Transcript: Milei elected president of Argentina

This is an audio transcript of the FT News Briefing podcast episode: ‘Milei elected president of Argentina’

Marc Filippino
Good morning from the Financial Times. Today is Monday, November 20th. And this is your FT News Briefing.

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Silicon Valley is still reeling from the chaos at OpenAI. And Argentina has a new president. Plus, investors are changing the way they look at start-ups.

Ivan Levingston
The idea is that there’s a dislocation in the VC market. You have these start-ups who are stuck in between where they’re not a flame-out, they’re not a unicorn.

Marc Filippino
I’m Marc Filippino, and here’s the news you need to start your day.

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Argentines voted overwhelmingly for a total change of pace yesterday. Far-right candidate Javier Milei won the country’s presidential elections. He’s a radical libertarian economist and first-term congressman. Milei defeated the current Peronist economy minister Sergio Massa. It’s a stunning rebuke to the movement, which has dominated Argentine politics for the past 30 years. Milei campaigned to drastically cut state spending and has suggested dollarising the economy to fight inflation. His inauguration is set for December 10th.

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It has been a wild few days for the tech world. On Friday afternoon, the board of OpenAI, you know, the company behind ChatGPT, abruptly fired its high-profile CEO, Sam Altman. And I’m recording this late Sunday night on the US East Coast. So I’m gonna caveat this by saying that some things might have changed by the time you listen. But not a lot is publicly known about what exactly led the company to remove Altman. We do know that OpenAI’s top executives, staff and investors were not OK with the move. By Saturday, they were putting a ton of pressure on the board to reinstate Altman, and on Sunday, the former CEO was back inside OpenAI’s offices. Now, the reason Altman came back — that wasn’t immediately clear. But sources tell the FT that Microsoft is exploring options like clearing out the board and reinstating him. Microsoft does have a lot of skin in the game here. It sunk $10bn into OpenAI earlier this year.

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There are changes afoot in the world of tech start-ups. Investors are now raising money to buy them out. That’s a big shift from the venture capital model where investors would throw money at start-ups but remain minority owners. I’m joined now by the FT’s Ivan Levingston who’s been covering this shift. So, Ivan, how did venture capital investment work before this new trend? And what’s going on now?

Ivan Levingston
When the times were good in the venture capital market during the later stage of the pandemic, when interest rates were zero, start-ups that were growing fast could easily raise money from investors, even if these start-ups were losing money and burning cash to grow. Now, with rising interest rates, venture capitalists are demanding a clear path for these start-ups to become profitable. The comparable public market valuations are falling, which is pushing down start-up valuations. So it’s created an opportunity for this new group of investors who see struggling companies where there still may be a real business there and they can step in and buy up these start-ups on the cheap.

Marc Filippino
So is this just kind of a push towards a private equity model?

Ivan Levingston
Exactly. Instead of a venture capital type of funding where you have several investors coming in, taking a minority position, you have more private equity-style investors coming in. They want to buy the whole company, take control and just run it for profit. It’s a different mindset. For venture capital as a model, the goal is to have these billion-dollar valuations, these billion-dollar outcomes. For private equity, you can very happily run a smaller business where you’re not going for the moon as long as it’s producing cash.

Marc Filippino
We also know that private equity is not doing great right now. We’ve actually covered this a lot on the show. Why are investors changing tactics like this?

Ivan Levingston
The idea is that there’s a dislocation in the VC market. You have these start-ups who are stuck in between where they’re not a flame-out, they’re not a unicorn. And so these new investors think that in this gap there’s an opportunity there where they can buy up the companies at a more attractive price than they’ll eventually be worth.

Marc Filippino
What’s the idea of how this would change the tech start-up landscape as a whole? Do we have any sense of what this might do?

Ivan Levingston
It’s a third path that we haven’t really seen before in any kind of meaningful scale. For the most part, it’s been a very binary path. If you’re a start-up, you either fail and it’s nothing, it’s a zero or it succeeds and we read about it, you know, in an IPO in five years. So to see this kind of new model of start-ups, looking for exits in a private equity-styled deal would be a different pathway.

Marc Filippino
Ivan Levingston is the FT’s European deals reporter.

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Bangladesh has gone all in on liquefied natural gas. It spent billions of dollars building up its capacity to import the fuel. But it looks like LNG was a bad bet and the country is dealing with regular blackouts. Here to explain what went wrong is the FT’s Ben Parkin. Hi, Ben.

Benjamin Parkin
Hi. Thanks for having me.

Marc Filippino
So just how reliant is the country on this fuel these days?

Benjamin Parkin
So, Bangladesh has long had domestic gas reserves, and that has been the sort of backbone of its energy system for many, many years. But those have depleted over the years and, about 15 or so years ago, realised the country had a major energy crisis. You know, it was a fast-growing, developing country known for its big garment sector, huge population and it badly needed power. So it started trying to figure out how it could address this. And one of the solutions it came up with was to start importing liquefied natural gas. And so, you know, if you speak to any Bangladeshi policymaker, they see LNG is now an essential part of the country’s energy future.

Marc Filippino
Why did they invest in LNG so heavily instead of, I don’t know, other types of fuel?

Benjamin Parkin
Well, one reason was that they traditionally already used gas. But another reason, which is not unique to Bangladesh, is that gas has over the past couple of decades, really been promoted around the world as this sort of transition fuel. Right? It produces around half the carbon of coal when it’s burnt. So the idea was that gas and LNG could be a reliable, cleaner and strategic source of energy for developing countries like Bangladesh and like lots of others in Asia — one that could set them on the path towards renewable sources.

Marc Filippino
OK. So then why is the country struggling to keep the lights on even though they’ve made this huge investment to import gas?

Benjamin Parkin
So the problems really intensified last year when Russia invaded Ukraine. That completely upended gas markets around the world because all of a sudden all the Russian gas that was going to Europe stopped. And so what that meant was that Europe needed new supplies. So they started buying up cargoes that had previously been destined for, say, Bangladesh. So Bangladesh found itself sort of really low on gas. It went months without being able to secure new LNG cargoes. And this meant, among other things, you know, blackouts. That meant that what gas Bangladesh was able to get came at a much higher price. So this really disrupted its economy and has snowballed into a really difficult economic situation.

Marc Filippino
Ben, is there a lesson that we can take away here about the transition to renewable energy in low-income countries like Bangladesh?

Benjamin Parkin
So the lesson that, you know, certainly advocates for a faster transition would say is that, you know, investing heavily in something like gas, which may be cleaner than coal but is not as clean as, say, solar or wind obviously, has been a mistake, and that countries need to accelerate their investments into renewables. And so as one person I spoke to for this story said, you know, gas will result in a never-ending transition. If you’re betting 10, 20 years’ worth of your energy future on gas, does that end up slowing down the overall urgently needed transition? And certainly a lot of people and a growing number of people in countries like Bangladesh think that it does.

Marc Filippino
Ben Parkin is the FT’s South Asia correspondent. Thanks, Ben.

Benjamin Parkin
Thank you.

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Marc Filippino
You can read more on all of these stories at FT.com for free when you click the links in our show notes. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

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