Davos in the Desert's epic flop — and the future of Saudi money
Giuseppe Cacace/AFP via Getty Images
Never has a conference failed more spectacularly than this year's Future Investment Initiative. The so-called "Davos in the Desert" was meant to position Saudi Arabia as an innovative, dynamic nation with a bright tech-centered future ahead of it.
Instead: No one wanted to speak at the conference, and almost no one wanted to even attend. In the slots reserved for high-profile western CEOs like Jamie Dimon and Dara Khosrowshahi, we saw instead executives mostly from Russia and the kingdom itself.
- The conference ended up shining a bright light on Saudi Arabia at exactly the time when the world was most focused on its most homicidal and mendacious tendencies. That then brought Saudi Arabia's devastating proxy war in Yemen back into the headlines.
- The crown prince gave a speech at the conference that was interrupted by abundant obsequious applause, furthering the (true) impression that Saudi Arabia is a long way from any real freedom.
- Even the real Davos felt tarnished by association, putting out a press release objecting to the misuse of its brand. (The press release came from the World Economic Forum, not the Swiss ski resort.)
With Saudi Arabia's reputation at a historic low, Elon Musk, for one, must be feeling quite relieved that he didn't sell his company to the kingdom. But other companies, and countries, still face a very tough decision.
- Companies like Uber that already have a significant Saudi investment seem to be OK, so far. They're not being broadly blamed for accepting Saudi money in the past. But if they take more Saudi money in the future, all bets are off.
- The Softbank Vision Fund, which is 45% owned by Saudi Arabia, reportedly wants to take control of WeWork, for an investment of between $15 billion and $20 billion. Softbank already has two board seats at WeWork, and the terms are surely very attractive to the board and senior management.
- A lot of WeWork's employees, tenants, and prospective tenants would be very unhappy at such a development. There would certainly be a lot of very negative publicity, at a company which prides itself on being collegial and progressive.
- From a PR perspective, the decision seems clear: Don't take the Saudis' money. But this decision isn't up to the PR people, it's up to the board.
At the sovereign level, the U.S. sent its Treasury secretary to sit awkwardly with the crown prince in Riyadh on the day before the conference started. The Saudi relationship is being led by Trump, who wants to rescue an underbaked arms deal in part by applying his trademark magic math to it.
- Canada has its own, much more fully-baked arms deal with the kingdom, and prime minister Justin Trudeau says that there's nothing he can do about it: his hands are tied.
What's next? There are two possibilities.
- The first is that it all goes away. Right now, this is a public relations disaster for the Saudis. But in the age of Trump, news memories are short, and the outrage machine will move on. Americans never much cared about Saudi human rights abuses in the past, and they'll find it hard to continue to care into the future. Business and government will then revert to the status quo ante without having to fear reputational damage for doing so.
- The second possibility is that Saudi money becomes toxic. Saudi Arabia's sovereign investments, unlike Norway's, are targeted at private companies that can rebuff their advances. (Endeavor has already done so.)
Not all money is the same. The people that come with it and who are behind it matter. That has always been the case and remains the case and we are reminded of it from time to time. Like right now.— Fred Wilson, Union Square Ventures