RIP Vice.
I have a tough time with this story.
On one hand, I’ve been a fan of Vice’s content since maybe 2009, when I started encountering it while listlessly scrolling the internet in between (or during?) law school classes. Their stuff was raw, edgy, and, at least to me, far more accessible than what CNN, MSNBC, and the other major outlets were producing at the time. Their stuff about food was interesting, their stuff about drugs I was never really into, but it was their conflict / global affairs / politics coverage that, for me, satisfied an itch borne from other outlets never really going far enough. If you’ve ever found yourself pissed off that an interviewer left a seemingly obvious—if controversial—question off the table, well, Vice journalists tended to not do that. It was game on, and I couldn’t help but pay rapt attention.
On the other hand, Vice was intensely problematic. The media world is no stranger to workplace sexual harassment, but—in true Vice style—they seemed to take even that to just another level. And you might say, what did we expect, really, from an outlet called Vice, of all things? (Though that’s obviously no excuse.) But the problems weren’t always perhaps so…expected. A toxic workplace culture is one thing, but to think that a co-founder of a pretty clearly left-leaning media organization would go on to found the Proud Boys? Yeah, that happened too.
But none of this stopped companies like Disney (yes, f-ing Disney!) from seeking to buy Vice outright for billions of dollars. That acquisition deal didn’t go through, but could you imagine? But that’s just how hot Vice was at that time. Everybody wanted a piece of the action. At its peak, Vice was valued north of $5 billion, hot on the heels of a massive equity investment from TPG. And yet, today, we’re left to mourn the loss of some pretty special journalism as Vice ceased publishing operations last week. The question on everyone’s mind is obvious: how the hell did we get here? And luckily for me, I don’t have to even try to explain it, because others have already done it for me.
The first place I’d recommend you go is this article in The Hollywood Reporter by Lachlan Cartwright, which does a far better job of detailing the history of Vice’s rise and fall than I’ve done here.
Next, read this article in The Guardian by former Vice journalist Sirin Kale. It’s…pointed, to put it lightly, but her insider’s details paint a picture I think we’ve all sadly seen before: founder starts company, convinces folks it’s worth a ton of money, gets a ton of money, and then uses it for, well, purposes. (Hint: not always purposes directly aligned with growing the business to nearly the forward-looking valuation on which the money was raised.) It reminds me of a story of another company, I think it also starts with a V? Or maybe a We?
Anyways, yeah. This is one of those things where it sucks that it’s happened, but you also kind of knew it was going to happen, and for any number of reasons, it probably should have happened a while ago?
If there’s a takeaway from this, it’s for other, larger media organizations grasping for relevance with millennial and Gen-Z audiences (*cough*CNN*cough*) to take a page out of Vice’s book—to sponsor the kind of edgy, “go there” journalism that made Vice great, and execute it without a toxic workplace or financial chicanery.
But that’s easier said than done, I suppose.
Come On, Elon.
It seems like Elon Musk just can’t get enough of being in court. In our last issue, we talked about Elon’s corporate governance issues. This week, Elon’s on the offensive, going after OpenAI and its CEO, Sam Altman, on a breach of contract claim because of an alleged shift in OpenAI’s goals (i.e., from being more of a non-profit to now focusing more on turning profits). At the center of all this are OpenAI’s dealings with Microsoft, which has provided significant funding to OpenAI’s development of technologies like GPT-4 (the engine behind ChatGPT).
On one hand, Elon kind of has a point. OpenAI—which Elon helped start—started off as a non-profit, and it’s maybe more than a little awkward when non-profits develop for-profit subsidiaries (which is sort of how OpenAI works). On the other hand, developing AI technology is expensive, both in terms of technological resources and human capital. Microsoft has committed to investing billions into Open AI, and, well, are we surprised that Microsoft wants to see a return on that investment? (Hint: no.)
There’s a funny thing about the very idea of an AI non-profit, though. The way AI exists, and is being developed, today, it is, at best, a tool that saves users time and money when performing certain tasks, like building a website or drafting marketing copy. Now, are these tasks more consumer-oriented tasks, or business-oriented tasks? Hint: it’s the latter. The things that AI largely does right now are help people do work better / faster, and—whether rightfully or wrongfully—help businesses do more work with less people. And until AI can clean bathrooms or take the car for an oil change, I dare say the biggest impact will be as a service integrated into a business’s offerings for its customers. It may not be the entire use case, but overwhelmingly the biggest.
Now let’s look at other services designed for businesses: we’ve got tax preparation, HR outsourcing, marketing technology, and the list goes on. How many of those are run as non-profits? Few, if any. And there’s sort of the rub: OpenAI’s goal of developing AI tech purely as a non-profit was doomed from the start, because it’s hard to get donors when the folks to your right and left are offering returns to investors. I think the folks at OpenAI either knew this, or figured it out quickly, and adapted accordingly. Better that than, say, Chapter 11. (Or 7.)
But maybe none of that matters, because Elon’s little suit alleges a breach of contract, and so your logical next question should be, what contract? It turns out, the “contract” that Sam Altman and OpenAI allegedly breached isn’t something like an express and binding agreement executed by two or more parties (i.e., what you normally think of as “contract” in a business context), but rather an e-mail. (Read it here. It’s Exhibit 2, on page 40 of the document.)
So, can an e-mail be a contract? Shockingly, the answer isn’t an outright “no.” For the lawyers in my audience, you know where I’m going with this; for the non-lawyers, you’ll be bored to sleep before we get there. So, I’m going to stick a pin in this for now, but I’d expect the response from counsel for Altman / OpenAI to be great reading for anyone currently doing contracts in law school.
Boeing’s 90 Days.
I wonder sometimes when I’ll be able to stop writing about Elon Musk. I also wonder the same thing about Boeing.
In the latest news, the FAA’s given Boeing 90 days to fix their quality control issues. 90 days. 3 months. If you’ve ever worked on any sort of major corporate program, you probably had the same reaction I did: what?!
To be clear, 90 days is a short timeframe for something like this. The quality issues at Boeing seem to be something of a Gordian Knot—a tangle of people, processes and policies that will all need overhauling. 90 days would be a reasonable timeframe in which to conduct an investigation into the problems, but to take that through to solutions seems not just difficult, but laughably so.
Nevertheless, here we go.
I like the Gordian Knot analogy for Boeing’s issues because of how the story ends; that is to say, don’t try to solve the problem, get rid of the problem. In the story, Alexander doesn’t try to untangle this big ornery knot, but instead cuts it in half with his sword. For Boeing’s door plug issue, there was a ton of finger-pointing back and forth between Boeing and its fuselage construction vendor, Spirit Aerosystems. Boeing said Spirit was to blame because of faulty assembly, and then there were issues with inspecting Spirit’s practices because they’re located in Malaysia, and the list of issues (/excuses?) goes on. For Boeing, creating a proper vendor oversight program to govern their relationship with Spirit is a lot like trying to untangle and retie the Gordian Knot. What’s the sword through the middle of it, you ask? Just buy out Spirit, and make it a part of Boeing (once again).
And that’s what’s currently in the news, as Boeing is reportedly in talks to reacquire Spirit, almost 20 years after Spirit was formed out of a Boeing spin-out of its fuselage construction operations in 2005. I’m not sure if this is more of a business school case study, or something we’ll find in the legislative history of future regulation over the aviation industry.
Maybe it’s both.
Other Points Of Interest.
Google gets hit with another antitrust lawsuit over its ad business. But is this just sort of the cost of doing business? With any antitrust issue, the question is this: what change can we reasonably make that would benefit consumers in the relevant market (i.e. here, the market for digital ad placements)?
The “uncommitted” vote could be a problem for Biden. The administration’s blanket support for Israel’s actions in Gaza is starting to bite them. Now there’s been some rhetoric towards Netanyahu and plans for US humanitarian relief airdrops in Gaza, but I can’t help but wonder if the (largely Muslim) community behind the Michigan “uncommitted” votes will see all this as just a bunch of “too little, too late.” I think actual outcomes will matter more here than in other instances of quelling an electorate. Based on what I’m seeing on a day to day basis, I’m not optimistic.
Shein looks to London as its US IPO hopes wane. I rarely ever say this these days but, bravo SEC? For a number of reasons, including things like labor standards, Shein just seems like a ball of suspicious activity masquerading as a company. I don’t like the idea of things like that having access to US capital markets. I’d love it if Shein no longer had access to US consumers, but hey, this is America, and if there’s one thing we want folks to have access to, it’s
reproductive healthcarecheap clothes.More headwinds for startups. Redesign Health, a sort of “mothership” for healthcare startups, is cutting way back on new company launches for 2024. Elsewhere, Rivian predicts zero growth for the year and, somewhat quizzically, blames the Fed? Like sure, rates affect consumer financing, etc., but a) this factor is non-unique to Rivian; and b) the Fed has bigger things to worry about than EV sales? In any case it’s looking like 2024 is going to be another year of headwinds for startups, but we’ll see. It’s still early days.
