CEO Daily: Tuesday, 18th July

To hear Michael Dell and Egon Durban tell it, life as a private technology company is far better than that as a public company. The reasons? First, there are fewer decision makers, making it easier to pivot quickly in a rapidly changing market. Second, those decision makers are steeped in the business because they have money at stake, while public company board members often don’t fill that bill.

Dell, the CEO of his eponymous company, and Durban, the managing partner of private equity company Silver Lake that took Dell private, were among the opening acts at Coins2Day Brainstorm Tech, which has brought nearly 700 executives, entrepreneurs and financiers to Aspen to explore the frontiers of technology. Other moments from the first day:

–Kyle Vogt, the CEO of Cruise Automation, said commercial deployment of driverless vehicles is “months, not years, away.” Vogt, who sold his company to GM a year and a half ago, also acknowledged that “working inside a large company has not always been smooth sailing. It took us probably six months to a year to really figure out how to work well together and achieve what we have now, which is mutual respect.”

-Steven Mollenkopf, CEO of Qualcomm, played down his patent fight with Apple, saying “these things tend to get to resolved out of court, and there’s no reason why I wouldn’t expect that to be the case here.” In a conversation afterward, Mollenkopf told me the reason that fight has gotten so much attention is because of the “size and influence” of Apple.

–General Stan McChrystal talked about the challenges facing corporations that have “structures that were absolutely right and effective in the industrial age” but “don’t work anymore.” Information moves so fast that “we have gone from complicated to complex.” And while technology is driving much of the change, “technology is never the problem. Getting the organization to modify the culture to be effective is extraordinarily difficult.”

News below. And you can watch today’s events at Brainstorm Tech live at www.coins2day.com

Top News

• Senate GOP Scraps Health Care Bill

Mike Lee of Utah and Jerry Moran of Kansas gave the coup de grace to the Senate’s unloved health care bill. President Trump called on the GOP to repeal the Affordable Care Act immediately and “start from a clean slate,” predicting that the Democratic Party would “join in.” Senate Leader Mitch McConnell now intends to hold a vote in the next few days on the bill that was vetoed by Barack Obama last year, repealing the ACA with a two-year transition to “a patient-centered health care system that gives Americans access to quality, affordable care.” Whether the two-year transition is enough to mollify the dissenting Republican senators is open to some doubt. Coins2Day

• Reform Agenda Setback Hits Dollar

The dollar fell to a 10-month low and stocks also retreated as the stalling of the health care bill undermined confidence in the administration’s ability to deliver growth-enhancing reforms, notably in tax policy. The dollar has been particularly vulnerable to such fears in recent weeks as central banks around the world have started to follow the Federal Reserve in tightening their monetary policy stance. It was Australia’s turn overnight, with the central bank pushing the Aussie up 1.5% to a two-year high with an upbeat economic forecast. The dollar’s weakness sharpens the focus on Thursday’s ECB meeting, where markets will see whether Mario Draghi tries to rein in the euro’s rise. It too hit a two-year high overnight and is now up nearly 10% from its low at the end of last year. Coins2Day

• KKR Draws up a Succession Plan

Buyout firm KKR named Joe Bae and Scott Nuttall as co-president and co-chief operating officer, respectively, and added them to its board, a move that just about makes them nailed-on certainties to take over the running of the firm when its founders Henry Kravis and George Roberts retire. KKR was the first of the big buyout houses and is one of the first to have to address the issue of generational change in a business that depends even more than most in finance on personal contacts and chemistry. The company’s shares rose 1% on the news to a near-two-year high. WSJ, subscription required

• P&G Says Peltz Brings No New Ideas

Procter & Gamble fired back at Nelson Peltz’s public criticism of it, saying that Peltz’s fund Trian hadn’t suggested any “new or actionable” ideas in previous meetings with management to create value. As such, it said it didn’t see the point of adding Peltz to the board. Trian, for its part, admits that its primary concern is that the company won’t implement its current round of cost savings as quickly and as thoroughly as it has promised. It says it could do more if it had access to more internal information about P&G’s plans. WSJ, subscription required

Around the Water Cooler

• “That’s Politics!”

President Trump continued to insist that it was legitimate for his son to meet a Russian lawyer offering information incriminating Hillary Clinton during last year’s election campaign, even though Trump Jr. Knew the information was sourced to the government of a hostile power. The president signed off his latest tweet on the subject with the conclusion, “That’s politics!” While that may strike a chord with long-standing public disenchantment with Washington, it’s a position that jars with Trump's pre-election promises to "drain the swamp," and directly contradicts months of assurances that there were no such contacts. Actual proof of collusion with Russian manipulation of the election remains elusive. Evidence of the readiness to collude continues to pile up. NYT

• No Light in Ericsson’s Tunnel

Ericsson shares sunk as much as 11% after it announced falling sales and a big net loss for the second quarter. It also said its turnaround would take longer than expected. CEO Borje Ekholm said the maker of wireless network equipment would accelerate and expand planned cost cuts, but said “challenging” environments in Europe and Latin America would mean that stabilization is the best it can hope for in the near term. Bloomberg

• Netflix Confounds the Doubters

Shares in Netflix jumped more than 10% in after-hours trading after it reported a much bigger-than-expected 5.2 million increase in new subscribers in the second quarter; over 80% of them are outside the U.S. Revenue also blew past expectations, up 32% on the year. New series of popular shows such as House of Cards and Better Call Saul helped the subs numbers. But its profit missed expectations, and the company predicted negative cash flow of $2.5 billion this year due to the high cost of producing more original content. With $4.8 billion in long-term debt, Netflix is an increasingly leveraged play, but as long as it’s growing like a weed (and it forecasts another 4.4 million subs this quarter), the market isn’t too worried. Coins2Day

• A Crack in the Dam

Ecuador became the first member of OPEC to abandon the cartel’s decision on output restraint, arguing that it needs the money too badly. The news confirms what OPEC’s own data for last month suggested— that discipline in compliance is fraying more with every week that U.S. Producers gain market share. Ecuador is one of the smallest oil exporters in OPEC, so its actions won't have much effect on actual supply and demand for oil, and thus for prices. And Saudi Arabia and Russia, the deal’s two main architects, are too invested to abandon it lightly. But Ecuador’s open defiance sets a poor example and will encourage others to act likewise, raising the risk of a new free-for-all. Bloomberg

Summaries by Geoffrey Smith [email protected];

@geoffreytsmith