Andrew here. Andreessen Horowitz just announced plans to move from Delaware and reincorporate in Nevada, following similar moves out of the state by companies including Dropbox, Tesla and TripAdvisor. It could be a watershed moment: One of the most influential firms in Silicon Valley is openly telling its young portfolio companies to consider moving, too.
This isn’t just about a few big names. It’s a signal to the entire tech ecosystem that the “Delaware default” might be coming to an end. We dive into that below, along with Linda Yaccarino’s exit from X, big news in noncompete agreements and more.
A loud new cheerleader for ‘Dexit’
For more than a year, Delaware has battled against what legal observers have nicknamed Dexit: companies leaving the First State, the legal home for most of corporate America, over concerns that it has become hostile to big business.
Elon Musk has been among the most prominent proponents of the movement. But Andreessen Horowitz, an influential venture capital firm, may have just become the most consequential.
What’s happening: Andreessen Horowitz is moving the incorporation of its primary business, AH Capital Management, to Nevada, three executives of the venture firm wrote in a blog post on Wednesday. The firm — known in Silicon Valley as A16Z — has been incorporated in Delaware since its founding in 2009.
In the post, the executives wrote that what once was a no-brainer — incorporating in Delaware — was “no longer the case.” A state court system that had clear laws that afforded founders and their boards sensible leeway to run their businesses now has an “unprecedented level of subjectivity” that leaves companies vulnerable to expensive shareholder litigation, they argued.
A16Z’s critique follows attacks by Musk and others on Delaware. The Tesla chief became an opponent of the state after a judge repeatedly blocked the carmaker’s plan to give him a huge payday tied to stock performance.
Musk then began moving his companies out of Delaware and urged others to follow. Some have, including Dropbox; Bill Ackman’s Pershing Square; and Tripadvisor, which had its own bruising battle with a state judge. Meta also considered such a move.
But A16Z represents a bigger potential threat. It’s one of the country’s largest venture capital firms, managing about $45 billion in assets. And start-ups often clamor to win investment from it as a validation of their strategy, giving the firm’s pronouncements great weight. (That said, some corporate-governance experts took issue with A16Z’s argument: “It literally misstates Delaware law,” a legal professor, Ann Lipton, wrote on social media.)
While A16Z previously recommended that start-ups incorporate in Delaware, the firm now suggests that nascent businesses go elsewhere, potentially depriving the state of billions in revenue. “While we will continue to fund companies incorporated in Delaware,” the executives wrote in the post, “we believe Nevada is a viable alternative and may make sense for many founders.”
Given both A16Z’s influence in Silicon Valley and other venture capitalists’ misgivings about Delaware, could other tech investors drive a bigger exodus?
HERE’S WHAT’S HAPPENING
President Trump threatens a trade war with Brazil, sinking its currency. Amid a new barrage of tariff announcements, the president threatened Brazil on Wednesday with a 50 percent levy on exports to the U.S. (Worth noting: the U.S. ran a trade surplus with Brazil last year.) The attack appears rooted in political grievance: Trump cited a “witch hunt” trial against the country’s former president, Jair Bolsonaro, who is a Trump ally. Separately, the inflationary effects of tariffs have sharply divided Fed officials over whether to lower interest rates, newly released minutes from their June meeting show.
Deal talks reportedly heat up for WK Kellogg and for Starbucks. Shares in Kellogg, the cereal giant, soared on Wednesday after The Wall Street Journal reported that it was near a $3 billion sale to Ferrero, the Italian maker of Nutella. Separately, CNBC reported that Starbucks was evaluating bids for a stake in its China business that could value the unit at up to $10 billion.
A top S.E.C. official says that “tokenized” stocks are securities. Hester Peirce, a commissioner who leads the agency’s crypto task force, said that so-called tokens that are essentially digital copies of stocks and other securities should still be regulated by securities laws. Tokenization drew attention when Robinhood announced a giveaway — to European investors, not to U.S. ones — of tokens tied to the privately held stock of OpenAI and SpaceX, a move that OpenAI criticized.
X, after Yaccarino
To Silicon Valley and Madison Avenue insiders, Linda Yaccarino’s departure as the head of X on Wednesday was hardly a shock.
Even so, her exit leaves a management hole in Elon Musk’s business empire. Musk already faces restive Tesla shareholders worried that he’s distracted by other issues — concerns hardly likely to be eased after Musk said he was forming an alternative political party, aggravating his feud with President Trump.
Yaccarino didn’t say why she was leaving, citing only a “historic business turnaround” and promising “the best is yet to come.” (X users hounded Grok, the Musk-run chatbot intertwined with the social network, but were largely ignored.) Musk’s only public comment: “Thank you for your contributions.”
How to grade Yaccarino’s 26-month stint? Musk hired the advertising veteran in 2023 to rebuild the site’s ad business after he slashed head count and gutted the platform’s content moderation teams. At the same time, the platform became more open to extreme political views (including Musk’s), hate speech and disinformation, drawing the attention of global regulators.
Yaccarino, known in ad circles as the “velvet hammer” for her mix of charm and hard-nosed negotiating, sought to smooth relations with some blue-chip brands, including Apple. But she also oversaw litigation against advertisers and reportedly threatened others to either spend on X or face a court battle. (Yaccarino later dismissed the report as “hearsay.”)
X is expected to generate about $1.3 billion in ad revenue this year, according to eMarketer, which is still down from Twitter’s prepandemic levels.
What’s next? The Wall Street Journal name-dropped potential replacements, including John Nitti, X’s global head of ad innovation; Angela Zepeda, its marketing chief; and Monique Pintarelli, who oversees the Americas business division.
Whoever takes the top seat will have to try both to restore X to profitability and to work with Musk, who didn’t exactly endear himself to advertisers at the 2023 DealBook Summit.
X faces significant challenges. The ad sector as a whole is hurting, and Musk’s ambitions to build the social media platform into a kind of “everything app” have yet to be realized. (Yaccarino on Wednesday mentioned X Money, a long-discussed plan to introduce payments on the social network, as coming “soon.”)
In any case, while X is a prominent part of Musk’s business kingdom, it’s a smaller component: Earlier this year, Musk sold X to xAI, his faster-growing artificial intelligence business.
The fate of the noncompete
Banning noncompete agreements was a cornerstone of the Biden administration’s efforts to protect workers, which ultimately put the F.T.C. on a collision course with much of corporate America.
The commission, under its former chair, Lina Khan, outlawed the agreements, a type of employment clause, last year, arguing that they depressed wages and hurt the economy. Business groups vehemently disagree.
On Thursday, the F.T.C. under President Trump faces a deadline on whether to continue defending the rule in court, Danielle Kaye reports.
Background: The rule sought to ban the agreements, which affect an estimated 30 million workers across income levels, according to the F.T.C. It was set to take effect last September. But a federal judge in Texas blocked it, ruling that the commission lacked the authority to issue the ban.
Business groups have pushed back. One argument: They say that the ban would hamper businesses’ ability to protect trade secrets and confidential information.
The rule is at a critical juncture. Legal experts say that Andrew Ferguson, the current F.T.C. chair, will likely side with businesses and let it lapse. “We are reviewing the decision and weighing our options,” Joe Simonson, a commission spokesman, told DealBook on Wednesday.
There is a catch. A third-party intervener — someone who is personally affected by a noncompete and therefore has legal standing — could petition courts to uphold the rule, Sandeep Vaheesan, legal director at the Open Markets Institute, told DealBook. In a letter last month, the advocacy group urged Ferguson to defend the ban on noncompete clauses.
Companies must still contend with state laws. California, Minnesota, North Dakota and Oklahoma have banned noncompete agreements altogether, while 34 states, plus Washington D.C., restrict their use. “In blue and red states alike, the trend is very much toward complete bans,” Vaheesan said.
Compliance is a big hurdle. That is especially true for employers with operations in multiple states, Mark Goldstein, an employment lawyer at Reed Smith, told DealBook. Regardless of what happens to the F.T.C. rule, he said, many of his clients are rethinking how they will word employee contracts in the future.
Chart of the day
Nvidia made Wall Street history on Wednesday when it briefly surpassed $4 trillion in market valuation, the first listed company to do so. The chipmaker at the heart of the artificial intelligence boom has risen more than 20 percent this year, shaking off worries about the rise of DeepSeek (which was believed to need fewer Nvidia chips to produce advanced A.I.) and President Trump’s trade war.
Ackman’s short, failed quest for tennis glory
Bill Ackman is many things: billionaire financier, prominent political supporter, outspoken social activist.
But on Wednesday, he failed to claim another title — holder of professional tennis points — after he and his doubles partner lost in straight sets at a tournament in Rhode Island.
The back story: Ackman played tennis in high school and remains an avid amateur (and investor in the sport). He has said publicly that he hoped to play in a tournament with Nick Kyrgios. An injury to Kyrgios scuttled that.
Ackman then said that Jack Sock, a retired pro, had been allowed to play in the Hall of Fame Open in Newport, R.I. as a wild-card entrant — and had asked the financier to be his doubles partner. Ackman told Front Office Sports that the two hadn’t met before they began practicing together last week. Still, he playfully boasted, “I’m peaking next week.”
How Ackman fared: He and Sock lost to an Australian pair in a match that lasted a little over an hour. Ackman struggled at times with his serve but also pulled off some finishes at the net.
The endeavor drew mixed reactions. Some observers accused Ackman for using his influence to get into a pro tournament, while others praised him for trying at all. What’s unclear is whether Ackman, who’s 59 and also a pretty busy guy, will try again.
THE SPEED READ
Deals
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The fintech company Revolut is said to be in talks to raise money at a $65 billion valuation. (FT)
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Blackstone said it would partner with the British insurer Legal & General to build a private credit fund that they plan to grow into a $20 billion vehicle. (Bloomberg)
Politics, policy and regulation
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A federal appeals court blocked a Biden-era F.T.C. “click to cancel” rule for subscriptions days before it was supposed to go into effect. (WaPo)
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“T-Mobile tells F.C.C. it’s scrapping D.E.I. as it waits for deal approvals from the agency” (Business Insider)
Best of the rest
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Who’s to blame for a surge in coffee prices? Hedge funds and other traders, according to the chair of the Italian coffee brand Lavazza. (FT)
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An $88 million climate satellite that was funded by Jeff Bezos has gone missing in space. (The Verge)
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Andrew Ross Sorkin is a columnist and the founder of DealBook, the flagship business and policy newsletter at The Times and an annual conference.
Bernhard Warner is a senior editor for DealBook, a newsletter from The Times, covering business trends, the economy and the markets.
Sarah Kessler is the weekend edition editor of the DealBook newsletter and writes features on business.
Michael J. de la Merced has covered global business and finance news for The Times since 2006.
Danielle Kaye is a Times reporter, covering business and policy for the DealBook newsletter.
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