Business

We’re in the Era of the ‘Top Gun’ C.E.O.

Published

1 year ago

August 1, 2023

We’re in the Era of the ‘Top Gun’ C.E.O.

“Your company is about to go on a rescue,” declared Christian Boucousis, who goes by the name Boo at work. “One of your company members went out to do reconnaissance and was shot down. Now you’re going to rescue your teammate and bring them home.”

Mr. Boucousis, a former fighter pilot, is chief executive of an organization called Afterburner, which promises to teach “the same precision and accuracy as elite military aviators” to corporate clients. His firm has worked with Nike, Pepsi, Bank of America and many other brands. These businesses aren’t struggling to save teammates shot down by enemy squadrons. Their problems? Market competition, shareholder pressures, employee turnover.

Some corporate executives find it thrilling, though, to spend a few hours feeling less like C-suite dwellers and more like Tom Cruise.Even for a significant cost: Afterburner’s “Top Gun Experience” training starts at $10,000 for a small team and can climb to $100,000 for a larger one.

“If you lose sight of the airplane you’re fighting against, you lose the fight,” Mr. Boucousis said. “We use that as a metaphor — if you lose sight of your business objectives, you’re not going to achieve them.”

There are a lot metaphors at work in this growing field: The office as battlefield. Landing the plane in a tough quarter. Rallying the troops for a product launch.

Work is war — or it can feel that way to certain chief executives. To meet the moment, it’s the era of Top Gun-style leadership training.

Many business leaders responded to the last few years of uncertainty — work force churn, return-to-office struggles, economic flux — by bringing softer, more emotional conversations into boardrooms. Some encouraged open discussions of employee mental health in the office. One chief executive, drawing backlash, even posted a selfie on LinkedIn showing tears streaming down his face after he laid off two employees.

Others went in the opposite direction, embracing a new style of corporate machismo. Elon Musk challenged Mark Zuckerberg to a cage match; Mr. Zuckerberg, who has been training in Brazilian jiujitsu over the past 18 months, texted the president of the Ultimate Fighting Championship to see if his rival had been serious about the proposition.

Corporate offices have long been filled with signs of aggression: shouting, cursing, traders pacing the floors with lacrosse sticks. Many of those came under scrutiny amid a push for more diversity and inclusion in the corporate world. But during times of economic pressure, the chest-thumping can sometimes come back in full force, some management experts say.

“Leaders are trying to regain a sense of control they feel they’ve lost over the last few years,” said Cali Williams Yost, a workplace strategist. “They’re searching to reassert control and power in a way that feels familiar.”

Companies have long valued military experience in hiring. Hollywood has for decades valorized military leaders as the ultimate examples of strength. But now corporate executives are actually play acting as military members. Hundreds of companies are turning to unorthodox programs that use fighter pilot simulations, military principles and even NASCAR pit stop techniques to train business executives on responding to uncertainty and flux.

Women can and do participate in these trainings, but many of the companies offering them are run by men — a source of concern for some management experts, who say workers are looking for more empathic leadership styles, not hyperaggressive ones. The share of Fortune 500 companies run by women only just crept over the 10 percent mark this year.

“I don’t think it aligns with what most people say they’re looking for in a leader, which is human-centric, empathetic, collaborative,” Ms. Yost added.

I spent two hours doing my own F35 flight simulation through a company called the Squadron, which has an office in the World Trade Center in Lower Manhattan. I put on a jumpsuit, sat behind a simulator and tried to navigate a fighter plane around Lake Mead, near Las Vegas. The Squadron team told me I should be aiming to crash no more than two times. I crashed five times.

A trainer had explained preflight that crashing isn’t all bad: “If you didn’t crash, what’s the cost? You didn’t take any chances.”

Five crashes also wasn’t ideal. “Plan better and know which targets you want to take,” another Squadron trainer advised me. “Planning is big money for you.”

Walking around the Squadron’s office, I met Tal Kerret, president of Silverstein Properties, which controls the lease on the World Trade Center site, who told me he had completed the F35 simulation and encouraged his employees to do the same.

“I need my team to perform under pressure,” Mr. Kerret said, explaining the stress of owning corporate real estate in New York City right now, as the industry endures its own crash driven by remote work. “We live in a world of risk. When you buy a property, when you develop a property, it’s an impossible thing to do something with zero risk.”

For clients of Afterburner and the Squadron (which came to New York in 2022), the experience of going on a fighter jet mission is not really the point. What’s more important is the debrief that follows the mission, when teammates discuss their weaknesses and identify the causes of their mistakes, so they can avoid those errors going forward.

“We come back after a mission and ask ourselves, ‘Hey, what did we set out to achieve today?’” Mr. Boucousis said.

Military veterans, like Jocko Willink, a former Navy SEAL, are unsurprised that a period of workplace chaos is pushing companies to rethink management, sometimes in extreme ways.

“The pandemic revealed that we need better leadership,” Mr. Willink said. “When people aren’t coming into work and you no longer see them every day, you have to use better decentralized command. That’s a classic law of combat leadership.”

Mr. Willink recalled a frightening operation during his time as a SEAL when he had to send his team to an isolated area where he wouldn’t be able to support them. “A lot was riding on my guys being able to execute their mission,” he said, adding that business leaders also have to constantly weigh risk. “It’s not the same consequences, but you have a lot riding on your shoulders.”

Whether Navy SEALS wisdom translates to a product release, though, isn’t clear. “The question is — is it meant to be fun? Is it meant to be photographed? Or is it meant to be impactful?” Melissa Nightingale, a co-founder of the management training firm Raw Signal Group, said of professional development. “About 75 percent of professional development efforts fall on the floor.”

Still, regardless of how fleeting the benefits, the management machismo keeps spreading, as companies clamor to train their employees in ways that don’t involve a Zoom screen. Like, for example, in a racecar pit.

In Raleigh, N.C., a financial technology company called Constellation Digital Partners brought its employees together — some meeting in person for the first time — to simulate a NASCAR pit stop. The training was facilitated by a company called Over the Wall, which was started by a former NASCAR pit crew coach, Andy Papathanassiou; rates start at $10,000 and vary depending on the size of the group and how much time it spends training.

Constellation’s roughly 30 employees gathered in their office parking lot around a green racecar. The employees took off lug nuts with an air wrench, hoisted off the car’s 50-pound tire, swapped in a new tire and got the lug nuts back on. They were dripping in sweat, sunscreen and grease, looking like the harried pit stop crew members of the Tom Cruise movie “Days of Thunder.”

“It sounds silly for me to say, but the hardest part is actually getting the tire on,” said Kris Kovacs, the company’s chief executive. “What that teaches you is you’ve got to preplan. Hard things, if you practice at them and preplan, become easier and easier.”

In the months after the training, Mr. Kovacs said he saw his staff become more communicative. They understood how to share their weak points with one another.

“You can do all the ‘Kumbaya’ trust fall stuff,” he said. “Or you can get dirty with your team throwing tires onto NASCARs.”

Business

Elon Musk, Mark Zuckerberg and Jeff Bezos to Attend Trump’s Inauguration

Published

4 hours ago

January 15, 2025

Press Room

Elon Musk, Mark Zuckerberg and Jeff Bezos to Attend Trump’s Inauguration

Bezos, Zuckerberg and Coke at the inauguration

Corporate America had already raced to donate big sums to Donald Trump’s record-breaking inaugural fund. Now some of its leaders appear eager to jockey for prominent positions at the inauguration next week.

It’s a new reminder that for some of the nation’s biggest businesses, forging close ties to a president-elect who is promising hard-hitting policies like tariffs is a priority this time around.

Jeff Bezos and Mark Zuckerberg are expected to be on the inauguration dais, according to NBC News, alongside Elon Musk and several cabinet picks.

The presence of Musk isn’t a surprise, given the Tesla chief’s significant support of and huge influence over Trump. But the other tech moguls have only more recently been seen as supporters of the administration. (Indeed, Bezos frequently sparred with Trump during his first presidential term.)

It’s the latest effort by Bezos and Zuckerberg to burnish their Trump credentials. At the DealBook Summit in December, Bezos — whose Amazon has faced scrutiny under the Biden administration and whose Blue Origin is hoping to win government rocket contracts — said that he was “very hopeful” about Trump’s efforts to reduce regulation.

And Zuckerberg recently announced significant changes to Meta’s content moderation policy, including relaxing restrictions on speech seen as protecting groups including L.G.B.T.Q. people that won praise from Trump and other conservatives. On the inauguration front, Zuckerberg is also co-hosting a reception alongside the longtime Trump backers Miriam Adelson, Tilman Fertitta and Todd Ricketts.

Both tech moguls have visited Mar-a-Lago since the election, with Zuckerberg having done so more than once.

Coca-Cola took a different tack. The drinks giant’s C.E.O., James Quincey, gave Trump what an aide called the “first ever Presidential Commemorative Inaugural Diet Coke bottle.”

More broadly, business leaders want a piece of the inauguration action. The Times previously reported that the Trump inaugural fund had surpassed $170 million, a record, and that even major donors have been wait-listed for events.

Others are throwing unofficial events around Washington, including an “Inaugural Crypto Ball” that will feature Snoop Dogg, with tickets starting at $5,000, The Wall Street Journal reports.

It’s a reminder that C.E.O.s are reading the room, and preparing their companies for a president who has proposed creating an “External Revenue Service” to oversee what he has promised will be wide-ranging tariffs.

David Urban, a longtime Trump adviser who’s hosting a pre-inauguration event, told The Journal, “This is the world order, and if we’re going to succeed, we need to get with the world order.”

In other Trump news: The president-elect is expected to appear via videoconference at the World Economic Forum in Davos, Switzerland, which starts on Inauguration Day, according to Semafor.

HERE’S WHAT’S HAPPENING

Investors brace for the latest inflation data. The Consumer Price Index report, due out at 8:30 a.m. Eastern, is expected to show that inflation ticked up last month, most likely because of climbing food and fuel costs. Global bond markets have been rattled as slow progress on slowing inflation has prompted the Fed to slash its forecast for interest rate cuts.

More Trump cabinet picks will appear before the Senate on Wednesday. Senator Marco Rubio of Florida, the choice for secretary of state, is expected to field questions about his views on the Middle East, Ukraine and China, but is expected to be confirmed. Russell Vought, the pick to run the Office of Management and Budget, will most likely be asked about his advocacy for drastically shrinking the federal government, a key Trump objective. And Sean Duffy, the Fox Business host chosen to lead the Transportation Department, will probably face questions on how he would oversee matters including aviation safety and autonomous vehicles, the latter of which is a priority for Elon Musk.

Meta plans to lay off another 5 percent of its employees. Mark Zuckerberg, the tech giant’s C.E.O., told staff members to prepare for “extensive performance-based cuts” as the company braces for “an intense year.” The social media giant faces intense competition in the race to commercialize artificial intelligence.

A new bill would give TikTok a reprieve from a ban in the United States. Senator Ed Markey, Democrat of Massachusetts, said he planned to introduce the Extend the TikTok Deadline Act, which would give the video platform 270 additional days to be divested from its Chinese parent, ByteDance before being blacklisted. It’s the latest effort to buy TikTok time, as the app faces a Jan. 19 deadline set by a law; President-elect Donald Trump has opposed the potential ban as well.

A question of succession

JPMorgan Chase and BlackRock, the giant money manager, just reported earnings. (In short: Both handily beat analyst expectations.)

But the Wall Street giants are likely to face questioning on a particular issue on Wednesday: Which top lieutenants are in line to replace their larger-than-life C.E.O.s, Jamie Dimon and Larry Fink.

Who’s out:

Daniel Pinto, who had long been Dimon’s right-hand man, said he would officially drop his responsibilities as JPMorgan’s C.O.O. in June and retire at the end of 2026. Jenn Piepszak, the co-C.E.O. of the company’s core commercial and investment bank, has become C.O.O.
And Mark Wiedman, the head of BlackRock’s global client business and a top contender to succeed Fink, is planning to leave, according to news reports.

What Wall Street is gossiping about JPMorgan: Even in taking the C.O.O. role, JPMorgan said that Piepszak wasn’t interested in succeeding Dimon “at this time.” DealBook hears that while she genuinely appears not to want to pursue the top job, the phrasing covers her in case she changes her mind.

For now, that means the most likely candidates for the top spot are Marianne Lake, the company’s head of consumer and community banking; Troy Rohrbaugh, the other co-head of the commercial and investment bank; and Doug Petno, a co-head of global banking.

The buzz around BlackRock: Wiedman reportedly didn’t want to keep waiting to succeed Fink and is expected to seek a C.E.O. position elsewhere. (So sudden was his departure that he’s forfeiting about $8 million worth of stock options and, according to The Wall Street Journal, he doesn’t have another job lined up yet.)

Fink said on CNBC on Wednesday that Wiedman’s departure had been in the works for some time, with the executive having expressed a desire to leave about six months ago.

Other candidates to take over for Fink include Martin Small, BlackRock’s C.F.O.; Rob Goldstein, the firm’s C.O.O.; and Rachel Lord, the head of international.

But Dimon and Fink aren’t going anywhere just yet. Dimon, 68, said only last year that he might not be in the role in five years. And Fink, 72, said in July that he was working on succession planning: “When I do believe the next generation is ready, I’m out.”

The S.E.C. gets in a final shot at Musk

Another battle between Elon Musk and the S.E.C. erupted on Tuesday, with the agency suing the tech mogul over his 2022 purchase of Twitter.

It’s unclear what happens to the lawsuit once President-elect Donald Trump, who counts Musk as a close ally, takes office. But the agency’s reputation as an independent watchdog may be at stake.

A recap: The S.E.C. accused Musk of violating securities laws in his $44 billion acquisition of the social media company.

The agency said that Musk had failed to disclose his Twitter ownership stake for a pivotal 11-day stretch before revealing his intentions to purchase the company. That breach allowed him to buy up at least $150 million worth of Twitter shares at a lower price — to the detriment of existing shareholders, the agency argues.

The S.E.C. isn’t just seeking to fine Musk. It wants him to pay back the windfall. “That’s unusual,” Ann Lipton, a professor at Tulane Law School, told DealBook.

Alex Spiro, Musk’s lawyer, called the latest action a “sham” and accused the agency of waging a “multiyear campaign of harassment” against him.

The showdown sets up a tough question for the S.E.C. Will Paul Atkins, the president-elect’s widely respected pick to lead the agency, drop the case? Such a move could call the bedrock principle of S.E.C. independence into question.

Jay Clayton, who led the agency during Trump’s first term, earned the respect of the business community for running it in a largely drama-free manner. It was under Clayton that the S.E.C. sued Musk over his statements about taking Tesla private.

Musk, who is set to become Trump’s cost-cutting czar and is expected to have office space in the White House complex, has called for the “comprehensive overhaul” of agencies like the S.E.C. The billionaire said he would also like to see “punitive action against those individuals who have abused their regulatory power for personal and political gain.”

In related news: The Consumer Financial Protection Bureau sued Capital One, accusing it of cheating its depositors out of $2 billion in interest payments.

THE SPEED READ

Deals

DAZN, the streaming network backed by the billionaire businessman Len Blavatnik, is closing in on funding from Saudi Arabia’s sovereign wealth fund as the kingdom continues to expand its sports footprint. (NYT)
The Justice Department sued KKR, accusing the investment giant of withholding information during government reviews for several of its deals. KKR filed a countersuit. (Bloomberg)
OpenAI added Adebayo Ogunlesi, the billionaire co-founder of the infrastructure investment firm Global Infrastructure Partners, to its board. (FT)

Politics and policy

Best of the rest

We’d like your feedback! Please email thoughts and suggestions to dealbook@nytimes.com.

Business

For uninsured fire victims, the Small Business Administration offers a rare lifeline

Published

5 hours ago

January 15, 2025

Press Room

For uninsured fire victims, the Small Business Administration offers a rare lifeline

As wildfires continue to burn around Southern California, thousands of business owners, homeowners and renters are confronting the daunting challenge of rebuilding from the ashes. For some number of them, the road ahead will be all the more difficult because they didn’t have any or enough insurance to cover their losses. For them, the U.S. Small Business Administration is a possible lifeline.

The SBA, which offers emergency loans to businesses, homeowners, renters and nonprofits, is among the few relief options for those who don’t have insurance or are underinsured. Uninsured Angelenos can also apply for disaster assistance through the Federal Emergency Management Agency, or FEMA.

The current wildfires are ravaging a state that was already in the midst of a home insurance crisis. Thousands of homeowners have lost their insurance in recent years as providers pull out of fire-prone areas and jack up their prices in the face of rising risk.

“For those who are not going to get that insurance payout, this is available,” Small Business Administration head Isabella Casillas Guzman said in an interview during a recent trip to the fire areas. “The loans are intended to fill gaps, and that is very broad.”

About one-third of businesses don’t have insurance and three-quarters are underinsured, Guzman said.

“There will be residual effects around the whole community,” she said. “Insurance will not cover this disaster.”

Businesses, nonprofits and small agricultural cooperatives can apply for an economic injury loan or a physical damage loan through SBA. Homeowners are eligible for physical damage loans. Economic injury loans are intended to help businesses meet ordinary financial demands, while physical damage loans provide funds for repairs and restoration. People can apply online and loans must be repaid within 30 years.

Renters can receive up to $100,000 in assistance, homeowners up to $500,000 and businesses up to $2 million, according to Guzman. Homeowners and renters who cannot get access to credit elsewhere can qualify for loans with a interest rate of 2.5%. The SBA determines an applicant has no credit available elsewhere if they do not have other funds to pay for disaster recovery and cannot borrow from nongovernment sources.

Interest rates for homeowners and renters who do have access to credit elsewhere are just over 5%. Loans for businesses could come with interest rates of 4% or 8% depending on whether the business has other credit options.

An applicant must show they are able to repay their loan and have a credit history acceptable to the SBA in order to be approved. The loans became available following President Biden’s declaration of a major disaster in California.

“We’ve already received hundreds of applications from individuals and businesses interested in exploring additional support,” Guzman said. “We know the economic disruption may not be contained to the footprint of any evacuation zones or power outages.”

People who don’t have insurance or whose insurance doesn’t cover the entirety of their losses are eligible for loans, Guzman said. While many will use the funds to start from scratch after losing their property to the fires, businesses that are still standing can also apply for support to cover lost revenue.

Guzman was not able to estimate the total value of loans they expect to offer in California but said the organization is on solid financial footing after temporarily running out of funds in October.

“Funding has been replenished by Congress, and we expect to be able to coordinate closely with Congress,” Guzman said. “We’re fully funded and in a good position to provide support.”

Business

Cookies, Cocktails and Mushrooms on the Menu as Justices Hear Bank Fraud Case

Published

13 hours ago

January 15, 2025

Press Room

Cookies, Cocktails and Mushrooms on the Menu as Justices Hear Bank Fraud Case

In a lively Supreme Court argument on Tuesday that included references to cookies, cocktails and toxic mushrooms, the justices tried to find the line between misleading statements and outright lies in the case of a Chicago politician convicted of making false statements to bank regulators.

The case concerned Patrick Daley Thompson, a former Chicago alderman who is the grandson of one former mayor, Richard J. Daley, and the nephew of another, Richard M. Daley. He conceded that he had misled the regulators but said his statements fell short of the outright falsehoods he said were required to make them criminal.

The justices peppered the lawyers with colorful questions that tried to tease out the difference between false and misleading statements.

Chief Justice John G. Roberts Jr. asked whether a motorist pulled over on suspicion of driving while impaired said something false by stating that he had had one cocktail while omitting that he had also drunk four glasses of wine.

Caroline A. Flynn, a lawyer for the federal government, said that a jury could find the statement to be false because “the officer was asking for a complete account of how much the person had had to drink.”

Justice Ketanji Brown Jackson asked about a child who admitted to eating three cookies when she had consumed 10.

Ms. Flynn said context mattered.

“If the mom had said, ‘Did you eat all the cookies,’ or ‘how many cookies did you eat,’ and the child says, ‘I ate three cookies’ when she ate 10, that’s a false statement,” Ms. Flynn said. “But, if the mom says, ‘Did you eat any cookies,’ and the child says three, that’s not an understatement in response to a specific numerical inquiry.”

Justice Sonia Sotomayor asked whether it was false to label toxic mushrooms as “a hundred percent natural.” Ms. Flynn did not give a direct response.

The case before the court, Thompson v. United States, No. 23-1095, started when Mr. Thompson took out three loans from Washington Federal Bank for Savings between 2011 and 2014. He used the first, for $110,000, to finance a law firm. He used the next loan, for $20,000, to pay a tax bill. He used the third, for $89,000, to repay a debt to another bank.

He made a single payment on the loans, for $390 in 2012. The bank, which did not press him for further payments, went under in 2017.

When the Federal Deposit Insurance Corporation and a loan servicer it had hired sought repayment of the loans plus interest, amounting to about $270,000, Mr. Thompson told them he had borrowed $110,000, which was true in a narrow sense but incomplete.

After negotiations, Mr. Thompson in 2018 paid back the principal but not the interest. More than two years later, federal prosecutors charged him with violating a law making it a crime to give “any false statement or report” to influence the F.D.I.C.

He was convicted and ordered to repay the interest, amounting to about $50,000. He served four months in prison.

Chris C. Gair, a lawyer for Mr. Thompson, said his client’s statements were accurate in context, an assertion that met with skepticism. Justice Elena Kagan noted that the jury had found the statements were false and that a ruling in Mr. Thompson’s favor would require a court to rule that no reasonable juror could have come to that conclusion.

Justices Neil M. Gorsuch and Brett M. Kavanaugh said that issue was not before the court, which had agreed to decide the legal question of whether the federal law, as a general matter, covered misleading statements. Lower courts, they said, could decide whether Mr. Thompson had been properly convicted.

Justice Samuel A. Alito Jr. asked for an example of a misleading statement that was not false. Mr. Gair, who was presenting his first Supreme Court argument, responded by talking about himself.

“If I go back and change my website and say ‘40 years of litigation experience’ and then in bold caps say ‘Supreme Court advocate,’” he said, “that would be, after today, a true statement. It would be misleading to anybody who was thinking about whether to hire me.”

Justice Alito said such a statement was, at most, mildly misleading. But Justice Kagan was impressed.

“Well, it is, though, the humblest answer I’ve ever heard from the Supreme Court podium,” she said, to laughter. “So good show on that one.”