John Gapper's blog

I am on leave until the second half of January so I will not be posting here until then. Happy New Year to all.

One does not go to the ballet for a political showdown but, in among the dancing, that was what we got last night at the American Ballet Theatre’s The Nutcracker at the Brooklyn Academy of Music.

According to the New York Times, “kids aside, the audience should be evenly split between harried Brooklyn moms and salivating balletomanes”. Yes, but I squeezed in too for what was a lovely new version choreographed by Alexei Ratmansky.

The excitement started even before the show when David H. Koch, the co-owner of Koch Industries, the largest privately-own industrial conglomerate in the US, came out on stage to talk about his $2.5m sponsorship of the production.

Most people applauded but there were also boos from near where I sat in the balcony, followed by an angry debate in the row in front of me, with one of the booers declaring “he’s an evil man” and a couple next to her telling her to “shut up” and to leave the theatre.

Reed Hastings of Netflix is widely admired as a chief executive and tends to get glowing media write-ups – including being named by Fortune magazine as its business person of the year. Mr Hastings also seems to have a deft touch with critical investors.

He has just given a fine lesson in how to respond to a critical attack by a short-seller while remaining friendly , and not appearing to be over-defensive or simply talking his own book. That is something that a lot of CEOs struggle with, notably Patrick Byrne of Overstock.com.

Here is the start of his long response to Whitney Tilson, the value investor who has written for the Financial Times, and who posted on Seeking Alpha about why Netflix was “an exceptional short idea”:

“At Netflix we mostly focus on building our business and letting the numbers do the talking. But Whitney is such a big-hearted donor to causes that I care about that I am writing this open letter for him to try to get him to cover his short now. My desire is to increase his odds of making money next year so he can donate even more to the charter public schools that we both think are important to our country’s future. For the record, I think short sellers are a positive force in capitalism, and I acknowledge that CEOs are generally biased in their bullishness on their respective firms.”

Nicely done, Mr Hastings, who goes on to make a detailed response to Mr Tilson’s criticisms of his company. In general, I think that CEOs should get on with running their businesses and not spend their time trying to talk up their share prices, but if you are going to do it, this is how.

Philip Stephens makes an interesting argument in his column this morning condemning BAA for the failure of Heathrow during the British snow – that the UK airport operator has invested more in providing shopping centres in its terminals than in critical infrastructure such as de-icing equipment.

I have  carelessly equated the two in my assessment of airports – that those with run-down and shabby terminals are probably bad airports per se. But this has made me reconsider US airports such as John F. Kennedy, which I passed through on the way to New Orleans yesterday.

While US airports tend not to have the same level of luxury shopping as UK ones – and JFK suffers from traffic delays due to over-capacity – they are far better at dealing with icy conditions. The same goes for Canadian airports, which hardly seem to blink an eye at snow.

I was struck by this last year when I turned up at the Montréal-Pierre Elliott Trudeau International Airport in a blizzard, fully expecting my flight to be delayed. Not a bit of it. The plane passed through a de-icing hangar and we took off on time.

Maybe Philip is right, and US airports have a better sense of priorities than the bling-infested British ones.

The Twitter fund-raising led by John Doerr of Kleiner Perkins Caufield & Byers which values Twitter at $3.7bn is interesting in several  ways. One of them is what it says about the emerging rivalry between venture capitalists in Silicon Valley and those in New York.

Mr Doerr was known for Kleiner Perkins’ green energy investments, but the venerable venture capital outfit has recently been eager to get into the social media boom. It even conceded a valuation of Twitter high enough to beat out Yuri Milner of Digital Sky Technologies.

However, Union Square Ventures, the New York venture capital fund that lies at the heart  of the “Silicon Alley” revival and was an early investor in Twitter is reported not to have invested in this round.

As Twitter’s valuation has risen, Union Square has opted not to re-invest because, at the elevated valuations Twitter now commands, it would absorb too much of Union Square’s venture funds. Fred Wilson of USV has written on his blog about his insistence on not chasing rising valuations.

Union Square is still an important investor in Twitter. However, the Kleiner Perkins-led round, for which is paid about $150m, is a clear sign that Silicon Valley does not want to get squeezed out of its leading investment role in the internet – either by Russian investors or those from New York.