Shana Tovah to our Jewish brothers and sisters: It's Rosh Hashanah, marking the new year 5780.
- Jake Tapper quips: "I’m still writing 5779 on my checks."
1 big thing: The unicorn myth exposed
A huge shift in American business was overshadowed amid impeachment last week: Investors are rethinking hot startups with frothy valuations and putting discipline (and reality) above the myth of the almighty and all-knowing founder.
- Suddenly, balance sheets and profits seem to matter to investors again, Axios Markets editor Dion Rabouin writes.
- The market is now bringing private valuations around to reality, as skittish Wall Street investors have been punishing billion-dollar-plus initial public offerings with questionable balance sheets or paths to profitability.
- Peloton is down 13% from its IPO price in just two days of trading, and teeth-straightener SmileDirectClub is 44% below its offer price in two weeks.
The bottom line from Felix Salmon, author of the weekly Axios Edge:
- Unicorns (and minotaurs!) are mythical beasts. When exposed to the harsh light of reality, they often look less impressive.
- Uber, Lyft, and Slack have all traded miserably as public companies, while WeWork has canceled its IPO altogether. Others like Airbnb, Palantir, and Stripe are likely to want to avoid the public markets for as long as possible.
- The IPO market is now readjusting those frothy private valuations.
- Venture capital went overboard on "founder friendly," but expect structures like dual-class shares to persist.
- And the real test comes when there’s a hot deal with a hot founder. VCs will do anything to get in. Even if it’s against their professed conservatism.
- And be cautious about extrapolation: WeWork had big problems. Peloton and SmileDirectClub are still worth lots more than in private markets. Datadog, a monitoring and analytics platform for developers, went public two weeks ago at huge price.
2. Trump warns of "Civil War"
President Trump provoked a rare rebuke from a fellow Republican for a tweet quoting a Dallas pastor, who campaigned for Trump and led his inauguration worship service, as saying Trump's removal could lead to "Civil War."
- The actual quote on Fox News by Pastor Robert Jeffress, via CNN's Brian Stelter: "If the Democrats are successful in removing the president from office, I'm afraid it will cause a Civil War-like fracture in this nation from which this country will never heal."
Rep. Adam Kinzinger (R-Ill.), who served in Iraq and is a pilot in the Air National Guard, tweeted that Trump's tweet was "beyond repugnant":
- "I have visited nations ravaged by civil war. @realDonaldTrump I have never imagined such a quote to be repeated by a President."
3. Trump goes to war without a war room
Jay Sekulow, a private lawyer for President Trump, tells me that the White House doesn't plan a "war room"-like structure of legal and communications rapid response like President Bill Clinton deployed during the last impeachment fight.
- Invoking the Mueller investigation, Sekulow said: "We have just handled a major investigation that was multifaceted and multi-jurisdictional. There was no war room. We responded as appropriate. We won that battle."
Sekulow said the impeachment inquiry "will be handled the same way."
- "Solid teams are in place both inside the White House and outside," the lawyer said. "I am confident that we will meet any issues with Congress."
- Trump, like during the Russia probe, will often serve as the commander, the spokesman, and the combatant.
- You saw this last night when he decided to quote a pastor claiming America could fall into a civil war if he is ousted.
Lanny Davis, the face of Clinton's war room during the impeachment battle of 1998-99, said Trump's team is making a mistake by not distinguishing between the Mueller investigation and impeachment.
- Davis said the Clinton war room included about a dozen people, half of them lawyers.
- "Without facts, good or bad," Davis told me, "you can't effectively defend against impeachment."
4. "Trumpcare" doesn't exist
Do a quick search for health insurance, and you'll find plenty of ads for "Trumpcare" plans that cost $59 or less per month. But there's a catch: Trumpcare doesn't exist, and many of these advertised plans offer bare-bones coverage, writes Axios' Bob Herman.
- Reality check: The primary way the Trump administration has altered the insurance market is by expanding niche products — including short-term plans, association plans and health reimbursement arrangements.
Why it matters: For people who buy health insurance on their own instead of receiving it through an employer, searching for a plan is already challenging. And deceptive marketing only makes it harder, especially when these plans will leave consumers on the hook for potentially ruinous medical bills.
5. The future of privacy starts in California
A landmark privacy law in California, which kicks in Jan. 1, will give Golden State residents the right to find out what a company knows about them and get it deleted — and stop the company from selling it, write Axios' Jennifer A. Kingson and Kia Kokalitcheva.
Why it matters: It could effectively become a national privacy law, since companies that are racing to comply with it may give these privileges to non-Californians, too.
- "The general consensus is that it's an inevitability — not an 'if' but a 'when,'" Kabir Barday, CEO of OneTrust, which helps companies comply with privacy laws, tells Axios.
6. MBS denies ordering Khashoggi murder
Saudi Crown Prince Mohammed bin Salman (MBS) denied that he ordered the murder of journalist Jamal Khashoggi last year, telling CBS' "60 Minutes" that it was a "heinous crime" for which he takes responsibility as one of the country's top leaders.
- "It's impossible that the 3 million [Saudi government workers] would send their daily reports to the leader or the second highest person in the Saudi government," he said while denying knowledge of the operation.
The big picture: Last year, the CIA concluded with high confidence that MBS ordered Khashoggi's killing, and a UN investigator recommended a further probe into the crown prince's role in his death. Despite these findings, the Trump administration has publicly stood by Saudi Arabia.
7. Pelosi's advice to the White House
Speaker Nancy Pelosi offered her best advice to the Trump White House during an interview with CBS' "60 Minutes" as her caucus looks to fast-track its impeachment probe over the coming months:
- "Speak the truth. Honor your oath of office to the Constitution of the United States. Speak the truth. And let us work together to have this be a unifying experience, not a dividing one for our country. Don't make this any worse than it already is."
P.S. House Minority Leader Kevin McCarthy offered a preview of the GOP's expected defense in the same segment: "The whistleblower wasn't on the call" between President Trump and Ukrainian President Volodymyr Zelensky.
- "The president did nothing in this phone call that's impeachable."
8. Energy's game of musical chairs
Oil, natural gas and coal still make up 81% of our world’s energy consumption, a figure hasn’t changed in 30 years, writes Axios' Amy Harder in her weekly "Harder Line" column.
- The big question for fossil-fuel companies — and efforts to tackle climate change — is when and by how much will demand for these fuels decline?
- That kicks off an existential game of musical chairs because the possible futures for the planet's energy mix are vastly different depending on the world’s appetite to curb emissions.
9. Forever 21 may not be
Forever 21 Inc. filed for bankruptcy protection, adding to the retail apocalypse, Bloomberg reports.
- Why it matters: This is "the latest big fashion merchant who couldn’t cope with high rents and heavy competition as the shift to e-commerce cut a swathe through traditional retailers."
What's next: "The Chapter 11 filing allows the Los Angeles-based company to keep operating while it works out a plan to pay its creditors and turn around the business."
10. 1 film thing
The Universal/DreamWorks animated adventure "Abominable" topped the box office over the weekend, while the Renee Zellweger-led Judy Garland tale "Judy" got off to a strong start, AP's Jake Coyle reports.
- "Abominable" is about a Shanghai teenager (Chloe Bennet) who discovers a lost yeti on the roof of her apartment building.
- She and a pair of friends traverse China to return the creature, whom they name "Everest," home to the Himalayas.
Why it matters ... Jim Orr, distribution chief for Universal: "It's not going to be all superheroes all the time."