Finance

Startup backed by Peter Thiel and Bill Ackman tells companies to stick to making profit and avoid politics

An upstart financial firm backed by Peter Thiel and Bill Ackman has a message for American corporations: Focus on making money, not taking stands.

Vivek Ramaswamy, who made his fortune in pharmaceutical startups before writing a book last year called “Woke, Inc.,” says he has raised $20m to start a fund manager that would urge companies not to wade into hot-button social or environmental issues. Thiel invested both personally and through his Founders Fund, joined by Palantir Technologies co-founder Joe Lonsdale and other venture investors.

Ramaswamy’s ambitions speak to the culture wars nipping at US corporate executives. Under growing pressure from employees, investors and customers, many have taken public positions on political issues only to face criticism from the other side. Walt Disney CEO Bob Chapek recently flip-flopped on whether to weigh in on a controversial Florida law, angering both camps. Coca-Cola and Delta Air Lines received blowback last year for criticising changes to election rules in Georgia.

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The firm, called Strive, will be based far from Wall Street in Ramaswamy’s home state of Ohio. In an interview on 9 May, the 36-year-old dubbed his approach “excellence capitalism,” focused on letting companies do what they do best—and nothing else—and inveighed against what he sees as a creeping liberal bias inside BlackRock and its peers, Vanguard Group and State Street, which he called an “ideological cartel.”

Those three firms in recent years have become almost unimaginably large, managing $20tn of assets. They have pushed companies to improve diversity, cut their climate emissions, and embrace other changes — largely under the banner of “stakeholder capitalism,” which considers other outcomes, not just profits, when assessing corporate behaviour.

In one high-profile example, all three sided against Exxon Mobil in its fight against a small hedge fund that had criticised its climate-change strategy and was seeking board seats.

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Ramaswamy says he wouldn’t have. “We will tell oil companies to be excellent oil companies and coal companies to be excellent coal companies and solar companies to be excellent solar companies,” he said. Ramaswamy has written for The Wall Street Journal’s opinion pages.

Representatives for BlackRock, State Street and Vanguard couldn’t immediately be reached for comment.

BlackRock chief executive Larry Fink has publicly pushed back on the idea that his personal politics have clouded the judgment his firm exercises when it votes its funds’ shares on behalf of investors.

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“Stakeholder capitalism is not politics,” he wrote in January. “It is not a social or ideological agenda. It is not ‘woke.’ ”

Ramaswamy’s project began undercover months ago, code-named “Whitestone” to capture its aim of being the anti-Blackrock, people familiar with the matter said. It isn’t known what products it will offer, and it has a long way to go to rival the combined market power of the financial giants it seeks to challenge.

“A majority of Americans want companies to stay out of politics,” he said. “They want to have a separate space for where they shop, where they work, and where they invest from the places where they cast their ballots or engage in their political debates.”

This article was published by The Wall Street Journal, part of Dow Jones

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