fortune--2020-02-03--Trump impeachment trial closing arguments aim at voters and history

Closing arguments in President Donald Trump’s impeachment trial unfolded Monday more for history than to sway votes, one final chance to influence public opinion and set the record ahead of his expected acquittal in the Republican-led Senate.
The House Democratic prosecutors drew on history, the Founding Fathers and common sense to urge senators — and Americans — to see that Trump’s actions are not isolated but part of a pattern of behavior that, left unchecked, will allow him to “cheat”‘ in the 2020 election.
The president’s defense countered the “fast-track” impeachment case against Trump was flawed and rushed, nothing short of an effort to undo the 2016 election and to try to shape the next one.
All that’s left, as the Senate prepares to acquit Trump on charges that he abused power and obstructed Congress is for Americans to decide now, and in the November election, as the third presidential impeachment trial in the nation’s history begins to close.
“Leave it to the voters to choose,” said White House counsel Pat Cipollone.
Senators acknowledge the House Democratic managers have essentially proven their case, that Trump abused power and obstructed Congress, by leveraging U.S. military aid to push Ukraine to investigate political rival Joe Biden to thwart the 2020 election.
But key Republicans have decided the president’s actions toward Ukraine do not rise to the level of impeachable offense that warrant the dramatic political upheaval of conviction and removal from office. His acquittal in Wednesday’s vote is all but assured.
Democrats argue “right matters,” while Trump’s GOP allies contend it is time to end the partisan proceeding.
“What message does that send? “ asked Rep. Hakeem Jeffries, D-N.Y., a House prosecutor, who warned that for Trump, the ”past is prologue.” He implored senators to realize that without a vote to convict, the Senate will “allow the president’s misconduct to stand.”
House managers opened with a plea from Rep. Jason Crow, D-Colo., a freshman, who told the chamber: “We cannot and should not leave our common sense at the door.”
The former Army Ranger invoked the founding fathers and even Republican Barry Goldwater from the Nixon-era impeachment proceedings to intone: “In America, no one is above the law, even those elected president of the United States. I would say — especially those elected president of the United States.”
Rep. Val Demings, a former police chief, argued that the president is not behaving like someone who is innocent. She warned he will try to “cheat” again ahead of 2020.
“Innocent people don’t try to hide every document and witness, especially those that would clear them,” she told the senators. “That’s what guilty people do.”
Before Trump’s celebrity defense mounted their closing argument, the president himself already registered his views on Twitter where he decried the whole thing, as he often does, as a “hoax.”
Kenneth Starr, the former prosecutor ahead of Bill Clinton’s impeachment, complained about the inadequacy of the House prosecutors’ case.
The Senate proceedings are set against a sweeping political backstop, as voters in Iowa on Monday are choosing presidential Democratic primary candidates in early voting and Trump is poised Tuesday to deliver his State of the Union address in his own victory lap before Congress.
The trial unfolded over nearly two weeks and reached a decisive moment last Friday when senators voted against calling witnesses and documents. Key Republicans said they had heard enough. It becomes the first impeachment trial in the nation’s more than 200-year history without any witnesses.
Even new revelations from John Bolton, the former national security adviser at the White House, whose forthcoming book discloses his firsthand account of Trump ordering the investigations, did not impress upon senators the need for more testimony.
Bolton has said he would appear, if he received a subpoena, but GOP senators said the House should have issued the summons and the Senate did not want to prolong the proceedings.
Prosecutors relied on a 28,000-page report compiled over three months of proceedings in the Democratic-controlled House, including the public and private testimony from 17 witnesses, many current and former ambassadors and national security officials with close proximity to the Ukraine dealings.
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Get up to speed on your morning commute with Fortune’s CEO Daily newsletter.


fortune--2020-02-03--Here’s how to enable Black Girl Magic at work

Coronavirus will take a bite out of Apple ’ s iPhone business .
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This is the web version of raceAhead, Fortune’s daily newsletter on race, culture, and inclusive leadership. To get it delivered daily to your inbox, sign up here.
Happy Black History Month, everyone. We’re kicking off our coverage with some #BlackGirlMagic, courtesy of this opinion piece from Leilani M. Brown, senior vice president of Strategic Partnerships and External Engagement for K12, Inc. More coverage, including some spectacular Super Bowl #LatinaMagic below.
***
Five years ago, when I first heard the phrase “Black Girl Magic,” I joined the chorus. I readily embraced the way it celebrates Black women—our beauty, intellect, resilience, and accomplishments. In a world that often says we are otherwise, who wouldn’t embrace this wonderful affirmation?
But when it comes to Black women’s participation in the workforce, our career advancement, and our earnings, we are not exactly experiencing the magic at work.
Consider this: Black students are enrolling in college at higher numbers. And according to the Journal of Blacks in Higher Education, in 2017, Black women earned 64% of the bachelor’s degrees, 70% of the master’s degrees, and 68% of the research doctorates awarded to Black students that year.
Despite these achievements, the wage gap for Black women remains daunting, ranging from 47 cents (Louisiana) to 71 cents (Hawaii) to a white man’s average dollar, according to the National Women’s Law Center.
Together, these two facts serve to debunk the myth that “college to career” is the only (or best) path to career success and upward mobility.
That notion isn’t just inaccurate—it’s unfair.
In fact, one of the things undermining our progress is a lack of participation in well-paying, technology-driven fields like software engineering, cybersecurity, health care, and manufacturing.
These career fields have the potential to level the playing field relative to access and earnings for all under-represented groups, including Black women. For example, the average median pay for web developers and program designers is more than $69,000 per year. However, in 2019, African Americans made up just 6.7% of the workers in this field.
So, where should business and education leaders start?
If they really want to minimize the inequities at scale—addressing the employment, wage, and participation gaps in a meaningful way—they can and should start preparing young Black girls for the future of work.
And that career preparation should begin in middle and high school. More than two-thirds of employers said in 2017 that they couldn’t find qualified talent to fill open jobs, according to a CareerBuilder survey. And a study by Georgetown University’s Center on Education and the Workforce estimates that 55 million job openings will be created through this year and more than 30% of them will be new-collar—jobs that require education and training beyond high school but less than a bachelor’s degree.
What if Black women could be first in line for these opportunities? What if they had access to tools like hands-on work experience, industry credentials, and specialized certifications, so they could be more competitive in today’s job market and tomorrow’s?
Career readiness and workforce development programs provide students with these tools and exposure to different career fields. Some programs—like those at Year Up and Idaho Technical Career Academy—even offer students the chance to earn college credits or work toward industry certifications, which can help give Black women a leg-up in the new-collar job market.
Schools, companies, and community organizations need to do more to prepare young Black girls and women to seize these opportunities.
I want to be clear—I am in no way suggesting that Black women should abandon their college dreams and aspirations. I went to college, my child will likely attend, and it is a great option for many young people.
But if one must incur significant student debt for a degree that doesn’t translate into a high-paying job, is it worth it? For many, that answer is a resounding no. On average, a Black woman graduating with a bachelor’s degree will enter the workforce with around $30,000 in student loan debt, according to an American Association of University Women (AAUW) report. This is nearly $4,000 more than the debt of Black male loan borrowers, and it’s nearly $11,000 more than that of their white male counterparts.
To change the tide, business and education leaders need to think critically—and speak honestly—about what is working and what is not. By romanticizing just one version of success, they are doing a disservice to Black women. And if it persists, it will continue to rob Black women of income-earning potential that could make a significant difference in their lives.
At the end of the day, it really is up to each of us—private-sector partners and education officials, parents and community members—to ensure that we are preparing our girls for the future of work and to be life-long learners and equitable earners in the new economy. This collective group should participate in a movement that addresses the earnings gap—a movement that supports Black girls and women and ensures that we achieve pay equity, greater opportunities and upward mobility.
Now that would be Black Girl Magic—at work.
Leilani M. Brown is senior vice president of Strategic Partnerships and External Engagement at K12 Inc. She is also a board member for Tallo, a platform that connects young adults to career and higher education opportunities, and author of From Campus to Cubicle: 25 Tips for Your First Professional Year.
***
Ellen McGirt curated and wrote the blurbs in this edition of raceAhead.
On Point
The Super Bowl half-time show was a tribute to Latina Magic Jennifer Lopez and Shakira delivered a truly electrifying bilingual performance last night. Lopez sent a strong message of solidarity to Puerto Rico; Shakira, who is of both Colombian and Lebanese heritage, taught everyone what a zaghrouta is. “I feel truly honored to be representing so many people out there,” said Shakira at a conference earlier last week. “Women, Latinas and people of any ages. I think J.Lo and I are here redefining paradigms about age, about race, about background.” And yes, the commercials still matter, whether they make you laugh, cry, or angry all over again.
NFL.com
Black women may sit out the Iowa caucuses While some 40% of Iowa voters are undecided, Black women in Iowa seem to be leaning back from the caucusing process. One problem seems to be that they’re not a focus. "They're reaching out more to the rural areas of Iowa than they are in Des Moines to me,” 61-year-old Kim McCracken-Smith told NBC News. “And in rural Iowa, there's no black people.” And when campaigns do reach out to Black voters, their messages are generic. But even in places with small Black populations, it’s a worrying oversight, says Aimee Allison, founder of She the People. “That may be what black women are thinking in other places where we need high turnout in order to win.”
NBC News
Former BET CEO Debra Lee may be set to launch an investment fund that focuses on Black women founders This is one of the tantalizing details that is buried in this report on Lee’s recent appearance at the invitation-only Upfront Summit in Pasadena, Calif., last week. For the most part, Lee’s remarks were a strong boost for diversity in business at the highest levels. “[A]ll the issues that Time’s Up was investigating—the harassment, revenge, retribution, women being harassed—those things can’t happen if you have women in decision-making roles,” she says. Then, she spilled a little tea about her three years on Twitter’s board before hinting that a few of her high powered friends were considering a fund that would support women of color in tech.
Techcrunch
Black women most likely to be “elder orphans” Census data show that one-quarter of the U.S. population will be over 65 by 2060, but within that number are cohorts of people who are aging alone, facing a “kin gap” without a partner, children, siblings or other relatives. Some 2.2% of Black women and 1.7% of Black men were “kinless” in 2015, compared to just over 1% of white women and less than 1% of white men, figures which are expected to rise to 7 and 6% respectively by 2060.
Ozy
On Background
White parents aren’t letting their kids play football anymore The game has long been sold as a character-building exercise, a place where rambunctious boys can learn teamwork, earn scholarships, and get fit while staying out of trouble. Except now… brain damage? There were nearly 7% fewer student-athletes participating in youth-tackle football in the 2017 to 2018 season, and it’s increasingly upper-income kids from white families who are opting out. “This divergence paints a troubling picture of how economic opportunity—or a lack thereof—governs which boys are incentivized to put their body and brain at risk to play,” explains Alana Semuels.
The Atlantic
Why American Dirt endures Julio Ricardo Varela, the co-host of the Webby-nominated "In The Thick" podcast and founder of LatinoRebels.com, is unsparing in his assessment of the American Dirt issue, a neatly marketed product for the white savior complex crowd. “American Dirt was, and will always be, for the kind of mostly white liberal who says they care about immigration policy but still look at immigrants from the Global South, and the Global South itself, with a discomfort they don’t ever want to admit,” he writes. That’s why the critiques haven’t made any difference. “It doesn’t matter what any given writer, reviewer or group of authors does to try to stop it; the urge to 'other us' for our own good is apparently too powerful for the publishing industry to resist.”
NBC Opinion
Let’s lose ourselves to Chinese science fiction I’ve been carving out time to familiarize myself with the extraordinary body of science fiction writing coming out of China, and thanks Clarkesworld magazine there’s a growing number of stories that have been translated into English. My current fave is the award-winning Wang Yao, who writes under the name Xia Jia. When she’s not publishing speculative science fiction, she’s an associate professor of Chinese Literature at Xi’an Jiaotong University. Clarkesworld has created a dedicated imprint to publish longer translated works, the first of which is a collection of Jia’s stories. Click through to learn more.
The Verge
Tamara El-Waylly produces raceAhead and manages the op-ed program.
Quote
“You don't be afraid. I said it was intended that you should perish, in the ghetto, perish by never being allowed to go beyond and behind the white man's definition, by never being allowed to spell your proper name. You have, and many of us have, defeated this intention and by a terrible law, a terrible paradox, those innocents who believed that your imprisonment made them safe are losing their grasp of reality. But these men are your brothers, your lost younger brothers, and if the word "integration" means anything, this is what it means, that we with love shall force our brothers to see themselves as they are, to cease fleeing from reality and begin to change it, for this is your home, my friend. Do not be driven from it. Great men have done great things here and will again and we can make America what America must become.”
—James Baldwin, "A Letter to My Nephew," first published The Progressive magazine in 1962.


fortune--2020-02-03--Mayors: Why gutting minor league baseball would be disastrous for our cities

The first coronavirus vaccine is set for testing in China

Major League Baseball (MLB) owners will sit down at their regular meeting Feb. 4-6 in Orlando to discuss the state of their sport, including a plan to eliminate up to 42 of their minor league affiliates. We believe that plan is misguided, and that’s why we are joining with dozens of mayors from across the country to stop it.
Baseball—fireworks, hot dogs, green grass, the roar of the crowd—connects many of us to our communities and our neighbors. In many mid-sized cities across America, that connection includes a local minor league team.
A night at the local ballpark is affordable, entertaining, and fun. A family of four can pile in the car and spend a few hours watching highly skilled players, grab a good bite to eat, and laugh at the activity on the field between innings. Generations of players have risen from the minor league system into the majors, ensuring the growth of this great game for well over a century, and fans have followed them.
Numbers prove the sustained popularity of these evenings at the ballpark. Four out of five Americans live in a city with at least one minor league team, according to a 2018 ESPN poll conducted on behalf of Minor League Baseball. Last year, attendance at America’s minor league ballparks exceeded 40 million—the 15th year in a row that such clubs have exceeded that benchmark.
As a result, baseball’s economic impact on our cities is immense and, in many places, irreplaceable. The employees of our teams and ballparks, as well as countless vendors, hotels, and small business owners rely on minor league baseball’s fans for their livelihoods.
To keep baseball in these communities, cities have invested valuable public resources in new ballparks. These often-controversial deals mean that local taxpayers have a bigger stake than ever in whether or not their teams stay put.
That’s why this proposal and MLB’s apparent outlook is counterproductive. On the one hand, the league claims it wants improvements to stadiums; but on the other, it says it wants fewer players and teams overall. Without assurances that minor league baseball is a long-term priority of the MLB, our cities and many others will end up with fewer upgrades and new facilities, not more.
Mayors and leaders across the country want minor league baseball to thrive. We want to see more restaurants and activities around stadiums, greater encouragement for kids to play on their local little league teams, and additional entertainment options for families.
Supporting these teams also serves MLB’s interests. Right now, owners are dealing with the repercussions of a massive sign-stealing scandal. Like any good business, they need to earn and keep the trust of their fans. The fact is that there are no greater ambassadors for the sport than the minor league teams. Those linked with big league teams serve as great brand advertisements for the league and its players.
Nearly 100 mayors have joined a task force to stop the contraction of minor league baseball, which could happen this week. Some mayors on our task force have teams in their towns that MLB wants to eliminate, and others seem “safe,” but we all share a deep concern for the future of the game. Collectively, we stand together to support minor league baseball, and have expressed our displeasure to MLB’s executives. We hope to continue the dialogue as MLB owners consider their options.
For more than a hundred years, minor league baseball has been part of the fabric of many American cities. Pulling out of 42 cities would be a major error for Major League Baseball. When the owners emerge from their meetings, we look forward to hearing how we can work together to save our teams.
Steve Benjamin is mayor of Columbia, S.C.
Andy Berke is mayor of Chattanooga, Tenn.
Nan Whaley is mayor of Dayton, Ohio.
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fortune--2020-02-03--Google tests photo printing subscription service

Google Photos is testing a monthly subscription service that will automatically print 10 of your photos and mail them to you—only you may not know which shots it selects until the prints arrive.
Instead, artificial intelligence will select 10 4×6 shots from the past 30 days, based on preferences users select. Subscribers will pay $7.99 per month for the pictures.
The service, first reported by 9To5Google, is in a very limited test at present. Google told Fortune it did not have additional details to share regarding when (or if) it planned to expand availability.
You’ve got three themes you can select to guide Google in picking the pictures—people and pets, landscapes or a little bit of everything. (“People and pets” is the most popular option among users so far.)
Users will have the option to edit the photos before they’re printed or can get a surprise delivery each month.
The program, which is notably more expensive than typical photo processing charges, is part of Google Photos’ ongoing expansion into physical products. The division, launched in 2015, has offered photo books for several years, but in 2019 began offering canvas prints and allowing users to directly print photos at CVS or Walmart stores.
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fortune--2020-02-03--Why 19 Republican governors went against the Trump administration’s stance on refugees

Last November, President Trump announced that the U.S. would accept, at most, 18,000 refugees for resettlement in 2020—the lowest number since Congress created a formal refugee resettlement program in 1980. He also issued an executive order last September allowing individual states and localities to choose whether to resettle any at all—a move that was seen as a further step by the administration to weaken the U.S. refugee program. (That order was recently blocked by a federal judge in Maryland for being “unlawful,” with the judge also noting it did “not appear to serve the overall public interest.”)
Earlier this month, seemingly in line with the White House’s initial directive, the Republican governor of Texas announced the state would not accept resettled refugees this year, even though Texan cities like Houston and Dallas have traditionally been hosts to large populations of refugees.
But 19 other Republican governors broke ranks and joined 23 Democratic governors in agreeing to keep their doors open to refugees. Coming just four years after 29 Republican governors (and one Democratic governor) called for a halt to Syrian refugees coming to their states, this was an unexpected turn of events.
That 19 Republican governors have publicly welcomed refugees points to the fact that—notwithstanding the heated rhetoric around refugees—they understand that refugees make important contributions to their state economies.
In 2017, there were nearly 2.5 million refugees living in the U.S., and about 96% of them were employed, according to New American Economy. That year, they brought in $91.8 billion in income, paid $25.4 billion in taxes, and held nearly $66.4 billion in spending power.
They also create jobs for Americans: 13% of refugees started their own businesses in 2015, compared to 9% of the US-born population, according to a 2017 New American Economy report. More than 180,000 refugee entrepreneurs ran businesses that generated a total $4.6 billion that year.
Businesses themselves are increasingly seeing the value of refugees in their workforce. As executive director of the Tent Partnership for Refugees, a network of 100 large multinationals working with refugees, I have heard time and time again from our member companies, which include global brands like Hilton, Starbucks, TD Bank, and IKEA, that refugee workers are some of the most hardworking, motivated, and loyal employees they’ve ever hired. And, critically, they stick around. In a 2018 study conducted in partnership with the Fiscal Policy Institute, 19 out of 26 employers polled reported a higher retention rate for refugees. In meatpacking plants, for instance, annual turnover was 25% for refugees, compared to 40% for other employees. In the manufacturing sector, only 4% of refugees left their jobs within a given year, compared to 11% of other workers.
But refugees’ contributions aren’t solely measured in dollars—refugees also revitalize dying communities. In St. Louis, for example, The Economist pointed to how Bosnian refugees helped turn around a “crime-ridden” neighborhood by opening restaurants and buying vacant homes.
Trump’s executive order required every governor to go beyond rhetoric and make a practical decision on whether to accept refugees—and before the judge even blocked the order, 42 of them, across the political aisle, decided to welcome them. When governors looked squarely at what their communities needed and what would make their economies stronger, they made a clear assessment: their communities benefit from accepting refugees.
Gideon Maltz is executive director of the Tent Partnership for Refugees.
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fortune--2020-02-03--Chiefs player pays adoption fee for all shelter dogs after Super Bowl victory

Derrick Nnadi is celebrating his team’s Super Bowl victory with some philanthropy.
The Kansas City Chiefs’ defensive tackle has announced he will pay all of the adoption fees for dogs currently at the KC Pet Project shelter. That’s going to make it easier for over 100 pooches to find forever homes.
KC Pet Project currently has 117 dogs up for adoption, according to its Website. Adoption fees for canines typically range from $75 to $300, valuing Nnadi’s donation at between $8,775 and $35,000.
Nnadi has been partnering with KC Pet Project all season through the Derrick Nnadi Foundation, a non-profit that helps several groups (including families and children) in a variety of cities, with a focus on Virginia Beach and Kansas City.
“Derrick’s father taught him at a young age that ‘As Nnadi’s we don’t receive, we give’ and The Derrick Nnadi Foundation embodies that mantra through all of the work that it does,” the foundation says on its Website.
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fortune--2020-02-03--HBO’s ‘McMillion$’ docuseries shows how cheaters scammed McDonald’s Monopoly game

A paunchy ex-cop nicknamed “Uncle Jerry” and a Mafia-affiliated strip-club owner leaked million-dollar prize tickets to dozens of larcenous Americans, who, in turn, cheated McDonald’s wildly popular “Monopoly” promotion by claiming they’d won the game fair and square. Their scam unraveled in 2001 when a live-wire FBI agent cast himself in the role of a TV commercial director and staged a seemingly preposterous sting operation. For filmmaker James Lee Hernandez, the little-known case screamed “killer documentary” ever since he’d happened upon a one-sentence item on Reddit in 2012.
For six years, he obsessed over the scheme with partner Brian Lazarte. After securing Freedom of Information Act documents and court transcripts, they traveled cross-country to the East Coast on their own dime and interviewed participants, determined to leverage their nonfiction spec project into a career-making breakthrough.
And then, one summer morning in 2018, Hernandez woke up to learn that the Monopoly scam story had become the talk of Hollywood—as told by somebody else. Posted on The Daily Beast, Jeff Maysh’s article sparked a bidding war among studios including Netflix, Universal Pictures, and Warner Bros. Six days after its publication—lightning speed by show business standards—20th Century Fox, Ben Affleck, and Matt Damon sealed a deal to make a movie based on the article.
Hernandez tells Fortune, “When Fox announced they’re going to do a feature film—after all the years of work I’d put into this thing? I had a full-blown meltdown.”
Hernandez needn’t have worried. Suddenly a hot topic, the Monopoly scandal fascinated industry executives including Lazarte’s friend Archie Gips, who worked with Mark Wahlberg and Stephen Levinson at the Unrealistic Ideas production company. Armed with a five-minute “sizzle” reel, Lazarte and Hernandez sold their concept in the room. Financing from HBO followed a couple of weeks later. Hernandez and Lazarte, previously employed primarily as TV editors, suddenly found themselves writing, directing, and producing a six-part documentary titled McMillion$. The series, which debuted last month at the Sundance Film Festival, launches Monday on HBO.
Directors Brian Lazarte and James Lee Hernandez attend HBO’s “McMillion$” Experience at Sundance 2020 on Jan. 27, in Park City, Utah. “We always looked at ‘McMillion$’ like a Coen Brothers movie,” says Hernandez. Daniel Boczarski—Getty Images for HBO
Drawing on surprisingly enthusiastic cooperation from the FBI and the McDonald’s corporation, Hernandez and Lazarte designed their project to flow like an extended feature film complete with cliffhangers, dramatic reenactments, split-screen graphics, pulsating music from Captain Marvel composer Pinar Toprak, and, most important, a riveting cast of real-life characters.
“We always looked at McMillion$ like a Coen Brothers movie,” says Hernandez. “It’s funny because of the characters, but there are also big things at stake here. Lives were truly affected. The federal government was involved. Once everybody saw our early cut, they got the tone we were going for: Okay, this documentary can be funny and serious at the same time.”
FBI agent Doug Mathews sets the tone for McMillion$ early on, explaining how he became fixated on catching the crooks after spotting a Post-it note on his boss’s desk about an anonymous tip alleging “Monopoly Fraud.” The wildly energetic Mathews swears with abandon, makes fun of his colleagues, and wears gold lamé suits to strategy meetings. “The entire first episode is from the FBI point of view,” says Hernandez. “When people worried that we’d just have a bunch of boring guys in suits, we’d respond: ‘You don’t know Doug Mathews.’”
In their first interview, he recalls, “Mathews talked for three hours straight, and he could have kept going.” Compelling as a hotshot narrator, Mathews describes how he enlisted fellow FBI agents to pose as lighting and sound technicians working for the fake Shamrock Productions, supposedly hired by McDonald’s to film Monopoly winners for a “reunion” celebration. Lazarte says, “We wanted the viewer to understand this very specific FBI point of view out the gate, and then flip it.”
FBI special agent Doug Mathews “talked for three hours straight, and he could have kept going,” says Hernandez of their first interview. Courtesy of HBO
Enter Robin Colombo. Her Mobster husband, Jerry, dominated the Monopoly scheme. “Robin has a checkered past and could do bad [things], but no matter how crazy the situations she told us about, Robin had a certain kind of charm and likability,” Lazarte says. In McMillion$, Colombo and her tiny Boston terrier command during the so-called Red Interview conducted at her East Coast home. Hernandez recalls, “Robin’s friend answered the door and let us in. Then Robin walks into the room wearing all red in red hair that matched her red couch, and the drapes are red. We’re like, ‘What else could she be but a Mob wife?’”
In the first three McMillion$ episodes previewed by Fortune, Gloria Brown emerges as the most affecting victim/culprit. A churchgoing single mother, she got roped into the scheme by her old friend Robin. In the “reunion” video directed by Mathews in 2001, Brown, visibly tense, lies about how she found her winning ticket. Seventeen years later, Brown tearfully details the rationalizations and torment behind her forced smile.
“Going into this, you might think it’s about good guys and bad guys and the people on the bad side deserve what they got,” Hernandez says. “But once we met Gloria for breakfast at a Cracker Barrel in Jacksonville, we started to understand how you can say yes to something without fully understanding the consequences. She truly believed this [million-dollar Monopoly ticket] would be her chance to get ahead, but it turned out to be the complete reverse.”
As for the Daily Beast piece that indirectly paved the way for McMillion$, reporter Maysh says the movie based on his article is moving forward, fueled by a screenplay from Deadpool writers Rhett Reese and Paul Wernick. “The script is genius,” according to Maysh. After being alerted to the case by movie producer David Klawans (Argo), Maysh spent about two years doing research.
“I remember my phone interview with Robin Colombo was the wildest tape I had ever recorded,” he tells Fortune. “I’ve had stories go viral before, but this was a new level. It was the No. 1 trending topic on Twitter. Radio stations all over the world called me.”
And the big call, finalizing the deal for a reported $1 million?
“My agent Joel Gotler handled the sale,” Maysh says. “I remember sitting down on the floor of my apartment when they told me the price.”
Whether an online article, documentary film, or Hollywood movie, the Monopoly scheme that unfolded between 1995 and 2000 serves as a cautionary tale of uncommon potency.
“This is the ultimate story of American greed,” says Maysh. “Everyone played the game, so in a way, all of us were victims. That’s what makes it so powerful.”
As Hernandez sees it, “There’s a certain [mentality] nowadays where it’s like, ‘No matter how hard you work, you’re not going to get ahead, so you have to be an opportunist.’ And sometimes, those opportunities might be on the wrong side of the moral compass. How many people would say no to this same situation? How many people, if given the same ability to get these tickets—as much as people want to say they wouldn’t do it—maybe they would.”
Lazarte adds, “I mean, everybody wanted to win.”
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—Zombi Child auteur Bertrand Bonello on colonialism, French trap music, and a “cinema of fear”
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fortune--2020-02-03--Iowa caucus voting app’s ‘security through obscurity’ seeds disinformation and legitimacy concerns

When Iowans caucus Monday evening for their preferred Democratic presidential nominee, party leaders will be encouraged to use a new smartphone app to tally and transmit results. The app will allow caucus managers, Democrats who run the caucus process in each of Iowa’s 1,678 precincts, to quickly report results back to the state for tabulation. But that’s about all party leaders in Iowa have said about the app: It exists.
Last week, party officials said keeping specifics of the app confidential is a strategic move to ensure it remains secure and out of hackers’ crosshairs. “We are confident in the security systems we have in place,” Iowa Democratic Party Chairman Troy Price told the Wall Street Journal.
This lack of transparency has alarmed cybersecurity and election tech experts, who say the strategy could backfire and leave the caucuses open to powerful disinformation campaigns. Multiple security officials confirmed to Fortune that they reached out to the DNC to express their concern about the lack of communication surrounding the app.
“Security through obscurity doesn’t engender trust—and trust in the electoral process is a cornerstone of fair democratic elections,” says Tim Mackey, principal security strategist at the Synopsys Cybersecurity Research Center.
The Iowa Democratic party did not respond to multiple requests for comment by Fortune about the app, including what security testing has been done on it, and who will be responsible for auditing the votes after the caucuses.
Multiple sources tell Fortune that the DNC partnered with the Department of Homeland Security and Harvard University’s Defending Digital Democracy (D3P) project to develop the app. But, that alone raises a yellow flag, says Gregory Miller, co-founder and COO of the OSET Institute, a nonpartisan, nonprofit group focussed on open source election technology. “Harvard’s D3 Project focuses on process (not platform), and to a lesser extent, policy,” he adds. “D3 is not any kind of qualified technical cybersecurity assessment organization.”
(After publication—and the chaos of the Iowa caucus—sources clarified their previous statements. Harvard’s D3P project and the DHS were brought in to consult on general election security, but they did not specifically test or contribute to the development of the app used.)
Disinformation campaigns love a vacuum, and—filling in the space where security details would typically be—conspiracy theories and questions over the integrity of the app are rising online in advance of the caucuses.
“Because there’s no transparency and no one can answer questions, it makes it all much easier to create an effective rumor or conspiracy theory,” says Edward Perez, OSET’s global director of technology development. “All that is necessary for a disinformation campaign to be effective is to say something that causes doubt.”
Cloudy security
This is not the first time Iowa has used tech in the caucus process—it’s just the first time parties involved have revealed nothing more about it.
In 2016, Microsoft created two special apps: one for the Democrats and another for the Republicans to use when calculating and submitting their caucus results.
“Built on Microsoft technology, the new platform will feature a secure system, which will enable precincts to report their results directly by party and will ensure that only authorized Iowans are reporting results,” Microsoft said in a 2015 blog post. The results were stored and managed on Microsoft’s Azure cloud platform. A spokesperson for the company tells Fortune that Microsoft is not working with the Iowa Democrats on the 2020 election app.
Miller contends that if the 2020 app was being supported on a popular, secure server like Google or Amazon’s cloud platforms, there would be no need for the silence.
Instead, he tells Fortune, there may be others reasons for cloaking the name of the developer. “It could well be they’re using off-shore, low-cost developers, which would have hugely bad optics, regardless of where they come from,” he says.
Another possibility, Miller posits, is that “it’s a local ‘Joe’s App Shop’ developer, who will likely get paid to run the back-end.” Disclosing that fact wouldn’t just call into question the developer’s credentials and cybersecurity qualifications, but would expose it as a target for hackers.
The mystery surrounding the caucus app developer also concerns Mackey. “Since most businesses also operate with a desire for their customers to trust them, I would expect any vendor of electoral software—including apps—to be proud of their contribution to the execution of fair elections and thus want their name associated with the election,” he says.
Integrity and the Internet
According to Miller, the app being connected to the Internet “is downright alarming and candidly suggests that some part or all of the Democratic Party operations are tone deaf to the current well-documented Internet voting risks,” he adds.
But it’s worth noting that the state’s first-in-the-nation process does come with built-in transparency that makes it different than other elections that use secret ballots. Iowa’s caucuses involve groups of people gathering in rooms at their local precinct to openly choose a candidate. This makes it more difficult to fix election results, since voters will know the outcome of the caucus in their precinct. This year, for the first time ever, voters will also be asked to fill out a presidential preference card, creating a paper trail of the vote, in case the app leads to any irregularities.
“In the context of the Iowa caucuses, the use of an app is an attempt to better account for the challenges of how the caucuses operate,” Mackey says.
However, as technology becomes an increasingly large part of the voting process, security vendors, political parties and the local government officials in charge of overseeing the vote need to be transparent about the tech they’re using, who makes it, and the types of security testing it has undergone, Mackey says.
In the case of Monday’s caucuses, OSET tells Fortune that the app has yet to be stress-tested. A report out of Iowa says caucus leaders using Android phones are having issues with it. Are either of these allegations true? With the DNC not responding and the app’s developer a mystery, it’s unclear. When considering whether they trust the new app, Iowans, as the voting process begins, will just have to go with their gut—just like they do when they vote.
“Trust is the fulcrum of the stability of our democracy, and it is the product of two things: transparency and communication,” says Miller, “In the absence of those elements, it’s hard to establish trust.”
Clarification, February 4, 2020: After publication, sources clarified the involvement of two groups brought in to consult on the development of the app.
More must-read stories from Fortune:
—2020 candidates’ positions, and records, on economic issues that affect women
—Bernie Sanders wants the future of the far left to be female. Is that enough?
—Michael Bloomberg’s radical plan to cut prescription drug costs
—Fortune Explains: The debt ceiling
—Millions have been purged from voter rolls—and may not even realize it
Get up to speed on your morning commute with Fortune’s CEO Daily newsletter.


fortune--2020-02-03--Founder of Google’s Moonshot Factory and Udacity makes a big new bet

Some of Silicon Valley’s top technologists believe artificial intelligence’s biggest impact on business starts in the humble call center.
Investors from venture capital firms like Andreessen Horowitz and Greylock Partners said on Monday that they had invested $21 million in Cresta, a call center technology startup co-founded by Sebastian Thrun, a high-profile Silicon Valley executive who founded Google’s so-called X moonshot factory and online education company Udacity.
Cresta’s software analyzes a corporate client’s call center transcripts to learn which phrases or words top salespeople have used that ultimately led to successful sales. Other agents are then prompted to use that language when they field customer calls, in an effort to increase sales.
“We built software that provides real-time prompts, like what to say during a conversation to help guide them,” said Cresta CEO Zayd Enam.
For example, a call-center agent for a home improvement store who gets a call about kitchen sinks may see a prompt to ask about kitchen tiles. The goal is to prod agents to ask more questions that ultimately lead customers to buy products that they wouldn’t otherwise have.
Enam’s idea for Cresta started with his PhD project that involved applying breakthroughs in computers understanding language to reduce some of the repetition of modern corporate work. Although his research originally focused on tasks like creating automated answers to emails, Thrun, who was Enam’s PhD advisor at Stanford University, suggested that it should be focused on more specific tasks that could be more applicable to business problems like sales.
“When you have this broad vision you can’t do everything—you have to narrow it down,” Thrun said. “You have to find the [business] case where you can operationalize it, make it happen, and effectively make money.”
Thrun is chairman of Cresta, with no daily operational role. He is currently CEO of KittyHawk, a company backed by Google co-founder Larry Page that is trying to develop flying vehicles.
Cresta’s software underscores recent advances in natural language processing (NLP) that have led to a number of companies applying the technology to corporate call centers. As Gartner vice president of research Olive Huang previously told Fortune, while computers still struggle to always understand human voices, they are still good enough for companies to use in their corporate call centers, reducing the need to hire as many call center staff.
Now, tech companies like Google, Amazon, and communications software firm Twilio have noticed the trend and have all created their own A.I. technologies for call centers. In November, Salesforce said that it plans to debut its own A.I.-powered customer-service tool to assist call center workers handing customer calls.
Big tech companies make for serious competition to Cresta, which has only 30 employees. But, lead investor Ben Horowitz, a venture capitalist with Andreessen Horowitz, said Cresta’s software is powerful enough to stand out in the crowded field. Horowitz is betting that customers will be swayed by the company’s product rather than be captivated by the “positioning and branding” of larger tech companies.
“I would rather have more money than the comfort of knowing I bought it from Marc Benioff,” Horowitz said about the software’s presumed effectiveness compared to competing call center software sold by Salesforce.
Some of Cresta’s other investors include Sun Microsystems co-founder Andy Bechtolsheim, Mark Leslie, and Aviv “Vivi” Nevo.


fortune--2020-02-03--What we know about WeWork’s new CEO

What we know about WeWork’s new CEO

This article originally ran in Term Sheet, Fortune’s newsletter about deals and dealmakers. Sign up here.
WeWork has found the person who will replace Adam Neumann as the chief executive of the company: Sandeep Mathrani, a seasoned real estate veteran. He will be tasked with steering the embattled co-working giant back on the right path following its failed IPO attempt.
Mathrani has been known as somewhat of a “corporate turnaround artist” in the real estate world. He was named CEO of General Growth Properties in 2011, when it was emerging from what was then the biggest real estate bankruptcy in U.S. history. Six years later, he sold the company to Brookfield Property Partners in a deal valued at approximately $15 billion.
Here’s what else we know about Mathrani:
— Most recently, Mathrani was the chief executive of Brookfield Property Partners’ retail group. At Brookfield, he led an investment in Industrious, a co-working office space startup that competes with WeWork.
— Mathrani will join WeWork as CEO starting Feb. 18, 2020 and will report to Marcelo Claure, who helped recruit him to join the company. (Claure will remain executive chairman.)
— He will succeed WeWork interim co-CEOs Sebastian Gunningham and Artie Minson, who will stay at the company during Mathrani’s onboarding.
— One of Mathrani’s first tasks will be to build out leadership since so many top executives have departed following Neumann’s exit. WeWork is planning to announce new board members and a new chief financial officer, chief marketing officer and chief communications officer soon, according to The Wall Street Journal.
Under Neumann’s leadership, WeWork positioned itself as a tech startup harnessing the “energy of We.” It’s likely that under Mathrani, the company will be a more cleanly defined real estate business.
In a recent interview with Fortune, WeWork co-founder Miguel McKelvey said, “The leadership team has spent hours and hours and hours to ensure that we have a plan that we’ll be able to succeed with.”
The new WeWork story is only beginning.
FERTILITY FUNDING: Legacy, a sperm testing and freezing startup, has raised $3.5 million in funding from Section 32, Y Combinator and Bain Capital Ventures. Last year, I noticed an uptick in venture capital funding for male fertility startups. At the time, I noted that awareness is growing around male fertility, and startups and their deep-pocketed backers are here to capitalize on it. Investors poured $646 million into the fertility sector in 2018, according to PitchBook.
In the last decade, fertility startups have been focused on hyper-targeting female millennials even though men cause or contribute to infertility in about half of cases. Companies are just now turning their attention to male partners.
Legacy founder and CEO Khaled Kteily told TechCrunch last week: “Women are taught about their fertility but men aren’t, yet the quality of their sperm is degrading over the years. Sperm counts have gone down by 50 to 60% over the last 40 years, too.”
ONE LOL THING: Amazon CEO Jeff Bezos is busy adding $8 billion to his fortune, meeting with the FBI over the alleged hacking of his phone, and getting sued by his girlfriend’s brother. While we know very little about his thoughts on those developments, we do now know that the billionaire is 100% Lizzo’s biggest fan…
Polina Marinova
Twitter: @polina_marinova
Email: polina.marinova@fortune.com
VENTURE DEALS
- Rimilia, a U.K.-based SaaS-based fintech company, raised $15 million in funding. Investors include Eight - Roads Ventures, Kennet Partners, and Silicon Valley Bank.
- Doubtnut, an India-based developer of an online learning platform for students, raised $15 million in Series A funding. Tencent led the round, and was joined by investors including Omidyar Network India, AET, Japan, Ankit Nagori, and Sequoia Capital India.
PRIVATE EQUITY DEALS
- Cascade Windows, a portfolio company of CenterOak Partners acquired Amerimax Windows & Doors, a Norcross, Ga.-based producer of value-added aluminum, steel, vinyl and fiberglass products, from OmniMax International. Financial terms weren't disclosed.
OTHER DEALS
- Worldline will acquire Ingenico (ENXTPA:ING) in a cash and share deal that gives Ingenico a valuation of €7.8 billion ($8.6 billion).
IPOs
- Revolution Medicines, a Redwood City, Calif.-based biotech developing targeted cancer therapies, says it plans to raise $150 million in an offering of 10 million shares priced between $14 to $16 apiece. The firm posted revenue of $20.2 million and losses of $48.8 million in 2018. Third Rock Ventures (29% pre-IPO), The Column Group (19%), and Sanofi Research Invest (8%) back the firm. It plans to list on the Nasdaq as “RVMD.” Read more.
EXITS
- Behrman Capital sold ILC Dover, a Frederica, Delaware-based to New Mountain Capital. Financial terms weren't disclosed.
FIRMS + FUND
- Vestar Capital Partners, a New York-based private equity firm, raised $1.1 billion for Vestar Capital Partners VII, L.P.
- Turn/River Capital, a San Francisco-based private equity and venture capital firm, raised $420 million for its fourth fund, Turn/River Capital IV.
PEOPLE
- Fifth Wall promoted Dan Wenhold, Kevin Campos and Vik Chawla to partner. Josh Schwartz, Kate Miller and Sarah Liu were promoted to vice president.
- Riverwood Capital promoted Harish Belur, Joaquim Lima, and Scott Ransenberg to partner.
- Graycliff Partners named Ryan Supple as a principal.


fortune--2020-02-03--Coronavirus forces world’s largest work-from-home experiment

Thanks to the coronavirus outbreak, working from home is no longer a privilege, it’s a necessity.
While factories, shops, hotels and restaurants are warning about plunging foot traffic that is transforming city centers into ghost towns, behind the closed doors of apartments and suburban homes, thousands of businesses are trying to figure out how to stay operational in a virtual world.
“It’s a good opportunity for us to test working from home at scale,” said Alvin Foo, managing director of Reprise Digital, a Shanghai ad agency with 400 people that’s part of Interpublic Group. “Obviously, not easy for a creative ad agency that brainstorms a lot in person.” It’s going to mean a lot of video chats and phone calls, he said.
The cohorts working from home are about to grow into armies. At the moment, most people in China are still on vacation for the Lunar New Year. But as Chinese companies begin to restart operations, it’s likely to usher in the world’s largest work-from-home experiment.
That means a lot more people trying to organize client meetings and group discussions via videochat apps, or discussing plans on productivity software platforms like WeChat Work or Bytedance’s Slack-like Lark.
The vanguards for the new model of scattered employees are the Chinese financial centers of Hong Kong and Shanghai, cities with central business districts that rely on hundreds of thousands of office workers in finance, logistics, insurance, law and other white-collar jobs.
Clearing Expenses
One Hong Kong banker said he’s going to extend an overseas vacation, as he can work from anywhere with a laptop and a phone. Others say they are using the time typically spent wining and dining clients to clear their backlog of travel expenses. One said he’s shifted focus to deals in Southeast Asia.
“No one is taking meetings, my schedule is pretty empty,” said Jeffrey Broer, a venture adviser in Hong Kong. “One person emailed me: ‘Shall we meet somewhere in February?’”
One of the most unsettling factors for employees is the fast-changing impact of the virus, which is prompting daily changes in corporate directives.
Tiko Mamuchashvili, a senior event planner at the Hyatt hotel in Beijing who was supposed to return to work on Friday, was initially told her vacation would be extended until Feb. 3. Then she received a notification to work from home for two additional days. A few days later, the directive was extended until Feb. 10. She has to notify her department each morning about her whereabouts and report whether she is running a temperature.
“Usually going back to work from holidays feels a little weird, but working from home this time with such short notice feels even more unusual,” she said. With hotel event cancellations rolling in on a daily basis, “basically, all I can do is answer emails,” she said.
How the Coronavirus Is Infecting the Global Economy
Some managers worry the office exodus will lower productivity, but there’s evidence the opposite may be true. A 2015 study from Stanford University in California found that productivity among call-center employees at Chinese travel agency Ctrip went up by 13% when they worked from home due to fewer breaks and more comfortable work environments.
Shared Spaces
While the virus may test that theory on a wider scale, it poses an existential threat to another new business model: co-working spaces, which multiplied around big Chinese cities in recent years as property rents skyrocketed and tech startups boomed.
“It will be a very tough time,” said Dave Tai, deputy director of Beeplus, a Chinese co-working space and bakery with 300 employees.
The virus delayed the opening of its Beijing location and he says it’s pretty much impossible for him and others in his industry to work from home. Without customers willing to work in close quarters at the physical space, the business will die.
“The core of work space is community, people coming together. It’s difficult to replace that interaction and connection online,” he said.
For many companies, instructing office workers to stay home only solves part of the problem. Many rely on factories, logistics companies and retail outlets that face their own disruptions.
For phone-case maker Casetify, 2020 was supposed to be the best year yet. Headcount at the Hong Kong-based company had surpassed 150 by the end of December, and it was aiming to double sales this year.
But the spread of the virus from the city of Wuhan caused the factories in China that make its products to stay shut and prompted Casetify to ask most employees to work from home. A new outlet in Hong Kong’s airport lay empty. Sales in the city tanked.
“The show must go on, somehow,” said Casetify Chief Executive Officer Wes Ng, who has been logging onto a laptop in an apartment he shares with his wife and 9-month-old son.
No Plan B
Casetify has 30 days of extra stock, but Ng says there’s no plan B if the factories don’t reopen soon, a plight shared by thousands of other businesses in China and around the world.
Even for those who can do business by internet and phone, the virus means there may not be much business to do.
Bankers say IPOs and deals are on hold. Transaction value in the first 30 days of 2020 was half what it was the year before, according to data compiled by Bloomberg.
“The worst is yet to come,” said Nomura analyst Ting Lu in a research note. “We reckon the coronavirus could deal a more severe blow to China’s economy in the near term, relative to SARS in 2003.”
While statistics suggest the new coronavirus isn’t as lethal as SARS, it has already infected more people, and the speed at which the disease has spread is fueling fear. A big part of the expected blow to the economy during the current outbreak is likely to come from changes in “human psychology,” according to Warwick McKibbon, professor of economics at the Australian National University in Canberra.
He said SARS cost the global economy $40 billion and predicts the hit from coronavirus will reach three or four times that amount. “Panic is what seems to be the biggest drain on the economy, rather than deaths,” he said.
With factories shuttered and office workers staying home, many in China’s services industry face a difficult time. The sector is much bigger than it was during the SARS outbreak, accounting for 53% of the economy, up from 41% in 2002. But without customers, many businesses are in limbo.
Blockbuster movie premieres, most of which were slated for the new year holiday, have been postponed, Nomura said.
Some businesses have turned to the internet to help keep customers loyal, hoping to weather the epidemic.
Not Working Out
Shanghai gym owner Fenix Chen had intended to close his gym Hi Funny for three days for the Spring festival. He delayed reopening until Feb. 10, in line with the city’s recommendation.
“Most people in Shanghai are basically staying at home, avoiding public places,” he said. “The fear from the virus outbreak will have a lasting impact on our business.”
So Chen is encouraging clients to exercise at home and posting instructional videos online. “If they do continue this habit, that’s also important for our business after the virus blows over,” he said.


fortune--2020-02-03--Facebook’s ‘Clear History’ button is basically a farce

This is the web version of Data Sheet, Fortune’s daily newsletter on the top tech news. To get it delivered daily to your in-box, sign up here.
Jeff John Roberts here, filling in for Adam.
Facebook CEO Mark Zuckerberg is talking tough. Days after an earnings call in which he declared his new goal isn’t to be “liked” but to be “understood,” he told a Utah confab that his company’s commitment to free speech is “going to piss off a lot of people.” (Political ads will remain allowed on the platform.)
The company’s approach to consumer privacy might do the same. Case in point: Facebook’s “clear history” button that Zuckerberg promised to deliver in the wake of 2018’s Cambridge Analytica data breach, implying people would be able to opt out of Facebook collecting their data from third parties.
Now, the new tool is finally available in the U.S. but, alas, it is virtually ineffective.
Facebook collects data about you from websites and apps via a tracking tool called Pixel. Until now, Pixel has reported to Facebook what you do without your knowledge. The platform’s new feature lets you see who’s been passing on your data. The way Zuck put it: It’s a “new way to view and control your off-Facebook activity.”
In my case, it showed hundreds of companies, mostly media sites and travel and vacation sites. This was unsettling but not on the scale of what Washington Post tech columnist Geoffrey Fowler discovered. Polling his colleagues, Fowler found that sites had tattled to Facebook about their visits to a sperm measurement service, medical insurers, and a credit agency.
While Facebook deserves credit for finally disclosing such data, the company won’t let you do much about it. In that sense, the “clear history” button is basically a farce. Facebook is still gobbling up your data. All the button does is instruct Facebook not to blend that third-party data with its own collected data when it offers you up to advertisers. (The website Gizmodo was more blunt: Its account of the feature has the headline “Facebook’s ‘Clear History’ Tool Doesn’t Clear Shit.”)
What’s more, the “Clear History” button is buried deep in the settings menu. Those who want to manage their “Off-Facebook” settings must also enter their password and navigate a series of pop-ups of notifications. The page feels designed to create as much friction as possible while users try to exercise privacy choices.
On top of everything, Facebook is also flying in the face of California’s landmark new privacy law that allows consumers to tell companies to delete their data and stop selling it. The company has contended that it doesn’t “sell” data per se, and that its arrangements with third parties are subject to a special exemption. Some lawyers dispute Facebook’s interpretation, and it may require a court ruling to set out the company’s actual privacy obligations.
So Zuckerberg seems sincere about an approach that will “piss off a lot of people”—including his own customers. It’s a bold strategy. But at a time when regulators are circling and investors are getting antsy about Facebook’s future, it may not be the best one.
Jeff John Roberts
Twitter: @jeffjohnroberts
Email: jeff.roberts@fortune.com
This edition of Data Sheet was curated by Aaron Pressman.
NEWSWORTHY
The truth will out. After all that debate about whether WeWork was a tech company or not, the company is now sending a signal of its own. The next CEO of the struggling real-estate startup (ahem) will be longtime real estate exec Sandeep Mathrani. He ran mall company GGP, which he sold to Brookfield Property Partners, where he then ran the firm's retail group.
Switching horses in midstream. Chipmaker Intel is ending efforts to build A.I.-friendly silicon with designs acquired in its $400 million purchase of Nervana Systems in 2016. Instead, Intel will focus on chips from Habana Labs, which it just bought for $2 billion.
Virtual electorate. West Virginia is preparing to allow online voting via a mobile phone app for people with disabilities. The law, expected to be signed by Gov. Jim Justice this week, would be the first in the country. Speaking of government dictates, the European Union voted last week to require a single standardized charging port on all mobile devices. That could force Apple to change the proprietary lightning port on iPhones.
Kings of the one-click. The most recent Fortune Analytics poll examined e-commerce habits over the holiday shopping season. Amazon led, with Walmart and Target trailing behind. Consumers picked Amazon for delivery speed, while Walmart was the pick for best product prices.
Rest in peace. Disgraced telecom executive Bernie Ebbers, the former CEO of WorldCom, died on Sunday at age 78. Ebbers built WorldCom from nothing into a $200 billion behemoth, only to be pushed out and later convicted of fraud when the company collapsed in one of the largest bankruptcies in history. Ebbers was released from prison in December for health reasons after serving half of his 25-year sentence.
FOOD FOR THOUGHT
Self-driving vehicles of all sorts are moving off the drawing board and onto the roads. Texas is allowing Waymo to begin running autonomous semitrailer trucks on its interstates, with a human on board in case of emergency. Peter Holley has a deep dive into the Lone Star state's efforts for Texas Monthly. He spoke with John Esparza, CEO and president of the Texas Trucking Association.
“The Department of Public Safety will tell you distracted drivers are the biggest killer of drivers on our highways today and—once you deploy this technology that takes error out of human hands—you’ll start seeing some real change,” said Esparza, who served as a policy adviser to Governor Rick Perry and was later appointed to the Texas Tech University System Board of Regents by Perry. He also said that an experienced truck driver with a clean driving record is a “hot commodity.”
“I don’t see a time in the near future, or even when my grandkids are grown, that there won’t be a need for truck drivers,” he said.
IN CASE YOU MISSED IT
Privacy, bias and safety: On facial recognition, Berlin and London choose different paths By David Meyer
5G tablets have arrived. How fast can they change computing? By Don Reisinger
Why Super Bowl ads still matter in the streaming age By Ken Wheaton
How marketers are increasingly using A.I. to persuade you to buy By David Z. Morris
Should your company take design more seriously? By Nate Berg
Those controversial ‘Peloton wife’ ads may not have hurt sales after all, say analysts By Anne Sraders
BEFORE YOU GO
Plenty of tech companies advertised during the Super Bowl last night. Google had a moving spot about remembering lost loved ones. Amazon had Ellen DeGeneres being funny about the time before Alexa. And Facebook opted for a head-banging Twisted Sister classic to promote its Groups feature.
Aaron Pressman
On Twitter: @ampressman
Email: aaron.pressman@fortune.com


fortune--2020-02-03--What you need to know about new IBM CEO Arvind Krishna

IBM has a new leader, who arrives at a crucial moment, as one of the most storied corporations in America struggles to reverse years of decline. He will be expected to bandage the wounds already inflicted on Big Blue by a new generation of tech giants, and to create a largely new line of business that can return it to health.
All that, and you’ve probably never heard of him.
Exiting stage left will be Ginni Rometty. Her performance at the helm has been widely regarded as underwhelming, with profits declining by 43% over an eight-year tenure, even amidst a broader economic expansion. Her departure has been expected, and for some investors, apparently longed for: IBM’s stock rose more than 5% the day after it was announced that she was stepping down.
She will be replaced by Arvind Krishna, senior vice president and a leading architect of IBM’s cloud computing strategy. But Krishna arrives with a relatively low profile, having slowly and steadily climbed the corporate ranks.
So who is the man who will officially become CEO on April 6? Where does he come from, what skills does he bring, and, most importantly, can he turn a century-old tech firm into a leader again?
Who is Arvind Krishna?
Krishna, 57, is an IBM lifer, having joined the company in 1990 after getting an engineering PhD at the University of Illinois at Urbana-Champaign. He has been a senior vice president at IBM since 2015, and a leader in IBM’s cloud computing business since 2017.
Krishna, who was born in India, received more of the spotlight as the driving force behind IBM’s $34 billion acquisition last year of enterprise software maker Red Hat, among the largest tech deals ever. The acquisition highlighted IBM’s focus for future growth on cloud computing, the remote rental of data storage and processing power.
According to Craig Lowery, a cloud computing analyst for Gartner, Krishna’s elevation further affirms IBM’s cloud focus, as does the appointment, also on Thursday, of former Red Hat CEO Jim Whitehurst as IBM’s president.
Krishna’s long tenure in engineering distinguishes him from IBM’s previous three CEOs, who had largely non-technical careers before taking the top job. Krishna worked for more than two decades in data storage and management, and in addition to his other duties, heads IBM’s research unit.
That has drawn early comparisons to Microsoft’s appointment of Satya Nadella, a former cloud engineer, as CEO in 2014. Lowery believes IBM’s decision helps ensure that their cloud strategy is successful, since Krishna has spent his career immersed in the relevant technology.
In addition to his work on the acquisition itself, Krishna has played a major role in integrating Red Hat into IBM. At a Red Hat conference in May 2019, he spoke about his desire to preserve the free flow of ideas —and criticism—that defines engineering culture within both companies.
That also aligns with Krishna’s personality, according to Dan Ives, an analyst with Wedbush Securities. “He’s a tactician. He listens to others and he takes criticism,” he says. “He looks in the mirror, and he’s willing to see who he is and what IBM is.”
Can he fix IBM’s problems?
What IBM is, at the start of 2020, is troubled.
During her tenure, Rometty was unable to defend IBM’s position as a technology leader against industrywide change. “It’s clear that IBM was late to the cloud party,” says Lowery, giving the lead to competitors including Amazon Web Services and Microsoft’s Azure.
Though it has failed to attract many customers for its standalone cloud computing infrastructure, IBM is now focused on helping big clients connect and manage the sometimes-confusing array of cloud services they do use. The Red Hat acquisition was all about getting the technology and expertise to help clients smoothly run applications using data from, for instance, both a private cloud service from Cisco and a public cloud run by Google.
But IBM’s recent history shows that it takes more than technology to deliver results. Under Rometty, the company has put major research and development efforts into blockchain, a distributed database technology, and the Watson artificial intelligence program. But those investments have yet to produce substantial new revenue.
And there’s serious competition in helping knit together multiple cloud services: Dell, VMWare, and Google are all currently pushing offerings similar to IBM’s.
What happens next, then, will depend greatly on execution. A major factor is whether IBM will be able to reap benefits from the Red Hat acquisition. The integration of the two companies is just six months along. Toni Sacconaghi, analyst with Alliance Bernstein, projects it will be another year and a half before it’s known whether adding Red Hat’s products and know-how has helped IBM win more customers.
Ives, from Wedbush, believes Krishna is the right person to make it happen, having gained a good reputation within the company after a string of successful projects. It may take time to convince the rest of the world of that, though.
Lowery says Krishna “looks a little bit like a blank sheet of paper to me,” and adds that it “remains to be seen” whether he can successfully execute on IBM’s cloud strategy.
Because of his age, Sacconaghi thinks Krishna may not have a great deal of time to make an impact. Both Samuel Palmisano and Louis Gerstner became CEO at age 51 and retired at age 60, while Rometty became CEO at 54 and is leaving at 62. Nonetheless, Sacconaghi believes IBM has signaled a long-term commitment to cloud services with the appointment of Whitehurst—just 52 —as president, making him Krishna’s heir apparent.


fortune--2020-02-04--Toys, tech and cars: Supplies are running low for firms that depend on China imports

Wages , economic growth and manufacturing—3 metrics Trump should avoid in tonight ’ s State of the Union Address

For companies bracing for losses from China’s viral outbreak, the damage has so far been delayed, thanks to a stroke of timing: The outbreak hit just when Chinese factories and many businesses were closed anyway to let workers travel home for the week-long Lunar New Year holiday .
But the respite won’t last.
If much of industrial China remains on lockdown for the next few weeks — a very real possibility — Western retailers, auto companies and manufacturers that depend on Chinese imports will start to run out of the goods they depend on.
In order to meet deadlines for summer goods, retail experts say that Chinese factories would need to start ramping up production by March 15. If Chinese factories were instead to remain idle through May 1, it would likely cripple retailers’ crucial back-to-school and fall seasons.
“There’s complete uncertainty,’’ said Steve Pasierb, CEO of the Toy Industry Association. “This could be huge if it goes on for months.’’
Wuhan, the Chinese city where the outbreak hit hardest, is a center of automotive production. It’s been closed off, along with neighboring cities, isolating more than 50 million people and bringing factories to a standstill.
So far, U.S. automakers haven’t had to curb production for want of Chinese parts. But David Closs, professor emeritus at Michigan State University’s Department of Supply Chain Management, said the clock is ticking.
“I would say it’s weeks at the most,’’ Closs said. “One to two to three weeks.’’
The partial shutdown of Wuhan has already harmed the production of TV display panels and raised prices, according to a report by research group IHS Markit. The city has five factories making liquid crystal displays, known as LCDs, and organic light-emitting diodes, known as OLEDs, both of which are used for television and laptop monitors. China accounts for more than half of the global production of these display panels.
David Hsieh, an analyst at IHS Markit, said in a report that “these factories are facing shortages of both labor and key components as a result of mandates designed to limit the contagion’s spread,” leading suppliers to raise panel prices more aggressively.
Phone-maker Motorola, which has a facility in Wuhan, said that so far, it expects little impact because it has a flexible global supply chain and multiple factories around the world. Its priority has been the welfare of local employees, Motorola, which is owned by the Chinese electronics giant Lenovo, said in a statement.
Apple CEO Tim Cook told analysts last week that the company’s contractors in China had been forced to delay reopening factories that closed for the Lunar New Year holiday. Cook said the company is seeking ways to minimize supply disruptions. Some of its suppliers are in Hubei, the Chinese province at the center of the outbreak. Most of Apple’s iPhones and other devices are made in China.
In the meantime, economists are sharply downgrading the outlook for China’s economy, the world’s second-biggest. Tommy Wu and Louis Kuijs of Oxford Economics have slashed their forecast for Chinese economic growth this year from 6% to 5.4%. They expect most of the damage to be inflicted in the first three months of 2020.
“But a more serious and long-lasting impact cannot be ruled out,’’ they wrote Monday.
Forecasters are contending with unknowns. No one knows how long the outbreak will last, how much damage it will cause or how policymakers will respond to the threat.
“We’re grasping for precedents,’’ said Phil Levy, chief economist at the freight company Flexport who was an economic adviser in the administration of President George W. Bush.
Some look back to the SARS outbreak, which paralyzed the Chinese economy for the first few months of 2003. But the damage from SARS faded quickly: China was booming again by year’s end. And the world economy emerged mostly unscathed.
But times have changed in ways that are not favorable to containing the economic damage. Back then, China was the world’s workshop for cheap goods — toys and sneakers, for instance. Now, China has moved up to sophisticated machine parts and electronics like LCDs. And it accounts for about 16% of global economic output, up significantly from just 4% in 2003.
Levy said he was struck by how U.S. airlines reacted to the coronavirus: They suspended flights between the United States and mainland China for weeks — American airlines through March 27, United through March 28 and Delta until April 30.
The move doesn’t just affect tourists, students and business travelers. Passenger planes also carry a lot of freight.
“When you see them loading those big 747s, that’s not just your luggage,’’ Levy said. “That can be pallets full of electronics and other things.’’
The health crisis coincides with an especially difficult time for China’s factories. A 19-month trade war with the United States — in which the Trump administration imposed tariffs on $360 billion of Chinese imports — has already led U.S.-based multinational corporations to look for alternatives to Chinese suppliers. Many are moving to Vietnam or other low-wage countries to dodge President Donald Trump’s taxes on Chinese-made goods.
The coronavirus, along with fears that U.S.-China tensions over trade and geopolitics will persist, gives them one more reason to reduce their reliance on China. Among multinational firms, there is “increasing unease that China is starting to become quite risky,’’ said Johan Gott, an independent consultant who specializes in political risks for businesses.
But it isn’t easy to completely abandon China, where specialized suppliers cluster in manufacturing centers and make it convenient for factories to obtain parts when they need them.
Basic Fun, a toy company based in Boca Raton, Florida, has sought suppliers in Vietnam and India with no luck yet. Its CEO, Jay Foreman, said he is hoping that the factories in China will resume production by early April, which he considers the best-case scenario. But he fears that any more delays could mean that the factories don’t start to ramp up production until after May 1.
The stakes are high. Basic Fun gets about 90% of its toys from China. And Foreman has been contending with the trade war and disruptive protests in Hong Kong.
The coronavirus, he said, is “just a continuation of sitting on the knife’s edge … sleeping on the bed of nails from tariffs to the riots in Hong Kong and the virus. We just can’t get a break.”
More must-read stories from Fortune:
—Global companies enter lockdown mode as coronavirus rocks China
—Deutsche Bank’s “annus horribilis” reveals the true cost of negative interest rates
—As the coronavirus spreads, these stocks are the most exposed
—Mysterious GPS outages are wracking the shipping industry
—Fortune Explains: Tariffs and trade wars
Catch up with Data Sheet, Fortune’s daily digest on the business of tech.


fortune--2020-02-04--The wisdom of Clay Christensen

The wisdom of Clay Christensen

Toys , tech and cars : Supplies are running low for firms that depend on China imports

This is the web version of CEO Daily. To get it delivered to your inbox, sign up here.
Good morning.
Clay Christensen’s 1997 book, The Innovator’s Dilemma, is the most influential business book of the last three decades. It imprinted on every good business leader’s mind the possibility that, even if they did everything “right,” they could find their company facing fatal disruption from a low-cost competitor. “Disrupt yourself” became a modern business mantra as a result.
Christensen died on Jan. 23 at the age of 67, due to complications of a long battle with leukemia. His last interview with Karen Dillon, his long-time collaborator, is being published this morning by MIT Sloan Management Review. CEO Daily got an early peek. Excerpts here:
On his concern about U.S. productivity and growth:
“I absolutely worry about this. In…The Prosperity Paradox, we describe three types of innovation…’sustaining innovations,’ which… is the process of making good products better…’efficiency innovation,’ which is when a company tries to do more with less…and ‘market-creating innovations,’ meaning they build a new market for new customers.’ [The last category] are the source of growth in any economy… My sense is that we in the United States, like many other developed countries, are investing far too much energy in efficiency and sustaining innovations, and not enough in market-creating innovations.”
On the limits of Big Data:
“Big data…tends to gloss over or ignore anomalies… [It] tends to be far more focused on correlation rather than causation, and as such ignores examples where something doesn’t follow what tends to happen on average. It’s only by exploring anomalies that we can develop a deeper understanding of causation.”
On share buybacks:
“Buybacks are not inherently wrong, but at an extreme they indicate an inability of a firm (and perhaps an entire economic system) to identify market-creating opportunities.”
On why companies still haven’t solved the innovator’s dilemma … even though his book came out 23 years ago:
“Companies certainly know more about disruption than they did in 1995, but I still speak and write to executives who haven’t grasped the implications of the theory. The forces that combine to cause disruption are like gravity…they are constant and always at work within and around them. It takes very skilled and very astute leaders to be navigating disruption on a daily base.”
“In my experience, it seems that it’s often easier for executives to spot disruptions occurring in someone else’s industry rather than their own, where their deep and nuanced knowledge can sometimes distract them from seeing the writing on the wall.”
More news below. And be sure to look at this new research by Fortune Analytics which shows, among other things, that a surprisingly large percentage of Amazon Prime customers—29%—also bought online from Walmart during the holiday season.
Alan Murray
@alansmurray
alan.murray@fortune.com
TOP NEWS
Markets rebound
Asian markets experienced a slight recovery today, following yesterday's heavy, coronavirus-related falls in China. The Shanghai Composite is up 1.3%, the Hang Seng 1.2%, Kospi 1.8%, Nikkei 0.5%, and the ASX 200 0.4%. European markets are also healthy at the time of writing, with the Stoxx 600 being up 0.8%. U.S. futures look good, too. CNBC
Alphabet breakout
Alphabet's results yesterday beat analyst's profit estimates, but fell short on the revenues Wall Street was hoping to see. Shares fell 2.5% accordingly. Interestingly, though, Alphabet for the first time broke out results for YouTube's ad business ($15.1 billion in 2019 revenue, up from $11.2 billion the year before) and the Google Cloud unit ($8.9 billion in 2019; $5.8 billion in 2018). TechCrunch
Tesla shares
Tesla's share price rose by almost 20% yesterday, thanks to a bunch of factors. One of those was analysts boosting their forecasts for Elon Musk's automaker. Panasonic and Tesla's joint battery venture also became profitable in Q4, and Chinese battery maker CATL announced a supplier agreement with Tesla. New York Times
Iowa caucus
And the winner of the Democratic Iowa caucus is… dunno. You'll have to wait to find out, hopefully sometime today, because the state party found inconsistencies in the reporting of the results and is scrambling to put out something accurate. This may or may not have to do with a new app that precinct chairs were given to tally the results. Fortune
AROUND THE WATER COOLER
Ford battle
The Journal has an interesting piece on how Ford found itself at odds with the administration and with other automakers, by overestimating President Trump's appetite for a compromise with California over fuel-economy regulations. Analysts say the standoff has left the industry in a "quagmire". WSJ
Golden times
There's a record amount of gold in exchange-traded funds. According to Bloomberg, the holdings on Monday eclipsed the previous record, set in 2012. The reason? Coronavirus dampening risk appetites, and growing evidence for U.S. dollar weakness. Bloomberg
Antitrust enforcement
The German government has proposed a new law that would strengthen the powers of the country's antitrust enforcer when it comes to Big Tech. The regulator would be able to stop large companies from giving preferential treatment to their own products or services, if rivals' products and services therefore suffered. Dominant firms would also not be allowed to block users from transferring their personal information to other platforms. Financial Times
Privacy enforcement
Germany's federal privacy regulator has compared his Irish counterpart's "go-slow" approach to enforcing the EU's tough new laws on Facebook with Germany's probes into the dieselgate scandal. Ulrich Kelber said Helen Dixon's office, which has jurisdiction over most Big Tech firms, was heavily under-resourced for the task (something Fortune reported on last year). Irish Times
This edition of CEO Daily was edited by David Meyer.


fortune--2020-02-04--Wages, economic growth and manufacturing—3 metrics Trump should avoid in tonight’s State of the Unio

Wages, economic growth and manufacturing—3 metrics Trump should avoid in tonight’s State of the Union Address

If data is the new oil , these companies are the new Baker Hughes

This is the web version of the Bull Sheet, Fortune’s no-BS daily newsletter on the markets. Sign up to receive it in your inbox here.
Good morning, Bull Sheeters. Asia, Europe and the U.S. futures are all trading up this morning (as I type). That’s no small feat considering the latest grim coronavirus headlines—the first virus-related death in Hong Kong and the number of cases topping 20,000— plus the puzzling lack of news out of Iowa.
This morning I’m going to move off the global pandemic beat (I’m sure you don’t mind) and head stateside. Tonight is President Trump’s State of the Union speech.
For the occasion, I’ve prepared a few charts (three to be precise) that I’m fairly certain will get zero mention in the SOU. Each chart tells us something about the state of the economy.
Let’s jump right into it.
Employment vs. wages
At 3.5%, the U.S. unemployment rate is the envy of the developed world. It’s at a half-century low. You will hear this data point tonight. And it will get plenty of applause.
But wages are nothing to boast about. As the first chart shows, wage growth has ticked up only slightly under Trumponomics. The average American worker sees a 0.2% fatter paycheck (not factored in for inflation) compared to the day Trump was sworn into office in January, 2017.
***
As the chart above shows, the rate of American wage growth is less than it was a dozen years ago. We have yet to climb back to where we were in September, 2008 when Lehman Bros collapsed.
Sad.
What about manufacturing?
I’d wager Trump won’t dig too deep into the manufacturing numbers tonight. The trade wars, the Boeing mess, the slowing global economy are all doing a job on the “Made in the USA” brand.
Now, the White House did get a strong reading just yesterday of factory activity. We can only hope that wasn’t a blip. But take a look at orders on durable goods (excluding aircrafts). If you run an American company that makes stuff, you know this next chart well.
***
Throughout much of 2019, and particularly in the second half of the year, durable goods orders were more down than up, month-on-month. Maybe a thawing of the U.S.-China trade wars will improve this picture. Or…maybe the coronavirus will exacerbate it.
You call this growth?
Yes, America is growing. But these GDP numbers are nothing to crow about. The best you can say is it is better than Europe.
***
Growth is slowing. That’s the trend for all three trading powers. You can bet that economists are already recalculating (downwards) 2020 growth projections, factoring in the coronavirus impact.
There are economic achievements Trump can hail tonight: housing starts, consumer confidence, and yes the unemployment rate.
But he’ll be selective in how he presents it. Presidents always are in the SOU.
Bernhard Warner
@BernhardWarner
Bernhard.Warner@Fortune.com
Correction: Americans’ wages are growing at a slower rate than they were a dozen years ago—not that Americans are earning less. The newsletter has been corrected to reflect that change.
Today's reads
Calling all bears. The hit to oil demand caused by China’s deadly coronavirus outbreak is worrying Saudi Arabia. Oil prices finished Monday in bear-market territory, down more than 20% from their recent peak. The kingdom is pushing OPEC to respond with a deep, short-term cut in oil production of around 500,000 barrels a day, The Wall Street Journal reported. Representatives of OPEC and its allies are set to meet Tuesday and Wednesday to debate possible action, which could include a decision to reduce output at a possible meeting next week.
Pedal power. It turns out that those controversial ‘Peloton wife’ ads may not have hurt the fitness company’s sales after all, Fortune’s Anne Sraders reports. Peloton's now-infamous holiday ad, featuring a woman using the bike her husband gave her for Christmas, was deemed sexist by some. But Wall Street analysts predict that Peloton's second-quarter earnings on Wednesday will show the company has pedaled over the bumps in the road toward strong earnings. In fact, the ad’s notoriety appears to have made people much more aware of the brand as there was a surge in U.S. web searches for “Peloton” towards the end of last year.
Steadier stocks. Chinese stocks rebounded on Tuesday after falling by up to 9% yesterday, their biggest sell-off for more than four years, due to the coronavirus outbreak. The benchmark CSI 300 index of leading Chinese shares climbed by as much as 1.6% as Beijing stepped up efforts to defend the economy against the spread of the virus. The central bank steadied nerves by announcing a new cash injection to support China’s financial system.
Market candy
Next stop $7,000? More staggering numbers from Tesla, whose shares have been red hot since the start of the year, shrugging off stock market jitters over the coronavirus outbreak. The electric car maker’s stock surged 20% Monday in its largest one-day gain since 2013. Here's some more numbers to put this Tesla bull run into perspective:


fortune--2020-02-04--Democratic candidates claim victory as Iowa continues its delayed caucus count

Democratic party officials in Iowa worked furiously Tuesday to deliver the delayed results of their first-in-the-nation caucus, as frustrated presidential candidates claimed momentum and plowed ahead in their quest for the White House.
Technology problems and reporting “inconsistencies” kept Iowa Democratic Party officials from releasing results from Monday’s caucus, the much-hyped kickoff to the 2020 primary. It was an embarrassing twist after months of promoting the contest as a chance for Democrats to find some clarity in a jumbled field with no clear front-runner.
Instead, caucus day ended with no winner, no official results and many fresh questions about whether Iowa can retain its coveted “first” status.
State party officials said final results would be released later Tuesday and offered assurances that the problem was not a result of a “hack or an intrusion.” Officials were conducting quality checks and verifying results, prioritizing the integrity of the results, the party said in a statement.
The statement came after tens of thousands of voters spent hours Monday night sorting through a field of nearly a dozen candidates who had spent much of the previous year fighting to win the opening contest of the 2020 campaign and, ultimately, the opportunity to take on President Donald Trump this fall.
The candidates didn’t wait for the party to resolve its issues before claiming, if not victory, progress and moving on to next-up New Hampshire.
“It looks like it’s going to be a long night, but we’re feeling good,” former Vice President Joe Biden said, suggesting the final results would “be close.”
Vermont Sen. Bernie Sanders said he had “a good feeling we’re going to be doing very, very well here in Iowa” once results were posted. “Today marks the beginning of the end for Donald Trump,” he predicted.
“Listen, it’s too close to call,” Massachusetts Sen. Elizabeth Warren said. “The road won’t be easy. But we are built for the long haul.”
And Pete Buttigieg, the former mayor of South Bend, Indiana, was most certain.
“So we don’t know all the results, but we know by the time it’s all said and done, Iowa, you have shocked the nation,” he said. “By all indications, we are going on to New Hampshire victorious.”
Democrats faced the possibility that whatever numbers they ultimately released would be questioned. And beyond 2020, critics began wondering aloud whether the Iowa caucuses, a complicated set of political meetings staged in a state that is whiter and older than the Democratic Party, are a tradition whose time had past.
The party has tried to accommodate critics, this year by promising to report three different data points about voters’ preferences, presumably improving transparency. But the new system created new headaches.
State party spokeswoman Mandy McClure said it had “found inconsistencies in the reporting of three sets of results,” forcing officials to try to verify results with “underlying data” and the paper trail.
Some of the trouble stemmed from issues with a new mobile app developed to report results to the party. Caucus organizers reported problems downloading the app and other glitches.
Des Moines County Democratic Chair Tom Courtney said the new app created “a mess.” As a result, Courtney said precinct leaders were phoning in results to the state party headquarters, which was too busy to answer their calls in some cases.
Organizers were still looking for missing results several hours after voting concluded.
Shortly before 2 a.m., the state party was making plans to dispatch people to the homes of precinct captains who hadn’t reported their numbers. That’s according to a state party official in the room who was not authorized to share internal discussions publicly.
Earlier in the night, Iowa Democrats across the state cast their votes, balancing a strong preference for fundamental change with an overwhelming desire to defeat Trump. At least four high-profile candidates vied for the lead in a contest that offered the opening test of who and what the party stands for in the turbulent age of Trump.
It’s just the first in a primary season that will span all 50 states and several U.S. territories, ending at the party’s national convention in mid-July.
For Democrats, the moment was thick with promise for a party that has seized major gains in states since Trump won the White House in 2016. But instead of clear optimism, a growing cloud of uncertainty and intraparty resentment hung over the election as the prospect of an unclear result raised fears of a long and divisive primary fight in the months ahead.
One unsurprising development: Trump won the Republican caucus, a largely symbolic victory given that he faced no significant opposition.
The president’s campaign eagerly seized on the Democrats’ problems.
“Democrats are stewing in a caucus mess of their own creation with the sloppiest train wreck in history,” Trump campaign manager Brad Parscale said. “It would be natural for people to doubt the fairness of the process. And these are the people who want to run our entire health care system?”
Pre-caucus polls suggested Sanders entered the night with a narrow lead, but any of the top four candidates — Sanders, Biden, Warren and Buttigieg — was positioned to score a victory. Sen. Amy Klobuchar, who represents neighboring Minnesota, was also claiming momentum, while outsider candidates including entrepreneur Andrew Yang, billionaire activist Tom Steyer and Hawaii Rep. Tulsi Gabbard could be factors.
“We know one thing: We are punching above our weight,” Klobuchar said late Monday, promising to keep fighting in New Hampshire.
New voters played a significant role in shaping Iowa’s election.
About one-quarter of all voters reported that they were caucusing for the first time, according to AP VoteCast, a survey of voters who said they planned to take part in Monday’s Democratic caucuses. The first-timers were slightly more likely to support Sanders, Warren or Buttigieg, compared with other candidates.
At the same time, VoteCast found that roughly two-thirds of caucusgoers said supporting a candidate who would fundamentally change how the system in Washington works was important to their vote. That compared to about a third of caucusgoers who said it was more important to support a candidate who would restore the political system to how it was before Trump’s election in 2016.
Not surprisingly, nearly every Iowa Democrat said the ability to beat Trump was an important quality for a presidential nominee. VoteCast found that measure outranked others as the most important quality for a nominee.
The 2020 fight has already played out over myriad distractions, particularly congressional Democrats’ push to impeach Trump, which has often overshadowed the primary and effectively pinned several leading candidates to Washington at the pinnacle of the early campaign season.
Meanwhile, ultrabillionaire Mike Bloomberg, the former mayor of New York City, is running a parallel campaign that ignored Iowa as he prepares to pounce on any perceived weaknesses in the field come March.
The amalgam of oddities was building toward what could be a murky Iowa finale before the race pivoted quickly to New Hampshire, which votes next Tuesday.
For the first time, the Iowa Democratic Party planned to report three sets of results: a tally of caucus-goers’ initial candidate preference; vote totals from the “final alignment” after supporters of lower-ranking candidates were able to make a second choice; and the total number of State Delegate Equivalents each candidate receives.
There is no guarantee that all three will show the same winner when they’re ultimately released.
More must-read stories from Fortune:
—2020 candidates’ positions, and records, on economic issues that affect women
—Bernie Sanders wants the future of the far left to be female. Is that enough?
—Michael Bloomberg’s radical plan to cut prescription drug costs
—Fortune Explains: The debt ceiling
—Millions have been purged from voter rolls—and may not even realize it
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