The former boss who won’t go away

One private equity giant’s earnings to start: Apollo Global Management has taken a haircut on profits thanks to derivative trades it entered to hedge interest rate risk as the Federal Reserve looks set to start lowering rates in the months ahead.

And some bad news in Big Tech: Intel on Thursday revealed drastic plans to slash its employee headcount and capital spending in an attempt to put its business back on stable financial footing. Shares plunged 20 per cent on the news in after-market trading.

In today’s newsletter:

• Starbucks can’t shake its former CEO

• Big Law gets behind Kamala Harris

• SoftBank-backed start-up founder is accused of fraud

Howard Schultz’s ties to Starbucks

Starbucks’s three-time chief executive Howard Schultz says he’s out of the game. No, really.

“I have no operational role. I’m not on the board. I’m watching from afar and rooting and cheering for Starbucks,” Schultz said on the three-hour business podcast Acquired in June.

While he stepped down from his role of CEO last year, messy ties remain between Schultz and the company he can’t stop coming back to.

His entanglements with the $82bn coffee chain range from an investment in a family-owned Italian business from which Starbucks buys its olive oil to a private jet, DD’s Maria Heeter and the FT’s Rhea Basarkar and Anjli Raval report.

While Schultz was travelling in Sicily near the end of his third spell in charge, he was introduced to the idea of eating a spoonful of olive oil every day. It inspired him to create the “Oleato”, an olive oil coffee-hybrid Starbucks began rolling out to customers earlier this year (DD’s local Italian is very sceptical about this blend).

Schultz doesn’t just get the satisfaction of inventing the beverage — he also owns a 19 per cent stake in the olive oil business, company filings show. Starbucks paid the company, called Partanna, about $26mn last year.

The ties don’t stop there. Schultz leases his jet to Starbucks to use for corporate travel, and separately pays the company for rent and aircraft maintenance, filings show.

He’s also negotiated a retirement agreement that allows him to attend board meetings for life — plus, lifetime badge access to the company’s headquarters. And a parking space.

All that adds up to big pressure on the current CEO, Laxman Narasimhan, who has to grapple with another spectre over his shoulder: activist investor Elliott, which has taken a stake in the company and is pushing for board representation.

Conversations with Elliott are “constructive”, Narasimhan said on Tuesday’s earnings call.

Conversations with Schultz — a $1.6bn shareholder who has quipped at the board from the sidelines and warned board members against a settlement? Unclear.

And despite all the noise surrounding Starbucks governance, the Oleato? Not bad, said one DD team member on a “definitely for work” taste-test outing.

Big Law rallies behind Kamala Harris

Some of Big Law’s most prominent lawyers are going all-in for Kamala Harris.

Several of the biggest names at America’s most prominent law firms are pledging to throw their weight behind her campaign for US president in the final months before the November election.

Brad Karp, chair of prestigious law firm Paul Weiss, sought to rally support for Harris in an email sent out on Sunday to nearly 300 lawyers. It received an enthusiastic response: the leader of Cravath and senior figures at DLA Piper are helping to mobilise colleagues, according to recipients.

Big plans for fundraisers are also being set in motion. A large event loosely planned for this autumn is expected to raise as much as $10mn, as the push for Harris nationally continues to break fundraising records.

The email Karp sent out went to a who’s-who of heavyweight lawyers, including Wachtell’s co-founder Marty Lipton and Cravath managing partner Faiza Saeed. There were also high-profile lawyers at Skadden Arps, Quinn Emanuel, Latham and Watkins, Cooley and dozens of other firms — many of which represent the US’s largest corporate and tech groups.

And it’s not just Big Law: a group of investors just formed the group “VCs for Kamala”, with more than 100 venture capitalists including Mark Cuban and Chris Sacca pledging to back Harris on Wednesday.

The rallying cry for Harris is an about-face after Joe Biden’s disastrous debate against Donald Trump — after which fundraising had “completely dried up”, one major law firm leader said.

“There were events where they had no one agreeing to attend . . . when you’d expected to be raising $250,000 or more at a time.”

With a new candidate, the money’s now flooding in. And DD will keep tabs on the high-flying fundraisers that are bound to take place from the Hamptons to Beverly Hills in the coming weeks.

SEC goes after start-up IRL’s founder

In 2021, SoftBank’s Masayoshi Son was so taken by a pitch for a Gen Z social media app called IRL that he “wanted to meet within 48 hours and offered a $500mn investment”.

At least, that’s the claim made by the platform’s enigmatic founder Abraham Shafi, who ended up cashing a $150mn cheque from the Japanese conglomerate.

The investment soon turned sour. IRL was quietly closed down in 2023 by SoftBank and its other venture capital backers, with the former accusing Shafi of disguising the fact that the app’s purported 20mn users were in fact mostly fake, and sued him in federal court.

Earlier this year, five former IRL employees told the FT they were able to find ample evidence of bots proliferating across the site, and raised their concerns with management, only to be rebuffed. Some recounted excessive spending on a company retreat in Hawaii.

Shafi, who filed a competing lawsuit, has rubbished such claims, and alleges SoftBank was looking for a “scapegoat” to prematurely close down a good business, in order to avoid further embarrassment in the wake of the WeWork debacle.

On Wednesday, the US Securities and Exchange Commission waded in, the FT’s Joe Miller reports.

In a lawsuit filed in California, it alleged that not only was Shafi hiding from investors that the company was spending millions of dollars on advertising to entice young users, but that the mercurial founder and his wife-to-be were fraudulently using company credit cards to fund their wedding and lifestyle.

The lawsuit cited a 2021 text message exchange between Shafi and one of IRL’s VC backers, in which the person remarked that another prospective investor would “love” that IRL “spent virtually zero on marketing”.

In response, Shafi allegedly wrote: “That’s us! Real social.” At the time, said the SEC, IRL surreptitiously spent almost $6mn on advertising.

A lawyer for Shafi did not respond to a request for comment.

Job moves

• Société Générale has appointed Fouad Farah as global head of banking and advisory, replacing Demetrio Salorio. Farah was most recently head of global markets in the Americas, and has been with the bank for more than two decades.

• Finteum has appointed Rupert Hume-Kendall as a vice-chair and board member. He was previously chair of global corporate and investment banking at Bank of America’s Merrill Lynch.

• NRG Energy has hired Lawrence Coben as president and chief executive, a role he has had on an interim basis since November.

Smart reads

Quixotic IPO Few events in the capital markets have been as quixotic as Bill Ackman’s thwarted quest to list the Pershing Square USA fund on the New York Stock Exchange, Alphaville writes.

Rigged system Hundreds of thousands of people apply for the US’s H-1B visa programme each year. An investigation by Bloomberg shows that the lottery is rigged.

Venture romance Former Google chief executive Eric Schmidt gave money to his then-girlfriend’s investment firm, The Information reveals. Now, it’s unravelling.

News round-up

BNP Paribas in talks to buy Axa’s asset management firm for €5.1bn (FT)

Paul Marshal in advanced talks for Spectator magazine (FT)

Titanic maker Harland & Wolff secures lifeline loan (FT)

Can Kelly Ortberg turn Boeing around? (FT)

BA owner IAG restores dividend for first time since pandemic after beating forecasts (FT)

UK charges Glencore’s billionaire ex-head of oil over corrupt payments (FT)

Former CNN anchor Don Lemon sues Elon Musk and X over cancelled show (FT)