fortune--2020-01-15--Here’s why Boeing’s shares are holding up despite a brutal year

In a year of bad news—followed by yet more bad news—Tuesday was an extraordinary day for Boeing and its battered shareholders. Consider this rundown of headlines:
First, news broke that rival Airbus overtook Boeing in 2019, delivering more than twice as many airplanes—863 to 380—to customers last year. Dig deeper into the numbers and some real red flags appear for Boeing. The struggling aviation and defense giant reported that in 2019, for the first time in decades, it had a negative net number of commercial airplane orders. In other words, cancellations outpaced deliveries by 87 as airline customers continued to move on from the grounded Boeing 737 MAX.
Also on Tuesday, American Airlines announced it would keep the 737 MAX out of commission for a further two months, until June. And, to put a further exclamation point on the day, evidence surfaced that Boeing talked Lion Air out of more 737 MAX training for its pilots, generating further questions about whether Boeing did everything it could to keep pilots safe in the run-up to the two fatal MAX crashes that killed 346.
All in all, it was one heck of a second day on the job for new CEO David Calhoun.
And yet, with all that bad new, shares closed up 0.65%, outpacing the Dow Jones Industrial Average and S&P 500.
Through all the turmoil of firing its CEO, congressional testimony, and its finances going south, the trading dynamics for Boeing’s stock have remained remarkably steady over the past 10 months.
Yes, there’s been a 25% drop in the Boeing share price since its record high of $440.62 on March 1, 2019. But zoom out, and you see the share price is holding up fine. It’s trading 10% above where it was in December, 2018, when the markets swooned, and it’s more than twice as high as it was just three years ago. If you bought Boeing shares on January, 2, 2017, you’d be pretty happy right now with the return.
A couple of factors have put a floor on the shares, at least for now. And, market watchers believe, the company is at a crossroads. It’s primed either to take off, or to drop further. Fortune looks closely at what would trigger both scenarios.
The bearish case
Equity investing is not supposed to work this way. Bad news drives down share prices, particularly when sales are spiraling down and no one is sure what the future will bring.
In Boeing’s case, the tragedies of the 737 MAX crashes in 2018 and 2019 were the start of an historically bad stretch for the company. Business impacts began to quickly show as one national air safety regulator after another grounded the plane, and airlines began having second thoughts about the aircraft.
The graph below shows both net orders (new orders minus cancelled and rescheduled ones) and plane deliveries for both Boeing and the other half of the world’s major commercial aircraft duopoly—Airbus.
Boeing’s sales performance dropped off a cliff between 2018 and 2019. And, because of the fractured relationship between the company and regulators, particularly the Federal Air Administration, no one knows for certain when the MAX might fly again—in the U.S. or overseas.
Airliners aren’t the entirety of Boeing’s business, but they do represent an enormous piece. Commercial airplanes are only one of four major business divisions. The others include defense, space, and security; global services; and Boeing capital. But commercial airplanes have represented about 60% of total revenue. If the MAX doesn’t get off the ground, neither does Boeing’s business.
Total revenues were down 19.4% from $72.8 billion in the first nine months of 2018 to $58.6 billion in the same period of 2019. During that period, earnings per share sunk from about $12 to $0.66.
For investors, an important attraction is its commitment to share buybacks and dividend payments. But the investment community is right to feel antsy. Moody’s issued a credit downgrade review warning (S&P Global Ratings had already cut the credit rating the company in December) and now there’s fresh scrutiny on ex-CEO Dennis Muilenburg’s $80.7 million payout. Finally, there has been a series of equity analyst downgrades over the last few months, with Cowen and Berenberg announcing theirs days and weeks before yesterday’s bad news.
Still, the stock price more or less hangs on for a few reasons.
“Under normal circumstances, you say the market responds quickly to information, except for something like manufacturing,” said Giacomo Santangelo, a senior lecturer in economics at Fordham University. Even with the slide in new sales, existing contracts can’t be so easily put to the side. “All of the negative news on Boeing over the last year was not expected to affect the business now because they’re still producing. It’s the new contracts and future business” that will determine the true extent of the trouble the company faces.
The bullish case
It helps that Boeing operates in a duopolistic market. Airline customers have limited alternatives at the moment. They can’t write off fleet additions because many of their planes are aging. Newer craft have greater fuel efficiency to cut costs and boost margins at a time when air travel is booming. The only other supplier of this sort of commercial aircraft, Airbus, has its own problems with capacity. As an industry analyst at Citi told Fortune, if Boeing hadn’t had such a bad year in 2019, the big story in the sector would be the problems Airbus had meeting delivery targets.
It all points to the fact that there’s captured demand that can’t walk away or find another source.
As the Boeing share price demonstrates, investors are staying calm amid the firehose of bad news. One big reason: they believe the situation has hit bottom and can only go up from here.
“Boeing’s share price would have been hit a lot harder if people thought there was a reasonable probability that the 737 MAX would not fly again,” said Jerry Braakman, chief investment officer for First American Trust.
The larger issues of addressing the toxic workplace culture and repairing relationships with suppliers and regulators “will cost money,” said Braakman, who personally owns some Boeing shares. “And, for investors, that’s always a drag.”
The recent change at the top was also greeted with relief; investors poured back into the stock once Muilenburg was relieved of his duties.
“Bringing David Calhoun in is what gives us confidence to keep owning the stock,” said Kevin Simpson, chief investment officer at Capital Wealth Planning, which held a position in shares until they hit around $440, at which point it sold and then bought back at $375. “He’s the polar opposite of David Muilenberg. He’s not hiding things under the rug.”
However, no one is complacent about Boeing’s future. “It has resources to continue, but it needs to resolve this in a reasonable amount of time,” Braakman said.
What’s a reasonable timeline for Boeing to get back on track? Various analysts told Fortune that the company needs to be on its way to normalcy by late spring, early summer, or even the end of 2020 (although the longer the delay, the more impact share prices will feel) to fully regain the trust of the markets.
“If it happens later this year, Boeing can still do okay,” said Capital Wealth Planning lead portfolio manager Josh Smith. “If it stretches into 2021, then things get a little dicey.”
For now, all eyes and ears will be on the Boeing earnings report at the end of January. And nobody is discounting yet more bad news.
More must-read stories from Fortune:
—Forget policymakers. Greta Thunberg and her allies are targeting CEOs
—Investors see a 2020 recession coming—but think they’ll make money
—The Carlos Ghosn affair: A look inside the motivations of a fugitive CEO
—What $1,000 in 10 top stocks a decade ago would be worth today
—Laws meant to close down tax havens and shut loopholes could have opposite effect
Subscribe to Fortune’s forthcoming Bull Sheet for no-nonsense finance news and analysis daily.


fortune--2020-01-15--Goop investor Felix Capital raises $300 million for a new venture fund

What must e-sports ’ first female commissioner do to become a true trailblazer ?
Turn a profit

Felix Capital, a London-based venture capital firm, has raised $300 million for its third venture capital fund. The new fundraising doubles Felix’s total assets under management to more $600 million. For a VC firm that’s only been around for five years, it’s done pretty well for itself.
The firm backs “digital lifestyle” companies with customer bases that exhibit cult-like loyalty to the brands. Felix was an early investor in now-public companies including FarFetch and Peloton, as well as private companies Mejuri, Highsnobiety — and the one I’m personally most intrigued by — Goop. I spoke with Felix Capital founder and managing partner Frederic Court back in 2018 about his investment strategy for Term Sheet’s “5 Questions With a Dealmaker.”
As I wrote then, Goop is a company that encapsulates the firm’s investment thesis perfectly — it began as a newsletter of recommendations curated by Gwyneth Paltrow in 2008. Today, it’s a venture-backed lifestyle empire valued at more than $250 million. Court invested four years ago, and he sits on Goop’s board and considers Paltrow one of the best entrepreneurs he’s worked with.
“The big thing to know is that there’s a massive trend especially from the younger generation around wellness and well-being,” Court said at the time, adding, “The success comes when you combine the product with education, which is what Goop does. We see more and more people investing in themselves.”
NEW VC ALERT: Rachel Holt, who was Uber’s head of mobility, has left the company to join Construct Capital as a co-founder. Construct is a new Washington D.C.-based venture capital firm co-founded by Dayna Grayson, who was previously at NEA for six years.
“I’m really excited to take everything I’ve learned at Uber to help find, fund and scale the next generation of tech entrepreneurs,” she said in a tweet.
The duo is in the midst of fundraising. Stay tuned to Term Sheet for more info soon.
WELCOME TO THE NEW FORTUNE: In 1930, Fortune published its first-ever issue, featuring the goddess Fortuna and her wheel on the cover. This year, on our 90th anniversary, we’re celebrating with a new Fortune. Here’s what’s in store for you:
We’ve launched a new site, where you’ll find the best of business all in one place: strategic insights, deep-dive stories, and exclusive access to what executives are thinking. To access all of our revamped stories, register for free.
Later this month, we’re launching new newsletters: The Bull Sheet, a daily brief on finance news, and The Broadside, a monthly bulletin for career-oriented women. Sign up to stay up to date on their launches.
We’ve launched a new hub for our exclusive videos. It curates collections of executive insights—the latest and best from our interviews with business leaders, analysis series, and conference sessions. Access hundreds of hours of content.
Starting with the February 2020 issue, we’re substantially upgrading our print magazine. There will be more stories per issue, and the reading experience will be more premium, with gorgeous, higher quality covers and stock. To see for yourself, subscribe to the magazine.
Term Sheet will remain accessible via email, but the newsletter’s web posts will be behind the registration wall. As always, thank you for being a subscriber.
Polina Marinova
Twitter: @polina_marinova
Email: polina.marinova@fortune.com
VENTURE DEALS
- Zinier, a San Francisco-based startup bringing automation to the field service management realm, raised $90 million in Series C funding. ICONIQ Capital led the round, and was joined by investors including Tiger Global Management, Accel, Founders Fund, Qualcomm Ventures, NGP Capital, and Newfund Capital.
- FlashParking, an Austin, Texas-based parking technology company, raised $60 million in funding from L Catterton.
- 6sense, a San Francisco-based provider of a predictive intelligence platform, raised $40 million in Series C funding from Insight Partners.
- Covera Health, a New York-based provider of clinical analytics solutions to reduce medical misdiagnoses, raised $23.5 million in Series B financing. Insight Partners led the round, and was joined by investors including Prism Ventures.
- Insurify, a Cambridge, Mass.-based AI-powered insurance comparison platform, raised $23 million in Series A funding. MTech Capital and Viola FinTech co-led the round, and were joined by investors including Nationwide, Hearst Ventures, and MassMutual Ventures.
HEALTH & LIFE SCIENCES DEALS
- Color, a Burlingame, Calif.-based health tech and precision genomics firm, raised $75 in funding. T. Rowe Funds and Viking Global Investors co-led the round. Read more at Fortune.
- Oviva, a Switzerland-based digital provider of Type 2 diabetes treatment, raised $21 million in Series B funding. MTIP led the round, and was joined by investors including Earlybird, AlbionVC, F-Prime Capital, Eight Roads Ventures and Partech.
PRIVATE EQUITY DEALS
- Blackstone led a recapitalization of Altus Power, a Greenwich, Conn.-based solar power company, for $850 million.
- Bestar, which is backed by Novacap, acquired Bush Industries, a Jamestown, N.Y.-based maker of case goods and RTA furniture for the office and home. Financial terms weren't disclosed.
- Concours Mold Inc, a portfolio company of Crestview Partners, acquired the assets of Valiant Tool and Mold Inc, a Canada-based provider of engineering, design, simulation, program management, manufacturing and inspection services. Financial terms weren't disclosed.
- Sandbridge Capital made an investment in ILIA Beauty, a Laguna Beach, Calif.-based manufacturer of line of clean color cosmetics. Financial terms weren't disclosed.
EXITS
- Google agreed to buy Pointy, a Dublin-based developer of tech designed to help brick-and-mortar stores sell goods online. Financial terms weren't disclosed. Pointy raised more than $19 million in venture funding from investors including Vulcan Capital, Polaris Partners, Draper Associates, and Frontline Ventures.
- Google acquired AppSheet, a Seattle-based operator of a no-code mobile app development platform for companies. Financial terms weren't disclosed. AppSheet had raised approximately $18.5 million in venture funding from investors including Shasta Ventures and NEA.
- Liberty Hall Capital Partners sold Aircraft Performance Group, a Castle Rock, Colo.-based provider of proprietary flight operations software solutions, to AFV Partners. Financial terms weren't disclosed.
- Milliken & Company agreed to acquire Borchers Group Limited, a Westlake, Ohio-based specialty chemicals company, from The Jordan Company. Financial terms weren't disclosed.
FIRMS + FUNDS
- Lexington Partners, a New York-based investment firm, raised $14 billion for Lexington Capital Partners IX, L.P. and associated vehicles.
- Obvious Ventures, a San Francisco-based venture capital firm, raised $271,828,182 for its third fund “OV3.” Read more.
- Prime Movers Lab, a Jackson, Wyoming-based venture capital firm, raised approximately $100 million for its first early-stage fund.
PEOPLE
- Napier Park Global Capital named Nadja Marcoz as a partner of the firm.
- The Compass Group promoted Raj Dalal to principal.
- Wendel Group promoted Kyle Hutchison to principal.
- The Cynosure Group hired Drew Sandbo as a senior associate.
- Sofinnova Partners promoted Michael Krel to partner.
IF YOU LIKE THIS EMAIL...
Share today’s Term Sheet with a friend.
Did someone share this with you? Sign up here. For previous editions, click here.
For even more, check out Data Sheet, Fortune's daily newsletter on the latest in tech news. Sign up here.


fortune--2020-01-15--Giuliani letter among new documents disclosed by Democrats ahead of impeachment trial

House Democrats have released documents they obtained from a close associate of President Donald Trump’s personal lawyer Rudy Giuliani, including a handwritten note that mentions asking Ukraine’s president to investigate “the Biden case.”
The documents, obtained from Lev Parnas as part of the impeachment investigation, show Parnas communicating with Giuliani before the removal of Marie Yovanovitch, who was the U.S. ambassador to Ukraine. A man named Robert F. Hyde disparaged Yovanovitch in messages to Parnas and gave him updates on her location and cell phone use, raising questions about possible surveillance.
Democrats released the files Tuesday as they prepared to send articles of impeachment to the Senate for Trump’s trial. The documents add new context to their charges that Trump pressured Ukraine to investigate Democrats as he withheld military aid.
Parnas was in frequent communication with Giuliani and with Ukrainian officials, the messages show. He appeared to be pushing unsubstantiated allegations that Democrat Joe Biden and his son, Hunter Biden, were somehow engaged in corruption in Ukraine.
Among the documents is a screenshot of a previously undisclosed letter from Giuliani to Ukrainian President Volodymir Zelenskiy dated May 10, 2019, which was before Zelenskiy took office. In the letter, Giuliani requests a meeting with Zelenskiy “as personal counsel to President Trump and with his knowledge and consent.” In the letter, Giuliani said he would be accompanied at the meeting by Victoria Toensing, a Washington attorney and Trump ally.
One of the documents is a handwritten note on stationery from the Ritz-Carlton Hotel in Vienna that says “get Zalensky to Annonce that the Biden case will be Investigated.” Trump asked Zelenskiy in a July call to investigate his political rival, Democrat Joe Biden, and his son Hunter. Hunter Biden served on the board of a gas company based in Ukraine.
Democrats said that Parnas’ attorney confirmed that Parnas wrote the notes.
The documents — including phone records, texts and flash drives turned over by Parnas — were sent to the House Judiciary Committee by three other House panels “to be included as part of the official record that will be transmitted to the Senate along with the Articles of Impeachment,” according to a statement. Some of the materials were made public while others were marked as sensitive.
Parnas and his business partner, Igor Fruman, both U.S. citizens who emigrated from the former Soviet bloc, were indicted last year on charges of conspiracy, making false statements and falsification of records. Prosecutors allege they made outsize campaign donations to Republican causes after receiving millions of dollars originating from Russia. The men have pleaded not guilty.
In several of the documents, Parnas communicated with Giuliani about the removal of Yovanovitch. The ambassador’s ouster, ordered by Trump, was at the center of the Democrats’ impeachment inquiry. Yovanovitch testified in the House impeachment hearings that she was the victim of a “smear campaign.”
Trump on a July 25 call had promised Zelenskiy that Yovanovitch was “going to go through some things.” Roughly two months earlier, she was recalled from her diplomatic post.
On April 23, just before Yovanovitch was directed to return to the United States, Giuliani texted Parnas, “He fired her again.” Parnas texted back, “I pray it happens this time I’ll call you tomorrow my brother.”
Parnas also received messages from Hyde, who referred to Yovanovitch as a “bitch.” Hyde is now running for a U.S. House seat in Connecticut.
After texting about the ambassador, Hyde gave Parnas detailed updates that suggested he was watching her. In one text, Hyde wrote: “She’s talked to three people. Her phone is off. Her computer is off.” He said she was under heavy security and “we have a person inside.”
Hyde at one point texted Parnas that ”they are willing to help if we/you would like a price,” and “guess you can do anything in Ukraine with money … is what I was told.”
Parnas texted back: “lol.”
Lawrence Robbins, an attorney for Yovanovitch, called for an investigation in to the messages.
“Needless to say, the notion that American citizens and others were monitoring Ambassador Yovanovitch’s movements for unknown purposes is disturbing. We trust that the appropriate authorities will conduct an investigation to determine what happened.”
On Twitter, Hyde dismissed the claims as “laughable” and appeared to try to distance himself from Parnas. He said he would “welcome” an investigation.
The text messages show that Parnas consulted Giuliani in Jan. 2019 after the U.S. denied a visa for former Ukrainian Prosecutor General Viktor Shokin. Giuliani replied: “I can revive it.”
The following day, Giuliani told Parnas: “It’s going to work I have no 1 in it.” Giuliani then predicted “he will get one” before giving Parnas the phone number for Jay Sekulow, the leader of the president’s personal legal team. Sekulow is expected to be part of Trump’s legal team during the impeachment trial.
A federal judge earlier this month ruled that Parnas could provide the materials to Congress as part of the impeachment proceedings.
Democrats voted in December to impeach Trump for abuse of power and for obstruction of Congress.
More must-read stories from Fortune:
—Donald Trump and the power of incumbency
—Just six candidates qualify for the January Democratic debate
—The wealthiest members of Congress—and how they made their millions
—USPS could privatize as early as next year
—2020 Crystal Ball: Predictions for the economy, politics, technology, and more
Get up to speed on your morning commute with Fortune’s CEO Daily newsletter.


fortune--2020-01-15--Elizabeth Warren’s answer to the ‘electability’ question? Her record of winning elections

Good morning, Broadsheet readers! The WNBA gets a proposed new contract, Nancy Pelosi starts to move impeachment from the House to the Senate, and Democrats debate whether a woman can win. Have a wonderful Wednesday.
EVERYONE’S TALKING
– Answering The Question. The liveliest moment of the Democratic debate last night hinged on a question that has dogged the party—and the country at large—for years now: Can a woman be elected U.S. president?
The matter came up during the debate in Des Moines after it seemed to sever the otherwise friendly relationship between progressive Sens. Elizabeth Warren and Bernie Sanders this week. (“Mom and dad are fighting” is how one left-wing activist characterized the rift.)
For a refresher, the controversy bubbled up when CNN reported that during a private meeting at Warren’s home in 2018, Sanders told Warren that he did not believe a woman could win an election against President Donald Trump. Warren later confirmed the report in a statement: “I thought a woman could win; he disagreed.” Sanders, meanwhile, denied it wholeheartedly.
“What I did say that night was that Donald Trump is a sexist, a racist and a liar who would weaponize whatever he could,” Sanders said. “Do I believe a woman can win in 2020? Of course! After all, Hillary Clinton beat Donald Trump by 3 million votes in 2016.”
In The Cut, Rebecca Traister has an interesting theory about the senators’ differing recollections of the meeting; that “what Sanders himself said, in his denial…is not at odds with what Elizabeth Warren may well have heard.” Sanders’ expressed concern about the challenges of a woman running against an incumbent with misogynistic tendencies resonates with plenty of voters. That “lots of people feel this way doesn’t mean it’s true that a woman can’t win,” Traister writes. “But it also doesn’t mean that worrying that it might be true is inherently sexist. And it doesn’t mean that hearing it or some version of this conviction all the time—including from your allies and future competitors—as you gear up to run for president isn’t absolutely maddening…”
Warren’s initial statement to CNN aimed to defuse the conflict. “I have no interest in discussing this private meeting any further because Bernie and I have far more in common than our differences on punditry.”
But she didn’t necessarily shy away from the conflict—and the age-old question—last night, as she seemed to pivot to embrace her role as the leading female candidate.
“Bernie is my friend, and I am not here to try to fight with Bernie. But look, this question about whether or not a woman can be president has been raised and it’s time for us to attack it head-on,” she said.
Referring to the four men on stage, Warren added, “Collectively they have lost 10 elections.” She then acknowledged Sen. Amy Klobuchar for a zinger of a line: “The only people on this stage who have won every single election they have been in are the women: Amy and me.”
Underlying reports and commentary about the Warren-Sanders spat is a sort of disbelief that the issue of women’s electability is engulfing the Democrats. This, after Hillary Clinton secured the 2016 nomination and the popular vote and two years after a record number of female candidates—many emboldened by Clinton’s loss to Trump—ran for office and, to Warren’s point, won.
—
Also… it’s a big day for the Fortune team! This morning, we launched a new site, where you’ll find the best of business all in one place: strategic insights, deep-dive stories, and exclusive access to what executives are thinking. To access all the new content, register for free. Also shiny and new: a gorgeous magazine redesign (subscribe!), a video hub, and a fresh crop of newsletters on the way—Broadsheet readers may be especially interested in, ahem, The Broadside, a monthly bulletin for women looking to take their careers to the next level (sign up to check it out here.)
Claire Zillman
claire.zillman@fortune.com
@clairezillman
Today’s Broadsheet was produced by Emma Hinchliffe.
ALSO IN THE HEADLINES
- Slam dunk. WNBA athletes have a groundbreaking proposed new contract, allowing players to earn up to $500,000—triple their current limit—and providing benefits like maternity leave, a childcare stipend, and space in arenas for nursing mothers. (The agreement still must be approved by the league’s board of governors and union members.) WNBA commissioner Cathy Engelbert called the contract a "big bet on women." New York Times
- Olympic choice. Kimia Alizadeh, 21, won a bronze medal in taekwondo at the 2016 Olympics, making her the only Iranian woman ever to earn a medal at the games. Now she's defected from Iran, saying she was tired of being used in propaganda even though she was "one of the millions of oppressed women in Iran." Alizadeh says she was mistreated by authorities and made her announcement in an Instagram post. Slate
- Special delivery. Get ready for a big day. House Speaker Nancy Pelosi says the House will vote to deliver articles of impeachment to the Senate today. Pelosi will soon appoint impeachment managers (or prosecutors) to handle the case against President Trump. Washington Post
- Dern on Dern. An oral history of Laura Dern by Laura Dern? Yes, please. Fortune sat down with the three-time Oscar nominee as she recalled career-highlight moments from 40 years on screen. Fortune
MOVERS AND SHAKERS: Memorial Sloan Kettering Cancer Center appointed Roxanne Taylor chief marketing and communications officer. Hewlett-Packard Enterprise SVP and chief information officer Archana Deskus will join Intel in the same role. Longtime Uber exec Rachel Holt left the company (her most recent role was head of new mobility); she will launch a venture capital firm called Construct Capital. Lenovo's Kim Stevenson joined NetApp as SVP and GM of its foundational data services business unit.
IN CASE YOU MISSED IT
- Not in Kansas anymore. Secretary of State Mike Pompeo was expected to run for an open Senate seat in Kansas. He decided not to, emboldening Kansas Democrats, including state Sen. Barbara Bollier. She brought in record fundraising online after Pompeo's decision was announced, and Democrats think they have a shot at flipping the seat held by Republicans for more than a century. Washington Post
- Wharton goes west. Edith Wharton was known for continuing to edit her books long after they first published. Her only known copy of The Age of Innocence was tucked away in her "chateau in southeastern France." Now it's returning to her former Lenox, Masschusetts home, now a museum, in time for the novel's 2021 centennial and Wharton's 158th birthday next week. New York Times
- IUD controversy. Teens in Maryland have the right to get birth control on their own, without parental knowledge or consent. But a new bill would require parental approval for IUDs or implants, and some contraceptive access advocates say it's part of a larger push to limit teenagers' access to birth control of all kinds. Vox
ON MY RADAR
#MeToo voices aren't too biased for the Harvey Weinstein jury. They’re necessary Washington Post
Why we can't get enough celebrity mom cookbooks Romper
When a whisper network fails The Outline
QUOTE
"I think for women, knowing you can put on a dress 20 years later—it resonated. It was like, Yes, you know, life is not over at 20!”
-Jennifer Lopez on wearing her famous Versace jungle dress last year


fortune--2020-01-15--Fact checking candidates’ claims from last night’s Democratic debate

Democrats vying to replace President Donald Trump cut some corners on the facts in their latest presidential debate. Here’s a look at some statements from the stage in Des Moines, Iowa.
JOE BIDEN: “I was a single parent too. When my wife and daughter were killed, my two boys I had to raise. I was a senator — a young senator — I just hadn’t been sworn in yet. I was making $42,000 a year. I commuted every single solitary day to Wilmington, Delaware — over 500 miles a day, excuse me, 250 miles a day — because I could not afford … child care. It was beyond my reach.”
THE FACTS: Child care costs are burdensome for most working U.S. parents, but the former vice president wasn’t quite as broke as claimed when suggesting he took the train back to Delaware because child care costs were too high.
A $42,000 salary might not sound like much today. In fact, Senate records show it was actually $42,500. But Biden joined the Senate after winning his seat in 1972. Adjusted for inflation, he was earning more than $256,000 in today’s dollars. That is more than four times the median household income.
___
BERNIE SANDERS: “Medicare for all … will cost substantially less than the status quo.”
THE FACTS: There’s no guarantee that “Medicare for All” will cost less.
The nonpartisan Congressional Budget Office said in a report last year that total spending under a single-payer system like Sanders is calling for “might be higher or lower than under the current system depending on the key features of the new system.”
Those features have to do with the design of the system, questions like payment rates for hospitals and doctors, and whether patients are required to pay part of the cost of their care. The Vermont senator says his plan would require no cost-sharing from patients, no copays and no deductibles. But completely free care could trigger a surge in demand for medical services, raising costs. Other countries that provide coverage for all do use cost-sharing to help keep spending in check.
A research report last year by the nonprofit Rand think tank estimated that Medicare for All would modestly raise total U.S. health spending.
The study modeled a hypothetical scenario with a plan similar to Sanders’ legislation. It found that total U.S. health care spending would be about $3.9 trillion under Medicare for All in 2019, compared with about $3.8 trillion under the status quo.
___
BIDEN: “I was asked to bring 156,000 troops home from that war, which I did. I led that effort.”
THE FACTS: Biden is roughly right about bringing troops home, but he didn’t mention that the U.S. had to send some back.
President Barack Obama did designate Biden to take the lead in pulling U.S. forces out of Iraq and coordinating efforts to maintain stability in Baghdad. His results were mixed. Biden and Obama failed to win agreement from the Iraqi government to keep a limited number of U.S. troops there after December 2011. That was the deadline for a complete U.S. pullout under a deal negotiated by the Bush administration in late 2008. Biden was still vice president when Obama was compelled to return American troops to Iraq in 2014 after the rise of the Islamic State extremist group.
___
ELIZABETH WARREN: “The only person on this stage who has beaten an incumbent Republican any time in the past 30 years is me.”
SANDERS: “Just to set the record straight, I defeated a Republican incumbent running for Congress.”
WARREN: “I said, I was the only one who’s beaten an incumbent Republican in 30 years.”
THE FACTS: Sanders wins this argument — one of the stranger disputes of the night — by a matter of months. In November 1990, Sanders beat Republican incumbent Peter Smith to take Vermont’s only House seat. That was 29 years and two months ago. Sanders’ win, technically, slips in the 30-year window.
More must-read stories from Fortune:
—Donald Trump and the power of incumbency
—Just six candidates qualify for the January Democratic debate
—The wealthiest members of Congress—and how they made their millions
—USPS could privatize as early as next year
—2020 Crystal Ball: Predictions for the economy, politics, technology, and more
Get up to speed on your morning commute with Fortune’s CEO Daily newsletter.


fortune--2020-01-15--How shadowy brokers allegedly launder billions for crypto criminals

Criminals have long turned to cryptocurrencies like Bitcoin to carry out crimes including ransomware and extortion. But as law enforcement has improved at tracking the semi-anonymous currencies, criminals have had to devise new tactics for turning ill-gotten crypto proceeds back into cash.
In response, a new breed of middlemen have emerged to help them launder billions of dollars. So-called over-the-counter (OTC) brokers have emerged as the lynchpin of a new type of money laundering, helping to turn at least $2.8 billion worth of Bitcoin into cash for criminal entities in 2019, according to a new report from crypto forensics firm Chainalysis.
OTC brokers are a familiar fixture in both the crypto and conventional stock trading worlds, and many of them are legitimate. In the case of Bitcoin, they connect buyers and sellers who want to trade large amounts of the currency without listing it on an exchange—often out of concern that making the trade public could cause a price swing. The OTC desks collect a small fee for the service.
Popular cryptocurrency exchanges like Coinbase operate OTC desks while specialized OTC firms such as Cumberland arrange billions of dollars worth of transactions daily (neither Coinbase nor Cumberland are named in the Chainalysis report). Eric Turner, the director of research at cryptocurrency data firm Messari estimates that around two-thirds of Bitcoin traded on any given day flows through OTC brokers.
The arena is lightly regulated, however, as OTC brokers in the U.S. and abroad face fewer regulations, including know-your-customer laws. This has allowed shadowy operators, who often conduct business via Skype or messaging apps like Telegram, to offer criminals a safe way to convert Bitcoin into hard currency.
In its report, Chainalysis cites a “Rogue 100” group of criminal OTC brokers who control Bitcoin addresses—a form of digital wallet—through which hundreds of billions of dollars flowed in 2019. The firm says the Rogue 100, none of which are directly identified in the report, often transact with each other and also transfer Bitcoin through intermediary accounts to make it harder to trace.
When it comes time to convert the Bitcoin into hard currency, Chainalysis says the Rogue 100 rely heavily on two major overseas exchanges, Huobi and Binance, to cash out. While the exchanges are nominally subject to know-your-customer laws, the criminal OTC brokers are still finding room to operate—particularly on Huobi, says Chainalysis.
The report says that 70 of the Rogue 100 operate on Huobi. It’s unclear whether any group on the list operates on Binance, suggesting most allegedly illicit activity on the service is done by smaller players. Chainalysis does not explicitly say the exchanges have direct knowledge of the illegal activity. Instead, it says the exchanges should be more consistent in scrutinizing OTC brokers.
In response to the Chainalysis allegations, Binance chief compliance officer Samuel Lim, said Binance is compliant with all regulations and know-your-customer regulations in all jurisdictions that it operates in. He added: “Binance is committed to cleaning up financial crime in crypto and improving the health of our industry. We will continue to improve on our proprietary KYC and AML technology, as well as the third-party tools and partners we work with, to further strengthen our compliance standards.”
Huobi did not respond to multiple requests for comment.
New money-laundering infrastructure
Chainalysis, whose customers include major U.S. and European law enforcement agencies, did not provide specific identities of the Rogue 100 OTC brokers. But in an interview with Fortune, co-founder Jonathan Levin said that, given the low barriers to entry in establishing an OTC shop, some may be lone individuals operating through apps.
Others, however, may be long-established criminal networks. Levin notes that criminal gangs have offered money laundering services for decades and have, in recent years, added Bitcoin laundering as an additional product. On a practical level, this means the perpetrator of a ransomware attack may use a Bitcoin OTC broker run by established criminals to turn its proceeds into cash.
While corrupt OTC brokers would have obvious appeal to criminals looking to sell Bitcoin, the appeal for buyers is less obvious. According to Chainalysis senior economist Kim Grauer, part of the answer is price. In studying OTC transactions, she says buyers often obtain a discount when dealing with the likes of the “Rogue 100.”
All of this poses new challenges for law enforcement, which, in recent years, has made enormous strides in understanding cryptocurrencies and, in some cases, recovering them.
According to Jarod Koopman, the Director of Cybercrime at the Internal Revenue Service, his agency and others have seized millions of dollars of Bitcoin stolen from exchanges and used in other crimes—in part by using forensic services like Chainalysis to trace it. But criminals have begun to take new steps to cover their tracks, and the role of OTC brokers has emerged as a major new area of concern, he acknowledged in an interview with Fortune. Koopman says OTC brokers and other types of peer-to-peer transfer services can “break the chain” as law enforcement seeks to track the flow of illicit funds.
Levin, of Chainalysis, says that law enforcement can address such challenges by working more closely together on tracing funds, and applying additional scrutiny to exchanges and crypto currency brokers.
More must-read stories from Fortune:
—Greenpeace ranks China’s tech giants on renewable energy
—Facebook deepfake video ban may set off ‘cat and mouse’ game
—Why there are so many scooters in Los Angeles
—What a $1,000 investment in 10 top stocks a decade ago would be worth today
—Missile strike vs. cyberattack: How Iran retaliates
Catch up with Data Sheet, Fortune’s daily digest on the business of tech.


fortune--2020-01-15--Meet Twitter’s top lawyer, who has the final word on blocking tweets—including Donald Trump’s

Whenever somebody on Twitter takes issue with the network’s rules or content policies, they almost always resort to the same strategy: They send a tweet to @jack.
A quick scan of Chief Executive Officer Jack Dorsey’s mentions show just how often he’s called upon to lay down the law for the service he helped create. But what users don’t know is that they’re imploring the wrong Twitter Inc. executive. While Dorsey is the company’s public face, and the final word on all things product and strategy, the taxing job of creating and enforcing Twitter’s rules don’t actually land on the CEO’s shoulders. Instead, that falls to Twitter’s top lawyer, Vijaya Gadde.
As Twitter’s head of legal and policy issues, Gadde has one of the most difficult jobs in technology: Her teams write and enforce the rules for hundreds of millions of internet users. If people break the rules, the offending tweets can be removed, users can be suspended, or in extreme cases booted off Twitter altogether. Dorsey may have to answer for Twitter’s decisions, but he’s taken a hands-off approach to creating and enforcing its content policies.
“He rarely weighs in on an individual enforcement decision,” Gadde said in a recent interview. “I can’t even think of a time. I usually go to him and say, ‘this is what’s going to happen.’”
That leaves Gadde, 45, as the end of the line when it comes to account enforcement — a delicate position in a world where Twitter’s rules are both an affront to free speech and an invitation to racists and bigots, depending on who’s tweeting at you. “No matter what we do we’ve been accused of bias,” Gadde said. “Leaving content up, taking content down — that’s become pretty much background noise.”
Like most corporate lawyers, Gadde generally operates in the background herself, though her influence has helped shape Twitter for most of the past decade. A graduate of Cornell University and New York University Law School, Gadde spent almost a decade at a Bay Area-based law firm working with tech startups before she joined the social-media company in 2011. Her eight-plus years at Twitter are about equal to the amount of time Dorsey has worked there over the years.
But as Twitter’s role in global politics has increased, so has Gadde’s visibility. She was in the Oval Office when Dorsey met with U.S. President Donald Trump last year, and joined the CEO when he met Indian Prime Minister Narendra Modi in November 2018. When Dorsey posted a photo with the Dalai Lama from that trip, Gadde stood between the two men, holding the Dalai Lama’s hand. InStyle just put her on “The Badass 50,” an annual list of women changing the world. “Vijaya defines the word,” tweeted Twitter Chief Marketing Officer Leslie Berland.
When Gadde first joined Twitter, the internet was a different place. At the time, a lot of politicians were just getting familiar with the platform. Trump primarily used his Twitter to share announcements about his TV appearances (though this would quickly change). The official presidential account, @POTUS, wouldn’t even come into existence until 2015, under then-President Barack Obama.
When Gadde took over as general counsel in 2013, the social-media service had an “everything goes” mentality. A year prior, one of Twitter’s product managers in the U.K. famously said that Twitter viewed itself as “the free speech wing of the free speech party,” a label later repeated by then-CEO Dick Costolo. The company simply “let the tweets flow,” said one former employee.
That freedom is part of what drew Gadde to Twitter in the first place. An immigrant from India, Gadde moved to the U.S. as a child and grew up in east Texas, where her dad worked as a chemical engineer on oil refineries in the Gulf of Mexico, before moving to New Jersey in middle school. “I was the only Indian child most of my education until I went to college,” she says now. “You feel voiceless. And I think that that’s kind of what drew me to Twitter — this platform that gives you a voice, and gives you a community and gives you power.”
Twitter’s commitment to giving everyone a voice, though, has also come with a general reluctance to take it away. Twitter’s decisions in recent years to ban certain users, including conspiracy theorist Alex Jones and far-right media troll Milo Yiannopoulos, were news in part because Twitter’s decisions to act were so uncharacteristic. Gadde acknowledges the change, saying that the company has come to realize in recent years the responsibility it has to protect the safety of its users, including when they’re not using the product. “I would say that the company has shifted its approach dramatically [since I started],” she said.
Perhaps no user presents a bigger quagmire for Gadde and her team than Trump, the platform’s most famous user, whose tweets often push the boundaries of Twitter’s rules. The president’s habit of blasting messages to his 70.9 million followers has taken on a new vigor thanks to a looming impeachment trial and re-election bid. Following the U.S. drone strike in early January that killed a top Iranian general, Trump threatened Iran with military force in a number of tweets, including the targeting of cultural sites. That prompted many observers, including some former Twitter employees, to ask why he hadn’t been suspended — a cycle that has played out several times following other Trump tirades.
Last month, Trump attacked his Democratic rivals, blasted Congress over impeachment proceedings, and even mocked teenage climate activist Greta Thunberg from his @realDonaldTrump Twitter account. According to a USA Today analysis, his tweets contain more negative language than ever. The study looked at whether Trump tweeted words with positive or negative connotations, and found he “is posting fewer tweets with words that convey joy, anticipation and trust, and more that convey anger.” Trump sent or retweeted more than 1,050 messages in December, according to Hootsuite — more than any other month since taking office.
“The way he uses social media is a reflection of just how unusual a candidate, and now a president, Trump is. A big part of that is that he breaks all the rules,” said Patrick Egan, a professor of politics and public policy at New York University. “Something that a lot of people really like about him is that he says the kind of things he’s not supposed to say, and of course that’s exactly the kind of thing that can get you into trouble on social media.”
A tweet from U.S. President Donald Trump created while former U.S. Ambassador to Ukraine Marie Yovanovitch’s testifies before the House Intelligence Committee is shown in the Longworth House Office Building on Capitol Hill Nov. 15, 2019 in Washington, DC. Drew Angerer—Getty Images
Inside Twitter, Trump’s tweets are a frequent topic of conversation among employees, and Gadde’s authority also means that she has the unique job of punishing the world’s most famous tweeter — should it ever come to that. “My team has the responsibility to do that with every single individual who uses Twitter, whether it’s the president of a country or it’s an activist or it’s somebody we don’t know,” she said. “I honestly do my best to treat everyone with that same degree of respect.”
Twitter has so far decided that Trump hasn’t crossed any lines, but the company is prepared for such a scenario. While it’s unlikely that Twitter would ever suspend a well-known politician – the company also has a newsworthiness policy, which means it’s less likely to take action on tweets from elected officials — it’s devised another penalty for world leaders: A warning screen unveiled last summer that hides a tweet from public view and limits its distribution, but still allows people to view the tweet with the click of a button. It’s a way to publicly acknowledge that a politician has violated Twitter’s rules while admitting what they said is too newsworthy to be taken down. “It’s preserving a record of what is said in the public interest,” Gadde explained.
The process is designed like this: A content moderator, who may be a third-party contractor, reviews a tweet that has been flagged and determines whether it violates Twitter’s rules. If they decide that it does, moderators can usually enforce punishment at this stage, but Twitter requires a second layer of review for offenders who are considered public figures — in this case, a verified politician with more than 100,000 followers, Gadde said.
The tweet is then sent to Twitter’s trust and safety team, and if they also agree that the post violates the rules, Twitter convenes a special group of employees from across the company to review it. This group, about a half-dozen people from various teams, is meant to bring in a diverse set of perspectives, Gadde explained. That panel then makes a recommendation to Del Harvey, Twitter’s head of trust and safety, and her boss, Gadde, for a final decision.
Barring some kind of emergency, using the label will ultimately be Gadde’s call. “Vijaya has a young kid still, so she’s very used to being woken up any hour, which is helpful,” Harvey joked to a group of reporters last summer.
Gadde won’t go so far as to say the new warning label was created with Trump in mind — “We try to think of these things globally and not just about the United States,” she said — but added that even though the screen, referred to internally as the Public Interest Interstitial, hasn’t been used since its debut last June, it will eventually make an appearance. Gadde said Twitter has used the newsworthiness policy a “handful” of times in the past as justification for leaving offending tweets up. But the company didn’t have the warning label back then, so the general public didn’t know anything had even been discussed behind the scenes, she said. “We know it happens, and that it will happen.”
Twitter actually pointed to this policy in September 2017 when answering questions about the decision to leave up a tweet from Trump that appeared to threaten North Korea with nuclear war. Twitter also has a policy against threats of violence. A White House spokesman, Steven Groves, declined to answer questions about Trump’s use of Twitter.
Historically, Twitter’s rules around free speech have been so lax that a number of celebrities and journalists, including singer Lizzo, actress Millie Bobby Brown and New York Times writer Maggie Haberman, have stepped away from the service — at least temporarily — with many citing bullying and harassment. U.S. Senator Kamala Harris, a former Democratic candidate for president, thought Twitter’s enforcement weak enough that she implored the company to suspend Trump in a letter in October, saying he uses his account to obstruct justice and intimidate people, including the whistle-blower whose report ultimately led to his impeachment. Twitter responded that Trump’s tweets didn’t break the rules.
The newsworthiness exemption gives Twitter a lot of wiggle room when it comes to removing high-profile tweets, but Gadde said the point of the warning label, and the company’s attempt to explain it, are part of a broader effort to be more transparent about how and why the company makes decisions — something she admits hasn’t always been clear. As Twitter has grown, so has the company’s understanding that it can’t simply sit by and let people tweet whatever they want, Gadde said. It’s one of the many ways her job has evolved over the years.
“We’re trying to do so much more of our work in public,” she said. “I want people to trust this platform.”
More must-read stories from Fortune:
—Greenpeace ranks China’s tech giants on renewable energy
—Sex tech steals the spotlight at CES
—Why there are so many scooters in Los Angeles
—What a $1,000 investment in 10 top stocks a decade ago would be worth today
—Best of CES 2020? Tech sites’ opinions differ wildly
Catch up with Data Sheet, Fortune’s daily digest on the business of tech.


fortune--2020-01-16--Exclusive: Consumer confidence nears a record high in the U.S., but dips in China and Europe

These companies are winning with workplace culture in a tight labor market

The willingness of American shoppers to open their pocketbooks is what’s driving the country’s economy and minimizing the impact of the trade war. And while consumers in much of the world show signs of slowing down, American consumers are getting more confident.
The Conference Board’s Global Consumer Confidence Index for the U.S. inched up 2 points to 122 in the fourth quarter of 2019. That’s just under the record high of 123 that the U.S. achieved in the first quarter of 2018. An index reading at 100 or above is considered positive.
But as American consumers get more exuberant, the Global Consumer Confidence Index, an aggregate of measurements in 64 countries, was flat at 107 in the fourth quarter. In Europe, it fell 2 points to 86, and in Asia it was down 1 point, to 116. The index fell 2 points, to 112, in China.
“These numbers point at the fact that consumer spending is likely to remain a more important driver of growth in the U.S. than in China and the Euro area in 2020,” says Bart van Ark, chief economist at the Conference Board.
More confident American consumers add up to great news for the country’s economy. But lower confidence in continents like Asia and Europe can’t be written off by U.S. consumers or businesses. A drag in other parts of the world could eventually be felt at home.
The Conference Board’s Global Consumer Confidence Index, which goes back to 2005, is a separate index from the Conference Board’s Consumer Confidence Index it uses as a measure of U.S. sentiment. Each has its own methodology, with the global index using a standardized approach across all the countries it measures.


fortune--2020-01-16--Orange and natural wines shine in this new subscription service

Natural wine sommelier Doreen Winkler wants you to drink orange wine. That’s why she launched the first subscription service dedicated to orange and natural wines, Orange Glou, while also hosting pop-up bars showcasing orange wines across the United States.
“Some are still, some are sparkling; some are perfect to drink now, others are best laid away for later,” says Winkler. “But they’re all natural, all orange, and all delicious.”
Orange—otherwise known as skin-contact—wines are definitely a niche style. Made with white grapes, the style puts traditionally white wine grapes through the process of red wine: the grape skins are left in contact with the juice for a period of time during fermentation. That can range from a few hours to a few weeks. Red wine grapes will leave the red color, which is why the wines range in hues from pale purple to deep garnet and tawny. For white grapes, this turns the juice an orange-ish hue, resulting in the term “orange wines.” Some wines are extremely vibrant copper tones while others just look a bit more golden than your traditional white. Further, they are typically made in a natural wine style, meaning minimal intervention in the vineyard and winery.
“The wines may seem novel, but they have been made this way for millennia in [the country of] Georgia, while modern winemakers in France, Italy, and the U.S. have only recently embraced the style,” Winkler notes.
Orange Glou founder Doreen Winkler. Orange Glou
Many wine fans, especially those familiar with the natural wine movement, have known about orange wines for years. But the growing popularity of low intervention winemaking and natural and biodynamic techniques have catapulted orange wines into the mainstream. Winkler, a self-proclaimed lover of the style, has long been advocating for them to friends and family. It was only recently, though, that she saw the demand rise in the restaurants where she consults. The knowledge of and interest in orange wines have become so great that Winkler felt she could build and sustain an entire company dedicated to the style.
“Orange wine is niche, but I think that has more to do with accessibility than it does the desirability of the product,” she explains. “So many people I’ve talked to want to try orange wine, but their local store carries only a limited selection or none at all.”
Her focus at Orange Glou is to not only help people find orange wines but also find the best ones. Winkler says she has tasted more than 1,000 different bottlings to curate a collection that is lively, unique, and highly drinkable. Because the style is so experimental, she respects the attempts, but knows they aren’t always a success. That’s why Winkler is so adamant about experiencing everything before she commits. Beyond tasting objectively good, wines can be included in the Glou portfolio only if they follow a strict set of guidelines that Winkler put together— including no added yeasts, acids, stabilizers, or sugars; no filtration or fining; and little or no added sulfur. And they must all be handpicked grapes from organic or biodynamic farms.
The natural wines lineup from Orange Glou. Clay Williams/Orange Glou
Producers range from her longtime loves, like Donkey and Goat in California, to recent discoveries, such as Viñátigo from the Canary Islands. Orange Glou features wines that are hard to find, like Radikon, a winery on the border of Italy and Slovenia. Its Ribolla Gialla from Friuli has an extremely limited allocation, and Winkler is always on the hunt for a case. (“The aromas of toasted hazelnut, apricot, honeysuckle, mineral—a dream!” she describes.) Similarly, the brand also picks up Dlúhé Grefty, a Czech Republic–based winery that makes only 1,200 bottles a year; Winkler is a huge fan of its Alba Rosales Gewürztraminer and its aromas of lychee, rose water, and nectarine.
“Most wine subscriptions today are built from bulk bargain discounted bottles that wouldn’t sell at retail,” Winkler says. “With Orange Glou, you aren’t paying for a few bottles of leftover wine. You’re signing up for access to quality products I have spent my lifetime developing the connections and resources to acquire.”
Winkler may not be a household name, but she does come with an accomplished résumé. She got her first sommelier job at age 22, and went on to develop the wine program at several New York City restaurants including Aska (two Michelin stars), Aldea (one Michelin star), and Sel Rrose over the course of a decade. Winkler has worked in wine regions across Europe as well as Australia, and she is a frequent attendee at major natural wine events.
A six-bottle subscription box from Orange Glou. Orange Glou
The subscription program works like any other wine club. Members receive shipments of three or six bottles each month, costing $105 or $195, respectively, plus tax and shipping. Each bottle comes with a tasting sheet of notes by Winkler as to how the wine was made, when you should drink it, and with what, as well as tasting notes. One particular detail duly noted: How long the skins were left in contact with the juice during fermentation.
“Orange wines are for explorers at heart,” she adds. “There’s a huge range of colors, flavors, textures, and styles of orange wine out there. There’s a certain wildness that comes when you let the grapes do the work.”
More must-read stories from Fortune:
—The most anticipated books of 2020, according to Goodreads
—Why this 100% sustainable Icelandic sea salt is becoming a chef favorite
—The magic of the wedding industry’s most exclusive conference
—Just in time for Dry January: No-alcohol whiskey and gin alternatives
—The best travel destinations for every season of 2020
Follow Fortune on Flipboard to stay up-to-date on the latest news and analysis.


fortune--2020-01-16--These companies are winning with workplace culture in a tight labor market

‘ Unrealistically high : ’ Experts doubt China can fulfill its targets in ‘ Phase One ’ of the U.S. @ @

Don’t call it a war for talent.
Call it a quest to attract excellent people who thrive in your culture and want to stay.
Whatever you call it, the Best Workplaces in the San Francisco Bay Area are succeeding. They are recruiting highly skilled, energized employees, who then remain at their jobs even though they easily could hop to other firms amid one of the tightest labor markets in the country today. (See also: The Best Small and Medium Workplaces in the Bay Area.)
Anna Binder, head of people at work management software maker Asana, dislikes the war metaphor when it comes to talent management. Binder says it is overblown and off-base, given that it is always hard to hire the very most talented engineers, marketers, salespeople and other professionals.
Her strategy is to make Asana a place where work matters for each employee, and where every person feels a deep sense of belonging. To these ends, one of Asana’s secret weapons—er, magnetic qualities—is that the company is committed to decentralized decision-making. By giving people at all levels of the company real power over an aspect of the business, it’s easy for employees to see how their work ties into the broader company mission. The distributed approach to authority also allows employees to bring their passions into their professional life.
Binder says Asana’s “areas of responsibility” system makes the company stand out from other fast-growing tech companies where junior staffers may have to wait years before they have the kind of say they enjoy at Asana.
“It’s a huge draw for early-in-career talent,” Binder says. “Particularly in the product-development domain, this is a big deal—to own your corner of the sky.”
Binder says Asana’s turnover overall is about a third less than that at other high-growth companies in the Bay Area, and its “regrettable” attrition is in the single digits.
Given its egalitarian workplace culture and strong retention rate, it’s not surprising that Asana earned a top spot on the 2020 Best Workplaces in the Bay Area ranking just published by Great Place to Work, the global workplace culture experts, in partnership with Fortune. The top-ranking large company is Comcast NBCUniversal, followed by Kimpton Hotels & Restaurants, technology giant Cisco Systems, medical device maker Stryker, and consulting firm Slalom.
San Francisco-based Asana, which employs roughly 700 people, earned the No. 1 ranking among companies with fewer than 1,000 employees. Employee-development software firm 15Five took the second spot among small and medium-sized companies, followed by personal financial services firm NerdWallet.
To determine the 2020 Best Workplaces in the Bay Area, Great Place to Work analyzed anonymous survey feedback from more than 33,000 Bay Area employees. Employees responded to survey questions describing the extent to which their organization creates a Great Place to Work For All — that is, a culture where every employee has a consistently great experience, no matter who they are or what they do for the company. Great Place to Work’s analysis considers an organization’s size, workforce makeup, and what’s typical in their industry and in the Bay Area. The ranking also assesses employees’ daily experiences of innovation, the company’s values, and the effectiveness of their leaders.
Status as a Best Workplace in the Bay Area is a feather in the cap of companies working hard to find and hold on to talent. One of the foremost technology hubs in the world and home to Silicon Valley, the San Francisco Bay Area is experiencing strikingly low unemployment. The jobless rate in San Francisco and San Mateo counties was 1.9 percent in October 2019, down from 2.2 percent the previous year. That 1.9 percent is much lower than the national unemployment rate of 3.3 percent.
Some say a job market this tight makes for fierce battles for talent.
But like Asana’s Anna Binder, Shane Metcalf of employee development software firm 15Five would prefer to kill the talent war talk. It’s not about fighting other firms so much as it is about cultivating an employee experience that people can’t resist, suggests Metcalf, chief culture officer of San Francisco-based 15Five. “We are obsessed with building a powerful culture not only because it produces superior business results and has virtually eliminated undesired attrition, we build a world-class culture so that we can attract world-class talent,” he says.
It seems to be working at 15Five, which now employs about 200 people. In its eight years of operations only five people voluntarily have left the company. Only 2 of those departures were for other jobs, Metcalf says.
Developing the right leadership norms is critical for a strong, attractive culture, Metcalf says. Great Place to Work research has found that the most effective, inclusive leaders—whom we dub For All Leaders—have traits such as humility, the ability to build bonds of trust with and among team members, and a focus on a bigger purpose rather than immediate results. To ensure such leaders, organizations shouldn’t take a hands-off approach, Metcalf says.
“If you rely on the individual managers to lead their teams with emotional intelligence, vulnerability and compassion, you will get some lucky eggs and some rotten eggs,” he says. “You want to create such a strong cultural center of gravity that conveys “This is how we do it here” that it’s easier to identify the leaders who need some coaching on this and the ones who just need a high five for being more like Yoda and less like Superman.”
Metcalf and 15Five aren’t the only ones seeing the Man of Steel as an outdated management role model. More and more organizations are realizing that leaders who come across as invincible, strong and solo heroes are less effective than those willing to show vulnerability, demonstrate care and create psychological safety on their teams.
Asana’s culture requires new hires to have a measure of vulnerability and curiosity, and people typically become more open-minded and growth-oriented once they join the company, Binder says. Still, it can be a culture shock, she says, for newly hired leaders used to cut-throat corporate climates where “every conversation is a territorial fight.”
What is working to hold onto talent at Asana, Binder says, is almost the opposite of combative meetings. It’s a culture, she says, where people give and receive “real” feedback, but “in a safe and loving way.”
In other words, if there is a battle for talent in the San Francisco Bay Area, the Best Workplaces are winning it by making love not war.
View the lists of the best large and best small and medium workplaces in the Bay Area.
Ed Frauenheim is the senior director of content at Great Place to Work and a co-author of the book A Great Place to Work For All.


fortune--2020-01-16--BlackRock arrives fashionably late to sustainable portfolios

This is the web version of The Loop, Fortune’s weekly newsletter on the revolutions in sustainability. To get it delivered daily to your inbox, sign up here.
Good morning.
“Climate risk is investment risk,” BlackRock CEO Larry Fink wrote in his annual letter to CEOs this week, noting that climate change was forcing financiers to reconsider their “core assumptions” about modern finance.
To that end, BlackRock—the world’s largest asset manager—is making some changes to its portfolio. Companies that generate more than 25% of revenue from coal will be removed from the group’s actively managed funds.
However, as Fortune’s Alan Murray noted in CEO Daily yesterday, the majority of BlackRock’s funds are passively managed, so expect BlackRock to continue investing in fossil fuels for some time to come.
Nevertheless, divestment is catching. It was only last month that Goldman Sachs CEO David Solomon announced the bank would not fund future Arctic oil projects nor any thermal coal projects and Fink warns that in the near future, “sooner than most anticipate,” there will be a significant reallocation of capital.
MSCI, the financial tool provider and index maker, seems to agree. In the group’s 2020 ESG Trends to Watch report released this month, MSCI argues that increasingly capital will be tied to ESG performance. The trend is already on the rise. According to MSCI, ESG-linked loans more than doubled to $71.3 billion in the first three quarters of 2019 over the same period in 2018.
MSCI also predicts that stakeholder activism will become more prominent in the year ahead, but notes that only shareholders have formal mechanisms to hold companies directly to account. Here Fink is on trend again, writing in his letter that BlackRock won’t shy away from using its shareholder clout to pressure companies into conforming to ESG standards.
BlackRock has historically fallen short on this point. According to non-profit Majority Action, last year BlackRock supported only 12% of shareholder resolutions addressing climate change. Jackie Cook, director of sustainable stewardship research at Morningstar, estimates an additional 15 sustainability-related resolutions would have passed last year if BlackRock had offered its support.
No surprise then that, while skepticism that Fink will follow through remains, many commentators are in favor of BlakRock’s about face. Environmental Defense Fund president Fred Krupp gushed that Fink has “redefined what it means to lead on climate change in the finance sector,” suggesting that Fink’s letter might prove to be a “historic” moment.
Others were more reserved in their praise. Kirsten Snow Spalding, senior department director at Ceres Investor Network said, “BlackRock is now throwing their weight behind what already exists — a global movement to really addressing sustainability in portfolios…They’re not the first to the party, but just adding their weight is critical.”
More below,
Eamon Barrett
Eamon.barrett@fortune.com
CARBON COPY
Under fire
Australian PM Scott Morrison called for a government inquiry into the administration’s response to the wildfires that have raged across the country for months, but he stopped short of pledging policy changes that could further reduce carbon emissions. “The emissions reduction action of any one country anywhere in the world is not going to specifically stop or start one fire event, but what the climate resilience and adaptation work can do within a country can very much directly ensure that Australians are better protected against what this reality is in the future,” Morrison said. The Guardian
Climate trade-offs
The U.S. Senate is due to vote on the United States-Mexico-Canada Agreement (USMCA) later today, after the bill that would turn the NAFTA-replacement into law advanced through several committees on Tuesday. The bill is expected to pass, but a few Democrats voted against its advancement on the grounds that the USMCA has zero safeguards against climate change. “The USMCA is a trade deal that will hinder progress on climate action for a generation. This is a profound environmental and climate failure,” said Massachusetts Senator Edward Markey, who voted against the bill’s advance. Politico
India boos Bezos
India’s antitrust regulator opened an investigation into Amazon on Monday, days before Bezos in the country to attend an Amazon summit on SMEs in New Delhi. The Amazon CEO pledged $1 billion to help digitize local industries, but was met with protests from SMEs who accuse the e-commerce giant of “economic terrorism,” as small retailers can’t compete with Amazon’s low prices. New York Times
Bezos battles deniers
In other but related Bezos news, the CEO took a stand against climate change deniers while in India, telling an audience of SMEs: “Anybody today who is not acknowledging that climate change is real — that we humans are affecting this planet in a very significant and dangerous way — those people are not being reasonable.” Bezos’ proclamation comes the week after reports alleged Amazon had threatened to fire two employees for publicly criticizing the company’s climate policies. CNBC
IN CASE YOU MISSED IT
Elizabeth Warren: I’ll use the force of government to make tech work for people with disabilities by Elizabeth Warren
No more ‘chicken or fish?’ on wedding invites. Now on the menu: Plant-based entrées by Stephanie Cain
Forget policymakers. Greta Thunberg and her allies are targeting CEOs now by Christiaan Hetzner
‘They must scale up:’ Greenpeace ranks China’s tech giants on renewable energy by Naomi Xu Elegant
Retailers reuse and recycle the way to increased growth by Kevin Kelleher
SCRAPBOOK
Some news from the bizarre: American R&B singer Akon—of Lonely and Smack That fame—has bought a city in his country of birth, Sengal, which he hopes to develop as a destination for eco-tourism. The smartly-named Akon City will be built on a 2,000 acre patch of land close to the new airport in Senegal’s capital, Dakar.
It’s news to me but, the multi-platinum R&B star from the early noughties has a number of philanthropic efforts in Africa. Akon City will be powered by renewable energy provided by Akon’s solar-power initiative, Akon Lighting Africa, and the city’s economy will run on Akon’s own cryptocurrency called—wait for it—Akoin.
“If it works, we will scale it out to all the other countries in Africa so all the cities are connected. It’s going to be a 50-to-100-year project, most likely. I probably won’t even live to see it finished. But for the project in Senegal, we have a 10-year deadline for that city to be built out,” Akon told Newsweek in 2018.
Akon signed an MOU with the Senegalese tourism ministry on the city this week and will be built over the next ten years.
(Photo By Eóin Noonan/Sportsfile for Web Summit via Getty Images)
CLOSING NUMBER
250-360 million
That's the number of people who could be living in an area where there's a likelihood of experiencing a lethal heatwave by 2030 if carbon levels continue to rise unabated, according to McKinsey. The consultancy released a report on the physical and socioeconomic hazards of climate change this morning, covering topics such as exposure to heat, flooding, drought and starvation. It's full of interesting, often troubling, stats. For example, The share of annual outdoor working hours lost due to extreme heat and humidity in exposed regions would double from 10 percent today to 15 to 20 percent by 2050.


fortune--2020-01-16--The case for a health care futures market

This is the web version of CEO Daily. To get it delivered to your inbox, sign up here.
Good morning.
Do we need a futures market for health care? That’s the argument Greg Simon and Jeff Feldman make in the new issue of Fortune magazine. Financial futures, created in the 1970s, helped bring stability during a time of wild inflation and skyrocketing interest rates. Oil futures, created in the 1980s, did the same for an era of soaring energy prices. So why not try it to help manage health care costs?
“To put the problem in perspective,” Simon and Feldman write, “the United States spends roughly $350 billion a year on oil. The value of structured financial products to hedge or speculate on the price of oil, based on that expenditure, totals hundreds of billions of dollars. We spend a similar amount annually just on diabetes care, but there are no financial products to provide predictable and stable prices for vital components of diabetes treatment, such as insulin.”
It’s a thought-provoking proposal—and the first of a new magazine feature called The Big Idea. February is the 90th anniversary of our magazine, and to mark the occasion, editor-in-chief Clifton Leaf has spearheaded what he calls “the most ambitious redesign in our history.” It starts with a stunning cover, illustrated by Craig & Karl, whose work has been exhibited at museums in Athens, New York, Paris and Shanghai. The cover is, in Leaf’s words, “both a look back to Fortune’s many decades of bold cover design and a leap forward.” You can read The Big Idea here, and get an early peak at the cover below.
And speaking of bold design, we are putting the final touches on our Fortune Brainstorm Design conference, being held in Singapore on March 25 and 26. The event is dedicated to executives using design principals to rethink their businesses and please their customers. Among those attending are top design executives from PepsiCo, Walmart, IBM, Microsoft, Amazon, Aston Martin, Twitter, 3M, Salesforce, IKEA, Royal Phillips, Waymo, General Mills, and more. I’ll be there, too, and if you are interested in joining, shoot me a note at alan.murray@fortune.com, or go here.
More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
TOP NEWS
Phase One
The "phase one" trade deal that the U.S. and China signed yesterday may already have hit a snag. A pillar of the agreement is that China buys almost $95 billion more in American commodities, but some raw materials included in the deal, such as soybeans and corn, fell Wednesday. Traders want to see evidence of Chinese shipments increasing. Fortune
Impeachment march
Democratic House leaders yesterday marched the formal articles of impeachment against President Donald Trump over to the Republican-dominated Senate, which will today become an impeachment court, with opening arguments due Tuesday. The White House is confident of acquittal there. Fortune
Goldman profits
Goldman Sachs's 2019 profits took a 13% hit as a result of the 1MDB Malaysian corruption scandal. The bank had to stash away an extra $1.1 billion late in the year, in anticipation of an expected settlement with the U.S. Justice Department, and that pushed its return on equity to a poor 10% for 2019. Wall Street Journal
Apple A.I.
Apple has bought a Seattle-based A.I. startup called Xnor.ai, which was incubated in Microsoft co-founder Paul Allen's Allen Institute for Artificial Intelligence. Experts believe Xnor.ai's tech will help Apple better analyze the pictures that its users take, though it could also be used to make Siri more independent from the cloud when processing users' commands. Fortune
AROUND THE WATER COOLER
Tech and disabilities
Presidential contender Elizabeth Warren writes for Fortune that, should she enter the Oval Office, she would push for technology to work better for people with disabilities. Warren: "If companies that receive government funding to develop their products will not or cannot offer key assistive technologies at reasonable prices, my administration will… license patented innovations to companies that will ensure that technologies are affordable and accessible to people with disabilities." Fortune
Patent trolls
A host of tech firms and carmakers, including Apple and BMW, have urged the European Commission to target patent trolls—that is, companies that buy up patents in order to milk other companies via lawsuits and licensing. The firms particularly want EU courts to steer clear of issuing blanket bans on products in cases where very few patents have been infringed upon. Financial Times
Twitter ads
Twitter has apologized for letting advertisers target hate groups such as neo-Nazis and homophobes. The apology came as a result of a BBC investigation that found discriminatory terms such as "anti-gay" were not excluded from the characteristics of ad targets that are available to advertisers. BBC
Oil cap
Citi Private Bank reckons there's an "ultimate cap" on oil prices now, due to the fact that solar electricity has for the last couple years been cheaper to produce. The bank's chief investment officer, David Bailin, said today that the limited, brief boost to oil prices caused by last year's drone attack on Saudi oil facilities served as evidence of this shift. CNBC
This edition of CEO Daily was edited by David Meyer.
THE FUTURE OF FORTUNE IS HERE
In 1930, Fortune published its first-ever issue, featuring the goddess Fortuna and her wheel on the cover. This year, on our 90th anniversary, we’re celebrating with a new Fortune. Here’s what’s in store for you:


fortune--2020-01-16--Why it’s time for a futures market in health care

Each edition of The Big Idea puts forward a not-so-modest proposal for making the world better.
Financial futures were created in the 1970s at a time of very high interest rates and inflation. Those economic ills were cured by the mid-1980s. Oil futures were created in the early 1980s at a time of shortages and volatile prices. The oil market stabilized a few years later. Stabilization of prices and supply happened because industry participants could transfer risk and achieve predictable pricing while speculators could find trading opportunities.
Today, it is health care costs that are out of control and that have risen to unsustainable levels. Insurance premiums and co-pays are at record highs, and some insurance companies are refusing to pay for some of the most expensive treatments. Capital market tools can do for health care what they did for interest rates and energy—provide stability and reduce prices—all of which is in the interest of patients. But so far, those tools don’t exist for health care.
Creating a health care marketplace
A futures or forward contract is a legal agreement to buy or sell a commodity or financial instrument at a predetermined price at a specific future time. It is a classic two-way market between willing buyers and sellers.
Conversely, health care is a one-sided marketplace. Patients receive a service and pay the bill without knowing the price beforehand and without any way to use financial tools (think about home mortgages and car loans) to spread the costs over time—which is one reason that medical bills are the biggest cause of personal bankruptcies.
This one-sided marketplace affects employers as well. A review of large- and medium-size self-insured companies reveals that many have hedging strategies to deal with interest rate, energy, and currency risk (even the weather!), yet their health care risk is not hedged at all. Insurance companies, in particular, know little about the health issues for the next year’s insured population, so they are subject to price shocks for sicker patients.
One of the primary reasons a financial market has not developed for health care is the inability to represent the component costs in an accurate way. In the case of energy, for example, there are financial instruments that represent the cost of various grades of oil, gasoline, natural gas, and coal. Similarly, there are tradable contracts for many agricultural commodities (wheat, corn, soybeans, etc.). To likewise create a financial market for health care, we must be able to represent the costs of specific drugs, procedures, and so on.
Until recently, this has not been possible for lack of data. With the advent of electronic health records (EHRs), we can now receive a current anonymized data feed of paid claims on behalf of patients and know the cost of treating particular conditions in various places and populations. We can define the “unit” as the cost of treating one patient for one disease for one year—or as the cost of a knee replacement or an open-heart surgery. An insurance company could then transfer the risk of any specific cost increases to the financial markets.
To put the problem in perspective, the United States spends roughly $350 billion a year on oil. The value of structured financial products to hedge or speculate on the price of oil, based on that expenditure, totals hundreds of billions of dollars. We spend a similar amount annually just on diabetes care, but there are no financial products to provide predictable and stable prices for vital components of diabetes treatment, such as insulin.
The U.S. health care system is at long last edging closer to value-based pricing—in which fees are determined by patient outcomes rather than by each service performed. But here, drugmakers will assume new risk, for example, if their drugs don’t work in certain patients. For this approach to scale, pharma companies will need a way to hedge or “lay off” this risk to speculators. Otherwise, they’ll do what they’ve always done: raise prices.
It’s now possible using health data to create indexes that represent the cost of treating specific diseases, taking specific medications, and the cost of many medical procedures. Based upon these indexes, we can create financial tools (futures, forwards, options) that can allow for price discovery and risk transference.
Turning health care costs into assets
This allows us to turn health care costs into assets, as was done for oil or for carbon credits on the Chicago Climate Exchange. A hospital would be able to sell surgical procedures (knee replacement, for example) in bulk to insurance companies in a competitive marketplace that can provide for true price discovery—and allow for more efficient pricing. Further, if an instrument that represents a procedure, treatment, or drug is available on an exchange, even a prospective patient can purchase it.
A health care futures market will lead to stable and lower prices for consumers and more predictability for drug companies, providers, and payers as they learn to do what farmers have done for decades—hedge the future.
About the writers
Greg Simon was the president of the Biden Cancer Initiative and the executive director of the White House Cancer Moonshot Task Force. Wall Street veteran Jeff Feldman has specialized in health care and biotech investment for the past 20 years.
This article appears in the February 2020 issue of Fortune.
More must-read stories from Fortune:
—25 ideas that will shape the 2020s
—What was Carlos Ghosn thinking with his great escape? A former colleague offers clues
—Short-sellers took on Tesla and Elon Musk in 2019—and lost their shirts
—Airbnb copes with a bad trip on the road to a 2020 IPO
—Pharma needs to start embracing practical technology
Subscribe to Fortune’s forthcoming Bull Sheet for no-nonsense finance news and analysis daily.


fortune--2020-01-16--‘Unrealistically high:’ Experts doubt China can fulfill its targets in ‘Phase One’ of the U.S. trade

‘Unrealistically high:’ Experts doubt China can fulfill its targets in ‘Phase One’ of the U.S. trade deal

Viking ’ s new small-ship expedition cruises will offer close-up views of a rapidly changing Antarctica and Arctic Circle

The first chapter of the U.S.-China trade war, which has dragged on for nearly two years, closed yesterday as President Donald Trump and China’s Vice Premier Liu He signed a trade agreement optimistically dubbed “Phase One.”
“This is the biggest deal anybody has ever seen,” Trump said, addressing the audience of 200 delegates invited to witness the agreement being signed. His counterpart, Liu He, offered a more reserved description, calling the deal “an extensive agreement.”
The 94-page document addresses intellectual property, forced tech transfers, and theft of trade secrets, which are the core issues that prompted Trump to first investigate imposing steep tariffs on Chinese goods in March 2018.
However, the more concrete details of the deal revolve around commitments made by China to purchase $200 billion more of U.S. goods and services than it did in 2017—a promise not many analysts are convinced China can keep.
“The targets for increases in China’s imports from the U.S. appear to be unrealistically high, which could set up the deal to fail, leading to additional tariffs or even a full-blown trade war,” said Andy Rothman, investment strategist at Matthews Asia, in a note sent to Fortune after the deal was signed.
China’s shopping list
According to the agreement, the first $76.7 billion of additional purchases will be completed this year, with the remaining $123.3 billion acquired in 2021. The majority of China’s increased purchases will come from the industrial sector, while agriculture, energy and services make up the remainder.
Trump, who has a core support base among U.S. farmers, had pressured Beijing to increase its agricultural imports specifically. In November last year, Trump said that China would purchase an additional $50 billion worth of U.S. agricultural products. According to the signed agreement, China has committed to purchasing just $32 billion more and will “strive” to add a further $10 billion.
A potential $42 billion increase in farm sales is a significant step up from pre-trade war levels. In 2017, Chinese buyers imported $19.6 billion of U.S. agricultural goods. That value plummeted to $9.3 billion in 2018 as Chinese businesses opened new trading routes with other countries. Brazil became a new favorite for soybeans—a product that previously accounted for 52% of all U.S. agricultural exports to China—with exports to China surging 30% in 2018.
Darin Friedrichs, senior Asia commodity analyst at INTL FCStone in Shanghai, is sceptical that the Phase One deal will result in Chinese importers switching back to purchase U.S. soy. “Private Chinese companies had to start booking out of Brazil a few months ago, and can’t easily just walk away from those contracts,” Friedrichs said.
Perhaps more importantly, Friedrichs adds, the Chinese government actually has little control over soybean imports. That particular industry is led by private companies, which are driven primarily by price and, notably, the Phase One deal doesn’t obligate Beijing to eliminate any of the $185 billion worth of tariffs it had imposed on U.S. imports.
Assuming Beijing keeps its tariffs in place to act as leverage during Phase Two negotiations, U.S. goods will continue to cost a premium in China. “Obviously, China won’t slap random tariff on Brazilian products, so I think they’re limited in how much control they can exert to get companies to switch over,” Friedrichs said.
A state-owned solution
If private companies continue to abide by market forces, it may be up to state-owned enterprises to step up and fulfill Beijing’s purchasing commitments in the years ahead as—contrary to belief—the government is unlikely able to exert control over private enterprises’ purchasing decisions, according to Jon Cowley, a Hong Kong-based expert on international trade at global law firm Baker McKenzie.
“To meet its $77 billion commitment in 2020 suggests China will have to start buying products now so I think we’ll learn relatively soon which companies are placing orders. That will be quite telling about how Beijing intends to meet its commitments of the Phase One trade deal,” Cowley said.
The National Farmers Union (NFU) in the U.S. is doubtful Beijing will come through. In a statement online, NFU President Roger Johnson said that “given the numerous deals that have been reached and then breached in the past two years” the union remains skeptical; without more “concrete details” it is worried that “all of this pain might not have been worth it.”
Cowley suggests that’s a common sentiment. “A lot of companies are working their way through this 94-page legal and economic novel only to come to the end and find out that for them the trade war is still alive and well. They are still paying the tariffs they were paying yesterday.”
More must-read stories from Fortune:
—Geopolitical events just don’t bounce oil prices like they used to
—The Carlos Ghosn affair: A look inside the motivations of a fugitive CEO
—How the re-election of Taiwan’s president could reshape Asia’s economic landscape
—Laws meant to close down tax havens and shut loopholes could have opposite effect
—7 M&As that defined a decade of dealmaking and reshaped the economy
Catch up with Data Sheet, Fortune’s daily digest on the business of tech.


fortune--2020-01-16--Viking’s new small-ship expedition cruises will offer close-up views of a rapidly changing Antarctic

Viking’s new small-ship expedition cruises will offer close-up views of a rapidly changing Antarctica and Arctic Circle

Viking Cruises just announced a series of new destination-focused, expedition voyages with locales that will inevitably see rapid change over the next decade and years to come.
Viking Expeditions will set sail starting in January 2022 with its first vessel, Viking Octantis, embarking on voyages to Antarctica and North America’s Great Lakes. A second expedition vessel, Viking Polaris, will debut in August 2022, sailing to Antarctica and the Arctic.
Optimally sized for discovery, the new Polar Class 6 Viking Octantis and Viking Polaris will host 378 guests in 189 staterooms. Designed by the same experienced nautical architects and engineers as Viking’s ocean ships, the ships are purpose-built for expeditions—small enough to navigate remote polar regions and the St. Lawrence River, while large enough to provide superior handling and stability in the roughest seas.
Within the last eight years, the company has introduced more than 60 new river cruise ships and six ocean cruise ships to become the largest small ship cruise line with a current fleet of 79 river and ocean vessels around the world. In 2020, Viking plans to launch seven new river ships with six more ocean sister ships are on order and options for four additional ships. These options could bring Viking’s total ocean fleet to 16 ships by 2027.
A rendering of the Viking Expedition ship: Penthouse Junior Suite—Polar Option. Courtesy of Viking
To develop the new expedition itineraries and programs, Viking has forged exclusive partnerships with the Scott Polar Research Institute at Cambridge University and The Cornell Lab of Ornithology, both of which will match leading researchers and educators with each expedition. The onboard expedition program is designed to prepare guests for their onshore experiences, with more than 25 experts accompanying each journey: the Viking Expedition Team (expedition leader and staff, photographer, and submarine pilots), and Viking Resident Scientists (biologists, botanists, geologists, glaciologists, oceanographers, ornithologists, polar experts, and researchers).
Viking says its arrival at the Great Lakes, in particular, will bring the most modern vessels ever to explore this region while also marking a major commitment to local tourism and economic development for the states of Michigan, Minnesota and Wisconsin, as well as the Canadian province of Ontario. Additionally, Viking has partnered with the National Oceanic and Atmospheric Administration (NOAA), whose scientists will join expeditions in the Great Lakes to conduct research focused on changes in the region’s weather, climate, and ecosystems.
A rendering of the Deck 2 Aft Aula Auditorium on-board the Viking Expedition ship. Courtesy of Viking
Guests will have supervised access to The Laboratory, a 430-square foot center equipped with wet and dry lab facilities, a sample processing area, fume cupboard, freezer and cool storage, comprehensive microscope optics, and extensive bench space for analysis-specific instruments. The Laboratory will be situated in a glass-enclosed mezzanine where guests can learn from and participate with scientists undertaking primary research, an experience unique to Viking, according to the company.
Viking says it will offer a variety of ways for guests to experience their destinations—in accord with their interests and activity levels—at no extra charge. Expedition equipment available for guests on Viking Octantis and Viking Polaris will include a fleet of military pro zodiacs designed for professional use in the harshest of environments; a fleet of two-seater Arctic-tested kayaks; and two 12-seater convertible RIBs.
Each ship will also feature two six-guest submarines that feature revolving seats and 270-degree spherical windows for an incomparable undersea experience. Provided equipment will include the necessary basics—such as boots, binoculars and waterproof pants—as well as safety equipment, like satellite phones, VHF radios, ropes, life jackets, and a comprehensive shore survival kit. All guests will receive complimentary use of Viking Excursion Gear, which includes specialty items like trekking poles, snowshoes, and skis.
A rendering of the Deck 2 Aft area, Finse Terrace, on-board the Viking Expedition ship. Courtesy of Viking
Guests will also be able to take in lectures at The Aula, a panoramic auditorium at the stern. Inspired by the University of Oslo’s famed ceremonial hall where the Nobel Peace Prize was historically awarded, The Aula can seat half the ship’s guests at one time and will offer a dynamic venue for lectures and entertainment, with floor-to-ceiling windows and 270-degree views. Adjacent to The Aula through sliding glass walls is the Finse Terrace, an outdoor lounge area with couches and warming lava rock “firepits” with panoramic views of the surroundings. The two spaces are designed to create an indoor-outdoor al fresco experience for guests to be immersed in nature.
Of course, it’s not all work and no play. In keeping with Viking’s Nordic roots, the onboard spa onboard is designed with the holistic wellness philosophy of Scandinavia in min, hosting a thermal suite featuring a sauna, a warm hydrotherapy pool, and a badestamp (hot tub), surrounded by floor-to-ceiling windows. Guests can also swim and lounge in three different temperature-controlled pools, including an “inside-out” swimming experience at the terrace pool located at the stern, which features a retractable glass dome.
A rendering of the Explorer’s Lounge on-board the Viking Octantis. Courtesy of Viking
Starting today, January 15, all expedition voyages—including the new Great Lakes itineraries—are available to the public for booking.
Trips start in price and duration from $5,995 per person (including airfare within North America) for the eight-day trip around Niagara and the Great Lakes (form Toronto to Milwaukee). At the highest end of the scale is the 44-day voyage from Tromsø, Norway (the country’s northernmost town) to Ushuaia, Argentina. Starting above the Arctic Circle, the ship will sail past the Shetland Islands and Ireland before making the trans-Atlantic crossing, later making port in Rio de Janeiro, Buenos Aires, and finally to the “Last Continent” (Antarctica). Pricing starts at $33,995 per person, with discounted airfare from $999 per person.
More must-read stories from Fortune:
—The Philly bakery that makes Beyoncé’s birthday cakes
—Why Petit St. Vincent is the ultimate winter getaway this year
—The 2019 food trends we hope carry over to 2020
—This unique wine is the newest collector’s item in Asia
—The best travel destinations for every season of 2020
Follow Fortune on Flipboard to stay up-to-date on the latest news and analysis.