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CEO Daily: Tuesday, May 17

May 17, 2016, 10:54 AM UTC

This morning, Fortune is publishing Shawn Tully’s fascinating, in-depth look at construction giant Bechtel – a company that arguably has changed the face of the physical world more than any other. Its signature projects include the Hoover Dam (1936), the Trans-Arabian Pipeline (1950), the Bay Area Rapid Transit system (1976), NASA’s Space Launch Complex 40 (1992), the Channel Tunnel (1994) and the Athens Metro (2004).


For decades, the secretive, family-owned company avoided publicity. But it opened up in recent months for Tully, granting him extensive access to its executives and its strategy.


Why is Bechtel breaking its silence now? The answer: it needs to get its story out to attract talent. “Ours is a people business that depends on fielding the most capable project teams in the world,” says President Brendan Bechtel, the great-great grandson of the company founder who is expected to become its next CEO. Today, elite recruits demand to understand the values of the companies that are wooing them.


Bechtel’s point about attracting talent is one I’ve heard from many CEOs. And I heard it again yesterday during an off-the-record lunch before the start of Fortune’s Brainstorm E conference in Carlsbad, California. Today’s most talented workers want to work for companies that they believe are doing good in the world. It is pressure from those employees, as much as anything, that is driving the best companies to look beyond short-term profits and focus on a broader purpose.


Brendan Bechtel will be speaking at Brainstorm E in Carlsbad, California at 10:05 local time (1:05 p.m. EST). You can watch the live stream video of his conversation with Fortune’s Brian O’Keefe at And you can see all our coverage of the conference yesterday here.


More news below.


Alan Murray






Top News

Return of the Bubble

One of the country’s top banking regulators warned that bubble conditions are starting to form again in some pockets of the real estate market. Thomas Curry, who heads the Office of the Comptroller of the Currency, said the apartment markets in New York, Boston, Washington D.C. and San Francisco looked particularly frothy, and warned that lenders are weakening their loan terms and covenants. Trying to spot the next credit bubble, rather than the last one, is always tricky. But real estate has been at the heart of most of them throughout the ages, so such warnings need to be heeded, especially after eight years of nearly-free money from the Federal Reserve. On the bright side, banks have cut back on loans to highly indebted companies, known as leveraged lending, after a regulatory crackdown in recent years. However, the problems with bad loans to energy companies--SandRidge, one of the biggest shale producers, filed for Chapter 11 yesterday with $3.7 billion in debt--are far from being worked through.  Fortune

  Facebook Takes on Google in Video Ads

Facebook’s complex relationship with the rest of the media industry just took another turn. The company said yesterday it will start selling video ads on behalf of other companies, a move that will give it yet another revenue stream and take it into more direct competition with companies like Google in the $145 billion digital advertizing market. Publishers using the service will be able to include their own video ads alongside articles on Facebook’s Instant Articles feature, one of its more recent innovations to attract content to its site. The launch comes just ahead of two of the biggest ad-driving events of the year, the Olympic Games in Rio and the Euro 2016 soccer tournament.  WSJ, subscription required

 Google Team Goes Solo With Driverless Trucks Venture 

Some of the team behind Alphabet’s self-driving car project have launched a new startup aimed at making existing heavy trucks capable of autonomous driving. Ottomotto, as it’s called, was founded by Anthony Levandowski, one of Alphabet’s autonomous driving pioneers. Lior Ron, who headed Google Maps, has also joined the venture. They’ll be going head-to-head against companies such as Daimler and Volvo that are looking at enhancing the driving technology already incorporated in their trucks. Otto’s technology will focus first on enabling relatively simple long-distance highway driving, rather than urban driving, Levandowsky told The Wall Street Journal. He didn’t say when the technology would be readily available.  WSJ, subscription required

 IMF Plays Hardball Over Greece

This could be the gambit that breaks the deadlock over Greece (or that breaks the Eurozone, depending on how badly this year’s round of bailout poker is played). The Wall Street Journal reports that the International Monetary Fund wants to let Greece skip paying either interest or principal on its bailout lines until 2040. Germany, and some of the other Eurozone creditors, are unlikely to agree. After all, it'll mean that millions of voters won’t live to see Greece repay the money they grudgingly lent it over the last five years, giving fringe protest parties yet more ammunition against a crumbling mainstream. However, if they don’t agree, then the IMF may drop out of the program, forcing the Eurozone to fund the whole $95 billion itself, and creating a toxic binary dynamic between creditors and debtor that is more likely to end in Greece leaving the currency area. Either way, a solution is urgently needed: Greece’s economy shrank again in the first quarter, making it harder still for it to service its ever-rising debt burden.  WSJ, subscription required


  Opportunities in (Mitigating) Disaster

A new report from the World Bank underlined the sharp rise in vulnerabilities to the global economy from natural disasters. Global losses from disasters have nearly quadrupled over the last few decades from around $50 billion a year on average in the 1980s to nearly $200 billion a year over the last decade. At one level, this plays to the institution’s call for greater action to mitigate Climate Change. On another, it’s a reflection of how a still-growing population is increasingly concentrated in cities that are vulnerable to everything from epidemics to earthquakes and tsunamis. For business, as the World Bank points out, that puts an ever-bigger premium on investments in ‘preparedness and resilience’ to mitigate those risks, creating opportunities, be it insurance, seismology, healthcare, infrastructure or a host of other sectors.  World Bank

   Lending Club: the Subpoenas Arrive

The inevitable subpoenas have started to arrive at Lending Club, whose CEO Renaud Laplanche was forced out last week after an internal probe exposed how it had falsified the documentation on packages of loans that it was selling. The company said in a terse statement late Monday that it intends to cooperate with the Department of Justice’s and SEC’s investigations. In a quarterly filing, Lending Club also said that a number of large investors had stopped buying loans from it, a problem which will hobble any attempts to arrange new loans. The company’s shares, which were devoured by investors looking for a cleaner alternative to traditional financial stocks at its IPO at the end of 2014, have fallen 44% in the last week and hit a new all-time low in after-hours trading on Monday.  Fortune

 Look’s Who’s Dissing Brexit Now

Perish the thought that the man who disrupted Europe's cozy national carriers is now part of the same establishment that doesn't want to rock the boat. Ryanair founder and CEO Michael O'Leary used to describe the European Commission in Brussels as ‘the Death Star’ when it wouldn’t let him buy Aer Lingus, but, until June 23, he's one of its firmest fans. O’Leary is repainting some of his company’s jets with pro-Remain slogans and giving both his own and the company’s money to the Remain campaign. And, true to form,  he's not afraid of the wrath of those who say foreign businessmen shouldn’t be intervening in a British issue (“to hell with you”). Oh, for what it’s worth, he still “despises” the European regulations that adds to business costs (which is the main argument of the Leave campaign).   Bloomberg

 Hedge Fund vs Founder at Pandora

A fight over the future of music streaming company Pandora is brewing. Corvex Management, a hedge fund run by Carl Icahn protégé Keith Meister, disclosed on Thursday that it had built a 9.9% stake in the company and urged it to look for a buyer. That follows a drop in the company’s share price of some 45% over the last year as doubts have spread about its business model, which functions more akin to a radio station than to other, purely user-driven streaming services. However, a sale appears to have been the last thing on Pandora’s mind recently, having rehired one of its co-founders Tim Westergren as CEO in March. The company’s shares have drifted since then, suggesting that Westergren still has lots of convincing to do. Reuters