Spies, spin and an AI hype story

An epic Trump-Musk blowout to start: It finally happened. The relationship between Donald Trump and Elon Musk imploded spectacularly on Thursday. After Musk attacked Trump’s “big beautiful bill” to cut taxes as “a disgusting abomination”, Trump retorted that Musk was “crazy”. Cue the Tesla founder, who insinuated the president was associated with Jeffrey Epstein. Trump responded by threatening to cancel Musk’s government contracts. Musk then retweeted more Epstein-related content, and someone calling for the president’s impeachment. 

A talent war: JPMorgan Chase has told its incoming graduates that if they accept future-dated job offers elsewhere within 18 months of starting their analyst programme they will be fired.

And some mudslinging: Former SoftBank executive Rajeev Misra described financier Lex Greensill as “slippery and prone to lying”, according to correspondence disclosed in a court battle between the Japanese conglomerate and a Credit Suisse fund.

In today’s newsletter: 

• “Mossad for hire” becomes Builder.ai creditor

• Tote bags, Snow Patrol and private equity

• Meet Akio Toyoda, the race car-driving Toyota scion

The secretive spy agency hired by Builder.ai

The collapse of Builder.ai just took an interesting turn.

Last month DD brought you the story of how the company backed by Microsoft, SoftBank and the Qatar Investment Authority was filing for insolvency in the wake of allegations it had inflated its revenues.

It turns out Builder.ai hired a private spy agency after the FT’s reporting.

At the time of its collapse, the artificial intelligence start-up owed money to the Tel Aviv-based Shibumi Strategy, described by the Times (of London) as “Mossad for hire”.

The group was brought on to the books after the FT revealed founder Sachin Dev Duggal had been named in a criminal probe in India, according to DD’s Robert Smith, Alexandra Heal and Amelia Pollard.

Let’s take a step back.

Last year, the FT outlined in a series of stories that Duggal, who held the title of “chief wizard” at the company, had been dogged by legal disputes, including in relation to a high-profile criminal investigation. (Duggal has denied wrongdoing in all cases.)

Builder.ai collapsed last month and its list of creditors includes three interesting names: Shibumi, Quinn Emanuel, one of the world’s most feared litigation law firms, and Sitrick Group, a PR firm specialising in crisis communications.

(A former senior Builder.ai employee said that “working with international professional advisers is perfectly normal practice for a successful billion-dollar technology company operating in multiple jurisdictions”.)

Quinn Emanuel sent a letter to the FT last year on behalf of Builder.ai and Duggal. It alleged potential breaches of confidence in the course of the paper’s reporting on the tech company’s customer relations.

Quinn Emanuel doesn’t muck about: emails and business cards from its partners often come with a strapline declaring it “The most feared law firm in the world”.

Meanwhile, Mike Sitrick, co-founder of the eponymous PR firm, contacted the FT to raise concerns around the newspaper’s reporting process: “Fortune magazine has called our founder and Chairman ‘one of the most accomplished practitioners of the dark arts of public relations’,” boasts Sitrick’s website. 

As for Shibumi, this isn’t the first time it’s popped up in FT pink. The agency was involved in a high-profile spying scandal, as revealed by the FT’s Cynthia O’Murchu and DD’s Robert Smith in 2022.

It was founded by Israeli corporate espionage specialists Saphia Fenton, a former Mossad spy, and Ori Gur-Ari.

The revelations round off a busy week for the DD duo of Heal and Smith, who on Thursday revealed in full detail the extent of Builder.ai’s alleged manipulation techniques.

They reported on how Builder.ai is suspected of using a broader range of methods to inflate some of its revenues. Think improperly booked discounts, tiny upfront deposits and seemingly circular transactions with key customers. 

Lawyers for Builder.ai have said the company did not misreport revenues, and that its accounting methods had been subject to multiple rounds of financial and commercial due diligence by two of the Big Four audit firms.

Live, laugh, leverage 

Private equity executives gathering at this week’s annual industry conference in Berlin were greeted by giveaway tote bags that said: “Live Laugh Leverage”.

But there was more discussion of leverage than laughter as buyout investors navigated their third year straight of choppy markets and difficult dealmaking. 

Generally the message at SuperReturn was that Europe is now in greater focus as an attractive market thanks to the tariff-driven turmoil in the US.

Apollo president Jim Zelter said he was attending the conference for the first time as he announced plans for $100bn of deals in Germany, DD’s Ivan Levingston and Alexandra Heal reported.

Leaders from the likes of Blackstone and CVC laid out their views on the evolution of the private capital industry and of their own firms.

The atmosphere was relatively subdued even as thousands gathered and meetings spilled over into tiny wooden huts in parking spaces and rented tables at a Greek restaurant across the street from the main hotel.

One topic high on the agenda: how the lack of IPOs has forced private equity to turn to other paths for selling investments and become creative to generate cash for institutional investors.

In the evening, attendees headed to drinks and dinners with partygoers at one event and were treated to a performance by the rock band Snow Patrol.

Unfortunately for PE, the real mountain they continue to face is their own dry powder and a growing $3.5tn backlog of unsold deals that looks like Mount Everest when charted out.

Toyota’s angry shareholders

It was meant to be a deal that symbolised the progress Japan Inc has made in corporate governance.

But shares in Toyota Industries fell 12 per cent following a $33bn take-private proposal backed by chair and Toyota family scion Akio Toyoda.

Minority shareholders lambasted the deal for undervaluing the car parts supplier — one said they’d been “absolutely screwed”.

The criticism of the deal comes as Akio’s reign over a vast empire of subsidiaries and suppliers has also started to show signs of strain.

Some of his strongest supporters fear he is surrounded by loyalists and that the devoted following that surrounds him has instilled a sense of entitlement over a company in which he owns just a 0.18 per cent stake.

Even Toyota’s famously reticent shareholders have begun to raise governance concerns, dissent that would have once been unimaginable.

(Toyota points to the near doubling of its share price over the past five years and says the company is “not unduly influenced by the Toyoda family”.)

Read the full magazine piece here by the FT’s Kana Inagaki and David Keohane to learn more about the colourful Toyoda and his life-long ambition to live up to his grandfather’s success.

Job moves

• Uber has appointed Nikesh Arora, the chief executive of Palo Alto Networks, to its board of directors.

• CVC has hired Kate Thomas as a partner and head of North American distribution in its client and product solutions team. She joins from Sixth Street, where she was a managing director.

• Cybersecurity venture capital fund Cyberstarts has hired Dor Knafo as general partner and named Adam Aarons as operating partner. Knafo was chief executive of Axis Security and Aarons was previously chief revenue officer at Okta.

• Weil, Gotshal & Manges has hired Tom Ara to lead the entertainment, sports and media practice in its US private equity group. He joins from DLA Piper.

Smart reads

A new hope Nicotine pouches are taking off and Big Tobacco is hoping they’ll provide a lifeline as vaping demand levels off, the FT writes.

Moneyball Meet Sam Presti, the mastermind who has built one of the best teams in NBA history at the Oklahoma City Thunder. And he did it without the cash of his rivals, The Wall Street Journal writes.

Eat like a local Miami’s becoming the hot city for private equity and hedge fund types. The FT’s Globetrotter team has put together a guide to five of the city’s quirky food and drink experiences that you’ll struggle to find elsewhere.

News round-up

Pret A Manger owner sounds out new investors ahead of potential IPO (FT)

BlackRock’s Larry Fink sounds alarm over rising US deficit (FT)

UK fintech Wise to switch main listing to New York (FT)

Trump Media seeks to launch ‘Truth Social bitcoin ETF’ (FT)

Citigroup lays off 3,500 tech staff in China (FT)

Circle Internet shares soar 150% on NYSE debut (FT)

Man Group orders quants staff back to office five days a week (FT)

Kimberly-Clark to spin off Kleenex and other tissue products outside US (FT)

Procter & Gamble to slash 7,000 jobs in cost-cutting drive (FT)