gasoline needs in 25 years with biomass.” He dismissed incumbent energy companies in a 2007 interview as not investing heavily in biofuels because they weren’t “used to innovation and the rate of innovation we are likely to see in this business.” ... Unlike most failed startups, KiOR hasn’t just shut its doors and disappeared into oblivion. Today recriminations, investigations, and litigation continue to surround it. The Securities and Exchange Commission has been examining whether the company made false statements, including on a critical point: the yield of its biofuel (the amount that can be made per ton of wood chips). Two KiOR executives and Khosla himself are also facing a class action suit alleging that company executives misled investors about production volumes and yield. ... The state of Mississippi is also suing Khosla and key KiOR executives on similar grounds, claiming they hoodwinked the state to obtain a $75 million loan.
Meditation and mindfulness are the new rage in Silicon Valley. And it’s not just about inner peace—it’s about getting ahead. … Across the Valley, quiet contemplation is seen as the new caffeine, the fuel that allegedly unlocks productivity and creative bursts. Classes in meditation and mindfulness—paying close, nonjudgmental attention—have become staples at many of the region’s most prominent companies. There’s a Search Inside Yourself Leadership Institute now teaching the Google meditation method to whoever wants it. The cofounders of Twitter and Facebook have made contemplative practices key features of their new enterprises, holding regular in-office meditation sessions and arranging for work routines that maximize mindfulness. Some 1,700 people showed up at a Wisdom 2.0 conference held in San Francisco this winter, with top executives from LinkedIn, Cisco, and Ford featured among the headliners. … These companies are doing more than simply seizing on Buddhist practices. Entrepreneurs and engineers are taking millennia-old traditions and reshaping them to fit the Valley’s goal-oriented, data-driven, largely atheistic culture. Forget past lives; never mind nirvana. The technology community of Northern California wants return on its investment in meditation. … It can be tempting to dismiss the interest in these ancient practices as just another neo-spiritual fad from a part of the country that’s cycled through one New Age after another. But it’s worth noting that the prophets of this new gospel are in the tech companies that already underpin so much of our lives.
The Airbnb headquarters takes up three floors of a former battery factory in San Francisco’s SoMA neighborhood and houses roughly 1,100 employees, but its secondary function hits you as soon as you walk in: The place is a museum. Chesky, an art school graduate, designed the conference rooms as exact replicas of more than a dozen of the most significant Airbnb listings, including the nearby apartment where he and his cofounder Joe Gebbia were living when they rented out three air mattresses during a design conference to help pay the rent. (Chesky still lives there, periodically offering the couch to travelers for $40 a night.) Dollhouse-like dioramas of well-known listings greet guests near the lobby, and framed artwork lines the walls throughout, accompanied by museum-style didactic panels that offer an interpretation. An entire wall is dedicated to exploring the creative origins of Airbnb’s new logo, and another exhibit attempts to imagine what Airbnb’s flag might look like if the company were a country. One possibility: AIRBNB IS THE NEXT STAGE OF HUMAN EVOLUTION, overlaid on a scientific illustration that shows our progression from apes to cavemen to humans. None of this is done with much of a sense of humor, and as I mull the March of Progress, I wonder if there has ever been a company with such an expansive sense of its own importance. ... This is no exaggeration: During Airbnb’s first year in business, every venture capitalist Chesky pitched turned him down, and few guests were willing to risk staying with people they’d never met. Chesky and his cofounders relied on storytelling to make the idea seem friendly and, crucially, safe. It was a tall order, but Chesky is a gifted storyteller.
IN THE 2013 offseason -- coming off a year in which Curry had started 78 games and the Warriors had made the Western Conference semis -- Nike owned the first opportunity to keep Curry. It was its privilege as the incumbent with an advantage that extended beyond vast resources. "I was with them for years," Curry says. "It's kind of a weird process being pitched by the company you're already with. There was some familiar faces in there." ... Curry was a Nike athlete long before 2013, though. His godfather, Greg Brink, works for Nike. He wore the shoes growing up, sported the swoosh at Davidson. ... Nike had every advantage when it came to keeping Curry. Incumbency is a massive recruiting edge for a shoe company, as players often express a loyalty to these brands their NBA franchises might envy. And Nike wasn't just any shoe company. It's the shoe company that claims cultural and monetary dominance over the sneaker market. According to Nick DePaula of The Vertical, Nike has signed 68 percent of NBA players, more than 74 percent if you include Nike's Jordan Brand subsidiary. ... According to Forbes, Nike accounted for 95.5 percent of the basketball sneaker market in 2014. In short, its grip on the NBA universe is reflective of a corporation claiming Michael Jordan heritage and a $100 billion market cap -- all advantages that might explain why Nike's pitch to Curry evoked something hastily thrown together by a hungover college student. ... A PowerPoint slide featured Kevin Durant's name, presumably left on by accident, presumably residue from repurposed materials. "I stopped paying attention after that," Dell says.
If you made a movie about a laid-off, sad-sack, fiftysomething guy who is given one big chance to start his career over, the opening scene might begin like this: a Monday morning in April, sunny and cool, with a brisk wind blowing off the Charles River in Cambridge, Mass. The man—gray hair, unstylishly cut; horn-rimmed glasses; button-down shirt—pulls his Subaru Outback into a parking garage and, palms a little sweaty, grabs his sensible laptop backpack and heads to the front door of a gleaming, renovated historic redbrick building. It is April 15, 2013, and that man is me. I’m heading for my first day of work at HubSpot, the first job I’ve ever had that wasn’t in a newsroom. ... Arriving here feels like landing on some remote island where a bunch of people have been living for years, in isolation, making up their own rules and rituals and religion and language—even, to some extent, inventing their own reality. This happens at all organizations, but for some reason tech startups seem to be especially prone to groupthink. Every tech startup seems to be like this. Believing that your company is not just about making money, that there is a meaning and a purpose to what you do, that your company has a mission, and that you want to be part of that mission—that is a big prerequisite for working at one of these places. ... Another thing I’m learning in my new job is that while people still refer to this business as the “tech industry,” in truth it is no longer really about technology at all. “You don’t get rewarded for creating great technology, not anymore,” says a friend of mine who has worked in tech since the 1980s, a former investment banker who now advises startups. “It’s all about the business model. The market pays you to have a company that scales quickly. It’s all about getting big fast. Don’t be profitable, just get big.”
Most start-up offices look the same — faux midcentury furniture, brick walls, snack bar, bar cart. Interior designers in Silicon Valley are either brand-conscious or very literal. When tech products are projected into the physical world they become aesthetics unto themselves, as if to insist on their own reality: the office belonging to a home-sharing website is decorated like rooms in its customers’ pool houses and pieds-à-terre; the foyer of a hotel-booking start-up has a concierge desk replete with bell (no concierge); the headquarters of a ride-sharing app gleams in the same colors as the app itself, down to the sleek elevator bank. A book-related start-up holds a small and sad library, the shelves half-empty, paperbacks and object-oriented-programming manuals sloping against one another. ... My guide leads me through the communal kitchen, which has the trappings of every other start-up pantry: plastic bins of trail mix and Goldfish, bowls of Popchips and miniature candy bars. There’s the requisite wholesale box of assorted Clif Bars, and in the fridge are flavored water, string cheese, and single-serving cartons of chocolate milk. It can be hard to tell whether a company is training for a marathon or eating an after-school snack. Once I walked into our kitchen and found two Account Managers pounding Shot Bloks, chewy cubes of glucose marketed to endurance athletes. ... “Just add logic!” I advise cheerfully. This means nothing to me but generally resonates with engineers. It shocks me every time someone nods along. ... Around here, we nonengineers are pressed to prove our value. The hierarchy is pervasive, ingrained in the industry’s dismissal of marketing and its insistence that a good product sells itself; evident in the few “office hours” established for engineers (our scheduled opportunity to approach with questions and bugs); reflected in our salaries and equity allotment, even though it’s harder to find a good copywriter than a liberal-arts graduate with a degree in history and twelve weeks’ training from an uncredentialed coding dojo. ... Half of the conversations I overhear these days are about money, but nobody likes to get specific. It behooves everyone to stay theoretical.
- Also: Wall Street Journal - This Tech Bubble Is Bursting < 5min
- Also: Fortune - How Reddit Plans To Become a 'Real' Business 5-15min
- Also: BuzzFeed - Inside Palantir, Silicon Valley’s Most Secretive Company 5-15min
- Also: Quartz - Bill Gurley says Silicon Valley's unicorn fantasy is collapsing in on itself < 5min
- Also: McKinsey - The ‘tech bubble’ puzzle < 5min
- Also: Gawker - I Have No Idea What This Startup Does and Nobody Will Tell Me < 5min
- Also: Financial Times - China tech: Renminbi to burn < 5min
- Also: Bloomberg - For Sale! Vintage Internet Company 5-15min
There are a lot of directions in which to point fingers. There is Holmes, of course, who seemed to have repeatedly misrepresented her company. There are also the people who funded her, those who praised her, and the largely older, all-white, and entirely male board of directors, few of whom have any real experience in the medical field, that supposedly oversaw her. ... But if you peel back all of the layers of this tale, at the center you will find one of the more insidious culprits: the Silicon Valley tech press. They embraced Holmes and her start-up with a surprising paucity of questions about the technology she had supposedly developed. They praised her as “the next Steve Jobs,” over and over (the black turtleneck didn’t hurt), until it was no longer a question, but seemingly a fact. ... The system here has been molded to effectively prevent reporters from asking tough questions. It’s a game of access, and if you don’t play it carefully, you may pay sorely. Outlets that write negatively about gadgets often don’t get pre-release versions of the next gadget.
The New Normal is when plain logic no longer applies; when common sense takes the back seat. I have for a long time been defending the Federal Reserve Bank, and have not at all agreed with all those hawks who thought the Fed was sitting on its hands. Until recently, I felt very comfortable taking that view, but I am no longer so sure. Common sense suggests to me that the Fed ought to tighten a great deal more than they have already done, but does common sense apply? That is what this month’s Absolute Return Letter is about. ... something is not quite right, but what is it? Before I answer that question, let me share one more observation with you. Because the Fed is so inactive, there are signs of moral hazard growing in magnitude. Complacency appears to be sneaking in through the back door yet again. We humans never learn, do we? ... As GDP growth slows, more debt needs to be established in order to service existing debt, which will cause GDP growth to slow even further. I therefore think that, unless it suddenly becomes fashionable to default, debt will continue to rise and GDP growth will continue to slow in the years to come. ... I have changed my view in one important aspect. As debt levels continue to rise (short of any massive debt restructuring), governments will bend over backwards to keep interest rates at very low levels, as the only realistic alternative to low interest rates is default. ... Historically, when central banks have sat on their hands for too long, the end result has almost always been a bout of unpleasantly high inflation, and that has nothing whatsoever to do with the changing demographics.
Even before all of Fuhu's money disappeared, Mitchell was having a doozy of a month. Three weeks before, he and his co-founder, Robb Fujioka--Fuhu's mastermind and headstrong president--had been contacted by attorneys representing the company's primary manufacturer, Foxconn. The Chinese giant was more than just a vendor. It was an investor and patron that had been instrumental in launching Fuhu on its meteoric rise. With gross revenue of $196 million and a three-year growth rate of 158,957 percent ... But behind the scenes, the company was falling apart. In recent months, it had racked up unpaid bills from just about everyone it did business with. And Foxconn--to which Fuhu owed between $60 million and $110 million, depending on who was counting--had finally reached its breaking point. The lawyers told Fujioka and Mitchell that until they paid their tab, their company would be cut off. ... The consequences of losing their supplier were laid out in a thick stack of a Tennenbaum loan agreement that the Fuhu bosses had never bothered to read. ... The rise and fall of Fuhu is a cautionary tale about the seductions of early success and the overconfidence it can breed. But most of all, it's the story of two entrepreneurs who pushed too hard to go big--one whose personal drive led him to take oversize risks against the advice of those around him, and one who failed to stop him.
In a searing investigation into the once lauded biotech start-up Theranos, Nick Bilton discovers that its precocious founder defied medical experts—even her own chief scientist—about the veracity of its now discredited blood-testing technology. She built a corporation based on secrecy in the hope that she could still pull it off. Then, it all fell apart. ... At Theranos, Holmes preferred that the temperature be maintained in the mid-60s, which facilitated her preferred daily uniform of a black turtleneck with a puffy black vest—a homogeneity that she had borrowed from her idol, the late Steve Jobs. ... Holmes had learned a lot from Jobs. Like Apple, Theranos was secretive, even internally. Just as Jobs had famously insisted at 1 Infinite Loop, 10 minutes away, that departments were generally siloed, Holmes largely forbade her employees from communicating with one another about what they were working on—a culture that resulted in a rare form of executive omniscience. At Theranos, Holmes was founder, C.E.O., and chairwoman. There wasn’t a decision—from the number of American flags framed in the company’s hallway (they are ubiquitous) to the compensation of each new hire—that didn’t cross her desk. ... And like Jobs, crucially, Holmes also paid indefatigable attention to her company’s story, its “narrative.” ... In a technology sector populated by innumerable food-delivery apps, her quixotic ambition was applauded. ... she is often surrounded by her security detail, which sometimes numbers as many as four men, who (for safety reasons) refer to the young C.E.O. as “Eagle 1”—and headed to the airport. (She has been known to fly alone on a $6.5 million Gulfstream G150.) ... it is impossible to get a precise result from the tip of a finger for most of the tests that Theranos would claim to conduct accurately. When a finger is pricked, the probe breaks up cells, allowing debris, among other things, to escape into the interstitial fluid. While it is feasible to test for pathogens this way, a pinprick is too unreliable for obtaining more nuanced readings. Furthermore, there isn’t that much reliable data that you can reap from such a small amount of blood.
Between them, they employ hundreds of engineers and have raised millions in venture capital. They have met with world leaders, signed deals with sovereign nations and partnered with global engineering firms. Earlier this year, WIRED set about to document their progress. ... Newspapers quickly proclaimed that the hyperloop would heal regional divides. Others argued that the hyperloop would transform the economy, moving packages across continents in hours. Others were more sceptical. ... HTT now boasts more than 400 volunteers, including engineers from Nasa, SpaceX and Boeing. Unlike most startups, its employees are not paid, instead dedicating at least ten hours a week contributing to the project remotely – suggesting materials, building simulations, designing marketing materials – in exchange for stock options. ... One cost proved too high: both companies have abandoned the idea of a hyperloop from LA to San Francisco. The land is simply too expensive – and even Musk couldn’t work out a way to build stations close enough to the cities’ centres. Hyperloop One is instead exploring an LA-Vegas route, but more likely the first hyperloop will be outside America, in emerging markets, or somewhere with a long stretch of privately held land.
Hampton Creek never publicly admitted its numbers were wrong. It scrubbed its site of sustainability claims, and the Cookie Calculator vanished. Such quiet backpedaling might be forgivable at many young companies—overeager math isn’t unheard of in Silicon Valley. But at Hampton Creek, it fits a pattern of mistaken or exaggerated claims that may prove to be deliberately deceptive. ... the company deployed a national network of contractors to secretly buy back Just Mayo from grocery store shelves. ... Tetrick used supermarket sales figures much as he used the environmental claims—to raise venture capital ... His pitch: He would liberate billions of hens from the fetid misery of overstuffed cages—and in the process save water and grain and cut carbon pollution. Profane, charismatic, and built like the linebacker he once was, Tetrick became a tenacious evangelist for eliminating animal protein from the world’s diet. ... Tetrick contends that the mayo buyback program was primarily for quality-control purposes and cost just $77,000. ... A former accounting employee who worked with the company’s profit and loss statements says costs for the buybacks were included in several expense categories on the P&L, including one line item called “Inventory Consumed for Samples and Internal Testing.” As buybacks surged in 2014, Hampton Creek expensed about $1.4 million under this unusual category over five months, compared with $1.9 million of net sales in the period.
At some point towards the middle of the decade, shortly before the cult of the expert smashed into the populist backlash, the shocking power of central banks came to feel normal. Nobody blinked an eye when Haruhiko Kuroda, the head of Japan’s central bank, created money at a rate that made his western counterparts seem timid. Nobody thought it strange when Britain’s government, perhaps emulating the style of the national football team, conducted a worldwide talent search for the new Bank of England chief. ... nobody missed a beat when India’s breathless journalists described Raghuram Rajan, the new head of the Reserve Bank of India, as a “rock star”, or when he was pictured as James Bond in the country’s biggest business newspaper. ... The key to the power of the central bankers – and the envy of all the other experts – lay precisely in their ability to escape political interference. ... The call to empower experts, and to keep politics to a minimum, failed to trigger a clear shift in how Washington did business. But it did crystallise the assumptions of the late 1990s and early 2000s – a time when sharp criticisms of gridlock and lobbying were broadly accepted, and technocratic work-arounds to political paralysis were frequently proposed, even if seldom adopted. ... If the clashes of abstractions – communism, socialism, capitalism and so on –were finished, all that remained were practical questions, which were less subjects of political choice and more objects of expert analysis. ... Greenspan’s genius was to combine high-calibre expert analysis with raw political methods. He had more muscle than a mere expert and more influence than a mere politician. The combination was especially potent because the first could be a cover for the second: his political influence depended on the perception that he was an expert, and therefore above the fray, and therefore not really political.