Fred DeLuca ran Subway like a titan, sleeping with franchisees' wives, micromanaging, and penny-pinching. Insiders say he set it up for failure.
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Welcome to this weekly roundup of stories from Insider's Business co-Editor in Chief Matt Turner. Subscribe here to get this newsletter in your inbox every Sunday.
What we're going over today:
- Subway cofounder Fred DeLuca ruled the company like a demigod and pursued wives of franchisees. Here's how one man sent the world's biggest fast-food chain into a tailspin.
- Top VCs share 46 of the most promising startups of 2021.
- The first new Alzheimer's drug in decades has raised concerns in the healthcare industry.
- An Insider investigation reveals that officials helped sell access to California public schools to Chinese elite.
What's trending this morning:
- At least 20 executives have left Nike in the past seven months: We have a running list of the departures, and what they could mean for the future of the swoosh.
- A jet-setting superdonor to both Hillary Clinton and Donald Trump says he was secretly a spy for the CIA: Imaad Zuberi claims the agency used him to illegally meddle in domestic politics.
- Amazon Prime employees say women get few promotions: A Prime employee accused the group of being "institutionally biased against women" in a March memo.
- Inside BlackRock's powerful consulting arm: It's made the most influential money manager an advisor to world powers.
- Forget bitcoin and other hypervolatile cryptocurrencies. For everyday transactions, the future of money is stablecoins.
How Fred DeLuca sent Subway into a tailspin
By the time he died in 2015, Fred DeLuca had created a secretive, complex multibillion-dollar enterprise, and ensured no one knew Subway the way he did. We spoke with 20 of DeLuca's employees, business partners, and friends to understand why a man obsessed with his company failed to protect it:
Despite an estimated net worth of $3 billion, DeLuca eschewed designer suits, flew coach, and berated his daughter-in-law if she dared to pay up for organic produce at Whole Foods.
Frugality didn't always translate into modesty, though. As DeLuca grew Subway from a tiny submarine chain into a behemoth with 27,000 locations and $17 billion in global sales in its heyday, he refused to relinquish much control.
He ran Subway like a titan, maintaining a tight grip on the company operations and surrounding himself with employees who loved and feared him. DeLuca devised a system that gave him the final say and even philandered with some franchisees' wives, two sources said.
And he got away with it.
Read our full profile on the man who built - and ultimately hobbled - the Subway empire:
Also read:
- Subway franchisees say a new contract forces them to sign away their ability to criticize the struggling chain
- Workers are 'rage quitting' their jobs as a tightening labor market forces employers to take note of unfavorable conditions and low pay
The 46 most promising startups of 2021
Anis Uzzaman of Pegasus Tech Ventures and Hans Tung of GGV Capital both highlighted a sleep and meditation app Calm.
The pandemic shone a spotlight on wellness and mental health. Calm was already one of the biggest names in wellness tech, and it's poised to expand as the world emerges from pandemic lockdowns, Uzzaman said. Before the start of the year, it scored a $2 billion valuation in its Series C round.
"Mental health is often overlooked yet is among the most important aspects of healthcare," Tung said.
Get the full list here:
Also read:
- How a tweet sparked a feud in Miami, pitting Silicon Valley tech transplants against the city's old guard
- This pitch deck persuaded Sony Music and Twitch's cofounder to back a new company aiming to disrupt the multibillion-dollar live-streaming industry
Why the healthcare industry is skeptical about the new Alzheimer's drug
The arrival of the first new Alzheimer's drug in two decades should have been a moment of celebration. But so far, the healthcare industry is feeling concerned.
On Monday, the US Food and Drug Administration approved a new medication called Aduhelm. The drug, made by the biotech company Biogen, is designed to remove a sticky plaque that builds up in the brains of some people with Alzheimer's, which it did in clinical trials. But it isn't clear that using the drug to clear this plaque leads to an improvement in memory and cognition.
"I don't believe that the drug provides benefits," Dr. David Knopman, a neurologist at the Mayo Clinic, told Insider.
See why the new medicine has the health community worried:
Also read:
- Two doctors have resigned from a prestigious panel after the FDA approved a controversial Alzheimer's drug
- Here are the 9 biggest biotech winners after the FDA took an entirely new approach to approve Biogen's Alzheimer's drug
How officials helped sell public school access to Chinese elite
Pegasus California School seemed impressive. The class sizes were significantly smaller than other Val Verde schools, and it offered dedicated evening study sessions overseen by faculty. The school guaranteed parents, in writing, that every graduate would gain admission to one of the top 100 US universities. But there was a hitch:
Even though it was a part of an American public-school district, tuition and fees at Pegasus added up to more than $34,000 a year. And even though it was largely staffed by Val Verde teachers and administrators, it was actually a boarding school. And even though it conferred a Val Verde diploma to graduates, Pegasus California School was really a private academy exclusively serving Chinese students in Qingdao, China.
How it got there, and how it leveraged the resources and personnel of a middling public-school district for the benefit of private investors and wealthy families halfway across the globe, is the story of one businessman's quest to monetize American public education with the help of California's most powerful education official.
Read our full exclusive report on Pegasus California School here:
Also read:
You're invited: Join us and learn how to navigate the complicated process of buying a home in today's hot market on Tuesday, June 22 at 12 p.m. ET - during a free, hour-long virtual event presented by Fidelity. Register here.
Finally, here are some headlines you might have missed last week.
- Matt
- PayPal's origin story is male-dominated, but these 20 women played key roles in building the payments giant during its early days
- 12 bankers running fintech groups at firms like Morgan Stanley and Goldman Sachs give an inside look at dealmaking in the red-hot sector
- Credit Suisse has lost at least 44 execs, bankers, and traders in recent months. Here's a running list of who left and where they're going.
- Inside BlackRock's powerful consulting arm that's made the most influential money manager an advisor to world powers
- StockX Power Players: Meet the 26 execs - including recent hires from Amazon, eBay, and Yahoo - leading the resale marketplace as it eyes an IPO
- Shopify has seen a sudden rush of departures despite massive growth. Insiders say CEO Tobi Lütke's temper and 'robotic' personality are partially to blame.
- A veteran options trader breaks down 3 potential drivers of AMC's 2,500% surge this year - and shares how long the retail-fueled rally might last
- Meet the Zillow mafia: These 9 former execs are raising hundreds of millions for their own startups and taking over the real estate tech world
- 6 trucking-tech startup CEOs reveal how they plan to hang onto the huge gains they made amid pandemic turmoil
- No one is policing corporate America, and white-collar crime is on the rise. What comes next could be a full-scale financial meltdown.