fortune--2020-07-14--A newborn caught COVID-19 from his mother through the placenta, French doctors say

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A group of researchers in France say they have determined the first clear case of a newborn infected with COVID-19 through its mother’s placenta, according to a case study published on Tuesday.
The study, published in Nature Communications, tracks the birth of a boy in a Paris hospital in March by cesarean section, after his mother was brought to the hospital with symptoms of COVID-19 in the days before his birth. Extensive blood testing of both the mother, the newborn, placenta, and amniotic fluid revealed the baby had contracted COVID-19 through the mother’s placenta, the researchers said.
The newborn was placed in immediate isolation, but within days of the birth, he began to exhibit distress and muscle spasms characteristic with a neurological injury, which the doctors attributed to the virus. Shortly afterward, the newborn’s health began to improve, and both the mother and baby subsequently recovered and were discharged from the hospital.
The case adds to the growing medical debate over whether newborns, plus expectant mothers and fetuses, face an elevated risk of coronavirus infection. On Tuesday, an NIH study said placental transmission of COVID is a rarity, casting further confusion on the extent of the medical risk to expectant mothers and their offspring.
While other case studies have tracked babies born with COVID-19, it hasn’t been clear exactly how newborns contracted the virus—whether it was a prenatal infection, or through the labor, or after the birth. An early study in February in The Lancet, which tracked the birth of nine babies to COVID-19 positive mothers in Wuhan, found no evidence that COVID-19 could be passed to the baby in the womb.
Researchers polled by the Science Media Centre on the study noted that there is still no evidence that COVID-19 represents a heightened risk factor to newborns, and added that this baby’s symptoms could have been attributed to other factors.
“It is unclear whether any of the subsequent symptoms and signs observed in the baby were due to SARS-CoV-2 infection, or due to events that occurred around the time of his birth,” said Marian Knight, professor of child and maternal health at the University of Oxford and head of national surveillance on pregnancy and COVID-19 in the U.K.
“Among the many thousands of babies born to mothers with SARS-CoV-2 infection, a very few have been reported to also have a positive test for SARS-CoV-2—around 1–2%. As in this report, most babies do not appear to become severely unwell,” she noted.
“There isn’t any evidence that the virus is dangerous for babies, though we cannot exclude the possibility that it can cause fetal or neonatal infection that can be associated with really rare conditions as have been reported in children and adults with COVID-19,” said Christoph Lees, professor of obstetrics at Imperial College London.
“To put it another way, the great majority of women who test positive for SARS-CoV-2 or indeed have COVID-19 have normal pregnancy outcomes with healthy babies.”
The CDC currently says that transmission to newborn babies is thought to occur largely through respiratory droplets from mothers or other caregivers immediately after the birth.
It adds that while young babies may be at greater risk from COVID-19 than children older than a year, case studies are limited, and common symptoms are difficult to attribute conclusively to the virus.


fortune--2020-07-14--Harvey Weinstein $19 million sex-abuse settlement rejected by federal judge

How coronavirus could lead to an unexpected kind of diversity

A federal judge won’t give preliminary approval to a proposed $18.9 million settlement between Harvey Weinstein and nine women who say he sexually assaulted or abused them, saying the tentative deal isn’t fair to other women.
U.S. District Judge Alvin Hellerstein in New York said he was rejecting the settlement because the agreement tries to create a group case that covers claims by women who asked to be excluded from a deal. He said the proposal unfairly lumps together women who simply met Weinstein with those who were sexually assaulted by him.
“Not every woman was captured in the same way,” Hellerstein said. “Your settlement would create inequality among all of those people.”
Lawyers for women who opted out of the settlement lauded the decision.
“We have been saying for over a year and a half that the settlement terms and conditions were unfair and should never be imposed on sexual assault survivors,” said Douglas Wigdor, who represents six women who says they were abused by Weinstein. “On behalf of our clients, we look forward to pursuing justice against Harvey Weinstein and his many enablers.”
The women agreeing to the proposed settlement — female actors and screenwriters — sued the movie mogul in December 2017, alleging his namesake company, its officers and directors, and Miramax, the studio he once ran, enabled his predatory conduct. The only remaining defendant in the case is Weinstein, after others won dismissals.
Weinstein is currently serving a 23-year sentence at a maximum security prison in upstate New York after his conviction at a trial this year.


fortune--2020-07-14--Quest Diagnostics says the average turnaround for coronavirus test results is now 7 days or more

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A surge in coronavirus cases around the country has fueled increased demand for COVID-19 tests, significantly increasing the time it takes to receive results, according to lab testing giant Quest Diagnostics.
The company said in an update that the average turnaround for a COVID test is now seven or more days for non-high priority patients. For so-called “priority 1” patients, which includes patients who are already in the hospital and therefore at higher risk of coronavirus exposure, those who show active and serious symptoms, health care workers who have COVID-19 symptoms, and people who are about to undergo surgeries, Quest says that the average turnaround time for a test result is slightly more than one day.
The situation isn’t going to improve any time soon amidst the national surge in cases. Hospitals and ICUs in certain states like Texas, Florida, Arizona, and California are being overwhelmed with patients. But it’s not just the hot spots that dominate the news: According to a Fortune analysis of New York Times data as of July 9, 17 states have seen an average daily increase of at least 200 cases when compared with two weeks ago.
“[W]e want patients and health care providers to know that we will not be in a position to reduce our turnaround times as long as cases of COVID-19 continue to increase dramatically across much of the United States,” wrote Quest. “This is not just a Quest issue. The surge in COVID-19 cases affects the laboratory industry as a whole.”
As a result, the firm is asking health care providers and urgent care centers that administer the tests to prioritize which tests get sent to the lab, suggesting they “limit the number of specimens they forward for patients who are low risk.”
The lag time in returning test results leads to a vicious cycle. For instance, a person who tests positive but doesn’t know it for 10 days and is asymptomatic may transmit coronavirus to other people in the meantime. Knowing one’s status earlier could encourage them to take safety precautions such as self-isolation.
There have been nearly 3.4 million confirmed coronavirus cases in the U.S. and more than 135,000 deaths, according to Johns Hopkins.


fortune--2020-07-14--What’s the difference between A.I. veterans and A.I. virgins?

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Professional services firm Deloitte has a new report out this morning about A.I. adoption by corporations, and it is worth reading. (You can view the report here.) The main takeaway is that A.I. is becoming increasingly ubiquitous, and as it does, companies are going to have to think hard about how they can use the technology to differentiate themselves.
“Companies feel their window of competitive advantage is eroding,” Jeff Loucks, who heads Deloitte’s Center for Technology, Media and Telecommunications, which conducted the research behind the report, tells me. “It is harder to gain an advantage by simply being in the game.”
The report classifies businesses into three broad categories:
In rough terms, about a quarter of businesses are what Deloitte calls “seasoned” A.I. adopters. These companies have put at least five A.I. systems into production and have a high degree of expertise in how to build, maintain and manage them.
About 50% of companies Deloitte defines as “skilled” adopters: They’ve put between one and five major A.I. systems into production and have some expertise at how to run and manage them.
Then there’s the final quarter of firms, which Deloitte calls A.I. “starter,” who are still playing around with pilot projects and don’t have as much confidence in how to build or manage their A.I. capabilities.
Loucks and his colleague Nitin Mittal, the partner in charge of what Deloitte calls its analytics and cognitive business, say the firm has noticed a few key differences between those veteran A.I. adopters and the rest of the pack: The more experienced business are more likely to see A.I. as a strategic technology. They are more likely to be using it to pursue new business models and offer new kinds of services, Loucks says, as well as to increase revenues in existing ones. In contrast, the A.I. novices, he says, are more likely to be focused on using A.I. to reduce costs and cut headcount.
That may explain why, while all companies are investing heavily in A.I., the more experienced firms are spending even more, with 68% saying they have spent more than $20 million. The A.I. veterans are also reporting faster gains from deploying A.I.: 81% said they expected to earn that investment back within two years.
The other big difference, Loucks says, is that the experienced firms have spent a lot more time thinking about what can go wrong—everything from algorithmic bias to operational disruption if the software fails to thinking about how to protect data from hackers—and have put in place frameworks, policies and procedures to mitigate those risks. Loucks says these companies are more likely to conduct audits of both their data and their algorithms, continually monitor their A.I. models to detect the situations where reality is deviating from the data the software was trained on (a phenomenon known as “model drift”), and train staff in issues around A.I. ethics.
That’s important because 56% of those surveyed told Deloitte that their organizations are slowing down the adoption of A.I. because of concerns about emerging risks. Regulation is also a big issue, with 57% of the executives Deloitte contacted saying they have “major” or “extreme” concerns about how regulation could affect their A.I. projects.
Deloitte also asked companies about their struggle to hire people with the right A.I. skills and shared some of those results exclusively with Eye on A.I. More than half of respondents—54%—said the skills gap was “moderate,” “major” or “extreme.” But, Loucks says, the number of companies saying they have an acute need for data scientists, A.I. researchers and machine learning engineers has actually come down slightly from last year’s survey. He says this is the result of the increasing ability of companies to implement off-the-shelf solutions for many machine learning problems that any software engineer can implement without specific data science or machine learning skills.
“But where skill gap has opened is around individuals with both business savvy and technology experience,” Mittal says. He says these people are essential to what he calls “mainstreaming” A.I. within an organization. These are the people who understand how A.I. can be used strategically by the business. They are also the people who lead the teams who actually have to use the A.I. software on a daily basis, and who will depend on its results.
As always, the business that wins is not necessarily the one with the best technology. It is about having the right people.
And with that, here’s the rest of this week’s A.I. news.
Jeremy Kahn
@Jeremyakahn
jeremy.kahn@fortune.com
A.I. IN THE NEWS
U.K. and Australia announce investigations into ClearviewAI. The top data privacy regulators in both countries announced investigations into how the controversial facial recognition startup gathers and uses data. The move follows an announcement from Canada's information commissioner that the New York-based company had agreed to stop operating in the country following a regulatory investigation. Clearview, whose software has been sold to a number of law enforcement agencies in the U.S. and around the globe, has said it initially built its huge database of faces by scraping publicly available social-media images from the Internet, sometimes in apparent violation of those sites' terms of service. The company is also facing lawsuits in the state of Illinois for violating its data privacy law.
The second case of a man wrongly arrested due to facial recognition software emerges. Earlier this month, news emerged about a Detroit man who had been wrongly arrested in January for theft after facial recognition software the police were using incorrectly identified him. At the time, it was thought to be the first documented case in the U.S. in which someone had been wrongly arrested due this kind of error. But now an even earlier case—also in Detroit—has surfaced, with The Detroit Free Press reporting that a 25-year old man was also wrongly arrested for theft in May 2019. In both cases, the men arrested were Black. Many commercially-available facial recognition software has been shown to be significantly less accurate in identifying dark-skinned people. In both cases, the men were eventually released and the charges against them dismissed once it became clear the police had the wrong person. But both cases raise worrisome questions about the continued police use of the technology.
Nvidia overtakes Intel to become the most valuable chipmaker. Nvidia, whose graphics processing chips have become a mainstay of A.I. computing, is now the world's most valuable semiconductor company, with a market capitalization of $257.8 billion, Reuters reports. The Santa Clara, California-based company has narrowly edged past Intel, which is worth about $252 billion. Intel, long dominant in personal computers and data center servers, has struggled to gain a foothold in new markets such as mobile, automotive, computer gaming and A.I.
International Baccalaureate algorithm is under fire. After the pandemic forced the cancellation of this year's International Baccalaureate (IB) examinations, which are taken by 170,000 students each year, the organization that runs the two-year certification program decided to use an algorithm to predict what grades the students would have gotten on the exam and just award them that grade. High school students taking the IB program use them in applying for university, and, in some cases, admissions offers are contingent on students receiving a certain grade. Well—and you didn't need an algorithm to predict this—the algorithm's decisions have made a lot of students and teachers unhappy, with many saying students received grades far below what the students and teachers expected, according to The Financial Times. The IB Organization has said very little about how the algorithm works, but said it took into account the individual student's performance on coursework, predicted grades, as well as how their school had done in the past. As Wired said in its story on the ensuing uproar, parents and teachers are left "wondering how the system was designed and tested, why its workings weren’t fully disclosed, and whether it makes sense to use a formula to determine the grades that can shape a person’s opportunities in life."
UiPath joins Europe's small group of technology decacorns. The robotic process automation company UiPath announced it raised an additional $225 million in a funding round led by venture firm Alkeon. Others participating include Accel, Coatue, Dragoneer, IVP, Madrona Venture Group, Sequoia Capital, Tencent, Tiger Global, Wellington, and funds and accounts advised by T. Rowe Price Associates. The company said the new funding valued it at $10.2 billion, making the company one of the few European technology firms to achieve that lofty valuation—and one of the very first to do so before being publicly listed. The company, which was already one of the fastest growing enterprise software companies in the world, says that the pandemic has given its growth even more of a boost as businesses turn to automation to cut costs and accelerate digital transformation efforts.
A.I. startup Anduril raises $200 million in a fund raise that values company at $1.9 billion. The A.I. startup, whose co-founders include Palmer Luckey, the eccentric entrepreneur who created VR company Oculus, received $200 million in additional venture capital funding from Andreessen Horowitz, joined by 8VC, Elad Gil, Founders Fund, General Catalyst, Human Capital, Lux Capital, and Valor Equity Partners. The funding round valued the company at $1.9 billion. Anduril sells A.I.-enabled drones and surveillance towers to the U.S. military and law enforcement agencies. For more on the deal, read my Fortune colleague Lucinda Shen, who covered the funding round in our sister newsletter Term Sheet.
EYE ON A.I. TALENT
Axiologic Solutions, a Fairfax, Virginia, company that sells IT solutions to U.S. national security and intelligence agencies has appointed Louis Chabot as chief technology officer, according to trade publication AI Authority. Chabot was previously lead solutions architect at Perspecta Inc.
Ava, a London-based security company, has appointed Rick Snyder to its board of directors. Snyder was previously a senior vice president at Cisco.
Cujo AI, a cybersecurity company in El Segundo, California, has appointed Jeremy Otis as general counsel, the company said. Otis had been legal director for the Americas for Wärtsilä Marine, a marine technology company.
Jobvite, an Indianapolis, Indiana, company which makes software to help companies with hiring, said it had acquired the A.I. and data science team at data analytics company Predictive Partner. As part of the acquisition, Morgan Llewellyn, Predictive Partner's CEO, will become Jobvite's chief data scientist.
Salesforce chief scientist Richard Socher, who has helped infuse A.I. into a number of Salesforce products and conducted A.I. research on natural language processing and other topics, announced on Twitter he is leaving the company after four years to start his own company.
EYE ON A.I. RESEARCH
How do you make A.I. explainable? That's a big question for anyone hoping to deploy machine learning systems in real life. The results of many neural network-based approaches to A.I. are difficult to explain, especially if one wants an explanation for why a model made one particular prediction in one particular case. And many machine learning models that are more interpretable don't perform as well as the black box models. The whole idea of explanation itself is also fraught, with the needs of engineers, data scientists, end users and the person who may be affected by the algorithm's prediction all having different needs for different levels of explanation.
Recently, the Partnership on AI in San Francisco, the Alan Turing Institute in London, and the University of Cambridge convened 33 academics, industry experts, legal scholars, and policymakers for a day-long workshop to explore the topic. They reported some of their findings in a paper published this past week on the research repository Arxiv.org. Here were some of their key takeaways:
"Explainability tools cannot be developed without regard to the context in which they will be deployed."
When developing explainable machine learning, consider what sorts of explanations are actually valuable to those who are going to be using the algorithm.
Consider including key stakeholders in the development of explainable A.I. solutions so that their needs can be met.
Develop a training program to help people understand what machine learning is and what its limitations are.
Develop ways to quantify how certain an algorithm is of any given prediction and ways to convey that uncertainty to stakeholders who are using the algorithm. (This will give people a better sense of when they might need to overrule the prediction the model is making.)
Creating flexible explanation techniques that stakeholders can toggle, and building models that can update based on stakeholder feedback, will encourage adoption.
"When designing an explainable ML tools, include how the explanations might be acted upon as a central design question. If the explanations motivate the average user to game or distrust the system, perhaps it points to the model making predictions on unfair/unimportant attributes."
Since people will change their behavior as a result of deploying the algorithm, "successful deployment will require frequent accounting for these adaptations."
FORTUNE ON A.I.
Global IT spending forecast to fall 7% amid COVID-19 cuts—by Jeremy Kahn
Drone industry flies higher as COVID-19 fuels demand for remote services—by Aaron Pressman
Upstart electric-truck maker Rivian raises $2.5 billion in new backing—by Aaron Pressman
Do you trust Big Tech with your personal health data?—by Lance Lambert
BRAIN FOOD
The International Conference on Machine Learning (ICML), always one of the year's biggest A.I. research confabs, is underway. The conference had been scheduled to take place in Vienna, Austria, but moved online due to Covid-19.
There are too many interesting talks and papers presented at the conference to do much—or any—of it justice here. But I will just highlight one of the invited talks because it seemed particularly inspiring in what can seem like dark times: Lester Mackey, a machine learning researcher at Microsoft as well as an adjunct professor at Stanford University, was invited to give a talk on "Doing Some Good With Machine Learning."
Mackey says he actually became a machine learning researcher because he wanted to make a positive impact on the world. In his talk, he provided a "tour" of his various efforts over the past decade, as he progressed from grad student to PhD. to established researcher, to use machine learning for social good.
His track record is impressive. He's been involved in projects to improve the seismic detection of violations of nuclear proliferation treaties, to better predict the progression of patients with motor neurone disease (ALS), to improve financial coaching for those with low-incomes, to predict and prioritize patients for early healthcare interventions, to track opiate consumption worldwide, to help non-profits better understand client feedback, to better manage scarce water resources in the western U.S. with more accurate short-term climate forecasting, and, finally, to help forecast the progression of the COVID-19 pandemic in the U.S.
Mackey exhorted his listeners to take on four challenges:


fortune--2020-07-14--How the coronavirus has impacted VC dealmaking in 2020 so far

The pandemic didn’t hit stateside full force until March, marking the second quarter as the first period of purely coronavirus-impacted data for the venture industry.
The bottom line: While venture capitalists are open for business, it’s most certainly not a typical year. Deal activity in the second quarter slowed to $34.3 billion across 2,197 deals, a 23.2% decline in deal count from the first quarter of 2020, according to PitchBook and NVCA’s Venture Monitor, which released Tuesday.
Looking at the granules, the pandemic created a funding environment with no comparison.
Early on, investors expected late-stage company valuations to take a hit in a slowdown, as many companies nearing an exit have their valuations tied to those of public firms. But, perhaps as a result of a strong level of dry powder and the market’s rapid bounce back this time around, late-stage activity is on track to surpass 2019.
Late-stage mega deals, which the report defines as raises of over $100 million, grew to over 100 in the first half of 2020. That comes as investors double down on companies bulging at the seams as COVID-19 puts consumers online (think the likes of online grocery delivery company Instacart) or seek out companies they think are currently trading at a discount but will emerge from the virus (think home-sharing company Airbnb). Some 175 deals closed in all of 2019.
Other notable takeaways:
In the past, corporate venture investors were among the first to bow out in financially difficult times. Not so this time around: Corporate venture capitalists participated in 26% of all U.S. deals, setting a new high. Private equity firms participated in 13.9%, another record.
But not everything is rosy. Exits of venture capital-backed companies are on pace for their lowest since 2011—which could mean lower liquidity for Limited Partners. “An extended economic decline would change some longer-term behaviors around commitments to venture capital,” per the report.
Going up against Tesla: Instead of raising in private markets, Fisker, an electric SUV maker, decided to merge with a Special Purpose Acquisition Company backed by Apollo Global Management. This isn’t founder Henrik Fisker’s first rodeo. He designed cars for BMW and Aston Martin, and took a fall when his first EV effort, Fisker Automotive, filed for bankruptcy a decade earlier.
So why go public? “Having done this before, I just don’t feel it’s a good idea to try and raise so much capital in private rounds,” Fisker told my colleague, Aaron Pressman. “One round can be delayed, for whatever reason, and that means your product launch gets delayed, which then means you need to raise more money. I just don’t feel this works.” Read more.
Read more.
Lucinda Shen
Twitter: @shenlucinda
Email: lucinda.shen@fortune.com
VENTURES DEALS
- Oatly, a Swedish oat milk maker, raised $200 million. Blackstone Growth led the round. Other investors include Oprah Winfrey, Roc Nation, Natalie Portman, Howard Schultz (Starbucks), Orkila Capital and Rabo Corporate Investments
- Karma Kitchen, a UK-based cloud kitchen, raised £252 million ($318 million) in Series A funding. Investors include Vengrove Asset Management. Read more.
- Medly Pharmacy, a New York-based digital pharmacy, raised $100 million in Series B funding. Volition Capital and Greycroft led the round and were joined by investors including Horsley Bridge and Lerer Hippeau.
- Skydio, a U.S. producer of autonomous drones, raised $100 million in Series C funding. Next47 led the round.
- Pricefx, a cloud-native pricing software, raised $65 million in Series C funding. Apax Digital led the round and was joined by investors including Digital+ Partners.
- Lattice, a San Francisco-based human resources platform, raised $45 million in Series D funding. Tiger Global led the round and was joined by investors including Frontline Ventures, Founders Fund, Khosla Ventures, Thrive Capital Partners, Fuel Capital, and Y Combinator.
- Nasuni, a Boston-based cloud file storage company, raised $25 million from investors including Family Offices, Venture Capital and Corporate Venture.
- Traceable, an application security monitoring platform launched by AppDynamics CEO Jyoti Bansal, raised $20 million in Series A funding from Unusual Ventures and BIG Labs.
- TileDB, Inc., a Cambridge, Mass.-based data engine, raised $15 million in Series A funding. Two Bear Capital led the round and was joined by investors including Uncorrelated Ventures, Nexus Venture Partners, Intel Capital, and Big Pi Ventures.
- Movano Inc., a Pleasanton, Calif. Health tech company for those with chronic health conditions, raised $10 million in a bridge round led by Tri-Valley Ventures.
- Userlane, a Munich-based software adoption platform, raised €10 million ($11.3 million) in Series B funding. Five Elms Capital led the round and was joined by investors including Capnamic, High-Tech Gründerfonds,, and Commerzbank Group.
- Pattern Bioscience, an Austin-based bacterial identification and susceptibility testing firm, raised $9 million in extended Series B funding. Illumina Ventures led the round and was joined by investors including Omnimed Capital.
- CyberSmart, a London-based cybersecurity company, raised £5.5 million in Series A funding. IQ Capital led the round.
- MadKudu, a Mountainview, Calif.-based AI-based predictive analytics and marketing firm, raised $5.5 million in Series A funding. Benhamou Global Ventures led the round and was joined by investors including Alven and Partech.
- BuyBack Booth, a Montreal-based robotics company, raised $5.2 million in seed funding. Brightspark Capital led the round.
- Liteboxer, a New York-based boxing platform, raised $4 million in seed funding. Will Ventures led the round.
- Orbital Witness, a U.K.-based proptech startup, raised £3.3 million ($4 million) in seed funding. LocalGlobe and Outward VC led the round and were joined by Seedcamp and JLL Spark.
Bbot Inc., a New York-based restaurant and hospitality tech startup, raised $3 million in seed funding. Craft Ventures led the round.
- Digital Asset, a New York-based creator of open source DAML smart contract language, raised an undisclosed amount from VMware as part of its Series C round.
PRIVATE EQUITY
- Web.com Group, backed by Siris Capital, agreed to acquire Webcentral Group (ASX:WCG), a provider of digital services for small and medium Australian businesses. Financial terms weren't disclosed.
- Wrench Group, backed by Leonard Green and Partners, acquired Tampa-based Easy A/C and California-based Service Champions North, HVAC firms. Financial terms weren't disclosed.
- Groundworks Companies, backed by Cortec Group, acquired Foundation Services Michigan, provider of foundation repair services in Michigan and the Midwest. Financial terms weren't disclosed.
- Align Capital Partners invested in WilliamsMarston, an accounting advisory and management consulting firm with offices in Boston and New York. Financial terms weren't disclosed.
- Service Champions, a portfolio company of CenterOak Partners, acquired ABC Cooling Heating & Plumbing, a Hayward, Calif.-based provider of residential air conditioning and plumbing repair services. Financial terms weren't disclosed.
- NIBC, a Dutch bank, agreed to a proposed takeover bid from Blackstone, it at €1 billion ($1.1 billion). Blackstone lowered its offer to €7 per share from a previous €9.85 per share following the pandemic.
- Madison Dearborn Partners agreed to acquire Benefytt Technologies, a health insurance technology company, for about $410 million.
OTHERS
- Google is in advanced talks to acquire a $4 billion stake in Jio Platforms, an Indian telecom company. Read more.
- Mediaocean agreed to acquire 4C Insights Inc, a data science and marketing technology company. Financial terms weren't disclosed.
- Voyager Space Holdings acquired Pioneer Astronautics, a Lakewood, Colo.-based space exploration company, in a cash and stock transaction. Financial terms weren't disclosed.
- Hewlett Packard Enterprise agreed to acquire Silver Peak Systems, a provider of SD-WAN. The deal values Silver Peak at about $925 million.
IPOs
- MultiPlan, a healthcare services provider, will merged with Churchill Capital Corp III, a SPAC run by former CItigroup banker Michael Klein. The deal gives MultiPlan an enterprise value of about $11 billion. MultiPlan is currently owned by Hellman & Friedman. Read more.
- SoftBank is weighing a full or partial sale or public offering of Arm Holdings, its British chip designer. Read more.
EXITS
- EQT VII fund agreed to sell IFS AB, an enterprise software provider, to the successor funds EQT VIII and EQT IX, as well as TA Associates for about €3 billion ($3.4 billion).
F+FS
- TrueBridge Capital Partners closed its sixth venture capital fund-of-funds with $600 million in commitments.
PEOPLE
- TrueBridge Capital Partners promoted Rob Mazzoni to partner.
- Arsenal Capital Partners added Aaron Wolfe as an investment partner. He was previously a managing director at Sun Capital Partners. It also promoted John DiGiovanni to investment partner.


fortune--2020-07-14--Verizon must stop saying its 5G network is widely available, ad regulator says

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Superfast 5G wireless service is slowly rolling out across the country, but Verizon TV ads have exaggerated the progress, a top advertising watchdog said on Tuesday.
“To the extent Verizon wishes to promote the current availability and performance of its 5G network to consumers across the nation—including people who live in cities and towns across the country that may not receive Verizon 5G coverage for months, if not years—Verizon should ensure that its advertising clearly and conspicuously communicates to consumers the relevant, material limitations of its current network,” the National Advertising Division of BBB National Program concluded after reviewing the carrier’s TV spots.
Verizon’s new 5G service, which can provide downloads at speeds 10 to 100 times faster than the average 4G LTE connection, is available only in parts of 35 cities, with the carrier aiming to reach 60 cities by year-end. In a Fortune review of the new Lenovo Flex 5G laptop, Verizon’s 5G network hit download speeds of almost 2 gigabits per second in one location in Boston but dropped to a 4G connection of 98 megabits per second a few feet away. Nationwide, Verizon customers found 5G connectivity only 0.4% of the time in the U.S. in June, according to a report from Opensignal.
That was the kind of limited availability that was overlooked by Verizon’s TV commercials, according to the NAD’s findings. The industry self-regulator said Verizon should remove from its ads phrases such as, “People from Midtown Manhattan to downtown Denver can experience what your 5G can deliver” and discontinue any claims that imply “that its 5G service is widely available in cities across the country, and that its service is broadly and readily accessible in cities where it has been launched.”
Verizon told the NAD that it did not agree with all aspects of the decision but that it will comply with the recommendations. The carrier added that it “remains committed to the self-regulatory process and believes strongly in transparency of customer messaging.”
The TV ads in question stopped running months ago, a Verizon spokesman told Fortune.
Verizon is hardly the only wireless carrier to face NAD’s wrath over exaggerated TV advertising claims. The unit criticized AT&T for using the phrase “5G Evolution, the First Step to 5G” to describe its 4G service. AT&T appealed to the National Advertising Review Board, which reaffirmed the critique in May. And T-Mobile was dinged in 2017 for saying its 4G LTE network was faster than Verizon’s.
(Correction: This story was corrected on July 14, 2020, to state that the National Advertising Division is part of the BBB National Program.)


fortune--2020-07-14--A nonprofit just announced a 23andMe-like genomic sequencing model for a rare cancer—but it’s free

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The Multiple Myeloma Research Foundation (MMRF) is launching a new effort to provide cancer patients with personalized recommendations for dealing with their disease. The project, called CureCloud, resembles the model used by 23andMe and similar genomic sequencing companies, but it would be provided for free, the organization tells Fortune.
MMRF founder Kathy Giusti was diagnosed with multiple myeloma in 1996. In the nearly 25 years since, she’s dedicated her life to helping patients with the rare blood cancer, which can weaken bones and the immune system at large. Giusti spent years as a pharmaceutical executive at companies like G.D. Searle and Merck. The combination of experiences has informed her strategy for spurring treatments for the rare cancer, which afflicts about 33,000 Americans per year, according to the American Cancer Society (ACS).
The new CureCloud project amounts to a “crescendo of disruption” when it comes to multiple myeloma treatment, Giusti tells Fortune. After a blood draw at home by a phlebotomist, i.e. a blood lab technician, patients will receive a personalized report with advice on how to deal with their disease via the advent of genomic sequencing.
“With our support, anyone can now get sequenced,” says Giusti. “It doesn’t matter what your economic status is, we will sequence you if you raise your hand.”
The process was developed with the help of the Broad Institute and other partners, focused on creating a blood draw to make the genomic sequencing simple. The general approach speaks to Giusti’s longstanding belief that breaking down research silos, especially by expanding access and slashing costs, is critical to developing new cancer drugs.
“Patients get their own report sent back to them, and their clinician gets information as well,” she says. “So imagine the conversations the patients can have with their clinicians at that point.”
The CureCloud initiative required some $30 million to $40 million to fund and seeks to sequence the genome of 5,000 myeloma patients across the country. Those patients can participate in research programs meant to help discover new treatment options for different types of myeloma while also gaining access to a personalized dashboard that tells them how other volunteers with a similar form of cancer are faring and what works best for them.
Since the MMRF’s formation, a dozen drugs for multiple myeloma have been approved, largely with the help of the organization’s shared and public data bank, and, according to Giusti, “we tripled the life spans of our patients.”


fortune--2020-07-14--Climate change is important—but it shouldn’t distract us from other crucial problems

What is the point of climate change policy? To make the world a better place for all of us, and for future generations.
In my new book, False Alarm: How Climate Change Panic Costs Us Trillions, Hurts the Poor, and Fails to Fix the Planet, I analyze a lot of ways to make smart climate policy—and many that unfortunately waste resources. But we also need to ask ourselves the broader question: If the goal is to make the world a better place, is climate change policy the most important thing to focus on?
Certainly, it is one thing we should focus on. We must rein in temperature increases and help ensure the most vulnerable can adapt. But today’s popular climate change policies of rolling out solar panels and wind turbines have insidious effects: They push up energy costs, hurt the poor, cut emissions ineffectively, and put us on an unsustainable pathway where taxpayers are eventually likely to revolt. Instead, as I document throughout the book, we need investment in innovation, smart carbon taxes, R&D in geoengineering, and adaptation.
But we also need to recognize that reducing global warming is only one of many things we can do to make the world a better place.
We should also invest in health care, in education, and in technology. But we can’t do it all. Current climate policy is so expensive and will drain so much of potential future gains in GDP, that it will leave less money for policies that will enhance prosperity.
Ultimately, there is a limited amount of money we can spend on making the world a better place. So we need to make choices, and we need to make tradeoffs. The good news is that we have a great deal of data indicating what the best investments are.
My think tank, the Copenhagen Consensus, worked with 50 teams of economists and several Nobel laureate economists to analyze the UN’s Sustainable Development Goals for the year 2030, and find which initiatives will achieve the greatest “return on investment” for humanity.
Smart climate policies, like more green energy research and phasing out fossil fuel subsidies, should definitely be part of our solutions. But many popular climate policies will do little good, or even actively make the world worse off.
To help make the world better, we need to focus more on the very best policies. Top among these is freer trade. Free trade has recently been criticized by left- and right-wing politicians because it hurts vulnerable communities like manufacturing workers in the Rust Belt.
This misses the bigger picture. The governments could spend billions more supporting the most vulnerable communities that would be hurt by free trade deals, and benefits would still vastly outweigh costs. Globally, freer trade could unleash an amazing $2,000 of social benefits for every dollar spent. Much of these benefits would go to the world’s poorest, who would have far more opportunities if they could become part of the global market.
Unfortunately, the world has almost given up on the latest round of trade negotiations called the Doha Development Round, but if we were to successfully conclude such a global treaty on freer trade, economists estimate that it could by 2030 make the average person in the poor world a thousand dollars richer per person per year.
By making people richer—especially in the world’s poorest countries—freer trade would also lead to societies that are far more resilient to climate shocks, more capable of investing in adaptation, and far less vulnerable to rising temperatures. In that way, free trade can be considered a smart climate policy as well as an excellent way to promote human thriving generally.
Other policies, too, would be incredibly beneficial for the world and help us address climate change by making people better off and hence more resilient. Avoiding malnutrition in the first two years of a child’s life costs about $100 per child. Because good nutrition helps develop the child’s brain, it leads to better education and phenomenally higher productivity in adulthood. Indeed, the $100 spent on nutrition will on average increase each child’s lifetime income equivalent to a one-time amount of $4,500 today. Every dollar spent on fighting early childhood malnutrition results in $45 of social good.
There is a compelling case, too, to spend more resources fighting the world’s leading infectious disease killer, tuberculosis. This disease is hugely overlooked by philanthropists and governments. Tuberculosis mostly kills adults in their prime, leaving children without parents. For about $6 billion annually, we could save nearly 1.6 million people from dying each year. Parents could continue to work, and children would not be left as orphans. When the Copenhagen Consensus undertook an analysis for philanthropist Bill Gates, he concluded that his investments on tuberculosis, immunization, polio, and malaria were the “best investment I’ve ever made.”
Closing the contraception access gap would also be a transformational achievement. There are 214 million women of reproductive age in poor countries who want to avoid pregnancy but are not using a modern contraceptive method. Solving this challenge will cost just $3.6 billion more each year than what is spent today. That will immediately save lives, avoiding 150,000 mothers dying each year in childbirth, because of fewer pregnancies. Each dollar spent on contraception and family planning education will generate $120 of social benefits across the most vulnerable societies.
What do all these investments have in common, other than the fact that they are compelling investments? The fact that they are underfunded today. We could go still further in solving each of these challenges if we allocated more resources. Unfortunately, approximately one-fourth of foreign aid today is diverted to “climate aid” projects. Indeed, the money spent just on climate aid today could fund all these interventions in contraception, tuberculosis, malaria, immunization, and nutrition—with money to spare.
We definitely need to address global warming. It’s a real problem, and we need to put policies in place both to limit its extent and to enable the world to best manage its impact.
But if we truly want to make the world a better place, we have to be very careful that our preoccupation with climate change doesn’t distract our focus away from other crucial problems.
Bjorn Lomborg is president of the Copenhagen Consensus and visiting fellow at the Hoover Institution of Stanford University.
This op-ed is adapted from False Alarm: How Climate Change Panic Costs Us Trillions, Hurts the Poor, and Fails to Fix the Planet.


fortune--2020-07-14--Netflix is overvalued, UBS cautions

Netflix is overvalued, UBS cautions

Netflix Inc. was downgraded to neutral from buy at UBS, which cited valuation after a pronounced rally in the video-streaming company.
Thus far this year, Netflix is up more than 60%, making it one of the ten best performers in the S&P 500, which is down 2.3% for 2020. The stock has also gained more than 75% off a March low, a rally that has lifted it to repeated records and widened the company’s market cap lead over Walt Disney Co.
Shares rose 0.3% in premarket trading.
UBS’s move comes just days before the July 16 release of Netflix’s second-quarter results, and while the firm expects to see “a widespread benefit” from the pandemic favoring indoor entertainment options, the benefit of this trend appears priced in at current levels, analyst Eric Sheridan wrote. He reiterated his $535 price target.
At current levels, “investor fears seem to have disappeared and the current stock price increasingly reflects many of the long-term business moat dynamics,” he wrote. While the company’s long-term narrative remains intact, “we would rather be constructive at levels when a mix of potential subscriber volatility, FCF dynamics & competition are better reflected in the share price.”
UBS is not the only firm to grow somewhat cautious about Netflix at current levels. Wedbush reiterated its underperform rating on Tuesday, warning that despite a tailwind from shelter-in-place orders, “we expect content spending to trigger substantial cash burn for many years.” The firm raised its price target to $220 from $198, but warned that “competition for both content and subscribers may slow growth and limit the potential for price increases.”
Recently, Rosenblatt Securities wrote that it “struggle[s] to see the upside” from current levels given “uncertainty over how [long] this favorable environment will last.” Imperial Capital downgraded the stock last week.
Currently, the average price target on Netflix shares stands near $476, implying downside of about 10% from current levels.


fortune--2020-07-14--Why the role of chief diversity officer is so fraught

Good morning, Broadsheet readers! Ellevest improves its impact investing for racial justice, we mourn Zindzi Mandela and Naya Rivera, and the CDO job is hot—and hard. Have a thoughtful Tuesday.
– The revolving CDO door. It will likely come as no surprise that chief diversity officer is among the hottest jobs in corporate America, with CBRE, General Electric, and Zoom Video Communications all naming CDOs in recent weeks. Protests demanding racial justice have put a spotlight on employers’ roles in perpetuating inequality like never before, and firms are newly committed to diversifying their internal workforces and to making that clear in their public personas.
But the CDO job is fraught. A Wall Street Journal story published yesterday describes the revolving door of the CDO office. Current and former CDOs told the WSJ the high turnover of the role is due to “lack of resources, unrealistic expectations, and inadequate support from senior executives.”
The current social climate has elevated the profile of CDOs, but the challenges that plague the position have deep roots. My colleague Ellen McGirt (author of Fortune’s must-read newsletter raceAhead) framed the issue in stark terms last year in a story titled: “Chief diversity officers are set up to fail.” Her piece featured Russell Reynolds research that found that 47% of companies in the S&P 500 index had a CDO, but two-thirds of those executives had been hired or promoted to the role in the past three years. The major hurdles facing CDOs? Insufficient power within their organizations, spotty demographic data, and too little support from other company leaders.
What’s more, the job is flat-out taxing. “It requires an emotional muscle unlike any role I’ve ever worked in,” Joy Fitzgerald, the chief diversity and inclusion officer at Eli Lilly & Co told the WSJ. “You’re dealing with polarizing topics, and these topics and issues are very nuanced. There are not a lot of best practices you can point to that are easy or quick. You have to be comfortable knowing that the norm is managing discomfort.”
Given the avalanche of corporate pledges and platitudes about diversity in recent weeks, firms should be eager to address the shortcomings of their CDO offices. For starters, organizations should ensure CDOs report to the CEO so they have real influence on company culture; reporting to legal, marketing, or HR reduces a CDO’s reach.
As Ellen reported last year, the problems facing CDOs are not new; the solutions can be.
Claire Zillman
claire.zillman@fortune.com
@clairezillman
Today’s Broadsheet was curated by Emma Hinchliffe.
ALSO IN THE HEADLINES
- Invest responsibly. Ellevest, the investing platform for women founded by Sallie Krawcheck, is revamping its impact investing offering to allow clients to direct their money toward companies that support racial justice. Ellevest will now consider 13 factors, including the company’s workplace diversity, working conditions, ethical and environmental track record, and its involvement in firearm sales or the private prison industry. Fortune
- Keeping it Real. A funding exclusive this morning: the therapy startup Real raised a $6 million seed round from investors including Kirsten Green at Forerunner Ventures and Gwyneth Paltrow. Launching at the beginning of a pandemic required a drastic shift in strategy, says founder Ariela Safira, but the company focused on mental health has found its footing quickly. Fortune
- Rest in power. Zindzi Mandela, South Africa's ambassador to Denmark and the daughter of Nelson and Winnie Mandela, died at 59 on Monday. President Cyril Ramaphosa said that Zindzi was "a leader in her own right." CNN
- The new DeVos. Education Secretary Betsy DeVos's guiding philosophy has been local and parental control of schools as she's loosened federal requirements. Now, she's pushing forward President Trump's demand for schools to reopen—a drastic ideological shift. New York Times
MOVERS AND SHAKERS: Merck KGaA named Merck Healthcare CEO Belén Garijo deputy CEO. WeWork promoted Lauren Fritts to chief communications officer. Sima Gandhi, former head of business development and strategy for Plaid, and Amy Guggenheim Shenkan join the board of directors at DriWay Technologies. OpenExchange named Kate Cornish Booth chief people officer.
IN CASE YOU MISSED IT
- A critic on the crisis. In her new book, Washington Post media critic Margaret Sullivan rings the alarm about the crisis facing local journalism. Some local newspapers, she writes, are on the verge of disappearing forever. Fortune's Rachel King interviewed Sullivan about her book and the new urgency with which she's raising red flags. Fortune
- A room of her own. When law enforcement knocked on the door of Ghislaine Maxwell's mansion in New Hampshire, she fled to another room, prosecutors said in a new filing. Maxwell is scheduled to appear in court today for a bail hearing after she was arrested for facilitating the sexual abuse of minors by Jeffrey Epstein (she has denied all wrongdoing). New York Times
- In a jam. If you're familiar with trendy restaurants, you've probably heard of Sqirl. The L.A. eatery known for an Instagram-friendly ricotta toast with jam and its owner Jessica Koslow are now under fire for allegedly serving moldy jam and, worse, hiding mold from health inspectors. Sqirl responded to the allegations on Instagram, saying that it doesn’t use commercial pectin or a lot of sugar, so “a low-sugar jam is more susceptible to the growth of mold.” Eater
ON MY RADAR
Naya Rivera was the best part of Glee The Daily Beast
Why the Chicks dropped their 'Dixie' The New Yorker
What to know about the Jennifer Lopez–Alex Rodriguez bid for the New York Mets Fortune
PARTING WORDS
"I was like, ‘Oh my God, that’s an option? You can be a woman who is enraged? Yeah! I feel that!"
-Actor Cristin Milioti on being inspired by Uma Thurman's Kill Bill character, The Bride.


fortune--2020-07-15--Apple just won a mammoth victory over Europe’s “tax lady.” But the fight is far from over

From ball gowns to medical gowns : How one designer changed her business model to help local health care providers

Apple has prevailed–for now–in its epic fight against a $14.8 billion back-tax bill in Ireland.
On Wednesday morning, the EU’s General Court annulled a 2016 decision by the European Commission’s antitrust division, that had found Ireland had for years granted Apple illegal state aid by letting it effectively pay very little corporate tax on its European profits—as little as 0.005% in 2014.
Apple has two subsidiaries that are incorporated in Ireland but are not tax-resident there: Apple Sales International and Apple Operations Europe.
Apple and the Irish government say the profits flowing through these subsidiaries, which handle the manufacture and distribution of Apple products, are mostly taxable in the U.S., where Apple’s software and hardware is designed. The Commission argues that the subsidiaries should be fully taxed in Ireland, because that’s where their employees are, and where their activities are conducted.
The Commission’s 2016 decision was a bombshell not only due to the size of the sum, but also because the Competition Commissioner Margrethe Vestager was using antitrust law to tackle a tax issue—European regulators have long been trying to get largely American Big Tech firms to pay more tax, and this seemed like a creative way to do it.
“State aid” claim
According to the General Court, the Commission blew it. The Luxembourg-based court said the Commission didn’t sufficiently demonstrate that Ireland had given Apple’s Irish subsidiaries a particular advantage over other companies.
That means Ireland’s treatment of the iPhone maker didn’t amount to state aid—and Apple therefore doesn’t have to pay that whopping back-tax bill. (In case you’re wondering, most of the $14.8 billion has been sitting in an escrow account for years, while the legal drama unfolded.)
“We thank the General Court for their time and consideration of the facts. We are pleased they have annulled the Commission’s case,” Apple said in a statement. “This case was not about how much tax we pay, but where we are required to pay it…Changes in how a multinational company’s income tax payments are split between different countries require a global solution, and Apple encourages this work to continue.”
It wasn’t just Apple that had tried to get the Commission’s decision overturned. So had Ireland, whose 12.5% corporate tax rate—in the EU, only Hungary’s 9% rate is lower—has helped attract some of the world’s biggest tech firms to set up their international headquarters in the country.
The Irish finance department responded to the General Court’s ruling by saying it had “always been clear that there was no special treatment provided” to Apple’s Irish subsidiaries.
However, there are two big reasons why the drama is set to continue.
Firstly, while the EU’s General Court is the bloc’s highest authority in terms of establishing the facts of a case, the European Commission can still appeal to the Court of Justice, which is the highest authority on questions of law.
Most observers expect the Commission to do this, which means the case could drag on for a few years yet. Responding to the ruling, the Commission said Wednesday it was considering what to do next.
Secondly, the European Parliament has long been fed up with multinationals establishing themselves in the EU’s lowest-tax countries, through which they funnel the profits they earn in other EU countries.
Also on Wednesday, the Commission responded to that anger by unveiling a plan that would revamp the “parameters for fair tax competition” between EU member states.
“Globalization, digitalization, the growing role of multinationals in the world economy, the increased importance of intangible assets, and the reduction of barriers for business have all intensified the pressure on states to use taxation to compete for foreign investment,” the Commission said in its proposal. “This has prompted tax competition to escalate and evolve, testing the very parameters of fairness.”
There are international discussions about the tech-taxation issue taking place at the Organisation for Economic Cooperation and Development (OECD). If a new global standard for minimum effective taxation emerges from those discussions, the Commission said, then that would need to be integrated into the EU’s rules. If not—and the signs are not good, with the U.S. potentially pulling out of the talks—then the Commission wants the EU to set up its own standard.
“The Commission stands fully behind the objective that all companies should pay their fair share of tax,” Vestager said in a Wednesday statement. “If member states give certain multinational companies tax advantages not available to their rivals, this harms fair competition in the EU. It also deprives the public purse and citizens of funds for much needed investments–the need for which is even more acute during times of crisis.”
A bad day for Vestager
Whatever happens down the line, the General Court’s ruling is a major embarrassment for Vestager, the scourge of Silicon Valley and—in President Trump’s succinct phrasing—the “tax lady.” (She responded to that description with the immortal, “I do work with tax and I am a woman.”)
The Dane’s department already lost a similar case last September, involving Starbucks’s tax payments in the Netherlands. The Commission said the Dutch tax authorities had given Starbucks illegal state aid by granting it a favorable deal, but the General Court said it had failed to demonstrate its argument—much as had now happened regarding Apple and Ireland.
The fresh blow could weaken Vestager’s hand as she tries to resist attempts by France and Germany to reform EU competition rules. She infuriated those countries last year by blocking a rail-focused merger between Germany’s Siemens and France’s Alstom—a move that stymied the desired creation of a “European champion” and might have cost Vestager the chance to become president of the European Commission.
Nonetheless, the Irish tax case wasn’t Vestager’s only broadside against Apple. Last month she announced antitrust probes into Apple’s in-app payment rules and restrictions on other developers using the tap-and-go functionality of iPhones.


fortune--2020-07-15--From ball gowns to medical gowns: How one designer changed her business model to help local health c

From ball gowns to medical gowns: How one designer changed her business model to help local health care providers

Apple just won a mammoth victory over Europe ’ s “ tax lady.
” But the fight is far from @

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When the COVID-19 pandemic took hold of the United States in March, private businesses from liquor producers to automakers mobilized to help produce essential supplies, from hand sanitizer to ventilators. Retailers and fashion designers were also conscripted into the modern wartime-esque effort, transitioning their production lines from apparel to personal protective equipment (PPE), including face masks and medical gowns.
FABRIC is a fashion incubator cofounded in 2016 by Angela Johnson and Sherri Barry, with the intent of re-shoring apparel manufacturing while helping apparel entrepreneurs design and manufacture niche sewn products in smaller quantities so they don’t have to over produce overseas.
“It’s a sustainable solution to a modern problem that has been growing as the fashion industry has shifted from big box brands to niche, direct-to-consumer, online fashion brands,” says Johnson, who is also a fashion designer of her eponymous collection of imaginative blazers and ball gowns made from upcycled t-shirts.
Based in Tempe, Ariz., FABRIC has worked with 450 emerging apparel brands in the last four years, offering services in consulting, design development, no-minimum manufacturing, branding, marketing, office space, event space, and more all under one roof and at below market rates, according to Johnson.
But when the pandemic hit and PPE shortages made headlines, Johnson says the incubator was bombarded with requests for help to make PPE because they “were the only local resource with the expertise, equipment, and experience to design and manufacture almost any sewn product.” So they cleared the runway—literally—immediately turning the entire showroom into a facility for producing FDA-approved reusable isolation gowns for healthcare facilities. As of the first week of July, tailors at FABRIC have made more than 80,000 of these sustainable medical gowns, which can be washed 100 times—the equivalent to 8,000,000 disposable gowns.
Fortune recently spoke with Johnson about what it was like to upend her entire business model, the challenges that might not be so obvious from the outside, and what it was like to develop an entirely new revenue stream during a public health crisis.
The following interview has been lightly edited and condensed for clarity.
FABRIC fashion incubator cofounder Angela Johnson Courtesy of FABRIC
Fortune: When did you first realize the COVID-19 pandemic would affect your business? Who first reached out for help with producing PPE?
Johnson: In mid-March, as COVID was really starting to make headlines, many businesses began to shut down and the PPE shortage quickly became the nation’s biggest concern.
As a fashion incubator helping hundreds of apparel entrepreneurs, FABRIC was the only resource in Arizona with the skills, equipment, experience, and personnel to design and manufacture almost any sewn product. We were making everything from leggings, bathing suits, and jeans, to dresses, bags, and even sewn product inventions at no-minimums to help startup brands. We had built a significant fashion community, been recognized with some exciting awards, and had made some awesome connections in our state’s public and private sector for the impact that our innovative incubator was making.
As desperate inquires for PPE naturally came flooding in from smaller healthcare facilities, we were also connected to larger facilities by various city and state officials, including the Arizona Commerce Authority and others. The first of the larger facilities to connect with us were Banner Health and Dignity Health.
FABRIC pivoted from manufacturing for hundreds of small fashion brands to manufacturing hundreds of thousands of FDA-approved reusable gowns for health care facilities. Courtesy of FABRIC
What does the production line look like? How many people are working on this project? And where are the bulk of your PPE supplies going? Has that changed at all with the explosion of new COVID cases in Arizona as well as other states such as Texas, Florida, and California?
We wanted to make FDA-approved PPE that would protect health care workers, and since N95 masks were not a sewn product, we decided to focus on making FDA-approved, level two and level three reusable isolation gowns instead. These were in just as much demand as masks, and since cloth masks for the public could be made by anyone who could sew from home, the isolation gowns were proving to be the biggest need for the health care facilities.
Our small managerial team of six women, led by my co-founder Sherri Barry, created a pandemic task force. We locked ourselves in what we now call our War Room for about 18 hours to brainstorm how to pivot our model to help our healthcare heroes in this emergency crisis and simultaneously stay in business for the hundreds of brands who were counting on us. In collaboration with our non-profit, the AZ Apparel Foundation, we raised enough funds to obtain the equipment needed to transform our fashion runway into a PPE factory and acquire FDA certification in record time.
While simultaneously sourcing the scarce AAMI-approved materials and working with the doctors from each facility to design their own unique, ideal gown, we learned about lean manufacturing from the AZ Commerce Authority, hired about 50 more employees, and set up four production lines on our former runway. Each machine is placed strategically so that each sewing technician is six feet from the next, and they are all facing away from each other. As we built each line and filled them with employees, we immediately started filling very large orders for Banner and Dignity.
‘The price per use is cheaper than a disposable gown even when you factor in the wash price. The hospitals get to design their own custom gowns that meet their needs, and they love them,’ Johnson says. Courtesy of FABRIC
However, we also felt a social justice responsibility to address the needs of the smaller facilities as well as the Navajo Nation, who were seeing some of the highest rates of COVID cases in the country. We also created an open source project we called the 1 Million Gown Challenge in which we shared our design specs, instructions, pattern, and information on where to obtain a substantially equivalent material with the community so they could help create substantially equivalent gowns at home to fill these emergency needs. We’ve also trained and contracted out additional factories to help fill these large orders.
As of mid-July, we have made 80,000 reusable isolation gowns and each of these can be washed 100 times. This is equivalent to 8,000,000 disposable gowns so this is also a sustainable solution and if you factor in the per-use-price including the wash, they are also more affordable than disposable gowns. As COVID cases rise in Arizona and PPE demand keeps growing, we are faced with a sense of urgency to become more and more efficient and are adding overnight shifts starting this week and working on bringing on even more factories.
‘What was formerly our fashion runway is now a PPE factory. But we knew we had the skills and resources that were needed to help save lives and we couldn’t sit back and do nothing,’ Johnson says. Courtesy of FABRIC
This was originally supposed to be a temporary turnaround for your business model, but it has since become permanent, at least for the duration of the pandemic. What motivated that shift? And what challenges has that shift presented?
Prior to the pandemic, many of the brands we have helped were growing and needed higher capacity manufacturing, so providing a local solution for these brands was already a topic of conversation. When the pandemic hit, we pivoted to help our community and our healthcare workers in this emergency crisis.
As we feverishly converted our fashion runway into a PPE factory, we knew that the additional machinery would allow us to eventually serve our community of designers/brands with higher capacity manufacturing, but we didn’t have the bandwidth to consider the logistics and think much beyond the pandemic at that time. Now well into the pandemic, not only is there no end in sight to filling PPE orders, but new apparel entrepreneurs who have been stuck at home since March are ready and eager to start their fashion brands so we are getting more inquiries for our regular fashion incubator services than ever.
While we are still trying to settle in to the new normal of manufacturing PPE while also offering our regular incubator services in one building, we are now tackling the logistics of how to move forward with these two different business models. We cannot continue to manufacture PPE in our current incubator building forever. The building isn’t set up for that, and we need a space with loading docks and much more square footage so that we can continue to add more machinery and staff. We also would like our FABRIC incubator to return to its original model one day. As a result of all of this, we’ve decided to officially establish the PPE manufacturing as its own entity called Reusa. We are also actively in the middle of acquiring a separate facility for Reusa.
As of July 9, FABRIC has made over 80,000 sustainable medical gowns, which can be washed 100 times. Courtesy of FABRIC
On a personal note, whether we want to call it the New Normal or these anxious times, how have you been faring amid all this?
Thank you for asking this question. The pandemic has been hard on everyone in the world, and our team is definitely not immune. Checking in on each other is so important. While most people are dealing with isolation, loneliness, financial hardships, boredom, and other issues related to social distancing and business closures, our team has been dealing with the polar opposite, and this has also been challenging. We’ve worked more hours than ever before, and we’ve had to navigate exponential business growth while keeping our essential workers safe during a pandemic. Deprived of sleep and working at such a high stress level has come with its consequences.
Honestly, I would be lying if I didn’t admit that there have been times that I’ve personally been envious of my friends and family who are isolated at home with their families. However, the grass is always greener on the other side. I’ve spent the past two decades of my life creating the business of my dreams but it took an attitude shift to finally turn a corner with it in 2016. I had learned to be a “glass half full” person who believes in the power of gratitude. This new attitude had a powerful result in building my dream business and now its also helping me deal with anxieties of this pivot. I wouldn’t change a thing. I’m tired and anxious, but I’m grateful for the experience and for the opportunity to learn and push my own comfort level while doing something that is helping to save lives and benefit my community.


fortune--2020-07-15--Nissan takes on Tesla with the launch of Ariya, an all-electric SUV

Nissan Motor Co. unveiled a new electric vehicle and redesign of its “hamburger” corporate logo, seeking to make a fresh start after months of management turmoil and declining profitability.
The Ariya, an all-electric SUV with a range of as much as 610 kilometers (379 miles), is the first entirely new product to be launched under new management that took over in December. The debut of the model, which has a starting price of about 5 million yen ($46,600), is the automaker’s latest effort to refresh an aging lineup.
“Ariya has all the essence of Nissan’s technology,” said Makoto Uchida, Nissan’s chief executive officer.
Nissan could benefit from the buzz surrounding a new vehicle, even though it isn’t scheduled to go on sale until mid-2021. The Japanese automaker had its biggest loss in two decades for the year that ended in March, and the November 2018 arrest of former leader Carlos Ghosn triggered management turmoil that lingers to this day. The Ariya serves as a reminder that Nissan is still Japan’s second-biggest automaker by output, and that it has been working for years in preparation for the EV and autonomous driving era.
The interior of a Nissan Ariya crossover electric sport utility vehicle. Wire photography: Kiyoshi Ota—Bloomberg via Getty Images Kiyoshi Ota—Bloomberg/Getty Images
“Expectations are high,” said Koji Endo, an analyst at SBI Securities. “Whether this will sell is going to have a large effect on Nissan’s performance.”
Shares of Nissan advanced 7.3% in Tokyo, with analysts citing retail investor excitement about the Ariya’s debut. The stock has lost 34% this year.
A successor to the Leaf
The Ariya is a successor to the all-electric Leaf, which went on sale a decade ago in Japan and the U.S. Refreshed once in 2017, the five-door hatchback is one of the best-selling EVs in the world, with about 500,000 shipped so far. One drawback of the Leaf, however, has been its limited range of about 322 kilometers, or about 200 miles.
With a length of 4.6 meters and height of 1.6 meters, the Ariya fits squarely within the compact SUV category. The interior space, however, is comparable to that of a larger vehicle, thanks to the placement of batteries at the floor of the chassis, like in Tesla Inc.’s models.
The Ariya comes with ProPilot 2.0, the latest version of Nissan’s autonomous driving technology. The feature, which was rolled out last year for the refreshed Skyline, offers lane-changing and driver-monitoring capabilities. The Ariya also has a self-parking feature, and Amazon.com Inc.’s voice-based digital assistant Alexa.
The big question is whether consumers will be ready to buy the Ariya when it goes on sale in Japan mid-2021, and whether Nissan can get its business back on surer footing by then. For the coming fiscal year through March, analysts project, on average, a loss of 323 billion yen and a 17% decline in sales. In China, the Ariya will face tough competition from Tesla, which has a local plant churning out Model 3 electric sedans and, later on, Model Y SUVs.
“This car is extremely important for Nissan,” Senior Vice President Ivan Espinosa said in an interview. It is “the first car in a complete shift in our lineup and the way we want to address the market moving forward.”
On Wednesday, Nissan priced 70 billion yen of notes in three tranches, in its first yen debt sale since 2016. The coupons on the securities are the highest among all yen notes from Japanese firms this fiscal year, according to Bloomberg data.
Nissan is also using the Ariya’s debut to show off a new corporate brand logo, to be used on vehicles and official communication. It’s a simplified version of the prior design, with just two half-circles depicting the sun, fronted by the letters of the company’s name.
The Ariya is debuting just as the pandemic weighs on car demand and depresses economic activity across the globe. Global passenger vehicle sales are on track to slump 23% this year and EVs are set to drop 18%, the first decline in the modern era, according to BloombergNEF. The recovery will be mild in 2021, with China and Europe leading the way, according to researchers.
After going on sale next year, the Ariya will hit the markets of Europe, U.S. and China during the next fiscal year, which ends March 2022.
The Ariya will be available in four versions: a pair of two-wheel drive versions with a choice of different battery capacities, and two high-performance four-wheel drive models with different ranges. The two-wheel drive with the larger battery offers the greatest driving range.
“We now have a dedicated EV platform that will carry over into new vehicles,” Uchida said. “It’s my job, my responsibility, to bring Nissan back to the market.”


fortune--2020-07-15--Revolut bank offers cryptocurrency through Paxos ‘plug and play’ service

A handful of well-known companies, including Robinhood and Square, already offer Bitcoin and other cryptocurrencies. Now, a crypto startup wants to make it easier for hundreds of other companies to do the same.
On Wednesday, New York-based Paxos announced a new brokerage service that is intended to let merchants offload the technological and regulatory challenges that go with cryptocurrency.
Paxos’s first client is Revolut US, the American division of the online bank that is popular in the UK.
In an interview with Fortune, Paxos CEO Chad Cascarilla likened the new brokerage to a “plug-and-play” service by which companies of all sorts—from retailers to payment firms—can offer crypto to their customers while relying on Paxos on the backend.
“It’s clear many firms want to offer crypto, but are finding it’s difficult to build the regulatory and technological infrastructure to do that,” he says. “This allows anyone, no matter what type of firm they are, to do that.”
Paxos points to the tie-up between Starbucks and Bakkt, the Bitcoin subsidiary of the New York Stock Exchange, as an example of the growing interest among non-financial firms towards crypto.
While Paxos is a relatively minor player in the cryptocurrency world, the company stands out in part because it is a regulated trust company. This legal structure obliges it to retain 100 percent of the assets it holds on customers’ behalf—unlike banks, which can loan out customer deposits.
The trust structure also allows Paxos to enter deals with traditional financial firms inclined to avoid cryptocurrency for reason of risk or regulation.
Paxos already offers a cryptocurrency token backed by physical gold, and plans to use its new brokerage platform to offer a plug-and-play service for a variety of other assets.


fortune--2020-07-15--Google invests in India’s red-hot Jio Platforms to build cheap cellphones

On Wednesday, Chairman of Reliance Industries Limited Mukesh Ambani announced that Google will invest $4.5 billion to take a 7.7% stake in Jio Platforms, the telecoms and digital arm of Ambani’s vast Reliance conglomerate.
“This is not just a financial but a strategic investment by the Internet giant,” Ambani said Wednesday at his company’s annual general meeting. Ambani went on to tout Jio’s recent investment streak that began with a landmark $6 billion deal with Facebook in late April.
“[Jio Platforms] has now four strategic partners—Facebook, Intel, Qualcomm and Google. It has also six most admired technology and financial investors and three sovereign funds, taking the total tally of investors to 14,” he said. In total, Jio Platforms has raised nearly $20 billion since the company’s initial deal with Facebook, according to Ambani.
For Google, the announcement marks a rapid follow-up to the company’s Monday announcement that it would invest $10 billion in India over the next five to seven years. “This is a reflection of our confidence in the future of India and its digital economy,” Google CEO Sundar Pichai said of the pledge in a video call with employees on Monday.
The deal will give Google a foothold in India’s booming digital market, a space that has become a battleground in recent years between American giants like Walmart, Amazon, and Facebook.
Jio Platforms’ core business is a telecoms network that has seen its customer base balloon to over 370 million subscribers since its launch in 2016. The company is heralded for bringing tens of millions of Indians online for the first time by providing cheap access to data. Jio Platforms says that the recent spate of investments means that the company is now debt free, and the investments will help grow the company’s ventures in e-commerce, digital currencies, and other digital initiatives.
“This is a marriage of equals and hence of massive possibilities,” says Sanchit Vir Gogia, CEO of digital advisory firm Greyhound Research, who explained that the two companies can collaborate on devices, search, apps, and e-commerce. Jio’s partnership with Google, in addition to working with companies like Facebook, may put the firms in position to “collectively dominate [India’s] digital market,” he said.
After Ambani announced the deal on Wednesday, Google posted on its blog that as part of the deal Jio and Google will jointly develop an affordable smart phone for the Indian market.
“Together we are excited to rethink, from the ground up, how millions of users in India can become owners of smartphones,” Google said in the post. “This effort will unlock new opportunities, further power the vibrant ecosystem of applications and push innovation to drive growth for the new Indian economy.”
This was updated to reflect analyst comments and Google’s blog post on the deal.


fortune--2020-07-15--‘A real bind:’ Banks that carry out Trump’s new sanctions could violate Hong Kong security law

On Tuesday, President Donald Trump signed the Hong Kong Autonomy Act into law, passing a bill introduced in the Senate in May to rebuke Beijing’s imposition of a harsh national security law on Hong Kong. On Wednesday, China’s Ministry of Foreign Affairs condemned the passage of the law and vowed to enact retaliatory sanctions against “relevant individuals and entities of the United States.”
The Hong Kong Autonomy Act will sanction individuals that the State Department determines are “involved in the erosion” of Hong Kong’s autonomy and punish banks that continue to serve them as clients. But Hong Kong’s new national security law threatens to imprison people who “collude” with foreign powers, including passing sanctions like those just triggered by the U.S. The competing laws threaten to leave international banks torn between two obligations: one to Washington and the other to Beijing.
“It’s a real bind for banks that have both U.S. and China exposure,” said a Hong Kong-based partner at a law firm, who wished to remain anonymous due to the sensitive nature of the topic. “There’s real potential for banks to fall foul of one set of laws while implementing the other.”
Two laws
Beijing promulgated its wide-ranging national security law in Hong Kong on June 30. In general, the law prohibits four loosely defined offenses: secession, subversion, terrorism and collusion with foreign forces. Article 29 of the law, however, specifically outlaws “imposing sanctions” against Hong Kong or China. Violators face up to life in prison.
Meanwhile, the U.S.’s new Hong Kong Autonomy Act lists ten punishments for a financial institution that “knowingly conducts a significant transaction” with a person the State Department has marked for sanctions. Penalties include travel bans for bank executives, a blockade on loans issued by U.S. banks, and a ban on trading in U.S. dollars.
Violating U.S. sanctions could effectively cut off targeted banks from the international market, where the U.S. dollar is supreme. According to Reuters, China’s leading state-run banks began making contingency plans for such a scenario ahead of Trump signing the bill into law. But loss of access to the dollar would be the worst case. The actual strength of the U.S. law remains to be seen.
“The risks of exposure for international and Chinese banks is very low at this point. China will likely retaliate if there is a ‘real and serious’ sanction, but I think it will adopt a wait-and-see approach now,” said Angela Zhang, associate professor in Hong Kong University’s law department.
Under the U.S.’s Hong Kong Autonomy Act, the State Department has 90 days from the law’s signing to submit a list of individuals for sanction. Banks that continue to serve those individuals will then be punished over the course of a year, with the U.S. executive branch retaining power to waive the penalties at any point. Zhang, for one, considers the measures mostly symbolic. “In my opinion,” she said, “the Act is only a political ploy to demonstrate U.S. discontent over the NSL and that the United States is tough on China. But that’s all.”
Unclear instructions
It also isn’t obvious from the wording of Hong Kong’s national security law, whether banks that comply with U.S. sanctions would be guilty of “imposing sanctions” themselves, the Hong Kong lawyer says. Authorities in Hong Kong could be lenient in their interpretation, but the growing uncertainty will be of concern for international banks with business interests in both China and the U.S.
What’s more, authorities in Beijing may be reticent in using the national security law to punish banks that comply with U.S. sanctions, says Wang Jiangyu, law professor at the City University of Hong Kong.
“I don’t think complying with foreign sanctions would fall under endangering China’s national security; that would put international business in Hong Kong in a very difficult, uncertain situation,” said Wang. Beijing instead may punish the banks that comply with sanctions via fines or other measures that would be less detrimental to Hong Kong’s overall business environment, Wang said.
HSBC was compelled by officials in China to voice support of the national security law in June, before the law had even passed. The bank’s capitulation earned it a rebuke from Secretary of State Mike Pompeo, who called HSBC’s “browbeating” a “cautionary tale” for other businesses that chase business from Beijing.


fortune--2020-07-15--Hong Kong passport holders used to get special perks in the U.S. Not anymore

U.S. President Donald Trump on Tuesday ended Hong Kong’s preferential status with the U.S. to punish China’s government for its actions in Hong Kong.
The move will scrap Hong Kong’s economic, trade, and diplomatic privileges with the U.S., including special treatment for Hong Kong Special Administrative Region (SAR) passport holders compared to People’s Republic of China (PRC) passport holders.
According to the executive order on “Hong Kong normalization” that Trump signed on Tuesday, the U.S. will “eliminate the preference for Hong Kong passport holders as compared to PRC passport holders” within 15 days of the July 14 order.
Hong Kong SAR passport holders currently rank 19th on the 2020 Henley Passport Index, a global ranking of passports according to the number of places their holders can travel to without a prior visa. The PRC passport is ranked 70th.
Currently, Hong Kong SAR passport holders can travel to 170 regions visa-free or with a visa on arrival; PRC passport holders can travel to 74. Both require a prior visa to travel to the U.S., but there are some differences in U.S. visa regulations for the two passports.
For example, the validity period of the H-1B and H-4 visas for foreign workers and their immediate families is 60 months for SAR passport holders and 12 months for PRC passport holders, according to the State Department website.
PRC passport holders must pay a $422 fee to apply for an I-1 foreign media or journalist visa, and their visa is valid for three months; SAR passport holders don’t need to pay an application fee, and they receive a 60-month I-1 visa.
Similar differences in validity periods between SAR and PRC passports exist across diplomatic-affiliated, transit, cultural exchange program, religious, and other visas. In some cases, SAR passport holders are granted multiple-entry where PRC passport holders are granted single-entry for the same type of visa.
The U.S. has recognized Hong Kong’s special economic status since the territory was handed from Britain to China in 1997, according to terms laid out in the 1992 U.S.-Hong Kong Policy Act. The validity of the act was dependent on Hong Kong’s continued autonomy from mainland China as laid out in the “one country, two systems” principle that separates their legal, financial, and political infrastructure.
In May, hours before China approved a controversial national security law tailor-made for Hong Kong, U.S. Secretary of State Mike Pompeo said Washington had determined that Hong Kong was no longer autonomous from China. Pompeo’s announcement paved the way for Tuesday’s executive order scrapping Hong Kong’s special status.
It’s not clear how the change might affect U.S. passport holders traveling to Hong Kong. Currently, Americans can travel visa-free to Hong Kong and stay for up to 90 days.
The “Hong Kong normalization” order also suspended the U.S.-Hong Kong extradition treaty and prisoner transfer agreement, called for steps to terminate the Fulbright exchange program for both mainland China and Hong Kong, and opened a path to refugee status in the U.S. for Hong Kong residents “based on humanitarian concerns.”


fortune--2020-07-15--Vaccine hopes lift stocks even as Trump-China tensions escalate

This is the web version of the Bull Sheet, Fortune’s no-BS daily newsletter on the markets. Sign up to receive it in your inbox here.
Good morning, Bull Sheeters. Global stocks are mixed. China-Trump trade tensions are depressing Asian markets, but vaccine hopes are lifting Europe and U.S. futures.
Let’s see where investors are putting their money.
Markets update
Asia
The major Asia indexes are mixed in afternoon trade. The lone bright spot is Japan’s Nikkei , up 1.6% .
are mixed in afternoon trade. The lone bright spot is , up . The Trump Administration ended Hong Kong’s special trade status with the U.S., a move that could seriously crimp the region’s multinationals and banks. The Hang Seng was down as much as 0.3% .
with the U.S., a move that could seriously crimp the region’s multinationals and banks. The was down as much as . “Disappointing and wrong.” That’s China’s response to Britain’s decision to finally cut the cord with Huawei as a major 5G equipment provider.
Europe
The European bourses pulled higher out of the gates with the benchmark Stoxx Europe 600 up 0.8% .
pulled higher out of the gates with the benchmark up . Burberry shares fell as much as 6.7% after the company reported sales bombed 45% lower last quarter and that it will have to resort to dramatic belt-tightening, including job cuts and shop closings .
shares fell as much as after the company reported sales last quarter and that it will have to resort to dramatic belt-tightening, including and . A bit of upbeat earnings news now… Dutch chipmaker supplier ASML expects “a growth year” after Q2 revenues surged 35%. Shares dropped 2.9% at the open. Tough crowd.
U.S.
U.S. futures point to a positive open with the major averages expected to pad yesterday’s gains, which were helped by Caterpillar, Boeing and Big Oil stocks.
point to a positive open with the expected to pad yesterday’s gains, which were helped by Caterpillar, Boeing and Big Oil stocks. Banks had a mixed day on Tuesday. Wells Fargo shares plunged 4.5% while JPMorgan Chase ticked up 0.5% . Wells Fargo, Citigroup and JP Morgan set aside $28 billion to cover bad loans, a metric to follow to see how the American consumer and Corporate America are weathering the pandemic.
while JPMorgan Chase ticked up . Wells Fargo, Citigroup and JP Morgan set aside to cover bad loans, a metric to follow to see how the American consumer and Corporate America are weathering the pandemic. All eyes are on Moderna today. The company’s Covid-19 vaccine trial produced positive results, lifting hopes for some kind of virus treatment—and triggering an impressive risk-on rally. Shares were up 16% in pre-market trading.
Elsewhere
Gold is down.
is down. The dollar is down.
is down. Crude is up, but there are concerns OPEC could trigger another price drop if producers move ahead with a supply hike.
***
The vanishing V
Bank of America released its much followed fund manager survey yesterday. There’s so much in it that I’ll cover the findings tomorrow as well.
The big take-away: A V-shaped recovery is a longshot. America’s summer surge in coronavirus cases has just about wiped the best-case scenario off the table.
According to the survey, roughly one in seven respondents (only 14%) now say they expect the most benign sequence of events: the quick, sharp economic recovery. “U” continues to be the most likely prospect, but the dreaded “W” is gaining ground. (This is beginning to sound like the most frightening episode of Sesame Street ever scripted.)
All in all, investor sentiment remains extremely cautious. Fund managers are watching as investors crowd into the perceived safety of tech, gold, cash and bonds and ditch (or even, short) energy, banks and industrials. Earnings season is unlikely to change that.
And, the coming election is putting investors in a wait-and-see mood. No surprise there. This happens every four years.
The most popular Q3 trading strategy now is to do nothing.
There’s another number (two, actually) to watch. The S&P 500 at 3,250. Once the benchmark index ticks above that level, it’s time to sell, survey respondents say. The other number: 2,950. If the S&P hits that floor, then buy, they say.
At this rate, we could hit S&P 3,250 this week, if not today. Maybe somebody should alert the Robinhood crowd.
***
Have a nice day, everyone. I’ll see you here tomorrow.
Bernhard Warner
@BernhardWarner
Bernhard.Warner@Fortune.com
A note from my Fortune colleagues on a timely new initiative:
Many companies are speaking out against racial injustices right now. But how do they fare in their own workplaces? Black employees in the corporate world, we want to hear from you: Please submit your anonymous thoughts and anecdotes here. https://bit.ly/WorkingWhileBlack
As always, you can write to bullsheet@fortune.com or reply to this email with suggestions and feedback.
Today's reads
Middle seat. The most hated words in business travel. Delta Air Lines will extend beyond September its COVID-sensitive policy of leaving the middle seat empty, "a sharp divergence from Delta's largest domestic competitors," Fortune's Maria Aspan reports.
Mark your calendars. Tesla's addition to the S&P 500 is far from assured, and yet bulls are acting as if it's a done-deal. Fortune's Jen Wieczner takes you through all the twists and turns and ramifications of Tesla's potential inclusion in the benchmark index. The first date to mark on your calendar is July 22. Why's that? Take a look.
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Market candy
27%
This is one of the most depressing data points I've ever shared here. The percentage of working parents who now expect to leave the workforce because of parenting pressures is 27%. It was 6% in April. The COVID pandemic has become a crisis within a crisis.


fortune--2020-07-15--One result of the pandemic: The death of distance

This is the web version of CEO Daily. To get it delivered to your inbox, sign up here.
Good morning.
Were it not for the pandemic, I would be in Aspen today, for Fortune’s annual Brainstorm Tech confab. Instead, it’s been postponed to December 1-2, when it will be held virtually. But Fortune did assemble a distinguished group of tech leaders yesterday for a virtual discussion of how the pandemic is changing business.
One prediction they chewed on was the death of distance–that with the rise of remote work, location won’t matter. “I feel like there is more opportunity now for people to get out of the bubble,” said Jewel Burks Solomon, head of Google for Startups, U.S. “I’ve experienced what it was like to have investors say, ‘Oh, you’re in Atlanta, you’re not in Silicon Valley, so sorry, companies we invest in have to be close to us.’ Now that is no longer valid.”
Maybe. But not everyone on the call agreed. Some, like former GoDaddy CEO Blake Irving, concurred that where you live “just doesn’t matter anymore. There is no plan to go back to the way we were before.” But others, like Joe Marchese, CEO of Attention Capital, suggested “these are such extraordinary times, and it is hard to trust current trends.” Entrepreneur Mark Johnson questioned whether the lockdown would give the edge to people who had existing relationships, and disadvantage newcomers who lacked “the opportunity to break bread, have a coffee, see someone in person.” And Electronic Arts CEO Andrew Wilson, while citing a surge in virtual sports, also acknowledged that “there is a certain kinetic energy that comes from putting creative people in a building together.”
Who’s right? Time will decide. But interestingly, many companies are having to make bets now on the future, deciding whether to allow employees to work remotely or ditch costly city real estate.
More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
TOP NEWS
Bank preparations
JPMorgan Chase, Citigroup and Wells Fargo stockpiled a collective $28 billion in Q2 in order to prepare for a wave of consumer and business loan defaults. The preparations hit all the banks' profits in the quarter. JPMorgan expects unemployment rates to remain at double digits into 2021. Fortune
Biden tax
Joe Biden is working with former primary rival Bernie Sanders to come up with economic proposals that will turn the centrist's campaign platform more progressive (others involved in the project include John Kerry and Alexandria Ocasio-Cortez). One plank of that platform is a rollback of President Trump's big tax cuts. "A lot of you may not like that, but I’m going to close loopholes like capital gains and stepped-up basis," Biden told donors at a digital fundraiser. Fortune
Student rules
The White House has backed down on much-criticized rules it unveiled only last week, that would have barred foreign students from entering or staying in the U.S. if they were only studying online at an American university. Harvard and MIT had sued the government over the policy, calling it "arbitrary and capricious." Wall Street Journal
Hong Kong
President Trump has approved legislation that will strip Hong Kong of its special economic status in American eyes, meaning the U.S. will now treat Hong Kong as it does mainland China. The Hang Seng appeared to shrug off the move, rising slightly at open, before ending slightly down. Fortune
AROUND THE WATER COOLER
Tesla value
Tesla's value keeps shooting up, prompting CEO Elon Musk to simply tweet: "Wow." Piper Sandler, which previously estimated the value of a Tesla share at $939, now pegs it at $2,332. The actual share price for the electric-car firm hit $1,790 yesterday—or four times the price back during March's selloff. Financial Times
Billionaires hoarding
American billionaires need to step up their giving, writes WhyNot Initiative director Alan Davis for Fortune. Davis says Bill Gates' $300 million donation for COVID-19 relief is "a big number, but it's pocket change for him." He continues: "Food shortages and unemployment are at record highs, yet billionaires managed to add over $400 billion to their collective holdings just since this crisis began. Yet so far this year, the ultra-rich have barely increased their giving at all." Fortune
TikTok fine
ByteDance's hugely popular and controversial TikTok social media app (check out this video explainer by Fortune's Devin Hance) has been hit with a fine in South Korea for collecting the personal data of children under the age of 14 without consent from their legal guardians. The fine, levied by the Korea Communications Commission, came to around $155,000. ZDNet
PS5 hopes
Sony has reportedly boosted its order for the upcoming PlayStation 5 console by half, probably because it expects a huge sales lift from people staying at home for their entertainment rather than heading out. The PlayStation 4 sold 4.2 million units at launch, but Sony apparently hopes to sell 9-10 million. Facebook is also reportedly boosting production of its Oculus VR headsets. The Verge
This edition of CEO Daily was edited by David Meyer.