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This year has seen a number of high-profile I.P.O. flameouts, with Uber, Lyft and the home-exercise bike maker Peloton dropping below their debut prices and WeWork pulling its offering. The venture capitalist Fred Wilson argues that the reason is simple: Reality is setting in.

Mr. Wilson argues that these companies were spoiled by the private markets:

• Investors have been too eager to value many companies as software businesses, at 10 times revenues or more. “Now that narrative is falling apart,” Mr. Wilson writes.

• Uber’s gross margins were 46 percent, while WeWork’s were 20 percent. By comparison, Zoom, which makes videoconferencing software, has 81 percent gross margins.

• That disparity explains why Uber’s stock is down 33 percent from its I.P.O. price and WeWork’s stock sale fizzled — and Zoom’s stock has more than doubled since its debut.

Many think the I.P.O. market has returned to normal, and that it’s not such a bad thing if Wall Street is more skeptical of these companies. “There’s a reset going on right now,” the finance professor Jay Ritter told the FT. “Sanity has returned.”

That means many businesses will stay private a bit longer. Alan Felder, the head of private capital markets for Americas at UBS, told Bloomberg that they’ll most likely continue to raise money in the private markets.

Our take: That may be true — for now. There’s plenty of money available in late-stage venture capital funds like SoftBank’s Vision Funds. But these investors are increasingly demanding that companies show a path to making money, and it’s not clear how long their patience will last.


Today’s DealBook Briefing was written by Andrew Ross Sorkin, Michael J. de la Merced, Lindsey Underwood and Stephen Grocer.


CreditHaruka Sakaguchi for The New York Times

The retailer, which helped popularize fast fashion in the U.S., has filed for Chapter 11 bankruptcy protection, Sapna Maheshwari of the NYT reports.

It’s “a sign of the eroding power of shopping malls and the shifting tastes of young consumers,” Ms. Maheshwari writes.

The retailer “experienced big success in the early 2000s with its troves of merchandise that imitated of-the-moment designer styles at rock-bottom prices,” she adds. “But the company expanded too aggressively just as technology was beginning to upend its business.”

Forever 21 will cease operations in 40 counties, including Canada and Japan, and will close up to 350 stores, including 178 in the U.S.

Forever 21 plans to continue to operate its website and hundreds of stores in the U.S., where it is a major tenant for mall owners, as well as stores in Mexico and Latin America.

CreditArnd Wiegmann/Reuters

Steve Schwarzman, Blackstone’s co-founder and C.E.O., is known for being President Trump’s unofficial business emissary to Beijing. But the billionaire found himself unwillingly pulled into the latest drama in the capital — by the president himself.

Mr. Trump said last week that he had discussed allegations of Hunter Biden’s work in China with Mr. Schwarzman. The president, who accused Hunter Biden of securing $1.5 billion in investments from the Chinese, said he asked the Blackstone chief about the matter, but Mr. Schwarzman demurred from talking about it.

A spokeswoman for Mr. Schwarzman told the WaPo: “Steve never spoke to the president about Joe Biden or his family, nor has he had any conversations with the Chinese about Biden or his family.” (A spokesman for Joe Biden’s presidential campaign accused Mr. Trump of spreading mistruths about Hunter Biden.)

It was an unusual position for Mr. Schwarzman, who has served as a prominent bridge between Washington and Beijing in their continuing trade discussions. And it’s a sign that not even the business world may escape the widening scandal over Mr. Trump’s focus on the Bidens — and the impeachment proceedings that have now arisen over it.

More: Representative Adam Schiff, the chairman of the House Intelligence Committee, said that the Ukraine whistle-blower is expected to testify soon. Mr. Trump has demanded to meet the whistle-blower. And how a shadow foreign policy effort led by Rudy Giuliani led to the impeachment showdown.

Tech companies have disclosed a boom in online photos and videos of children being sexually abused, an NYT investigation finds, “exposing a system at a breaking point and unable to keep up with the perpetrators.”

Smartphone cameras, social media and cloud storage have made it easier to create and share images and videos of abuse. A record 45 million illegal images were flagged last year alone.

“Major tech companies have stepped up surveillance of their platforms and have found them to be riddled with the content,” Michael Keller and Gabriel Dance of the NYT report.

But criminals are increasingly “going dark” to hide their tracks, the NYT adds. Among their tools: virtual private networks that hide their locations; encryption for their messages and hard drives; and posting on the so-called dark web, which is inaccessible to conventional browsers.

“Some tech companies can take weeks or months to respond to questions from the authorities, if they respond at all,” the NYT adds. “Law enforcement records shared with The Times show that Tumblr was one of the least cooperative companies.”

“Facebook Messenger was responsible for nearly two-thirds of reports in 2018. And earlier this year, the company announced that it planned to begin encrypting messages, which would make them even harder to police.”

CreditDoug Mills/The New York Times

The White House is considering whether to block Chinese companies from listing their shares on American stock exchanges, Alan Rappeport and Ana Swanson of the NYT report. That would be another escalation in President Trump’s trade war with Beijing.

• “Details of how the United States would restrict Chinese companies from American stock markets were still being worked out and the idea remained in its early stages,” Mr. Rappeport and Ms. Swanson write, citing unnamed sources.

• “As of the beginning of this year, 156 Chinese companies were listed on American exchanges and had a total market capitalization of $1.2 trillion, according to the U.S.-China Economic and Security Review Commission.”

• “Supporters say the efforts would close longstanding loopholes that have allowed Chinese companies with links to its government to take advantage of America’s financial rules and solicit funds from American investors without proper disclosure.”

• “Skeptics caution that the move could be deeply disruptive to markets and the economy and risk turning American investors and pension funds into another casualty of the trade war.”

CreditJeenah Moon for The New York Times

John Williams, who leads the Federal Reserve’s biggest regional bank, has drawn criticism for his handling of an obscure but important part of the lending market. Those critiques are mistaken, he tells Jeanna Smialek of the NYT.

• Some investors have criticized the New York Fed as moving too slowly when troubles first emerged in the so-called repo market, an important source of short-term funding for corporate America. Turmoil there pushed the Fed’s benchmark rate above its intended range.

• In an interview, Mr. Williams defended the New York Fed’s actions. He told Ms. Smialek that data that is needed to decide a response to trouble in the repo market comes in slowly, delaying any move.

• “It was all hands on deck. Everyone was working tirelessly to understand what was happening.”

• To prevent further tumult in repos, Mr. Williams said, the New York Fed will consider raising the amount of capital it keeps in reserve to help stabilize markets, as well as more direct action to calm any turmoil there.

CreditCallaghan O'Hare/Reuters

Elon Musk said the prototype of the spacecraft that SpaceX hopes will take the first humans to Mars will go for a crewless test run in the next month or two, Kenneth Chang of the NYT reports.

The 164-foot-tall, stainless steel Starship rocket can take off, reach an altitude of 12 miles and then return to land in one piece. “By making rockets more like other forms of transportation where the vehicle is not thrown away after one trip, the cost of going to space could plummet,” Mr. Chang writes.

“It’s going to be pretty epic to see that thing take off and come back,” Mr. Musk said at a SpaceX facility outside Brownsville, Tex., where the rocket is being built.

“SpaceX has a steady business putting satellites in orbit and carrying cargo to the International Space Station,” Mr. Chang reports. But it’s unclear how the company can make money from the Starship business.

Mr. Musk says that the company could still meet the deadlines it has set to land on the moon and Mars within the next few years. But Mr. Chang notes that the entrepreneur “has a history of setting aspirational schedules that turn out to be too optimistic.”

Wells Fargo named Charlie Scharf, the C.E.O. of Bank of New York Mellon, as its new chief executive.

BP’s chief, Bob Dudley, reportedly plans to retire within the next year.

Google hired Mark Isakowitz, the former chief of staff for Senator Rob Portman, Republican of Ohio, as its head of government affairs and public policy in the U.S. and Canada.

Jefferies Financial Group has reportedly laid off 15 people from its energy investment banking team.


• Global M.&A. activity fell 16 percent in the third quarter compared with last year, its lowest volume in three years. (Reuters)

• The sensor maker AMS has raised its takeover bid for Osram, the German lighting company, to nearly $5 billion. (Reuters)

• Shares in Anheuser-Busch InBev’s Asia-Pacific business rose 4.4 percent in their market debut today. (FT)

• Food52, the recipe and cookware site co-founded by the food writer Amanda Hesser, has sold a majority stake in itself to the Chernin Group for $83 million. (Recode)


• New York City landlords are reportedly wary of signing new leases with the company, which could weigh down the city’s corporate real estate market. (WSJ)

• SoftBank, WeWork’s biggest investor, is said to have picked Marcelo Claure, its C.O.O., to help oversee the co-working company’s turnaround. (Bloomberg)

• Control of WeWork was largely a family affair. That was a problem. (Bloomberg)

Politics and policy

• An Interior Department plan to enlarge a California dam would benefit farmers in the region — who are former clients of the current interior secretary, David Bernhardt. (NYT)

• The head of the N.R.A. met with President Trump on Friday and asked him to “stop the games” over gun-control legislation. (NYT)

• How Mr. Trump helped rehabilitate the image of Crown Prince Mohammed bin Salman of Saudi Arabia after the killing of the journalist Jamal Khashoggi. (WaPo)

• As he prepares to step down as president of the European Central Bank, Mario Draghi defended his easy-money policies and criticized German opposition. (FT)


• Hong Kong’s role as a neutral bridge between the West and China is at risk as Beijing asserts control over the territory. (NYT)


• Federal antitrust investigators are scrutinizing Google’s plans to use a new internet protocol, which could make it harder for other companies to gain access to consumer data. (WSJ)

• A new treaty between the U.S. and Britain will force American social media platforms to share users’ encrypted messages with the British police. (Bloomberg)

• Facebook has fallen short on its plan to share user data with disinformation researchers. (NYT)

• Senator Elizabeth Warren announced a plan to recreate the Office of Technology Assessment to help Congress regulate tech. (Verge)

• The C.E.O. of Kickstarter denied retaliating against employees involved in unionization efforts, but said he opposes the campaign. (Vice)

Best of the rest

• Goldman Sachs is betting on consumer banking as its new moneymaking business, but so far it has lost $1.3 billion for its efforts. (WSJ)

• A decade ago, economists warned that offshoring could threaten white-collar jobs in the U.S. That hasn’t happened. (NYT)

• The U.S. shale boom is slowing. (WSJ)

• Boeing’s potential fix for the 737 Max will reportedly make its flight-control system resemble a version of the mechanism used on a military tanker jet. (WSJ)

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