The Great Holiday Billionaire Sell-Off

Jeff Bezos
Photo by Alex Wong/Getty Images
Theodore Schleifer
December 7, 2021

It’s December, which means it’s crunch time for the ultra-wealthy and their menagerie of tax planners, estate lawyers and philanthropic consiglieres to settle their affaires d’etat. The end of the year typically ushers in major offloading of stock by insiders looking to lock in a capital gain (or, if it’s efficient, to harvest a loss). This year has already seen a record $69 billion of stock sales by C.E.O.s, founders and big stakeholders—$20 billion is attributable to Jeff Bezos and Elon Musk alone—as billionaires confront the the specter of higher taxes next year, especially in Bezos’ home state of Washington, which just raised its capital-gains rate. 

The holidays are also a time for major charitable gifts and, to be sure, less charitable “gifts.” That’s not just because Christmastime presents are a tradition even for the paupers, but also because it may be time to offset a gain, or to use a donation to avoid realizing one to begin with. The latter “gifts” double as feats of financial engineering by people who need to move money from one bank account to another to comply with various legal strictures. Larry Page, for instance, each holiday season “donates” several hundred million dollars from his foundation to a donor-advised fund, a clever workaround to meet a requirement that a foundation disburse 5 percent of its assets each year. One other billionaire on my mind: Will we see another Medium post in the next few weeks from MacKenzie Scott outlining her own billions of dollars in holiday giving, just like we saw last December? She’s made three such releases to date—two in the summers of 2020 and 2021, one in December 2020. Another year-end disclosure would suggest that these missives have become a tradition of their own, here to repeat biannually for as long as there is cash in the bank.

Chan Zuckerberg’s Holiday Stocking Stuffer

When Mark Zuckerberg and Priscilla Chan announced plans for their philanthropy’s science programming back in 2016, it was easy to ridicule the couple’s objective, stated by them aloud in a San Francisco auditorium, to “cure all disease” in their children’s lifetime. The wisecracks about another naive tech billionaire arrived faster than you could say muscular dystrophy, and the philanthropy quickly clarified its aspirations to a slightly more terrestrial level by adding the words “cure, prevent or manage” all disease. 

Those jokes aside, C.Z.I.’s scientific research and investments have arguably produced its most successful, and certainly least controversial, work of the philanthropy’s three main priority areas. Facebook was among the first companies to take Covid seriously in large part because of scientific advice that Zuckerberg was hearing at C.Z.I., a philanthropic journey chronicled in the latest Michael Lewis book, The Premonition.

That’s why it’s worth paying attention to the announcement today that C.Z.I. is pouring $3.4 billion more into scientific research, the most significant commitment since C.Z.I’s science shop launched five years ago with a $3 billion pledge. C.Z.I. is focusing its work and doubling down in a few key areas including biomedical imaging (price tag: $600 million to $900 million) and artificial intelligence and brain science, with a new center at Harvard ($500 million). C.Z.I. is also investing in expanding its independent Biohub network—a project to coordinate research between universities—to several more regions beyond the Bay Area ($1 billion). “Over the next 10 years, CZI will build new tools, launch new institutes, and support research to directly measure and observe any biological process in the human body,” Zuckerberg said to the camera on Tuesday at a virtual event, seated alongside Chan.

Laser Eyes on Washington

Remember Brock Pierce? Sure you do: Who could forget the ten-year-old who played Gordon Bombay in the Disney classic The Mighty Ducks or its sequel? Perhaps we’re being unfair: Unlike plenty of child actors, Pierce actually used his fame to kickstart a successful business career. Pierce co-founded Blockchain Capital in 2013 and the stablecoin company Tether the following year, becoming a cryptocurrency evangelist long before other billionaires and celebrities started posting laser-eyes profile photos. While Pierce’s exact net worth is unknown—his crypto profits are estimated to exceed $1 billion—his bank account was sufficient last year to support a quixotic presidential run, on which he spent $6 million to secure a grand total of 50,000 votes. His campaign’s chief strategist was … Akon.

You get the picture. But Pierce is now settling for simpler pastures: the White House is out, and the United States Senate is in. A few weeks back, Pierce filed to begin raising money for an independent Senate bid in Vermont, which is very far from his current home in Puerto Rico—a popular tax-exempt domicile for fellow Bitcoin bulls like Frances Haugen—where Pierce recently flew in Eric Adams, whom he is advising on crypto. Pierce, of course, has virtually no chance as an independent candidate in heavily Democratic Vermont, which is more likely to simply elevate its lone U.S. congressman, Peter Welch. But like everything that Pierce has done for the last 30 years, his bid is at least likely to be highly entertaining.

What I’m Reading:
  • Eric Schmidt is the white knight riding in to save the Princeton Club of New York, which has always been a great place to store my luggage when I’m running around Midtown but has also been decimated by the pandemic and is now facing foreclosure. Inequality in elite colleges’ alumni squash courts is hardly the civil rights issue of our time, but it’s a reminder of how lucky some of these colleges are to have graduates and former board members with access to this kind of money. [Bloomberg]

  • The ouster of Tim Phillips, a major figure in the conservative movement and the longtime head of the Koch network’s principal organization, Americans for Prosperity, isn’t getting its due attention. The Koch network initially said last week that they forced out Phillips after a probe because of an issue with his “integrity” but said little else — effectively allowing him to twist in the wind. Now we know that Phillips was having an affair with a GOP official, and I’d be shocked if there’s not more to emerge. [CNBC]

  • The fallout from the Bill and Melinda French Gates divorce continues to cascade in ways significant and symbolic. A decade ago, the Gates couple and Warren Buffett crafted The Giving Pledge, in which billionaire philanthropists write public letters promising to give away their fortunes to charity. Now that Bill and Melinda are separate entities, however, they have published their own separate letters. Both messages, released last week, are worth a few minutes of your time: Bill reaffirms post-divorce that their jointly-run foundation is his “top philanthropic priority”; Melinda, interestingly, argues that billionaire philanthropy “is not an especially noble act.” 

  • It was worth tuning into Elon Musk’s back-and-forth with Joanna Stern at the Wall Street Journal’s C.E.O. conference yesterday for an unfiltered look at the id of the Silicon Valley titan class. The world’s wealthiest person was talking about taxes … and whether he should pay more of them. He pushed back on all the “anti-billionaire BS” with his trademark awkward bravado, but I thought this quote summed up what plenty of other corporate chieftains believe privately, but do not often say aloud: “It doesn’t make sense to take the job of capital allocation away from people who have demonstrated great skill at capital allocation and give it to an entity that has demonstrated very poor skill in capital allocation, which is the government.” Musk continued: “Why would you want to give a corporation with no competition, that can’t even really go bankrupt, more money?” [Transcript]