Technology

This week the business and tech world was stunned when Elon Musk hinted on August 7, via Twitter of course, that he wanted to take Tesla private. The estimated price tag for such a move is commonly put at up to $72 billion. Shortly after that no ‘white knights& appeared and Teslashares plummeted.

But today, Bloomberg came out with a new report which might well fan the flames of speculation on Monday.

Its story has sources which say that Saudi Arabiasovereign wealth fund (called the Public Investment Fund or PIF) was already in talks with Tesla to become a significant investor before Musktweets.

The timing of this revelation is important, because the PIF has already built up a stake — valued at about $2 billion — just short of 5 percent in Tesla in recent months.

One could easily surmise that the worldbiggest crude oil producer might well be considering a stake in the worldmost iconic electric car company to hedge against oil. Indeed, that is exactly what Bloombergsources are telling them.

Now, part of the reasons the PIF might be talking to Tesla is that the car maker is alleged to have already had limited talks with SoftBank, of which PIF is a major backer.

What makes these rumours so interesting is that Saudi Arabiagovernment is planning to supercharge the PIF into a $2 trillion fund.

And a major (let me repeat that) major focus of the PIF is technology. Why The Saudis are extremely keen to diversify the kingdomoil-dependent economy and it needs a war-chest and technology assets to do that.

This policy is being driven by Crown Prince Mohammed bin Salman, the next in line to the throne and dubbed ‘MBS& by everyone in Saudi.

Since he was named heir-apparent last year hebeen on a tear, restricting the powers of the religious police, removing the ban on female drivers and various other cultural reforms. Healso driving the countrytech policy, which last week appointed Steve Wozniak as a &tech ambassador&.

Healso behind Saudi Vision 2030, a huge national plan to diversify the economy, and develop public service sectors such as health, education and infrastructure. Technology will be a key enabler and driver of these numerous changes. Saudi Arabia is the largest spender on ICT in the Middle East, with spending estimated at $35 billion in 2015 and expected to surpass $39 billion by 2019.

Then thereNeom, the planned mega city close to the border region of Saudi Arabia and Egypt which will be 33 times the size of New York and make Dubai look like a village. This is being backed by $500 billion from the Public Investment Fund of Saudi Arabia and international investors.

Put all this in the context of a ‘mere& $72 billion for Tesla, an icon of the industry, a millennial Crown Prince who is hot for tech, and a sovereign wealth fund which will eventually hit $2 trillion, and Elon Muskhints that he may find enough funding to take Tesla private might not look so fanciful after all.

Image Credit: Ahmed Kutty/Gulf News

Happy 10th anniversary Airbnb.

When we first wrote about the company a decade ago, it was a spare website cobbled together by its founders for the low low price of $20,000.

In the years since, the marketplace Airbnb created has radically transformed the rental landscape in cities, created an entirely new hospitality market and surged to a valuation of roughly $31 billion.

As it prepares for an initial public offering in 2019, itworth a look back on how far the company has come, and how its founders& vision for a new type of way to monetize unused apartment space for budget travelers has become the engine driving a new kind of travel and new experiments in modern living (for better or worse).

When we wrote about the company in 2008, the pitch for Airbnbservices had already been set.

AirBed and Breakfast will definitely appeal to younger travelers, and conventioneers who can&t find a regular hotel room. In overbooked Denver, where 20,000 people will be descending for the Democratic National Convention, hotels are already sold out. More than 600 people have found alternative accommodations through AirBed and Breakfast, and 50 to 100 new listings appear every day. Prices range from $20 a night for an airbed to $3,000 for an entire house.

Indeed, itlikely that there would have been no Airbnb without the 2008 presidential campaign. The election created a serendipitous confluence of an incredibly unique historical moment where a groundswell of demand could be met by a new type of supply and Airbnbco-founders Brian Chesky and Joe Gebbia were there to capitalize on the opportunity.

Itgood to remember that in 2008, the co-founders were claiming that they could barely make rent. And they were certainly strapped for cash for the fledgling business. There, again, the 2008 election presented them with an opportunity.

&The world thoughtwe were crazy,& Gebbia recalled in an interview.

But the RISD grads had that $20,000 in seed funding and politically themed cereal boxes to tide the business over. It was the cereal gimmick — sellingObama OandCaptain McCains & for $40 a box that got them the hearing from Y Combinator co-founder Paul Graham and acceptance into the accelerator.

Three years later, the business was a rocket ship. It had pulled in a (whopping for the time) $112 million investment from Andreessen Horowitz, DST Global, and General Catalyst and was already on the path to bulldozing the old models of hospitality with a shared vision for visiting any city anywhere in the world.

&Airbnb, with its strong management team and engaged worldwide community is on a path to become a transformational company,& said Yuri Milner founder of DST Global, in a truly understated statement at the time.

So transformational, in fact, that the company would go on to raise billions more atop that hundred-million-plus Series B round.

But that success has not come without a certain cost.

For all of the ways in which Airbnb claims to be unlocking the local economy, it can&t avoid the accusations that it has locked out local renters in favor of financial speculators who are buying up apartments to lease to a traveling class rather than sustain a viable and vibrant neighborhood for the actual citizens that live there.

One study, published earlier this year (and funded by the AFL-CIO and the Hotel Trades Council), indicated that the company significantly impacted rental prices in New York.

…the study estimates that Airbnb has driven up long-term rental prices by 1.4 percent, or $384 per year, for the median New York City renter. The research suggests that both restricted availability in the long-term rental market and increased financial incentives in the short-term rental market account for this increase.

Itthose kinds of figures that have led to the sometimes aggressive pushback from local real estate advocates. Indeed, it was just about three years ago that San Francisco protestors from the Coalition on Homelessness took over Airbnbs headquarters to protest what they viewed as the companycomplicity in the surge in evictions and homelessness in the city.

In a 2015 letter to New York legislators, Airbnbpublic policy chief at the time, David Hantman, wrote, &The majority of hosts use the money they earn to pay their bills and stay in their homes.&

And in a separate blog post (now apparently lost in a site redesign) around the same time, Hantman took Airbnbargument further. &In fact, Airbnb makes cities more affordable,& Hantman was quoted as writing in Vice.&Sixty two percent of Airbnb hosts in New York said Airbnb helped them stay in their homes and the typical Airbnb host in New York earns $7,530 per year — a modest, but significant amount that can make a huge difference for families.&

The companykerfuffles with regulators (a sort of mirror image of the woes faced by fellow marketplace service Uber and its American competitor Lyft) have not effected the way investors are valuing the virtual room-for-rent-filled house that Chesky and Gebbia have built.

As we reported earlier this year,Airbnb raised nearly $4.4 billion in funding as a private company, to date, and reports say it is on track to make between $3.5 billion and $4 billion in revenues this year from its business connecting travelers with private homes and an array of other related services.

Thata long, long way from matching would-be attendees to the 2008 Democratic National Convention with air mattresses or sofas in Denver.

California is moving toward becoming the first state to require companies to have women on their boards &assuming the idea could survive a likely court challenge.

Sparked by debates around fair pay, sexual harassment and workplace culture, two female state senators are spearheading a bill to promote greater gender representation in corporate decision-making. Of the 445 publicly traded companies in California, a quarter of them lack a single woman in their boardrooms.

Source: Board Governance Research and CALmatters

SB 826, which won Senate approval with only Democratic votes and has until the end of August to clear the Assembly, would require publicly held companies headquartered in California to have at least one woman on their boards of directors by end of next year. By 2021, companies with boards of five directors must have at least two women, and companies with six-member boards must have at least three women. Firms failing to comply would face a fine.

&Gender diversity brings a variety of perspectives to the table that can help foster new and innovative ideas,& said Democratic Sen. Hannah-Beth Jackson of Santa Barbara, who is sponsoring the bill with Senate President Pro Tem Toni Atkins of San Diego.&Itnot only the right thing to do, itgood for a companybottom line.&

Source: Board Governance Research and CALmatters

Yet critics of the bill say it violates the federal and state constitutions. Business associations say the rule would require companies to discriminate against men wanting to serve on boards, as well as conflict with corporate law that says the internal affairs of a corporation should be governed by the state law in which it is incorporated. This bill would apply to companies headquartered in California.

Jennifer Barrera, senior vice president of policy at the California Chamber of Commerce, argued against the bill and said it only focuses &on one aspect of diversity& by singling out gender.

&This bill basically mandates that we hire the woman above anybody else who we may be fulfilling for purposes of diversity,& she said at a hearing.

Similarly, a legislative analysis of the bill cautioned that it could get challenged on equal protection grounds, and that it would be difficult to defend, requiring the state to prove a compelling government interest in such a quota system for a private corporation.

Source: Board Governance Research and CALmatters

Five years ago, California was the first state to pass a resolution, authored by Jackson, calling on public companies to increase gender diversity. In response, about 20 percent of the companies headquartered in the state followed through withputting women on their boards, according to the research firm Board Governance Research. But the resolution was non-binding and expired in December 2016.

Other countries have been more proactive. Norway in 2007 was the first country to pass a law requiring 40 percent of corporate board seats be held by women, and Germany set a 30 percent requirement in 2015. Spain, France and Italy have also set quotas for public firms.

In California, smaller companies have fewer female directors. Out of 50 companies with the lowest revenues, 48 percent have no female directors, according to Board Governance Research. Only 8 percent of their board seats are held by women.

The 2017 study said larger companies did a better job of appointing women, with all 50 of the highest-revenue companies having at least one female director and 23 percent of board seats held by women.

&The main issue is still that a lot of companies headquartered here don&t have women on their boards,& said Annalisa Barrett, clinical professor of finance at the University of San DiegoSchool of Business. &We quite often like to think of California as progressive and a leader on social issues, so thatkind of disappointing.&

Barrett publishes an annual report of women on boards in California. Public companies are major employers in the state, and their financial performance has a big impact on public pension funds, mutual funds and investment portfolios. &Financial performance does really impact the broader community,& she said.

The National Association of Women Business Owners, sponsor of the bill, says an economy as big as Californiaought to &set an example globally for enlightened business practice.& In a letter of support, the association cites studies that suggest corporations with female directors perform better than those with no women on their boards.

One University of California, Davis study did find that companies with more women serving on their boards saw a higher return on assets and equity, but the author acknowledges this may not suggest a cause-and-effect.