A cardboard box shortage may hit Silicon Valley as more tech workers are told to pack their things. Meta (aka when you order the Matrix on Wish) is the latest company to begin laying off staff. This comes as Twitter realizes it may have acted a little rashly and fired some people that it actually needs. Settle down, Parag, they don’t mean you.

The lowdown

• 🪓 Facebook parent Meta to commence layoffs this week.

• 🐦 Twitter asks some laid off workers to return, after realizing their skills may be required after all.

• 📈 Berkshire Hathaway’s operating earnings increase by 20% year on year.

Flex your finance muscle 💸💪

As we continue through our hypothetical VC term sheet, today we are looking at:

Pro rata rights 💰

A pro rata right allows an investor to maintain their ownership stake in a company in percentage terms by giving them the option (but not the obligation) to participate in a future round of financing.

Pro rata rights allow investors to double down on what they consider to be the best startups. This article ($) highlights how, in 2020, “funding rounds larger than $100m commonly receive twice as much money from investors as companies are willing to accept.” The more successful a company, the harder it is to get onto the cap table. Perhaps less so now.

You can read through some example scenarios involving pro rata rights here.

Featured stories

News Corp and Fox merger a gamble on sports betting?

Elliott Management penned a letter to investors ($) last week warning that the world may be headed for the worst financial crisis since the Second World War, and a period where investors will find it very hard to make money. They are finding it ok right now though.

Cigarette maker Philip Morris launched a takeover bid for smokeless tobacco product company Swedish Match in May, at Skr106 per share. Activist fund Elliott then started buying up the stock to agitate for a higher price. Elliot managed to amass a 10.5% stake, before a new offer of Skr116 per share was made last month.

Elliott has decided to back the deal, which is expected to net the fund a $150 million profit($). Not bad for six months’ work. Philip Morris isn’t too upset about the increased offer either. The movement in the exchange rates since the first offer was made means that, rather than paying for the Swedish match, it’s really just handing over foreign exchange gains. Cigars all around then.

The content we're consuming today

• The first lecture in a new series on Meta from Aswath Damodaran. This one focuses on corporate governance.

• The New Yorker: What Hunter-Gatherers Can Teach Us About the Frustrations of Modern Work.

Off-balance sheet items

• COP 27 has kicked off. The Economist has put together a list of ‘What to read to understand climate change’.

The bottom line