fortune--2020-12-16--What are your top business predictions for 2021?

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It’s the most reflective time of the year!
As the end to this bizarre year approaches, I want to peer into your crystal ball.
What will 2021 bring? Send me your best predictions for how the new year will unfold for dealmaking and businesses. There’s a lot of material to work with: A pandemic changed the world. IPOs are booming. TikTok battled with the Trump administration. Big Tech is cementing its place as the new Wall Street in ‘08. Quibi opened…and shuttered its doors. Bitcoin is back, and to an extent, so is VR.
I welcome your business predictions from the broad (where will be the strongest areas from M&A?) to the specific (who will Microsoft buy next? Who is the next WeWork?).
You know where to find me—either email me at Lucinda.shen@fortune.com or tweet at this new Twitter thread by end of day Thursday.
On Friday, I’ll feature highlights of your answers, alongside your name and title, unless you explicitly indicate that you’d only like to use your first name.
Here’s the great thing. Though none of you predicted a massive pandemic, some of last year’s predictions for 2020 were scarily accurate.
Sure, many of you predicted a recession in 2020. But Michael Proman, managing director at Scrum Ventures was even more precise in his prediction, correctly foreseeing increased M&A activity in home fitness companies, saying companies like Tonal, Mirror and Zwift would be “likely acquisition targets.” In June, Lululemon announced plans to acquire Mirror.
Patricia Nakache, general partner at Trinity Ventures, successfully predicted that business leaders would be increasingly forced to publicly address political issues. Even as Coinbase took what it considered an apolitical stance, it still became political, whether they liked to or not.
We are still waiting for some very promising predictions to materialize. South Central Ventures Investment Manager Pedja Predin prophesied that former T-Mobile CEO John Legere would reveal himself to be “Adam Neumann’s real biological father, or that Adam Neumann is actually Sacha Baron Cohen playing a role.” Either Baron Cohen is an excellent actor with teleportation abilities, or this particular prediction may not be panning out.
This is my way of saying: Yes, bring even your zany and far-fetched predictions.
Looking forward to hearing from you :)
ANOTHER IPO! ContextLogic, the company behind discount e-commerce platform Wish, raised $1.1 billion in an IPO of 46 million shares priced at the high end of its previously stated range: $24 apiece. The IPO is a venture capital-backed unicorn debut in public markets when Affirm and Roblox have pushed their debuts to 2021 after seeing other offerings raise higher-than-expected valuations.
The story is unfolding differently for Wish at the moment. While the pandemic has increased the need for e-commerce, Wish’s growth has been slower, with revenue up 32% in the first nine months of 2020 to $1.8 billion. Meanwhile, over 70% of sales come from “personalized browsing,” or impulse buys, rather than searches for specific items—raising questions about the company’s long term.
ESCAPE FROM SAN FRANCISCO: Many of those leaving San Francisco are loud about their grievances and reasons. But as I’ve written in the past, while “exits from the crowded and troubled city are splashy, it’s worth meditating upon who stays to understand the full impact of the changes on the city.” Most of those that stay won’t talk about it—who would announce, “Hey, I’m staying in my same old home?” But here’s one Tweet from Airbnb CEO Brian Chesky: “Airbnb is staying in California and I’m staying in California. This is a special place.”
Lucinda Shen
Twitter: @shenlucinda
Email: lucinda.shen@fortune.com
VENTURE DEALS
- StockX, a Detroit-based sneaker marketplace, raised $275 million in Series E funding valuing it at $2.8 billion. Tiger Global Management led the round and was joined by investors including Altimeter Capital, Sands Capital, and Whale Rock Capital Management.
- nference, a Cambridge, Mass.-based biomedical computation company, raised $60 million in Series C funding. Matrix Capital Management led the round and was joined by investors including Matrix Partners, Mayo Clinic Ventures, and NTTVC.
- Atsena Therapeutics, a Durham, N.C.-based clinical-stage gene therapy company focused on blindness, raised $55 million in Series A funding. Sofinnova Investments led the round and was joined by investors including Abingworth and Lightstone Ventures.
- Modern Health, a San Francisco-based mental health and digital therapy company, raised $51 million in Series C funding. Battery Ventures led the round and was joined by investors including Felicis Ventures, Kleiner Perkins, Founders Fund, 01 Advisors, Afore Capital, and Okta’s Frederic Kerrest.
- MinervaX, a Danish-based biotech company focused on Group B Streptococci, raised $57 million in Series B funding. Investors included Sanofi Ventures, Wellington Partners, Adjuvant Capital and Industrifonden
- Vercel, a San Francisco-based developer platform, raised $40 million in Series B funding. GV led the round and was joined by investors including Greenoaks Capital, Bedrock Capital, and Geodesic Capital in addition to existing investors Accel Partners and CRV.
- Lendeavor, a San Francisco-based company lending to healthcare practices now known as Provide, raised $34 million in Series A and B funding. QED Investors led the round and was joined by investors including Fifth Third Bank, Montage Ventures and Clocktower Technology Ventures.
- Zilch, a London based buy now, pay later startup, raised $30 million. Investors include Gauss Ventures and Simon Nixon (Seek Ventures).
- Curai Health, a Palo Alto-based virtual care company, raised $27.5 million in Series B funding. Morningside Ventures led the round and was joined by investors including General Catalyst and Khosla Ventures.
- Ovation.io, a Boston-based drug discovery platform, raised $21.5 million in Series B funding. SignalFire led the round and was joined by investors including Madrona Venture Group, Borealis Ventures, StageDotO Ventures, and David Shaw.
- Zoomin Software, a Tel Aviv, Israel-based maker of software for Saas software customers, raised $21 million. Bessemer Venture Partners, Salesforce Ventures, and Viola Growth led the round.
- ConsejoSano, a North Hollywood, Calif.-based maker of software for multicultural patient care, raised $17 million in a Series B funding. Magnetic Ventures led the round and was joined by investors including American Heart Association/Bernard J. Tyson Impact Fund, DaVita Venture Group, Salesforce Ventures, NBA All-Star Victor Oladipo, 7wireVentures, Impact Engine, Tufts Health Plan, and Wanxiang America.
- Sourcepoint, a New York-based-based privacy compliance company, raised $17 million. Arrowroot Capital led the round.
- Iris Automation, a San Francisco-based computer vision technology company, raised $13 million in Series B funding. Bessemer Venture Partners, Bee Partners, OCA Ventures, Sony Innovation Fund, and Verizon Ventures invested.
- Tive, a Boston-based supply chain visibility and insights company, raised $12 million in Series A funding. RRE Ventures led the round and was joined by investors including Two Sigma Ventures, NextView Ventures, Hyperplane Ventures, One Way Ventures, and Fathom Ventures.
- Truera, a Redwood City, Calif.-based maker of a way to test A.I., raised $12 million in Series A funding. Wing VC led the round and was joined by investors including Conversion Capital and Greylock, Data Community Fund, B Capital Group, and Harpoon Ventures.
- DASH Systems, a Los Angeles-based airdrop deliveries software company, raised $8 million in seed funding. 8VC led the round and was joined by investors including Tusk Venture Partners, Loup Ventures, Trust Ventures, Perot Jain, and MiLA Capital.
- ClearTrace, an Austin-based maker of software company with automated energy and carbon accounting, raised $4 million in Series A funding. Clean Energy Ventures led the round and was joined by investors including Brookfield Renewable Partners.
- RAIN, a voice and conversational A.I. company, raised $3 million in Series A funding. Stanley Ventures led the round.
- FoodMarble, a Dublin, Ireland-based digestive tracking company, raised $2.6 million in seed funding. Business Venture Partners led the round and was joined by investors including SOSV, Breed Reply, Delta Partners, and Enterprise Ireland.
- Lantern, a New York City-based startup focused on death planning, raised $2.3 million. Draper Associates led the round and was joined by investors including Amplify, XFactor Ventures, and F7 Ventures.
PRIVATE EQUITY
- GIC invested $200 million in Sinopec Green, a Chinese geothermal heating company. Read more.
- Silversmith Capital Partners led a $60 million minority investment in Microblink, a London-based A.I.-powered computer vision software maker.
- Bain Capital Credit agreed to acquire Liverpool Victoria Financial Services’ savings, retirement, and protection businesses for about $707 million. Financial terms weren't disclosed.
- Ameriprise Financial, CI Financial, GTCR and Reverence Capital Partners are considering second-round bids to acquire Wells Fargo’s (NYSE: WFC) asset management arm, per Bloomberg. Read more.
- AnaCap Financial Partners agreed to acquire Novia Financial, a U.K.-based wealth management platform. Financial terms weren't disclosed.
- Capital Alignment Partners acquired American Pavement Preservation, a Las Vegas-based provider of asphalt preservation services.
- Charger Investment Partners acquired a majority stake in Advanced Composite Products and Technology, a Huntington Beach, Calif.-based maker of structures for defense, space, aviation, automotive, marine, industrial machinery and subsea telecom applications. Financial terms weren't disclosed.
- J.F. Lehman & Company acquired ENTACT, a Westmont, Ill.-based construction company providing environmental remediation and geotechnical services. Financial terms weren't disclosed.
- Offen Petroleum, backed by Court Square Capital Partners, acquired the assets of Ozark Mountain Energy, a motor fuel distributor, and Petroleum Express, an affiliated trucking company, both based in Mt. Vernon, Mo. Financial terms weren't disclosed.
- Shamrock Capital invested in Excel Sports Management, a New York-based sports management and marketing agency. Financial terms weren't disclosed.
Southwest Elevator Company, a portfolio company of Align Capital Partners, merged with Action Elevator Company and added on Avery Elevator, two elevator maintenance and construction companies.
EXITS
- BIC acquired Rocketbook, a Boston-based maker of a smart notebook, for $40 million. Techstars backed the firm.
- MessageBird acquired Pusher, a London-based API company for $35 million. Pusher investors included Balderton Capital and Fabric Ventures.
- Odyssey Investment Partners agreed to acquire Protective Industrial Products, a Latham, N.Y.-based supplier of personal protective equipment from Audax Private Equity. Financial terms weren't disclosed.
OTHER
- Eli Lilly (NYSE: LLY) acquired Prevail Therapeutics (Nasdaq: PRVL), a New York-based gene therapy company, valuing it at $1 billion.
- GoDaddy (NYSE: GDDY) acquired Poynt, a Palo Alto.-based payments company, for $320 million.
- bp has acquired a majority stake in Finite Carbon, a Wayne, Pa.-based Carbon-offsetter. Financial terms weren't disclosed
- IBM (NYSE: IBM) acquired Expertus Technologies, a Canadian fintech and payments processing firm. Financial terms weren't disclosed.
- Unity (NYSE: U) acquired RestAR, a Tel Aviv, Israel-based computer vision company allowing fashion brands to scan and render physical consumer products in 3D using a mobile device. Financial terms weren't disclosed.
- JD Sports acquired Shoe Palace, a U.S.-based shoe retailer, for $325 million. Read more.
- Adidas is weighing a sale of Reebok, a U.S.-focused shoe retailer. Read more.
SPAC
- Tokopedia, the Indonesian e-commerce giant, is weighing a merger with Bridgetown Holdings, a SPAC backed by Richard Li and Peter Thiel, per Bloomberg. Backed by SoftBank, the company could seek a valuation of between $8 billion to $10 billion, per Bloomberg. Read more.
- indie Semiconductor, an Aliso Viejo, Calif.-based automotive semiconductor company, agreed to go public via merger with Thunder Bridge Acquisition II (Nasdaq: THBR), a SPAC, in a deal valuing the firm at $1.4 billion.
- Verano Holdings, a Chicago-based multi-state cannabis operator, plans to go public in Canada by merging with Majesta Minerals, a shell company. The deal values the firm at about $2.8 billion.
- AST & Science a maker of a space-based cellular broadband network, plans to go public via merger with New Providence Acquisition Corp., a SPAC. The deal values the firm at $1.4 billion.
- Tribe Capital Partners, a venture firm, is seeking to raise $200 million for a SPAC that could go public as soon as January, per Bloomberg. Arrow Capital is set to be a SPAC sponsor alongside Tribe. Read more.
F+FS
- Periscope Equity, a Chicago-based private equity firm, closed its second fund at $225 million.
- Westlake Village BioPartners, a Los Angeles-based venture firm, raised $500 million across two funds. Its Opportunity 1 fund raised $70 million while its second early stage fund raised $430 million.
- XYZ Venture Capital, a San Francisco-based venture firm, raised $80 million for its second fund.
- Sova VC, a London-based venture firm, launched with plans to invest more than €50 million ($61 million) in early stage companies.
- Slack, a San Francisco-based communications company, dedicated $50 million to its second venture capital fund.
PEOPLE
- Fifth Wall Ventures, a Marina Del Rey, Calif.-based venture capital firm focused on real estate, named Greg Smithies as a partner co-leading the firm’s Climate Technology Investment team. Previously, he was a partner at BMW i Ventures.
- Forerunner Ventures, a San Francisco-based venture firm focused on commerce, promoted Nicole Johnson to partner.
- JMI Equity, a growth equity firm, promoted Larry Contrella to general partner.


fortune--2020-12-16--Bitcoin price rockets past $20K to new all-time highs

MacKenzie Scott is giving away her $ 60 billion fortune at a record pace

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The price of Bitcoin skyrocketed Wednesday morning, jumping from around $19,800 per digital token to as high as $20,696, according to data from CoinDesk. The surge, which unfolded in a matter of hours starting at 8 a.m. ET, marks new all-time high prices for the original cryptocurrency.
Because it has a fixed issuance rate and is substantially immune from governmental intervention, advocates have often touted Bitcoin as a hedge against social or economic instability. Specifically, Bitcoin has been a magnet for critics of the expansionary monetary policies central banks often deploy to combat economic stagnation. That argument has gained significant traction during the coronavirus pandemic, and demand for Bitcoin has surged among everyday citizens in particularly troubled nations such as Argentina.
2020 has also seen a string of increasingly traditional institutional and corporate investors making major moves into Bitcoin. In just the past few days, that has included insurer MassMutual taking a $100 million position and investment fund Ruffer putting down 2.5% of its $20.3 billion in assets.
That has helped lead the Bitcoin price back to realms last seen in 2017, when a significantly more hype-driven rally pushed it close to $20,000 before a bear market sent it as low as $3,200 by the end of 2018. Despite growing high-level acceptance, Bitcoin is still a speculative and volatile asset.
Bitcoin was first launched in 2009, in part as a response to the fallout of the 2008 financial crisis. The ownership and transfer of Bitcoin tokens are tracked on a blockchain, which maintains copies of the system’s transactions on millions of computers worldwide. The software that coordinates those records is open-source and is maintained by a distributed group of developers, rather than by any company, bank, or government.
Other cryptocurrencies inspired by Bitcoin, including Ethereum and Litecoin, also saw major gains. The prices of such so-called altcoins often track with the Bitcoin price.


fortune--2020-12-16--Apple’s privacy labels could change how apps collect your data

Supreme Court Justice Louis Brandeis was a tireless crusader for human rights who fought to regulate monopoly businesses and end the corrupt business practices of his time. Before joining the court in 1916, he also helped formulate the individual right to privacy in an 1890 law review article. Obviously this was way before the Internet, but it’s still a relevant read today.
“Instantaneous photographs and newspaper enterprise have invaded the sacred precincts of private and domestic life,” Brandeis wrote in the essay co-authored by Samuel Warren. “And numerous mechanical devices threaten to make good the prediction that ‘what is whispered in the closet shall be proclaimed from the house-tops.'”
Brandeis is also the person who, some years later, popularized the phrase in favor of transparency in government and business that “sunlight is the best disinfectant.” He actually wrote, “Sunlight is said to be the best of disinfectants.” But the pithier, shorter version became popular. Everyone needs a good editor.
I was reminded of the former Associate Justice this week when Apple rolled out its “App Privacy Details” program, or as it’s become known more widely, privacy nutrition labels. You can see them on any app that’s been updated this week, and all apps (even all of Apple’s apps) will have the disclosures eventually. Here’s the one for the Taco Bell app:
As you can see, the labels are divided into several sections. The first part, called “Data Used to Track You,” tells you what specific data the app is using for tracking users beyond the app, such as an email address or one of the identifiers created by the ad industry. The second section, called “Data Linked to You,” shows the kind of data collected, like purchases, usage of the app, location, etc. A third section, called “Data Not Linked to You,” shows information an app is collecting but not tracking specific to each user.
The more revealing details come if you click on one of the sections. Then the label reveals what data is collected and lists it in one of six categories based on how the app developer is using it (such as third-party advertising, product personalization, or the dreaded “other purposes,” which Apple leaves as a vague catch-all).
Taco Bell’s app doesn’t look too scary, but check out the listing for Facebook in the app store on your iPhone. It just scrolls and scrolls.
On the other hand, we all know Facebook collects a ton of info. I doubt the sunshine of this disclosure will act as enough of a disinfectant to prompt much change by Facebook. That’s going to take public campaigns, regulatory actions, maybe new laws. It’s like a nutrition label on a Twinkie. We already know it’s packed with sugar and artificial ingredients.
But I am hoping that the new labels help curb the widespread creepy and even dangerous data collection by apps that aren’t as well known as Facebook.
Many apps, particularly free gaming apps, embed ad industry code to track and collect data that doesn’t have anything to do with the functions of the app (although they request for permission when you install the app). In a revealing report, Washington Post tech columnist Geoffrey Fowler last year found his iPhone was riddled with 5,400 trackers reporting his activity to an array of unknown companies. A more recent CNN report looked at the data collected about pre-schoolers.
These cases are more like the nutrition labels that let us know that some cans of soup are packed with added sugar and some cheese slices have enough artificial ingredients to almost glow in the dark. Truly useful—and horrifying.
Apple is already planning a crackdown on one way the ad industry tracks users, but more can be done to discourage tracking in the first place. Because plenty of what’s now whispered to your smartphone definitely should not be proclaimed from the house-tops.
Aaron Pressman
@ampressman
aaron.pressman@fortune.com
NEWSWORTHY
G-not. You may or may not get your issue of Data Sheet on time today. Google is suffering from additional outages across its services for a second day. The search giant may also be hit with a second U.S. antitrust lawsuit soon. This one focuses not on exclusive contracts, but design changes to search that may have hindered rivals, Politico reports. A few more of these and private equity firms will start buying them up to create a Google antitrust mega-suit rollup that they can take public in 2024.
You should see me in a crown. Maybe we should call it posh-casting? Prince Harry and Meghan, The Duchess of Sussex, signed a deal with Spotify to produce and host a series of podcasts. The question: Will it be more or less popular with Buckingham Palace than Netflix's most recent season of The Crown?
The giving tree. Since Jeff Bezos and MacKenzie Scott got divorced last year, their immense wealth was divided and now they both rank in the top 20 on Bloomberg's Billionaires Index (he's #1 and she's #18). But MacKenzie is looking to move down the list quickly, as she's giving away her slice at a rapid clip. She's donated $4 billion over the past four months to many causes, including Movement for Black Lives, National Domestic Workers Alliance, and several historically Black colleges and universities.
When you price upon a star, makes no difference who you are. On Wall Street, the IPO parade continues to march even without Affirm and Roblox. Bargain online seller Wish priced its shares at $24 giving the company a stock market value of more than $14 billion. Trading under the most excellent stock symbol WISH starts later today.
I'll stop the world and trade with you. Massachusetts securities regulators have been looking into free trading app Robinhood and they are not pleased. They're filing a complaint on Wednesday alleging that the app exposed customers to “unnecessary trading risks.” The company says it is "committed to operating with integrity, transparency, and in compliance with all applicable laws and regulations.”
FOOD FOR THOUGHT
The pandemic has revived the ebook market, but some devoted fans never gave up on getting their reading done on a screen. Writer Susan Orleans explains her logic for favoring e-reading in an essay called "Confessions of a Kindle Convert."
Most of my reading is done at night, in bed. I’ve bought every kind of book light and I hate them all. I’m not trying to sell you a Kindle, but I do love the fact that it’s illuminated, and that I can make the text big, for my late-night tired eyes.
Physical books are static, and that’s part of what makes them so appealing; they’re objects that have been designed and created to have a certain effect. Ebooks reduce the experience of the book to something almost vaporous, a whisper, as if the book traveled to you on the wind. Oddly, that makes them more like where the whole undertaking of storytelling began, with oral recitation. The fixation on the book as object came much, much later than the interest in storytelling, which is as old as humankind.
IN CASE YOU MISSED IT
A.I. needs to get real—and other takeaways from this year’s NeurIPS By Jeremy Kahn
Vise, a company founded by two high school graduates, raises $45 million in funding with Sequoia at the helm By Lucinda Shen
Workit Health, a digital rehab startup, raises $12 million By Michal Lev-Ram
Bank chief proposes far-out crypto idea ‘that should be next Nobel Prize’ By Robert Hackett
Big Tech risks big fines, and even breakup, under Europe’s new content and antitrust rules By David Meyer
Public, a would-be Robinhood rival, raises $65 million By Jeff John Roberts
(Some of these stories require a subscription to access. Thank you for supporting our journalism.)
BEFORE YOU GO
I know director Chris Nolan isn't happy about it, but I had to take in his latest twisty thriller masterpiece, Tenet, on the small screen. Sorry, Chris. It was still a mind-bending, globe-trotting joy ride of a movie that will be invading my thoughts for weeks to come. Four stars.


fortune--2020-12-16--Bosses are expressing gratitude all wrong. 7 better ways to be thankful this holiday season

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You’ve surely been on the receiving end of one of those mass emails praising a team or the entire company on a job well done. While well intentioned, the message comes off as basically: Thank you for working.
How can we do better?
This holiday season, with its odd 2020 rituals of Zoom cocktails and virtual ugly sweater contests, represents an opportunity to more sincerely and meaningfully express gratitude and appreciation toward employees—and to make it a year-round practice. Some gestures that stand out:
Personalized, specific notes on how a contribution made a difference.
on how a contribution made a difference. Kudos or compliment boards that the entire team or staff can see and contribute to, filled with high fives and lavish praise.
Real-time feedback to employees commending how they handled a specific project or situation.
to employees commending how they handled a specific project or situation. Gifts that show a manager really knows an employee.
Replacing gifts with donations to charity or organizations aligned with the values of the company.
or organizations aligned with the values of the company. Connecting an employee’s behavior to how it aligns with the company’s culture and values.
More trust and flexibility on work schedules, perks such as prime parking spots, and benefits such as childcare and elder care.
When asked about gratitude that was meaningful and memorable, it’s rarely about fancy gifts but the sincerity with which it was delivered.
“The best ‘thank you’ I received was a Slack message after a difficult conversation,” said Fabienne Lauture, who works in human resources for a tech company. “An executive reached out to say thank-you for demonstrating courage in a difficult moment and that my ability to share the critique afforded her the opportunity to lead better. It was a sincere thank-you that acknowledged my contribution and the impact it had on her. It was also in real time and not in a formal channel—that lent to the authenticity of her gratitude.”
Getting this right is not just a matter of better management but of staff retention. According to workplace consultant O.C. Tanner’s research, 79% of employees who quit their jobs say that a lack of appreciation was a major reason for leaving, and nearly two-thirds of Americans say they weren’t even recognized one time last year.
Because many workplaces cannot have a holiday party this year, company leaders say the season is a chance to rethink what such gestures were really all about in the first place.
“Gratitude is not about a one-time holiday party, day off, or spot bonus,” said Aron Ain, the CEO of Ultimate Kronos Group, a workplace software company. “It cannot be an afterthought or a check-the-box activity. It is about creating a culture of gratitude.”
He said UKG plans to invest $35 million next year in enhanced benefits programs to acknowledge the extraordinary efforts of employees at all stages of life, including the tremendous burdens on caregivers right now. For example, complimentary tutoring and virtual after-school programs will be offered for the children of employees.
Indeed, the pandemic has forced companies to extend gratitude to not just employees but their families as well. Luan Lam, the global vice president of people at Harness, said the software company rolled out a program called TGIF where all employees get an extra paid day off every month to spend time with family.
At ThoughtSpot, an analytics platform, CEO Sudheesh Nair said family was always welcome at the company’s annual holiday party, and this year was no different—even though the parties took place in individuals’ living rooms. “We shipped personalized gifts to all employees’ kids and hosted a remote soiree, with an at-home scavenger hunt for the kids and other entertainment like an online hypnotist,” he said.
As COVID has also forced reflection about leading a more purposeful life, companies are trying to connect exceptional work to their values. Ping Identity, a software company, recently implemented a “Say Thanks, Give Back” program in which employees could nominate colleagues and gift them a donation to the charity of their choice.
Being so intentional about workplace performance is called “purposeful recognition,” a management philosophy popularized by David Novak, past CEO of Yum Brands, which runs some of the most popular fast-food chains such as KFC, Taco Bell, and Pizza Hut.
He cited 60% of employees saying they are more motivated by recognition than money.
“When you create a culture where your employees feel appreciated, valued, and inspired, you get better results,” he said. “People start doing things because they want to, not because they have to.”


fortune--2020-12-16--Restaurants lure New Yorkers to states with fewer restrictions

New Yorkers banned from dining inside their neighborhood restaurants are crossing state and city lines to get a bite to eat as temperatures turn frigid.
Restaurateurs are taking notice. To persuade diners to visit their other locations outside New York City and make up for lost sales in the dining capital, business owners are offering promotions and shifting workers to New Jersey, Connecticut and other parts of New York state.
Call it a kind of pandemic arbitrage, said Jeffrey Bank, chief executive officer of Alicart Restaurant Group, which owns destination eateries including Carmine’s in New York and in the Tropicana Atlantic City.
“It makes no sense that indoor dining is not safe in New York City, but it is safe in Long Island, in Albany, in Westchester,” said Bank, who is promoting a deal the Tropicana is offering to get New Yorkers to drive down to Atlantic City.
“It’s only 1 hour 45 over the GW Bridge, and you can eat the same great food at Carmine’s with a discounted room,” he said.
A series of indoor dining bans have popped up around the U.S. as Covid-19 cases surge again. New York City was the latest city to stop indoor service since most states rolled back restrictions from the spring meant to stymie the spread of Covid-19.
However, the difference this time around is that other parts of New York State, and surrounding New Jersey and Connecticut, still allow indoor dining at various levels of reduced capacity. For instance, New Jersey restaurants can operate at 25% of indoor capacity while Connecticut eateries can run at half capacity.
Conflicting Orders
The discrepancy has prompted complaints from diners and business owners over regional regulations intended to stop a virus that knows no geographic boundaries. It’s also caused public confusion over the health reasons of why it’s safe to sit inside a restaurant in, say, Jersey City, or Greenwich, Connecticut, but not in Manhattan.
“It certainly is more effective to have a coordinated response that’s regional rather than ends at the state line,” said Scott Braithwaite, a professor of population health and medicine at NYU Langone Health.
Restaurants and bars account for 1.4% of coronavirus exposures, Governor Andrew Cuomo said in a recent briefing, while local gatherings drive three-quarters of exposures. That suggests the move to close restaurants could have unintended consequences, Braithwaite said.
“If people were to say, ‘Let’s not go out to the restaurant, let’s go to my home,’ and they didn’t wear masks and sat close to each other, then it could even be worse,” he said.
Because of the latest round of restrictions, business owners are scrambling to move workers and investment away from New York City. Sati Sharma, owner of Brick Lane Curry House in Manhattan and in Jersey City, moved three of his workers to New Jersey after the ban came in to effect Monday. Five of Bank’s New York City employees moved to the Atlantic City Carmine’s the same day.
Bridge and Tunnel Deals
Restaurants are also promoting deals at locations outside of New York City to get New Yorkers into those dining rooms. The Tropicana Hotel is offering a $44 room rate on Thursday nights for Carmine’s patrons in Atlantic City.
Chef David Burke, whose restaurant empire includes three spots in New York City, said he’d offer any New Yorkers who dine at his New Jersey restaurants 10% off their check. “It’s too cold to eat outdoors now, people want to be indoors,” he said.
Edward McFarland, the owner of Ed’s Lobster Bar in New York and Sag Harbor, N.Y., says that the problem is a lack of consistency from Governor Cuomo. “You’re telling me that indoor dining is causing an uptick in cases in New York City, but nowhere else in the state? I haven’t seen anyone produce numbers that support this closure. In Long Island I can still have 50% seating.”
Others are trying to rejigger their New York City operations to keep serving food. Osteria Morini in Soho will increase delivery, while Little Beet Table on Park Avenue says it may just close up shop on slow days. For some iconic establishments, such as 21 Club and Bistro Le Steak, it’s already too late. They say they are closing their doors after decades of serving city patrons.
Already more than 110,000 restaurants have closed permanently or for the long-term across the country, with New York State seeing more than 8,000 closures, according to the New York State Restaurant Association. More than half of those are in New York City, the industry group said.
‘Living Room Spread’
New York City Mayor Bill de Blasio on Dec. 14 said he recognized the pain the restaurant industry has endured throughout the pandemic, but that he agreed with Governor Cuomo’s decision to shutter indoor dining to stem the disease’s spread.
That’s despite the fact that household gatherings, not restaurants, are driving exposure in New York.
“Restaurants have done their part, and the state’s own numbers reflect this fact,” Fleischut said Melissa Fleischut, president and CEO of the New York State Restaurant Association, in a statement. “This action is unfair and devastating.”
The risk that gatherings would move from restaurants to people’s homes is the reason New Jersey Governor Phil Murphy said he decided not to follow New York City’s lead in shutting down indoor dining.
“We’re not going to do something to make us feel good if we don’t have the data that supports it,” Murphy said of his decision to keep indoor dining at 25% capacity in New Jersey, among the last U.S. states to return to indoor dining in the spring.
Cuomo’s office said the decision to close New York City was a calculated one. “New York City has one of the densest populations in the nation and as we saw in the spring, that can cause infections to spread rapidly,” said spokesman Rich Azzopardi.
Azzopardi said the state also banned indoor dining in other dense population centers, including Buffalo, Rochester and Syracuse. “This is about saving lives and we know this makes some people unhappy, but better that than sick or worse,” he said.
Pennsylvania has also taken action. Governor Tom Wolf suspended all indoor dining through Jan. 4, along with salons, casinos, museums and gyms in the state, which has averaged 10,000 new cases a day for the past week.
The decision drew fury from some restaurateurs who vowed to defy the order and risk hefty fines.
Saucony Creek Grille and Catering in Kutztown, Pennsylvania, said it would remain open seven days a week, according to a Facebook post.
“Sorry if this upsets anybody, but we still have bills to pay, and I refuse to have my daughters stare at an empty Christmas tree this year,” the post said.


fortune--2020-12-16--Elizabeth Warren’s next book arrives in April

Sen. Elizabeth Warren has a book coming out about six key experiences and perspectives. The title should be familiar to those who have followed the Massachusetts Democrat’s career: “Persist.”
Henry Holt and Company announced Wednesday that “Persist,” which the publisher calls “a deeply personal book and a powerful call to action,” will be released April 20. “Persist” will refer to Warren’s recent bid for the Democratic presidential nomination, won by Joe Biden, but is not a campaign memoir.
“I wrote ‘Persist’ because I remain as committed as ever to fighting for an America that works for everyone,” Warren, whose previous books include “A Fighting Chance” and “This Fight is Our Fight,” said in a statement. “I’ve written a dozen books, but this one is especially personal: I bring the pieces of who I am to the fight for real change, and I passionately believe that we are in a moment when extraordinary changes are possible.”
Financial terms for the deal were not disclosed. Warren was represented by Robert Barnett and Daniel Martin of Williams & Connolly, where clients have ranged from former President Bill Clinton to a political rival of Warren’s, Sen. Mitch McConnell. A portion of author proceeds from “Perisist” will be donated to the Greater Boston Food Bank, the Food Bank of Western Massachusetts, the Worcester County Food Bank, and the Merrimack Valley Food Bank.
Warren became associated with the word “Persist” after a 2017 confrontation with McConnell, the Kentucky Republican and Senate majority leader. Warren was giving a speech on the Senate floor, denouncing then-attorney general nominee Jeff Sessions, when Republicans invoked an obscure rule to silence her.
“Sen. Warren was giving a lengthy speech,” McConnell said. “She had appeared to violate the rule. She was warned. She was given an explanation. Nevertheless, she persisted.”
Clinton’s daughter, Chelsea Clinton, has collaborated with illustrator Alexandra Boiger on a handful of picture books that use McConnell’s expression, including “She Persisted: 13 American Women Who Changed the World” and “She Persisted in Sports: American Olympians Who Changed the Game.”


fortune--2020-12-16--Sales are up for the ski and snowboard industry despite COVID lockdowns

Millions of Americans would love to bust out of pandemic isolation and go skiing.
The $20 billion U.S. ski and snowboard industry hopes the coronavirus lets them.
Lockdowns starting in March wiped out spring break, the second-most lucrative period of the season, and with it an estimated $2 billion from industry revenue. The most profitable time is Christmas vacation, coming soon, and the resurgence of Covid-19 has slope operators nervous that another shot at decent earnings will be lost at a time when pent-up demand is reaching a bursting point.
“It’s just going to be a very different year for all of us, an interesting year, a stressful year,” said Jeff Hanle, vice president of communications for Aspen Skiing Co., which owns the Aspen Snowmass resort in Colorado. “People are very excited to be outside, to be up on the hill.”
With wide distribution of a vaccine still months away, different mountains have different reasons to worry. Aspen Snowmass, which caters to the jet set with more than 350 trails on four peaks, expects to lose 80% of its international business as pandemic travel restrictions remain in force. At smaller, family-owned slopes, such as Minnesota’s Lutsen Mountains and Nub’s Nob in Michigan, the challenge is more to keep customers and staff safe while they gear up, take breaks and refuel with chili and hot chocolate.
Ski-in, ski-out accommodations can alleviate crowding in public spaces, and Lutsen Mountains, overlooking Lake Superior, can take advantage of that, according to Marketing Director Jim Vick. The resort is encouraging overnight guests who are staying trailside to use their rooms as their own private day lodges, freeing up space in the lodge for day guests. Nub’s Nob is asking visitors to eat and drink outside and to boot up at their cars.
Rules vary at different locations. The California side of Lake Tahoe is closed to overnight guests due to Covid-19 restrictions while the Nevada side remains open. Some resorts have instituted reservation systems to limit the number of skiers, which, of course, cuts into revenue. And the National Ski Areas Association is urging skiers to ride chairlifts and gondolas only with people they know.
More than 51 million visitors hit American slopes last year, according to the NSAA. That was on pace for the fourth-best season since counting started in the 1970s — were it not for the March shutdowns.
Sales for 2020-2021 look promising. Nub’s Nob, in the northwest corner of Michigan’s Lower Peninsula, says it’s sold 10% more season passes than last year, after 2019 sales topped 2018 by 10%, according to General Manager Ben Doornbos. Vail Resorts Inc., which operates 37 resorts and ski areas, including the chic Colorado destination for which it’s named, said unit sales were up about 20% from last season.
“The safety of our guests, employees and communities continues to be our top priority,” Chief Executive Officer Robert Katz told investors.
That priority has led many ski areas to hire more workers for tasks related to the virus, such as to enforce social distancing and speed up ticket processing to prevent crowding. Some resorts take on employees from out of the area and provide them housing. That became more complicated with Covid-19.
Lockdowns also affect businesses that cluster around ski areas, such as gear shops, motels, shuttle services, liquor stores and restaurants.
“If the ski resort sneezes, the community catches the cold,” said Dave Byrd, the NSAA’s director of risk and regulatory affairs.
North Shore Winery sits down Ski Hill Road from the Lutsen Mountains resort. In March, when the pandemic first shuttered the tasting room, Manager Jayden Corliss said the business was just trying to keep the heat and lights on. Now, the winery is encouraging online sales, hosting virtual live music nights and promoting its wine club in an effort to offset lost business onsite.
“There’s no way to really make up the sales we’re losing in the tasting room, but we want to keep our staff employed as much as possible, keep our customers happy and really just keep North Shore Winery feeling like the same business that it’s always been,” Corliss said.
Ski-area operators are planning to stay nimble as public-health conditions change. John Burton, marketing director at Timberline Lodge and Ski Area on Oregon’s Mt. Hood, said planning more than a few weeks at a time is impossible.
“We’ve been trying to get ahead of it, and plan and plan and get the details out, and we’ve figured out that that’s a pretty futile effort,” he said.
In a season where just about everything will be different, skiers can take comfort that the sport itself will remain the same.
“When you point your skis downhill and start moving, that’s what’s going to be the same,” Aspen’s Hanle said. “That rush and that feel.”


fortune--2020-12-16--Biden picks Buttigieg to lead transportation—drawing the ire of the progressive left

On Tuesday, it emerged that President-elect Joe Biden will nominate Pete Buttigieg—the former mayor of South Bend, Ind., and Biden’s former rival for the Democratic presidential nomination—to serve as transportation secretary in his administration.
As one of the fastest-rising young stars in the Democratic Party, the 38-year-old was widely tipped for a role in the Biden administration. He parlayed two terms as mayor of a midsize city in a Midwestern red state into national political aspirations—narrowly winning this year’s Iowa caucus and placing second in the New Hampshire primary, before dropping out of the presidential race ahead of Super Tuesday and endorsing Biden.
As a surrogate for Biden’s campaign, Buttigieg garnered praise for his willingness to appear on Fox News and other conservative media outlets to advocate for Biden and the Democrats. That willingness to engage in debate with the other side—coupled with his success as a openly gay, Democratic politician in a traditionally conservative state—only further burnished Buttigieg’s star, with some seeing him as the future of a moderate Democratic Party capable of beating the Republicans in their own backyard. As transportation secretary, Buttigieg would be the first openly LGBTQ cabinet secretary approved by the U.S. Senate.
But Buttigieg also has his fair share of detractors. Even before the 2020 presidential campaign, his three-year stint at management consulting giant McKinsey & Co. and his overly ambitious, careerist political trajectory were already raising eyebrows among the progressive left. But a contentious primary in which he lured big corporate donors and frequently took aim at progressive favorite Bernie Sanders firmly established Buttigieg as the bête noire of the left’s vocal online commentariat—many of whom reject him as a continuation of the Democratic Party’s corporatized, neoliberal establishment.
Those voices were out in full force Tuesday to meet the news of Buttigieg’s pending nomination with skepticism and, in some cases, outright disdain—questioning his qualifications for the role and jesting about what his tenure as transportation secretary would entail.
A depressing display of the professional class belief that consultants know more than workers. He could nominate a bus driver or train conductor or city transport engineer to head the department. But the Buttigiegs of the world have convinced people their fancy credentials matter https://t.co/wBO5ftj30N — Nathan J Robinson (@NathanJRobinson) December 15, 2020
Briefly being mayor of a town smaller than Fargo, North Dakota does not qualify you to be Secretary of Transportation. — Gravel Institute (@GravelInstitute) December 15, 2020
does Indiana even have mass transit lolhttps://t.co/yzYhLDfdxL — Ken Klippenstein (@kenklippenstein) December 15, 2020
Buttigieg is going to solve America's transit problems by hiring McKinsey to figure out ways to use public money to pay Uber — kill 💀 tim 💀 faust (@crulge) December 15, 2020
has pete buttigieg ridden a bus before — Current Affairs (@curaffairs) December 15, 2020
People are saying Pete Buttigieg isn’t qualified for transportation secretary, and yet pic.twitter.com/r96OKqvgMq — sarah emerson (@SarahNEmerson) December 15, 2020
Politico transportation reporter Sam Mintz pointed out the unprecedented scale of Buttigieg’s new task, and how he beat out some experienced candidates in getting the DOT nod.
The mayor of a city of 100,000, with 60 buses, will be appointed to lead an agency with nearly 55,000 employees, an $87 billion budget and more than a dozen administrations, overseeing the nation’s airspace, highway system, pipeline safety and much more.https://t.co/hB6bNGLDoK — Sam Mintz (@samjmintz) December 15, 2020
Here's some of who Buttigieg beat out for DOT:
-David Kim (8 years at DOT, LA Transit, head of Calif's state transportation agency)
-Sarah Feinberg (4 years at DOT, led FRA, head of NYC Transit)
-John Porcari (led Maryland DOT, USDOT deputy secretary) — Sam Mintz (@samjmintz) December 15, 2020
But Mintz and other observers also noted that Buttigieg does indeed have transportation credentials of his own, including initiatives that he pursued as South Bend mayor.
This anecdote from @AVGregR is one of many who told @TSnyderDC and I that yes, Pete Buttigieg does in fact have some wonky transportation credentials, even if his resume looks thin on paper.
More words for subscribers: https://t.co/HLXTDxOxx4 pic.twitter.com/WBnukSatpI — Sam Mintz (@samjmintz) December 15, 2020
For Urbanist Twitter talking about @PeteButtigieg and DOT. Policies established with him as Mayor:
Legalized ADUs citywide
Eliminated parking minimums in 1/2 directs, reduced everywhere else
Established @SmartStreetsSB focusing on reducing pavement, increase walkablity, cycling — Joseph Molnar (@JosephRMolnar) December 14, 2020
Fun fact: when Buttigieg was mayor, South Bend won $1 million from the Bloomberg Mayor's Challenge to give people Uber cards to pay for transportation to and from work. Looking forward to more of this creative thinking from Secretary Buttigieg! https://t.co/4McuJAnM6f — Zach Griffen (@runzach) December 15, 2020
Though Buttigieg will work to push forward President-elect Biden's transportation initiatives, the former mayor had plans of his own for DOT that were detailed in his larger infrastructure plan. https://t.co/ZtbJkMRBTY pic.twitter.com/z8zKXsca0u — Justin Gomez (@JustinGomezABC) December 15, 2020
Buttigieg is an aviation geek who collected flight maps as a youth https://t.co/dBNpzd9SpA — Ben Jacobs (@Bencjacobs) December 15, 2020
Still, Buttigieg’s nomination will rankle those on the left who were hoping that Biden’s cabinet would strike a more progressive tone. Thus far, it appears the President-elect’s transition has paid little mind to cabinet recommendations outlined by progressive groups.


fortune--2020-12-16--MacKenzie Scott acknowledges what so few rich people are willing to say

This is the web version of The Broadsheet, a daily newsletter for and about the world’s most powerful women. Sign up to get it delivered free to your inbox.
Good morning, Broadsheet readers! Meghan and Harry ink a Spotify deal, Paris’s mayor is happy to pay a gender parity fine, and MacKenzie Scott acknowledges an ugly truth. Have a wonderful Wednesday.
– Money talks. In May 2019, when MacKenzie Scott, the former wife of Amazon CEO Jeff Bezos, signed the Giving Pledge—a commitment by some of the world’s wealthiest couples and individuals to give away their fortunes—she made an additional vow to swiftly dispense of her billions: “I won’t wait,” she wrote.
Based on the past 18 months, we should take the elusive Scott at her word.
In a Medium post on Tuesday, Scott announced that she’s given away $4.2 billion in the past four months, on top of $1.7 billion in gifts she announced in July.
The latest round of money went to 384 organizations, some of which are focused on meeting basic needs, like food banks, while others target systemic inequalities, such as legal defense funds. Scott’s donations come without earmarks. She says that her team’s due diligence is intended to identify well-run, impactful organizations and to “pave the way for unsolicited and unexpected gifts given with full trust and no strings attached.”
The nature and rapid pace of Scott’s giving are nearly unheard-of in the philanthropic world.
“You think of all these tech fortunes, they’re the great disrupters, but she’s disrupting the norms around billionaire philanthropy by moving quickly, not creating a private foundation for her great-grandchildren to give the money away,” Chuck Collins, director of the Program on Inequality and the Common Good at the Institute for Policy Studies, told the New York Times.
Still, Scott is accumulating wealth faster than she can give it away. Her fortune, totaling $60.9 billion, has grown by $23.8 billion this year, making her the world’s 18th richest person. The Amazon shares she received in her divorce from Bezos account for the vast sum, and they’ve been on a tear in 2020 as the pandemic forced more shoppers online.
The COVID-19 crisis, as we well know, has exacerbated inequalities that already existed. The world’s richest people offer the starkest example. An October report found that the 500 wealthiest people had gained $813 billion collectively so far in 2020. On his own, the world’s richest person, Scott’s ex, has accrued $70.5 billion in new wealth this year. Many constituents of the 99%, meanwhile, lost their jobs, lost their homes, and joined food lines.
Scott is one of the few beneficiaries of the pandemic to acknowledge—even indirectly—this ugly truth; that she’s gotten richer because of a crisis that’s devastated so many.
She says as much in her Medium post: “This pandemic has been a wrecking ball in the lives of Americans already struggling. Economic losses and health outcomes alike have been worse for women, for people of color, and for people living in poverty. Meanwhile, it has substantially increased the wealth of billionaires.”
Scott could let her money do all the talking, but even as she shuns media interviews and speaking engagements, she seems determined insert herself into the conversation about mass wealth and inequality—and her commentary promises to be more frank than what’s offered by her (mostly male) peers.
Claire Zillman
claire.zillman@fortune.com
@clairezillman
Today’s Broadsheet was curated by Emma Hinchliffe.
ALSO IN THE HEADLINES
- Sussexes go to Spotify. It's been a busy week for Meghan! First, her first startup investment. Now, the Duchess of Sussex and her husband, Prince Harry, signed a multiyear podcasting deal with Spotify, launching Archewell Audio. Their strategy continues to resemble the Obamas', following a similar setup at Netflix. The couple worked with Spotify chief content officer Dawn Ostroff on the deal. Fortune
- She's got Energy. The latest reported addition to President-elect Joe Biden's cabinet is former Michigan Gov. Jennifer Granholm. If confirmed, she will join the administration as energy secretary. Granholm is known as an advocate for renewable energy. Former Environmental Protection Agency chief Gina McCarthy, meanwhile, is expected to be named senior White House adviser on climate change. New York Times
- Admin experts. Several veterans of the Obama and Bush White Houses joined Fortune for a virtual event to discuss the issues that the incoming Biden administration will tackle. Former Obama senior aide Valerie Jarrett called on the Biden team to introduce immediate economic aid; Frances Townsend, former assistant to President George W. Bush for homeland security and counterterrorism, emphasized the need for Biden to begin repairing relationships with U.S. allies. Fortune
MOVERS AND SHAKERS: Anna Wintour, already Condé Nast's global content adviser, is now the legacy media giant's first global chief content officer. The company also named Amy Astley global editorial director of Architectural Digest; and Divia Thani global editorial director of Condé Nast Traveler. Christie Smith, Apple's former global VP for inclusion and diversity, joins Accenture's strategy and consulting practice as a senior managing director. Goldman Sachs named Abigail Pohlman, currently U.S. head of institutional client solutions and head of ESG and impact investing for private wealth management, head of the Private Wealth Management Sustainable Solutions Group. Storyblocks hired Brown University executive director of talent and resource management Allison Jno-Baptiste as VP of people. PSAV CFO Becky Sheehan, NakedPoppy CEO Jaleh Bisharat and USA Today publisher Maribel Perez Wadsworth join Skillshare's board of directors.
IN CASE YOU MISSED IT
- Egalité? Gender parity rules in France are perhaps being taken a bit too literally. The country fined Paris city hall €90,000 for employing too many women in senior roles (there were 11 women and five men in the positions). Paris Mayor Anne Hidalgo said she was "happy to announce that we have been fined." Guardian
- MPW East. Fortune still, of course, can't hold our in-person Most Powerful Women events in the U.S. But Fortune China hosted a Most Powerful Women Summit in Shanghai last week. Wei Sun Christianson, chief executive of Morgan Stanley China, weighed in on China's economy recovery at the gathering. Attendees also heard from British ambassador to China Caroline Wilson. Fortune
- Competition's steep. The European Commission announced major new regulations governing how tech companies operate in Europe. The Digital Services Act and Digital Markets Act are both set to undergo long review periods. "With size comes responsibility," says Margrethe Vestager, European commissioner for competition. Time
ON MY RADAR
Your rights at work after a miscarriage Working Mother
How Nicole Kidman's rich white women took over television L.A. Times
America is running out of nurses The New Yorker
PARTING WORDS
"Why shouldn’t I say, 'Actually, you can’t talk to me from 6:30 until 8 p.m. unless it’s an emergency, even on a presidential campaign during a pandemic, because that is the only time I have with my kids. And that is more important.'"
-Jen O'Malley Dillon, Biden presidential campaign manager and incoming deputy chief of staff


fortune--2020-12-17--Why wealthy women of color are more confident investors than their white female peers

A country with one of the strictest COVID lockdowns is seeing a V-shaped recovery

The world’s wealthiest people are overwhelmingly men. And the world’s wealthiest women are overwhelmingly white.
But women of color—specifically Black and Latina women—who are among the economically privileged in the U.S. are nevertheless more confident in their abilities as investors than their white female peers.
According to a new survey by JPMorgan Wealth Management, shared exclusively with Fortune, wealthy Black and Latina women take more action with their finances than white women. The division in October surveyed 1,375 women investors, 779 of whom identified as white and 596 of whom identified as Black or Latina; all the women surveyed had investable asset levels of at least $150,000 and primary or shared responsibility for their households’ financial decisions.
Seventy-five percent of the women of color surveyed said they felt confident about their financial goals in the year ahead, compared to only 50% of white women. Seventy-eight percent at least in part developed their financial know-how through their own research, like online educational resources or TV shows; only 47% of white women did the same.
Throughout the coronavirus pandemic, affluent women of color have continued to show that same bold approach to their finances. Nineteen percent capitalized on market volatilities as investors and traders, while just 5% of white women did.
Wealthy Black and Latina women, it seems, have built this confidence as financial decision-makers without much help from the financial services sector. Twenty-one percent of the women of color surveyed said that when they started to invest, the available financial services either failed to meet their needs or led to a bad experience. The respondents didn’t specify whether those failures were due to the financial offerings themselves, a situation involving negative or racist treatment by a financial adviser, or something else. Fifty-five percent of the women of color agreed that investing is more challenging for people of their race.
JPMorgan undertook this research to learn how to better meet the needs of affluent women of color who come to its wealth management team, said Kelli Keough, head of digital and client solutions for JPMorgan Wealth Management. Keough adds that the bank believes that understanding racial and gender dynamics among the wealthy provides insight into broader societal issues like closing the staggering racial wealth gap.
So far, the bank has identified one key way to improve. Black and Latina women are more interested in how their wealth can support their families—and traditional services that focus largely on retirement savings are not what these investors are looking for.
To explain that difference, Keough cites some societal data that looks far beyond the small cohort of the affluent who were the focus of this study. The average Black family has $13 in wealth for every $100 held by a white family. When it comes to investing, only 33% of Black households own any stocks, compared to 61% of white households.
As part of racial groups that have faced a historic wealth gap, are Black and Latina women more determined to take action to secure their financial futures than white women are? Are affluent women of color less likely to have other members of their extended families with similar levels of wealth, and thus more focused on family? Are wealthy white women, often part of families that include wealthy white men, playing it safe and leaving the risk-taking to their husbands, fathers, and brothers?
Keough said that JPMorgan is interested in doing further research to answer these questions. One definite conclusion of this research, though, is the importance of early-in-life financial education in building the habits that help affluent Black and Latina women feel confident as investors. Eighty-four percent of Black and Latina women surveyed had savings or investment accounts established for them as children, compared to 78% of white women. Sixty-one percent of the women of color said conversations about the importance of investing were part of their upbringing; 55% of white women said the same.
“They’re taking control,” Keough says of women of color, “even though they’re saying the investing world is challenging.”


fortune--2020-12-17--Public confidence in Sweden’s controversial COVID-response architect ‘in a downward spiral’

The chief architect of Sweden’s controversial response to the pandemic is losing the confidence of the people who are supposed to be following his advice, with even the nation’s monarch signaling his disapproval.
Anders Tegnell, Sweden’s state epidemiologist and the country’s main proponent of an anti-lockdown strategy, saw his support slump 13 points in a poll published on Thursday, to 59% of those surveyed. Confidence in his employer, the Swedish Public Health Agency, sank to 52% from 68% in October, according to the poll by Ipsos and Dagens Nyheter.
“Confidence is in a downward spiral,” said Nicklas Kallebring, an analyst at Ipsos.
The latest poll follows cries for help from Sweden’s health-care workers, who are increasingly overwhelmed by a pandemic that has sickened and killed exponentially more of their countrymen than in any other Nordic country. The situation has already overwhelmed intensive care units in Stockholm, and authorities are now urgently trying to come up with contingency plans.
No Face Masks
Meanwhile, Tegnell has continued to defend Sweden’s overall strategy of avoiding lockdowns. He also argues that there’s no real evidence that face masks work, and Swedes are among the only people left going about their daily lives largely mask-free, with shops, restaurants and gyms all still open.
In an interview with broadcaster TV4, Tegnell said no one can tell whether Sweden’s strategy has failed.
“More or less all countries are struggling with this,” he said. But he acknowledged that the situation in his home country is dire.
“We are beginning to approach breaking point in many different aspects,” he said. “I understand that health-care is having a very tough time now…the staff are worn out,” all of which means “that the pressure on care is becoming very, very great.”
More broadly, the Ipsos/Dagens Nyheter poll of 1,226 voters showed that trust in the authorities, generally, has fallen to a new low of 34%.
“If confidence in the authorities disappears, fewer people will listen to the advice and recommendations they give,” Ipos’s Kallebring said. “It can have real consequences for life and death.”
Sweden’s central bank on Thursday published an estimate of the economic cost of a prolonged pandemic. Its research shows that each month by which the health crisis can be shortened will add 25 billion kronor ($3 billion) to gross domestic product, and improve public finances by 20 billion kronor.
The King
The Covid-19 death toll in Sweden stands at 7,802, the highest in the Nordic region in both absolute and per capita terms. The situation has caused such wide-spread shock in the country that it drew a rare verbal intervention from the King.
“The Swedish people have suffered enormously in difficult conditions,” King Carl XVI Gustaf told state broadcaster SVT. When it comes to the strategy deployed in Sweden, he said, “I think we have failed.”
In his interview with TV4, Tegnell said he was “surprised” by the intensity of the second wave of the pandemic.
“I think many, with me, are surprised that it has been able to come back so strongly,” he said.


fortune--2020-12-17--Sen. David Perdue’s suspicious stock success shows why members of Congress shouldn’t be allowed to t

Sen. David Perdue’s suspicious stock success shows why members of Congress shouldn’t be allowed to trade individual stocks

With the 2020 U.S. presidential election formally decided, it is still up in the air as to which political party will gain a majority in the Senate. Who controls the Senate is solely dependent on the outcomes of a runoff election and a special election, both in Georgia, in January 2021.
The Republican candidates for the two seats, senators David Perdue and Kelly Loeffler, have attracted attention for their stock-trading activities, with the former alleged to be the most prolific stock trader in Congress. Indeed, both senators from Georgia were investigated for potential insider trading, with the investigations being dropped by the Senate Ethics Committee. However, several facts surrounding these cases still need to be uncovered and highlighted.
Insider trading by representatives or senators has long been a concern among citizens and politicians alike. An attempt to curtail the likelihood of such fraudulent activity was the passage and enactment of the Stop Trading on Congressional Knowledge (STOCK) Act in April 2012. The STOCK Act prohibits trading based on privileged information (acquired through various briefings and hearings in Congress), and requires more frequent disclosure of financial transactions by members of Congress.
While that legislation is certainly a step in the right direction, it does not go nearly far enough to prevent members of Congress from exploiting their access to privileged information. The Perdue episode is a case study of why the STOCK Act is clearly insufficient, and it provides an opportunity to establish a road map for curbing such abuse.
In a previous case in March 2020, Sen. Richard Burr and several other members of Congress sold stocks worth millions of dollars prior to the market crash, which could be, at least partially, attributable to their access to privileged private information from confidential hearings and internal meetings in Congress. Although the Justice Department has closed its investigations into three other senators, the investigation of Burr is still in progress.
Given the 2,596 trades by Perdue during his six-year term, he continues to face scrutiny by several media outlets as the pandemic continues. He traded about 200 stocks in different industries, some of which fall within the purview of his position on Senate committees and his prior position in the private sector. Indeed, several pandemic-related stocks, such as Pfizer, DuPont, and Caesars Holdings, figure in his trades.
While sitting on the Cybersecurity Subcommittee, Perdue also actively bought and sold stocks of cybersecurity company FireEye when it signed a contract with the Army Cyber Command. He bought stock in BWX Technologies before taking charge of the subcommittee, and sold it after the company secured funding from the Navy.
As a member of the Senate Banking, Housing, and Urban Affairs Committee, Perdue actively traded stocks of banking companies, such as JPMorgan Chase, Bank of America, and Regions Financial Corporation, all of whom potentially benefited from his deregulation bills. This is also true of First Data Corporation, a financial services company with whom his trades seem to be particularly well-timed, given that he repurchased the stock weeks before it was acquired by Fiserv at a premium. He also sold stocks of Cardlytics, where he was a board member, after receiving an email message from its chief executive. That was followed by an announcement of executive changes and a sharp tumble of the stock price.
Against the backdrop of allegations that Perdue’s transactions involve suspicious trading, we evaluated his trading performance relative to a passive benchmark. The performance of the market as a whole is a natural benchmark, since it is well-known that it is difficult to consistently beat the market.
Senate Stock Watcher provides financial disclosure data from the Senate, which can be used to replicate Perdue’s performance. We focused on all stocks that were purchased and subsequently sold between January 2015, when Perdue entered the Senate, and April 2020, when he disposed of almost all his stocks. We then evaluated the equally weighted return performance of all stocks in Perdue’s portfolio relative to that of the total return on the S&P 500 stock market index, accounting for the reinvestment of dividends.
Patrick Augustin, Francis Cong, and Marti G. Subrahmanyam
The left panel in the graph above compares the cumulative return of the Perdue portfolio to that of the S&P 500, with growth expressed as a percentage. This evidence suggests that Perdue performed worse, by a significant margin, than a passive investment into an S&P 500 index fund would have. For example, $1 invested in 2015 into Perdue’s portfolio would not have made any money by April 2020, while the same amount invested in the aggregate stock market would have grown by approximately 50% to $1.50. In other words, the evidence suggests that he was not a superior stock picker overall.
A drastically different picture emerges in the right panel, where we focus only on the 10 stocks of Perdue’s portfolio that have been found to be potentially related to his committee oversight or his relationships with the private sector. For that subsample of stocks, $1 invested in January 2015 would have doubled by April 2020, while the market grew by about 50% over that time period. Specifically, the effective annual return of Perdue’s trading strategy is 14.05%, which is significantly larger than the 8.92% effective annual return earned by the S&P 500 total return index over this period.
Perdue’s stock-picking performance in these information-sensitive stocks is impressive. It not only beats the aggregate stock market by a significant margin, but it also surpasses the performance of all of the equity hedge fund indexes compiled by Hedge Fund Research over the same period. Clearly, such performance would be regarded as that of a star trader, and not that of a politician with other onerous duties.
Notably, Perdue also outperformed a technology index and a health care index, which experienced effective annual returns of 8.54% and 8.13%, respectively. While any investor may simply “become lucky,” such a performance may raise eyebrows, especially because it is recorded for investments in a select number of stocks for which Perdue had access to privileged information. On the other hand, if the performance is a demonstration of Perdue’s skills, then a successful career in the hedge fund industry is likely to await him after his many years of service in Congress.
It is difficult to establish a clear connection between information obtained in closed hearings of committees and the trades. Although some suspicious trading activities have been widely condemned, the fact that no member of Congress has been prosecuted under the STOCK Act reveals the challenge in proving illegal insider trading by elected politicians. Those accused of such activity often claim that their transactions are based on public information or are managed by independent trusts. The difficulty arises from the lack of clarity in U.S. securities law; indeed, years of legal practice in this area suggest that the boundaries of illegal insider trading are difficult to define. The fact is that the law ultimately fails to deter members of Congress from allegedly engaging in such activities.
Given the difficulty in policing financial markets, a simple but extreme solution would be to prohibit members of Congress from trading individual stocks altogether. This would not prohibit public officials from trading securities based on broad market indices such as ETFs, which are less sensitive to privileged private information. In a similar spirit, Sen. Jeff Merkley has introduced the Ban Conflicted Trading Act, which prohibits members of Congress from trading individual stocks but does not outlaw their ownership. A similar bill has also been introduced in the House.
It is important that these bills be enacted for citizens to be reassured that their representatives in Congress do not profit from their privileged positions.
Patrick Augustin is an associate professor of finance at the Desautels Faculty of Management at McGill University.
Francis Cong is a researcher at the Desautels Faculty of Management at McGill University.
Marti G. Subrahmanyam is the Charles E. Merrill professor of finance and economics at the Stern School of Business at New York University.


fortune--2020-12-17--PayPal joins a major investment round in ‘plug-and-play’ crypto firm Paxos

Paxos, a New York City–based cryptocurrency firm, announced a $142 million Series C funding round on Thursday that makes it one of the biggest firms in the fast-growing crypto industry. The new round, which means Paxos has raised more than $240 million in total, was led by investment firm Declaration Partners and included contributions from PayPal’s venture arm, among others.
Despite raising plenty of money, Paxos has flown under the radar compared to more prominent crypto firms like Coinbase. This is largely because the company’s focus is on providing back-end financial plumbing to other firms, including digital bank Revolut. In October, PayPal announced Paxos was helping it manage its new consumer Bitcoin offering.
Paxos also stands out because its pedigree is purely Wall Street. While most other crypto founders are steeped in Silicon Valley and libertarian culture, Paxos CEO Chad Cascarilla cut his professional teeth at Goldman Sachs and Bank of America.
In an interview with Fortune, Cascarilla said financial infrastructure is a highly regulated field, and that led him to build Paxos in close cooperation with regulators. He notes the company has access to the networks of the SWIFT money exchange network and to the Federal Reserve, and a no-action letter from the SEC to offer various crypto-related products—relationships that are unusual for an industry often defined by an outlaw mentality.
Paxos has also built a comprehensive technology stack that Cascarilla has described as a “plug-and-play” service. Its bread-and-butter product is a type of cryptocurrency known as stablecoins—a form of digital money pegged to a conventional currency like the U.S. dollar, and backed 1-to-1 by an audited pool of reserves. Paxos has issued its own tradable stablecoin, and also white-label stablecoins offered by several cryptocurrency exchanges.
While many of the details are arcane, the infrastructure Paxos is building is potentially transformative for fields beyond cryptocurrency. These include the stock market, where Paxos has obtained permission to clear digital versions of shares—a process that could dramatically improve the speed and efficiency of how equities are traded. The company has also created digital tokens for gold that are tied to actual bars of bullion held in a London bank.
Other Paxos customers include Credit Suisse and Societe Generale.
Cascarilla acknowledges that the work carried out by Paxos isn’t particularly sexy, but he says Paxos has enormous promise because it is building a base layer of technology that is gradually being employed by giant corporations and financial institutions. He also claims the company is well-positioned because its customers don’t regard it as a potential competitor.
Paxos declined to provide details of its valuation or how much money it’s making, though Cascarilla noted the new capital infusion will allow it room to become profitable in coming years.
Other investors in Paxos include Mithril Capital, RIT Capital Partners plc, RRE Ventures, and Liberty City Ventures.


fortune--2020-12-17--Why the U.S. needs to help the world get vaccinated

Good morning. David Meyer here in Berlin, filling in for Alan.
It’s certainly wonderful that COVID-19 vaccines are rolling out in wealthy countries this month—Germany will commence vaccinations just after Christmas, pending European Medicines Agency approval that is expected Monday—but what of lower-income countries?
A great deal rests on the shoulders of the World Health Organization-affiliated COVAX facility, which is subsidizing bulk buys for such countries. As Cambodia just demonstrated by shunning China’s Sinovac shots, many countries would rather lean on COVAX than offer up their citizens for Chinese trials (Beijing is having to test its vaccines outside China, because its success in tackling the pandemic undermines the effectiveness of domestic trials.)
But COVAX is in big trouble, largely due to underfunding. Reuters reported yesterday that this factor, plus vaccine trial setbacks, distribution challenges and the complexity of supply contracts, meant billions of people could have no access to a vaccine until 2024.
Just to reach its target of vaccinating a fifth of people in lower-income countries next year, COVAX needs $4.9 billion on top of the $2.1 billion already in its coffers.
So far, the biggest heroes in this story are the U.K. and the European Union—the former has pledged over $700 million for COVAX, and the EU has so far allocated over $1 billion to the effort—plus wealthy donors such as the Bill & Melinda Gates Foundation, which has committed $156 million.
Where’s the U.S. in all this? Nowhere, yet—the America-first Trump administration shunned COVAX back in September, because the World Health Organization is involved. The big question now is whether President-elect Biden will muster the U.S.’s considerable financial might (as the EU has asked him to do) to aid this globally crucial scheme.
Of course, Biden’s first concern will need to be the U.S.’s own terrifying COVID landscape. But make no mistake, the success or otherwise of COVAX will have considerable repercussions for the U.S., as it will for every other country.
COVID-19 is a pandemic, and it won’t be truly under control until it’s been stamped out everywhere. Even as wealthy countries immunize their populations, many people there cannot or will not get vaccinated; when the world’s borders open up again, they will remain vulnerable. That means the U.S.’s return to normal does not just rest on what happens within America’s borders.
Biden’s a multilateralist, and it’s this aspect of his looming presidency that most appeals to the rest of the world. There would be no better way for him to revive the U.S.’s standing on the international stage, and to keep the U.S. safe, than to help make COVAX a success.
More news below.
David Meyer
@superglaze
david.meyer@fortune.com
TOP NEWS
States vs Google
Ten U.S. states are suing Google for anticompetitive conduct. According to Texas state Attorney General Ken Paxton, "Google repeatedly used its monopolistic power to control pricing, engage in market collusions to rig auctions in a tremendous violation of justice." This adds to the pressure of the DoJ's antitrust case against Google, launched in October. The FTC and most states also recently sued to break up Facebook—which, per the new suit, colluded with Google to stymie rival ad exchanges. Fortune
Bitcoin surge
Bitcoin hit record levels yesterday, and it's gained about 10% since—at the time of writing, one bitcoin is worth well over $22,000. There's no one event that can explain the surge, apart from a wave of speculative zeal. Anyhow, this is the fourth significant Bitcoin boom in the OG cryptocurrency's 11-year history. Fortune
Rio Tinto CEO
Rio Tinto, whose CEO Jean-Sebastien Jacques resigned in September over the mining giant's blasting of sacred Aboriginal sites in Australia, has named his replacement. It's CFO Jakob Stausholm, who will take the top job on January 1. Longtime Rio veteran Peter Cunningham will assume the financial position. Bloomberg
Cyber attack
The major cyber attack on U.S. government agencies and companies is still ongoing days after its discovery, according to the FBI and other security agencies. "This is a developing situation, and while we continue to work to understand the full extent of this campaign, we know this compromise has affected networks within the federal government," they said. It's likely that a nation state, possibly Russia, is responsible. Financial Times
AROUND THE WATER COOLER
Chip shortage
A series of unfortunate events has led to a chip shortage that is panicking manufacturers of cars, TVs and smartphones alike. The shortage is delaying productions by weeks or months. The main cause is underinvestment that’s become clear as demand picks up at an unexpected pace, but others include Huawei's bulk-buying, a Japanese chip plant fire, a strike at France's STMicroelectronics, and Southeast Asia's coronavirus lockdowns. Reuters
Luckin settlement
Luckin Coffee will pay $180 million to settle SEC fraud claims over the Chinese company's book-cooking. The regulator said Luckin had not admitted nor denied the charges, though it's worth noting that Luckin did indeed fess up to the fabrication of 2019 sales figures back in April, and it sacked its CEO and COO over the incident shortly after. Wall Street Journal
Locust swarms
The Horn of Africa and Yemen are suffering a second wave of locust plagues that threatens to spread on both sides of the Red Sea. This relentless year has already hammered East Africa with its worst locust swarms in seven decades, laying waste to crops across the region. This fresh assault could be just as bad, U.N. officials warn. BBC
Future ads
IBM VP Bob Lord writes for Fortune that the demise of third-party tracking cookies, which will be brought on by Apple and Google policy changes in early 2021 and late 2022 respectively, is a good thing, because A.I.-derived ads will provide "better value for consumers, advertisers, and publishers alike." Lord: "My company is partnering with a number of others to create a digital advertising ecosystem, based on A.I., that is open, transparent, and privacy-first—instead of walled and mysterious." Fortune
This edition of CEO Daily was edited by David Meyer.


fortune--2020-12-17--How high can Bitcoin go? The bulls say this rally has only just begun

This is the web version of Bull Sheet, a no-nonsense daily newsletter on what’s happening in the markets. Sign up to get it delivered free to your inbox.
Good morning, Bull Sheeters. There’s incremental—ish—progress on a new stimulus package in Washington, and on a post-Brexit trade deal. That’s providing abundant reason for the bulls to send global stocks and futures higher this morning.
Speaking of bulls… we got perhaps the most bullish call of the year yesterday on Bitcoin. How bullish? Would you believe, in the foreseeable future, a single Bitcoin could be worth several hundred thousand bucks— enough to buy you 1.17647059 Ferrari GTS convertible roadsters? If you want the Stradale Spider, you’ll need a second Bitcoin. (Whether a Ferrari dealer will take your Bitcoin, dear reader, is an entirely different thought experiment.)
Let’s see what’s moving markets (in hard currency terms).
Markets update
Asia
The major Asia indexes are higher in afternoon trading with the Shanghai Composite up 1.1% .
are higher in afternoon trading with the up . The woes of Luckin Coffee continue. The SEC yesterday slapped a $180 million penalty on Nasdaq-delisted Chinese coffee chain after discovering it went to elaborate means to deceive investors and regulators. Luckin’s malfeasance first came to light thanks to some dogged short activists… Serious question: how’s Luckin’s coffee? Any good? Anybody know?
continue. The SEC yesterday slapped a penalty on Chinese coffee chain after discovering it went to elaborate means to deceive investors and regulators. Luckin’s malfeasance first came to light thanks to some dogged short activists… Serious question: how’s Luckin’s coffee? Any good? Anybody know? New Zealand, under Prime Minister Jacinda Ardern, has become something of a global model for fighting COVID. The country’s economy has bounced back sharply from pandemic lows, achieving what appears to be a solid V-shaped recovery.
Europe
The European bourses climbed out of the gates with the Stoxx Europe 600 up 0.5% at the open.
climbed out of the gates with the up at the open. The British pound continues to climb on hopes a post-Brexit trade deal . Fishing rights , which amounts to an infinitesimal sliver of trade between the neighbors, is the last big holdup.
continues to climb on hopes a . , which amounts to an infinitesimal sliver of trade between the neighbors, is the last big holdup. Alas, it’s not a fully rosy picture. Nissan is pulling out of a pact to make its new EV, the Ariya, in Britain. The reason: concerns of higher tariffs in a post-Brexit world.
U.S.
U.S. futures point to a solid open this morning. That’s after the S&P 500 and Nasdaq closed higher on Wednesday on, get this, hopes of an imminent stimulus deal, making this perhaps the lengthiest buy-the-rumor trade in stock market history.
point to a solid open this morning. That’s after the and closed higher on Wednesday on, get this, hopes of an imminent stimulus deal, making this perhaps the lengthiest buy-the-rumor trade in stock market history. Shares in Alphabet’s Google and Facebook closed essentially flat yesterday after Texas filed an antitrust lawsuit accusing the search giant of colluding with Facebook to put a chokehold on the online ad market .
. In this everything-goes-up market, here’s an unfathomable misfit of a headline: Online retailer Wish falls in 2020’s worst debut for big U.S. IPO.
Elsewhere
Gold is up, trading around $1,880/ounce .
is up, trading around . The dollar is down.
is down. Crude is cruising, with Brent futures trading above $51.25/barrel .
is cruising, with futures trading above . Bitcoin bulls are lighting fancy cigars with wads of worthless dollar bills this morning. The crypto currency is up an additional 16%, trading, at one point, above $23,000. Next stop? $400,000 (that’s not a typo), says Guggenheim Investment’s Scott Minerd.
***
Buzzworthy
Running the numbers, Part I
Running the numbers, Part II
Running the numbers, Part III
Herd on the Street
***
Postscript
A programming note: Fortune‘s newsletters will go on hiatus over the next two weeks in observance of the Christmas and New Year’s holidays. As such, tomorrow’s edition will be the final Bull Sheet newsletter for 2020.
***
Have a nice day, everyone. I’ll see you here tomorrow. But first…there’s more news below.
Bernhard Warner
@BernhardWarner
Bernhard.Warner@Fortune.com
As always, you can write to bullsheet@fortune.com or reply to this email with suggestions and feedback.
Today's reads
Crypto securities. Lost in the euphoric headlines over Bitcoin valuations yesterday was a fascinating piece of news out of Germany. The country is giving the green light to electronic-only securities, "a move that paves the way for 'crypto securities,'” writes Fortune's David Meyer.
Santa Claus rally? The S&P has been trading mostly sideways in December, but that doesn't mean 2020 has already seen its last all-time high. LPL's Ryan Detrick, one of the best markets historians out there, presents an interesting case for why investors shouldn't count out a late-December rally.
Some of these stories require a subscription to access. There is a discount offer for our loyal readers if you use this link to sign up. Thank you for supporting our journalism.
Market candy
Quote of the day
As a broker-dealer, Robinhood has a duty to protect its customers and their money... Treating this like a game and luring young and inexperienced customers to make more and more trades is not only unethical, but also falls far short of the standards we require in Massachusetts.
That's William Galvin, Secretary of the Commonwealth of Massachusetts, who announced yesterday a lawsuit against Robinhood, accusing the popular investing app of aggressively marketing to novice investors, exposing them to "unnecessary trading risks."


fortune--2020-12-17--Chinese consumers are spending again—but they remain wary of restaurants

As the first in and the first out of the pandemic, China’s economy has staged a dramatic recovery this year. It surged 3.2% and 4.9% in the second and third quarters, respectively, after plunging 6.8% in the first, compared with the same periods last year. But spending at restaurants has been especially slow to bounce back.
On Wednesday, China’s National Bureau of Statistics (NBS) released economic data for November. While retail sales were up 5.8% year on year overall, sales for catering—which includes dining in restaurants as well as takeaway—shrank 0.6% compared with last year, with consumers spending roughly $76 billion. The slight decline marked a reversal from October, when catering services increased 0.8% over 2019 totals.
“People probably spent more during the weeklong national holiday in October and then tightened their spending again in November, which is one reason why November sales were weak compared to the month before,” says Bo Zhuang, chief China economist at TS Lombard.
But the year-on-year decline points to a pandemic-induced hesitancy to dine out, indicating that, despite China’s success in taming COVID-19, members of the public are still wary of one another.
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When the coronavirus outbreak began in China, local authorities ordered restaurants to close as part of social distancing measures. Although China’s food delivery services—like Ele.me and Meituan—helped restaurants retain some of their business as some city lockdowns stretched on for months, to-go orders were never a complete replacement for money earned from in-restaurant dining.
That the pandemic began just before the Chinese New Year was another blow to the industry. Families canceled their reunion dinners in droves as local authorities banned banquets and other large gatherings. According to the NBS, the catering industry made 15.5% of its annual revenue during the Chinese New Year in 2019. But in the first two months of 2020—the period covering the Chinese New Year—revenue across the catering industry plummeted 43.1%.
Rules on group dining are now easing, but consumers remain cautious about returning to restaurants, where contagion can be facilitated by poor air circulation and the necessary act of removing masks to eat.
In July, research from China showed how a single COVID-19 carrier at a restaurant in Guangzhou infected 10 other diners—some seated 10 feet away. The venue’s air conditioner carried saliva from patient zero across the dining tables, spreading the infection to three families.
Imogen Page-Jarrett, a Beijing-based research analyst with the Economist Intelligence Unit (EIU), says there’s been “a shift in consumer behavior, because there was such a long time when people weren’t allowed to eat out.
“Chinese consumers are still cautious about eating out, especially in large groups,” Page-Jarrett says.
To be sure, some people have returned to pre-pandemic lifestyles. Earlier this month, a wedding banquet in China’s southwestern Sichuan province featured 300 guests. But the celebration turned into a cautionary tale after a pilot in attendance tested positive for COVID-19. Now the 300 guests must undergo testing. The hotel that hosted the banquet is temporarily closed, and its staff are quarantined.
Safety concerns aside, people are dining out less because the long lockdowns made them more accustomed to eating at home. Another factor is the pandemic-related slowdown in household income this year, Page-Jarrett says. Household income is growing at roughly 2% this year, compared with 8% in 2019.
The blow to consumer spending power also means restaurants can’t recoup losses by raising prices. In April, famous brands such as hot-pot chain Haidilao faced a backlash on social media for upping its menu prices. The furor beat the restaurateurs into retreat; executives issued public apologies and promptly returned prices to pre-pandemic levels.
But despite the hardships suffered by the catering industry this year, EIU expects dining to lead China’s retail sales growth next year as consumer confidence returns. The Hong Kong–listed Haidilao—China’s leading hot-pot chain by sales—is on track to open 400 additional locations this year, mostly in China. At the beginning of the year, Haidilao had targeted opening just 300.
Haidilao chief strategy officer Zhou Zhaocheng told Reuters the pandemic is “an opportunity for us” as the collapse of other restaurateurs has increased Haidilao’s bargaining power when negotiating rent with new landlords.