Emerging Currencies, Citgo Seizure, Tesla Board: CEO Daily for August 10, 2018
Good morning. Time for Friday feedback.
Several CEO Daily readers rose to my challenge in Wednesday’s piece on Elon Musk to answer the question: When in the history of business have the outspoken opponents of transparency and scrutiny turned out to be the good guys?
GS came back with the most obvious example—indeed, the one Musk may be channeling—Steve Jobs.
“I don’t know if Steve Jobs was a good guy, which depends on how you define what good guy means, also I don’t really care if he wasn’t. Good/bad can’t deny Apple under his leadership became one of the greatest companies in business history.”
DS took a more historical view:
“James Madison (and many other Founding Fathers) —The Constitutional Convention took place in secret to, in the words of Madison, ‘secure unbiased discussion within doors and to prevent misconceptions and misconstructions without.’”
He also cited the “CEOs of State Farm, Dell, Mars, and America’s other successful private companies—Leaders who recognized the short-termism and distraction that a public listing can cause and either took their company private, or never went public in the first place.”
And MM put two Titans from the Gilded Age on the table:
“Although it is arguable whether John D. Rockefeller was a good guy or not, Standard Oil improved the quality of oil and reduced costs for consumers. Standard was highly secretive and did not like inquisition or any type of scrutiny.
JP Morgan in its early days is another example worth considering. Highly private, shunned any kind of scrutiny, but set the standards for banking conduct in a way that raised the bar.”
All good responses. I feel privileged to have such thoughtful readers. (My Twitter feedback on this same subject was less enlightening.)
But from the investors’ perspective, I still think there is much to be said for CEOs who embrace transparency and who welcome, or at least tolerate, scrutiny. And if you want a frightening example of what can happen when they don’t, read John Carreyrou’s Bad Blood.
Enjoy the weekend. News below.
The Turkish lira is still sliding—it lost as much as 13% of its value against the dollar today, and is down more than 20% over the week. Markets are worried about Turkey's ability to pay back foreign currency debts. Meanwhile, the Russian ruble lost as much as 5% against the dollar yesterday, and Russian stocks fell by as much as 9%. The big losers there were state banks and the airline Aeroflot, which would suffer if yet more U.S. sanctions arrive. Financial Times
Speaking of U.S. sanctions, Russian Prime Minister Dmitry Medvedev has a warning. "If some ban on banks' operations or on their use of one or another currency follows, it would be possible to clearly call it a declaration of economic war," he said. "And it would be necessary, it would be needed to react to this war economically, politically, or, if needed, by other means. And our American friends need to understand this." CNBC
A U.S. federal judge has ordered the seizure of Citgo Petroleum, which is majority-owned by the Venezuelan state-owned PDVSA. The seizure, prompted by a legal action from Canada's Crystallex, is to satisfy a Venezuelan government debt, and it makes it more likely that PDVSA will lose control of the company. Other creditors have also had their eyes on Citgo. Wall Street Journal
Tesla's board is reportedly preparing to tell chairman and CEO Elon Musk to recuse himself as it reviews his proposal to take the company private. This is not unusual, as take-private reviews go. What is unusual is that the board, per Reuters, still hasn't "received specific information on who will provide the funding." Also, check out Jen Wieczner's piece on how Musk's blocking of people on Twitter could cause him trouble with the SEC. CNBC
Around the Water Cooler
Spotify and Samsung
Spotify is partnering with Samsung to provide streaming music across all the South Korean giant's devices—smartphones (in which Samsung is the world's market leader,) TVs, watches and speakers. The preinstallation agreement is a big boost for both partners in the fight against Apple Music. "We believe that this significant long-term partnership will provide Samsung users across millions of devices with the best possible music streaming experience, and make discovering new music easier than ever—with even more opportunities to come," said Spotify CEO Daniel Ek. Rolling Stone
The European budget airline Ryanair is suffering a pilot strike in five countries today, leading to a cancellation of a sixth of Ryanair's flights. The carrier has been facing long-running industrial action over the negotiation of collective labor agreements—about 300 flights were cancelled last month, though this strike is affecting 400, with pilots walking out for 24 hours in Germany, Sweden, Ireland, Belgium and the Netherlands. BBC
Stormy Daniels' lawyer, Michael Avenatti, is not exactly publicity-shy—and this may be part of the reason why. Avenatti, who enthusiastically rails against President Trump at every opportunity, has revealed that he is exploring a presidential run. He will address the Democratic Wing Ding fundraiser today in Clear Lake, Iowa. Bloomberg
InfoWars and Twitter
Remember how Twitter CEO Jack Dorsey said the platform wasn't booting conspiracy theorist Alex Jones and his InfoWars outlet because they hadn't broken Twitter's rules? "It's worth noting that at least some of the content Alex Jones published on other platforms (e.g., Facebook and YouTube) that led to them taking enforcement against him would have also violated our policies had he posted it on Twitter," Twitter VP Del Harvey told staffers in a Wednesday email. Well, CNN looked into Jones' accounts and discovered he had posted all of the same Islamophobic, harassment-encouraging content to Twitter and its Periscope service. Oops. CNN