fortune--2020-02-20--How the 5G revolution could increase mobile security—and opportunities for hackers

As 5G becomes a bigger part of our lives, security experts warn telecoms deploying 5G networks, companies making products that connect to 5G networks, and end users need to think seriously about security.
In a series of interviews with Fortune, security experts said 5G, a new, ultra-fast mobile network technology that can deliver speeds of up to 2Gbps and will eventually replace today’s 4G LTE, can both improve overall security and create more opportunities for malicious hackers to target users.
“Like with any new technology, 5G provides opportunities for both the good guys and hackers,” says Monique Becenti, a product specialist at website security company SiteLock.
5G, Becenti says, will work with a vast array of corporate networks, applications, and devices that will call on it for a variety of needs, ranging from managing the smart home to operating autonomous cars. But all of those implementations also create opportunities for hackers to attack.
“With more networks and applications utilizing 5G, it may increase exposure to attacks for businesses and consumers,” she adds.
Forrester analyst Paul McKay sees an equal possibility of 5G improving and limiting security, and is concerned that the millions of new devices that could connect to 5G networks over time could pose threats if they’re not properly secured. However, McKay notes that 5G comes with security requirements assigned by telephony standards organization 3GPP that could be critical in the fight against hackers.
“[5G] has many enhanced security features over 4G, such as improved integrity protection mechanisms, encryption, and better protection against attempts to introduce rogue radio devices and other non-authorized devices,” McKay says. “Authorization and authentication of mobile devices is far stronger when implemented correctly (in 5G) than in 4G, leading to increased device identity protection.”
The connection speed improvements that 5G offers could create better data-processing opportunities for companies, Becenti says. And that data processing could be used to detect and respond to security threats before they become a bigger concern, boosting overall cybersecurity efficiency.
“It allows businesses to utilize the Internet of Things and other computing applications to more effectively analyze data, detect threats and enhance cybersecurity for the end-user,” he adds.
But 5G security may not be a binary debate between better or worse, says Dimitrios Pavlakis, a digital security analyst at ABI Research. Pavlakis believes 5G security will depend upon its implementation in devices and networks.
“Multiple security aspects must be reworked for each different implementation” of 5G, he says.
A new attack vector
All the experts interviewed for this piece agree that malicious hackers will actively seek opportunities to attack both consumers and corporate users over 5G. The implications of that—and on the theft of critical information—could be significant.
“The stakes are high in 5G security, because these networks will be an important component of future critical infrastructure that will become closely integrated with our digital economy and society,” says Elsa Kania, an adjunct senior fellow at the Technology and National Security Program at the Center for a New American Security.
Kania envisions a time when hackers can use 5G exploits to “threaten public safety and critical industries in future smart cities” that would use the next generation networks.
“The talk of a race to 5G is problematic because speed must not come at the expense of security,” Kania says.
Luckily, that race has only just begun. While 5G is being deployed in dozens of countries around the world, it’s far from ubiquitous. And the vast majority of consumers and enterprise users around the world are still using 4G technology. That gives the industry time to build networks and devices that connect to those networks, all while keeping security in mind.
“If 5G is implemented correctly and we apply the security measures that are built into the standards, we will ultimately be able to improve security,” says McKay.
But he cautions that it will take time.
“It will take a few years and bumps in the road before we get it right,” he says.
And during that rough period, consumers and enterprise users will need to focus on keeping their data safe as threats arise.
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—Did the ‘techlash’ kill Alphabet’s city of the future?
—Predicting the biggest tech headlines of 2020
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fortune--2020-02-20--5 reasons the T-Mobile-Sprint merger should’ve been rejected—and will raise your phone bill

We know something essential about the coronavirus .
We ’ re not doing anything about it

There used to be five, then there were four, and with the recent ruling allowing the takeover of Sprint by T-Mobile, there will now likely be only three nationwide wireless carriers. The painful consequences will be felt in your wallet.
The vast majority of economists believe that the elimination of Sprint as a rival to other carriers will result in less competition, higher prices, and lower quality in phone service. Antitrust law is there to make sure that mergers that harm customers are blocked. So, why is this one allowed?
The Justice Department normally would stop this merger. But DISH Network, a satellite TV company, convinced a federal judge that it will be able to replace Sprint as a fourth rival. However, unlike Sprint, DISH has no telecom customers and no telecom network. Evidence presented at the trial showed that it will take DISH up to seven years to build a nationwide network from scratch and require tens of billions of dollars of investment.
Additionally, the Justice Department gave DISH a sweet deal that, paradoxically, provides business incentives to DISH not to invest in a new network. Under the deal, DISH can lease and resell T-Mobile’s wholesale phone service. This encourages DISH to just be a reseller and never build a full-fledged network of its own (or even build a tiny one to satisfy Justice Department lawyers), saving billions of dollars. If DISH does not build a new network, there will not be a fourth major rival to compete for customers, leading to higher bills.
Judges usually err on the conservative side, and, given the speculative—indeed, unlikely—nature of the claim that DISH will spend billions contrary to its business incentives to build a network, one would have expected the judge to block the merger. But this judge ignored economists’ antitrust testimony (including our own amicus brief), and was persuaded by witnesses for the merging parties, including their CEOs.
It’s part of CEOs’ job descriptions to be persuasive, especially when it concerns future plans. There is nothing that holds them to what they say in court. If accused of making false statements, they can easily claim that adverse business conditions prevented their predictions from being realized.
Once this merger is done, DISH can do whatever it wants. If it is profitable not to invest, it won’t. There is little the judge can do at that point, while all phone customers, including those of AT&T and Verizon, will be paying higher prices.
There is another significant error in allowing this merger to go through. For years, T-Mobile acted as a maverick and undercut prices, especially those of AT&T and Verizon. The judge assumed that T-Mobile will do the same post-merger. But the new T-Mobile will no longer be a company with only 17% market share; it will double in size, close to respective shares of AT&T and Verizon. In that market position, T-Mobile could well abandon its aggressive undercutting and become one of the three comfortable fat cats.
The judge essentially ruled that Sprint does not have a future unless acquired by T-Mobile. This is overly speculative. To be sure, Sprint is a badly run company, and its control by SoftBank starved it of much-needed capital. But Sprint is far away from bankruptcy, has a lot of valuable assets (which, ironically, the judge underscored to tout the importance of the merger), and a very rich, large shareholder in SoftBank. If companies experiencing moderate difficulty can regularly persuade judges that their only choice is to be acquired by a rival, we may end up with many more anticompetitive mergers.
The final nail in the coffin of this bad decision was the judge’s deference to the Justice Department and Federal Communications Commission (FCC). He quotes from a previous case to describe the agencies as “intimately familiar with this technical subject matter, as well as the competitive realities involved.” If our courts are satisfied with the judgments of the Justice Department and FCC, why even hold a trial?
The bottom line is that this decision, to a large extent, disregards the interests of consumers. They will pay in the form of higher prices every month, while the testifying CEOs will celebrate the huge bounty they made off this transaction. The rest of us can take bets on how many years it will take for DISH to build its own network—if ever.
Nicholas Economides is a professor at New York University Stern School of Business.
John Kwoka is a professor at Northeastern University.
Thomas Philippon is a professor at New York University Stern School of Business.
Robert Seamans is a professor at New York University Stern School of Business.
Hal Singer is a professor at Georgetown McDonough School of Business.
Marshall Steinbaum is a professor at the University of Utah.
Lawrence J. White is a professor at New York University Stern School of Business.
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fortune--2020-02-20--Amherst makes a big buy in its quest for one million rental homes

Measured by big, bold plans, no real estate firm matches the epic ambitions of Amherst Holdings. The under-the-radar firm is aiming to to build one of the world’s biggest residential real estate empires by scooping up and renting suburban homes. Amherst is on the move: On February 18, it announced a major deal to acquire Front Yard Residential for $2.3 billion, including debt. In a single stroke, that purchase lifts Amherst into the top ranks of the big corporate owners that have emerged since the financial crisis. Adding Front Yard’s 14,700 single family rental homes raises Amherst’s portfolio to 36,500, making it by far the biggest privately-held player in the industry, and third largest overall behind Invitation Homes at roughly 80,000 properties, and American Homes 4 Rent at 53,000.
To discuss the deal and the industry’s prospects, I spoke to Amherst CEO and chairman Sean Dobson. Over the past 25 years, Dobson built Amherst from tiny bond house into a diversified owner and manager of rental homes, provider of financing for commercial properties, and fund manager for real estate securities with $20 billion under management.
“We originally sold Front Yard a large portfolio of homes that we’re mainly buying back,” he told me. “We continued to manage 6,000 to 7,000 homes homes that we originally bought, renovated and sold them.” He notes that Amherst has concentrated its purchases in fast-growing markets in the south and southwest, notably Atlanta, Dallas, and Charlotte, as well as in midwestern metros with steady job growth, such as St. Louis and Cincinnati. By acquiring Front Yard, he’s doubling down on those thriving Sunbelt and sturdy Rustbelt metros. “Front Yard has more homes in Chicago, for example,” he says, “but our portfolios mainly overlap” in markets where homes are still relatively cheap, so that after fully renovating properties, Amherst can typically rent them in the $1,400 to $2,000 a month range that’s affordable to middle class families.
Dobson sees single family rentals, offered by big owner-managers, as the asset class of the future for two reasons. First, millions of properties held by the group that long dominated the industry, mom and pop owners, are pouring onto the market. The heirs of the original landlords no longer want to fix leaky roofs, replace old air conditioners, and find new tenants.
“The generation that now owns these homes can invest in an REIT to benefit from the single family home market. They no longer have to own and manage houses themselves,” he says. He reckons that 15 to 16 million homes are in the hands of these small proprietors, mostly in clusters of 50 to 100 properties. As the new generation of owners exits, Amherst plans to be a big buyer, adding new appliances, fresh carpeting, and refurbished siding that can make 1990s vintage dwellings look like new construction.
Second, Dobson is seeing an overwhelming demand for rentals. “We put 2,000 homes a month on the market,” he says, “1,000 from our normal vacancies, and 1,000 from homes we’ve bought and just renovated. For those 2,000 offerings, we’re getting 150,000 in inquiries a month. That’s over 70 for every home that becomes available.” The reason? “People rent rather than buy mainly because of their lack of access to credit,” he says. “So many people can’t qualify for mortgages. For example, our renters are more likely to have student debt than the average renter, and the amount of student debt our renters have is twice the average.”
Dobson points to another trend swelling the ranks of renters. “Many older couples sold their homes and decided to downsize,” he says. Frequently, he adds, they’re folks who move to a new city to be near their children and grandchildren and want the flexibility of renting while keeping the cash from the sale of their homes. “That group now makes up 20% to 30% of our renters,” he observes. Those older couples are flocking to rent houses because the big owners are standardizing the quality of their offerings, whereas a few years ago, the choices were so scruffy they’d chose a garden apartment instead.
So is Dobson sticking to his goal, as expressed to Fortune in my story last year, of eventually owning one million rental homes?
“We’ll get to a million,” he says. “It shocks me the number of renters out there we don’t have homes for.” Amherst is paying $155,000 per unit for Front Yard’s almost 15,000 homes. As landlord of a million homes, Amherst would reign over a kingdom worth something like $155 billion. That would make it one of the biggest consolidators in the annals of real estate, in a neighborhood that ten years ago, few thought could be consolidated. It’s a compelling, some would say over-the-top, vision from a renowned visionary. One of the fun spectacles in the years to come will be Dobson’s quest to make it happen.
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fortune--2020-02-20--Roger Stone sentenced to more than three years in prison for Trump cover-up

Roger Stone, the longtime Republican operative and Donald Trump associate, was sentenced to 3 years and four months behind bars for lying to Congress and tampering with a witness to protect the president during the Russia investigation.
The sentence is in line with the three-to-four year range recommended by the Justice Department after it overruled the longer term sought by the prosecutors assigned to the case. He was also ordered to pay a $25,000 fine.
Stone’s sentencing Thursday by U.S. District Judge Amy Berman Jackson in Washington caps a week of political turmoil that followed Trump’s Feb. 11 criticism of the original recommendation that his friend receive a prison term of as many as nine years. The four prosecutors in the case all stepped down after the Justice Department said it was withdrawing their proposal and submitting a new, more lenient one.
Jackson said the case against Stone was clear and explicitly rejected his argument, backed by the Trump, that it was politically motivated. Instead, she said, the prosecution was the result of Stone injecting himself into the election to try to help damage the 2016 Democratic presidential candidate, Hillary Clinton.
“He was not prosecuted, as some have complained, for standing up for the president,” Jackson said. “He was prosecuted for covering up for the president.”
Stone was not taken into custody. The judge said Wednesday he would be allowed to remain free while he requests a new trial and pursues other legal options after his sentencing.
The outcome is sure to be picked apart by partisans looking for any sign that Jackson, whom Trump has targeted on Twitter, either caved to the president or pushed back against him by imposing an even tougher sentence. Stone declined to speak at his sentencing, but his lawyer asked that Stone be given no time for the charges on which he was convicted in November.
The government’s reversal on its sentencing recommendation prompted Democratic lawmakers to accuse Trump of using the Justice Department for his own bidding. It also set up a rare clash between the president and his attorney general, William Barr, who complained on television that Trump’s comments were harming the public perception of the Justice Department as impartial.
‘Confusion’ Apology
At the sentencing Thursday, Justice Department lawyer John Crabb apologized to the judge for the “confusion” caused by the withdrawal of the original prosecutors, whom he defended as acting “in good faith.” He said there had been a miscommunication within the department over “what the appropriate filing should be.”
Asking Jackson to impose a tough sentence “without fear, favor or political influence,” Crabb said. “This prosecution is righteous.”
Stone, who is planning to appeal his conviction, has also filed a sealed request for a new trial. Details of the motion aren’t public, but Trump and other Republicans have claimed the jury foreperson was a Democrat biased against Stone. An earlier request for a new trial alleging bias by a different juror was denied by Jackson.
Speculation that Trump will pardon Stone has also swelled since the president issued a slate of high-profile clemencies Tuesday to several well-connected individuals convicted of white-collar crimes. Since his tweet denouncing the original sentencing recommendation for Stone as a “miscarriage of justice,” Trump has continued to criticize the case, including during the sentencing.


fortune--2020-02-20--MGM Resorts hack exposes details of 10.6 million guests

One of Las Vegas’s biggest hotel chains has been hacked, exposing the personal data of millions of individuals.
MGM Resorts was hit by cybercriminals, first reported by ZDNet, who lifted personal and contact details for 10.6 million hotel guests, including celebrities, employees and government officials. Among the information taken was full names, home addresses, phone numbers, emails and dates of birth.
Financial information does not appear to have been stolen in the attack.
MGM Resorts has more than 20 hotels worldwide, but its biggest concentration is in Vegas, where it owns 13, including the Bellagio, Mandalay Bay, Aria, Vdara and the Mirage.
While sizable, the breach pales in comparison to the 2018 breach of Marriott, which exposed data of up to 500 million guests.
The information was posted to a hacking forum Monday. It’s unclear which hotels were affected by the attack though one news outlet who scanned the names noticed that information about Stephen Paddock, the man who opened fire from the Mandalay Bay Resort on Oct. 1, 2017, killing 58 people, was included in the data dump.
MGM, in a statement to Fortune, said it discovered unauthorized access to a cloud server last summer.
“Last summer, we discovered unauthorized access to a cloud server that contained a limited amount of information for certain previous guests of MGM Resorts,” the company said. “We are confident that no financial, payment card or password data was involved in this matter. … At MGM Resorts, we take our responsibility to protect guest data very seriously, and we have strengthened and enhanced the security of our network to prevent this from happening again.”
MGM Resorts says it notified impacted guests “in accordance with applicable state laws,” but many states do not require victims to be notified when the hacked information is limited to data such as address, phone number, etc. So many people who were affected by the hack might have no idea they were included.
Worried you’re a possible victim of the MGM Resorts hack? Here are a few precautionary steps to take:
Monitor your financial accounts
Even though MGM says financial records weren’t accessed, it’s best to be safe. Check your accounts for fraudulent activity. Most Americans don’t keep close tabs on their checking and saving balance and don’t examine every item on their credit card bill – and hackers count on that.
Set up credit monitoring
Identity theft is the big threat here and you want to be sure no one is using your personal information. It’s also not a bad idea to sign up for a credit monitoring service, such as Equifax’s TrustedID Premier (though Equifax had a notable data breach of its own in 2017) or CreditKarma.
If you’re especially worried, consider a credit freeze, which prevents new credit from being issued without your direct permission.
“Your best protection against someone opening new credit accounts in your name is the security freeze (also known as the credit freeze), not the often-offered, under-achieving credit monitoring,” notes the U.S. Public Interest Research Group.
Change your passwords—again
Yes, it’s a pain, but it’s a critical step, especially if you’re using the same password on multiple sites.
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fortune--2020-02-20--Boeing asks lawmakers to suspend preferential tax rate

Washington state lawmakers introduced bills Wednesday, at The Boeing Co.’s request, to suspend the aerospace giant’s preferential business and occupation tax rate unless the United States and European Union reach an agreement on their long-running international trade dispute that would allow the lower tax rate.
Democratic Sen. Marko Liias and Democratic House Majority Leader Rep. Pat Sullivan are the sponsors of the companion bills in the Senate and House. Under the legislation, starting on April 1, the company will no longer receive the 40% tax break that the Legislature adopted for the aerospace industry in 2003, which was expanded in 2013.
Last year, the World Trade Organization body ruled that Boeing received an illegal U.S. tax break from Washington state that damaged sales by European archrival Airbus.
The decision by the WTO’s appellate body considered whether the United States had complied with a 2012 ruling that found that plane-maker and defense company Boeing received at least $5 billion in subsidies prohibited under international trade rules.
But the ruling was limited and the decision found no grounds upon which the European bloc could seek damages from an arbitrator, except for the relatively small Washington state tax program — which the U.S. says was worth $100 million a year.
In a statement, Boeing spokesman Bryan Watt said Wednesday that the company advocated for and supports the legislative action to “resolve the sole finding against the United States in the long-running trade disputes between Europe and the United States over government support for the production of large commercial airplanes.”
“This legislation demonstrates the commitment of Washington — and of the United States — to fair and rules-based trade, and to compliance with the WTO’s rulings,” he said.
In December, a WTO panel ruled that the European Union has not complied with an order to end illegal subsidies for plane-maker Airbus, which prompted the Trump administration to impose tariffs on nearly $7.5 billion worth of EU goods in October.
“Now is the time for Airbus and the European Union to finally come into compliance by ending illegal launch aid subsidies once and for all and addressing the harm they have caused the United States aerospace industry and its workers,” Watt said.
Liias said in a statement a legislative solution was a “critically important issue for our state’s economy.”
“We share Boeing’s concern that retaliatory tariffs will hurt not only our state’s aircraft industry, but other Washington-based exporters and family-wage jobs here in Washington,” Liias wrote.
Sullivan said that that goal of the legislation is to “protect family-wage, good-paying jobs provided by the aerospace industry and other sectors that will be impacted by tariffs if the legislature does not act this session.”
Gov. Jay Inslee said he would be working with lawmakers and Boeing officials to expedite the bill.
“There is broad agreement in Olympia that we need to act this session to address the WTO issue in order to avoid retaliatory tariffs that would damage not just our commercial aircraft industry, but other important Washington exports,” he said in a written statement.
The bills are not subject to normal legislative deadlines because they’re considered necessary to implement the budget. The 60-day legislative session ends March 12.
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fortune--2020-02-20--Facing falling enlistment numbers, the U.S. Army takes a new approach to recruitment: Mom and Dad

Gone are the days when the United States Army plastered airwaves with recruitment ads featuring images of young men parachuting out of planes, fording streams, and jogging across barren fields over the sober horns of Mark Isham’s “Army Strong.”
Today’s Army is taking a different approach: They’re going after Mom and Dad.
A series of new television recruitment ads feature mothers and fathers in war settings, trying to persuade their children not to join the Army.
In one ad, titled “Warfighter,” a mother approaches her son who is decked out in a ghillie suit and aiming a gun. The mother, who’s wearing a nightgown and housecoat, implores the young man to come back home.
“Michael,” she begs. “You can do anything you want. Why this?”
Michael stays strong. He tells his mom that he doesn’t want to be stuck behind a desk.
Still, she worries. Finally, the music swells, and Mom comes around. The pair are transported back home to their porch, where they engage in indistinguishable chatter.
“Their success tomorrow begins with your support today,” reads the screen as we hear Mom giggle.
Another ad, “Fire Team,” features a mother following her son as he raids a building in a far off country, gun pointed.
“Do you really want to go through with this?” she asks her son before he kicks down the door to a room, ready to shoot.
This new approach comes after the military missed its 2018 recruitment goals. The slipup was the first since 2005 (at the height of the Iraq war).
The military subsequently scaled back its recruitment goals by 50% for the next few years, saying it was focusing on the bigger picture.
But the underperformance came as the Pentagon was handed $700 billion by Congress, the largest military budget in U.S. history—indicating that this isn’t a problem that can be solved with money alone.
In 2018, when the military realized it would come up about 6,500 people short of its recruitment goal of 76,500 (already lowered from 80,000), it sunk an additional $200 million into its efforts. The extra money didn’t work.
While critics have pointed many a finger to explain the decline (see: low unemployment rates and a growing economy), the Department of Defense has targeted another issue: a lack of propensity to serve.
The media market is oversaturated, say representatives from the Department of Defense, and it’s difficult to fight for the attention of young people.
The share of young people left to fight for is also shrinking. A recent study by the U.S. Army Recruiting Command found that only about 1% of the Army’s prime demographic are actually willing to join. Even if they wanted to join up, less than 30% of all American youth meet the physical standards required to serve because of medical conditions, obesity, and other disqualifiers.
In 2018, the military issued waivers to recruit about 7,600 people who did not qualify under current guidelines. About 2% of new recruits scored between the 10th and 31st percentile in the Army aptitude test.
A slow decline
Interest in military service has been declining since conscription—or compulsory enrollment, commonly known as the draft—officially ended in 1973, but it’s reached its apex with the current generation of potential military recruits, the first to come of age with no direct familial ties to a conscripted force.
After the post-Vietnam crossover from a drafted to a professional army, the part of the population engaged in military service began to decline, says Capt. James Long, a reserve Army infantry officer and innovation fellow.
Now, the military relies on self-selection, says Long.
“There’s this large trend we’ve seen in the last couple of decades where the likelihood of someone in the military following in a parent or family member’s footsteps is pretty high,” he says. “The consequence of that has been less of a broad-ranging appeal to demographics that are increasingly important.”
Young people certainly understand the risks of military service—injury, post-traumatic stress disorder, and long deployments—says Katherine Helland, director of Joint Advertising Market Research & Studies (JAMRS) at the Department of Defense. But, she says, they fail to recognize the value propositions and benefits that the military has to offer.
All it takes is getting them to listen. “We do find that getting that information to the youth market does have an impact,” she says.
Hence the parental outreach.
In the 1990s, about 40% of the youth market had parents who served in the military; that number is now down to 15%. “We don’t have those intimate connections to military service anymore,” she says.
Recent data gathered by JAMRS found that only 32% of mothers and 39% of fathers would recommend service to their son or daughter. The numbers were much lower when there was no history of military service in the family.
The Pentagon says that the campaign to educate parents, whom they refer to as influencers, about service life is now essential to the future of military recruitment.
Without the right information at hand, says Stephanie Miller, director of accession policy at the DOD, parents are often surprised, concerned, and unsure of how to proceed. Often, they just shut down the conversation.
“If we’re not able to reverse these trends that we’re seeing, this disconnect in the market, what is it going to look like when today’s youth become the parents and today’s parents become the grandparents?” asks Helland. “Who will our next generation of youth turn to, to truly understand all of the benefits of military service?”
But the problems with the declining propensity to serve may come to a head way before the next generation of potential recruits are born.
Here comes Iran
A ground war with Iran, while unlikely, isn’t quite as dubious as it once was—at least not since President Donald Trump ordered the death of Iran’s top general, Qassim Suleimani, in January, prompting a retaliatory Iranian missile attack, which left at least 109 people injured. Trump and colleagues like Sen. Lindsey Graham (R-S.C.) seem to have no qualms about publicly and regularly threatening Tehran, either.
Last week, the Senate voted in favor of a resolution that aimed to block Trump from any further military hostilities toward Iran. The bill, crafted by Tim Kaine (D-Va.), would require Trump to end all military action in the country within 30 days. The measure will soon go to the House, where it’s expected to pass without a problem.
But Trump has indicated that he will veto any such resolution, and Congress does not appear to have the two-thirds vote required by each chamber to overturn such a veto.
Officials have indicated that they’re trying to avoid conflict, but the prospect of another prolonged engagement in the Middle East may be enough to turn away potential recruits, just when the military needs them most.
“War in the Middle East is certainly something we have to be cognizant of, and part of the challenge of that longer presence at war is the misperception of negative consequences,” says Miller.
Iran, a country of more than 80 million people with a wide range of missiles and a force of about 550,000 active personnel, “would require military resources far beyond those we employed in Iraq and Afghanistan,” says retired Maj. Gen. Dennis Laich, director of the Patriots program at Ohio Dominican University. “A war with Iran would be a disaster.”
The military simply doesn’t have the manpower to face Iran while keeping other troops around the globe and in Iraq and Afghanistan, he says.
Meeting recruits halfway
In the early 2000s, about 90% of households had phone lines. Today, that number is closer to 40%. The television set, much like the home phone, has also fallen out of vogue. Just 50% of young people watch traditional sources of TV, according to Pentagon data.
That means traditional cold calls and attention-grabbing ads are no longer enough to grip young people’s attention. So, the military is adapting.
“The market is becoming harder and harder and more saturated, so we have to try to meet them where they are,” says Miller. “We’re doing more work in virtual recruiting, and we’re trying to have a stronger presence on social media platforms where people can have a chatroom and live presence with their recruiter.”
They’re also tapping social media influencers to help boost perception. The Marine Corps recently invited YouTube stars to participate in basic training camp and make videos about their experience. The Navy challenged YouTube stars to shadow sailors and then face off to see who could do a specific job best, kind of like the military equivalent of Bobby Flay’s Throwdown.
CrossFit competitions and e-sports events have also been particularly fruitful for recruitment efforts. The Army and Navy have both established their own e-gaming teams.
“You see this movement away from NASCAR to more of a presence at CrossFit and extreme sporting events. Those are the areas where we see people engaging who meet our standards,” says Miller.
But the ROI from their efforts has not yet been established, and the DOD is still analyzing new data.
Often the recruiters attend these events knowing that they won’t even generate one lead, says Helland. Instead, they’re focused on the long game.
“What we’re trying to do is shift the market in a larger, longer-term way to address this issue of the disconnect,” she says. “We may not get a lead tomorrow, but next year we may.”
Efficiency
Long-term planning doesn’t relieve the current deficit, and the present-day enlisting process is still quite arduous.
It takes between four and six months to enroll the average recruit, with more wait time before they’re shipped off to basic training.
“Right now, there’s a guy who’s served for three years, he comes back and knows every high school in the area,” says Gil Barndollar, the military fellow-in-residence at the Catholic University of America’s Center for the Study of Statesmanship. “He talks to 100 kids, and out of those, 25 call him back. Then, out of those, eight are serious. Then he drills that down and ends up with four recruits. You throw a lot of resources at the problem.”
The recruitment and retention of manpower are also tremendously expensive tasks.
The Department of Defense currently spends about 60% of its entire budget on manpower, and those costs are up about 50% in real terms since 2001, according to a study by the Center for Strategic and Budgetary Assessments. The defense research group found that if spending increases along the same trajectory, it will eat up the entire Pentagon budget by 2039.
“The all-volunteer force is a misnomer. This isn’t the Rough Riders in 1898 with people stepping forward out of patriotism. They are recruited in a competitive labor market,” says Barndollar. “You can throw money at the problem, but we still have gaping holes in a lot of places.”
Recruitment officers will often sweeten the deal with a signing bonus, and those bonuses can be as high as $40,000.
There are about 10,900 paid recruiters around the country. Those recruiters, says Laich, “should be in the force training and leading soldiers. It’s an awfully expensive proposition that adversely impacts readiness and capability of the military as a whole.”
On average, each recruiter brings in one enlistee every seven weeks, which Laich calls inefficient and expensive.
All volunteer?
But if you ask Laich, the all-volunteer model is long for this country anyway.
Ultimately the Department of Defense will be forced to return to conscription, he says. “We say that it’s an all-volunteer force, but we’re paying huge sums of money to induce people to join.”
In 2018, the Army paid more than $400 million in enlistment bonuses and nearly that much last year. The vast amount of money it takes to sign up recruits, says Laich, raises the question: “If it’s an all-volunteer force, why do you have to pay somebody to volunteer?”
An all-volunteer force, according to Laich, reduces both the quality and quantity of recruits, especially as propensity to serve declines.
“Let’s face it, National Merit Scholars who would make great enlisted intel analysts or cyber-warriors don’t consider joining the military,” he says. “All-state linebackers who would make great infantrymen don’t consider joining the military. So we have a situation where no one has skin in the game, and what we do is prey on the lower socioeconomic classes.”
Department of Defense data found that the largest percentage of new Army recruits, 22.5%, come from households with $40,116 to $51,363 in annual income. Just 14.3% of recruits come from households that bring in more than $84,195.
About 43% of men and 56% of women are either Hispanic or a racial minority, more than their civilian labor force percentage.
“With a volunteer force, you’re always going to be competing in the marketplace,” says Barndollar, who also advocates for conscription. “If this were the type of country where the military was venerated above all else, that could be very powerful. But we’re not that country. We’ve got this unhealthy and maybe even toxic relationship with our military now.”
The all-volunteer force has won only one war (the Gulf War) since 1973, says Laich, whereas the conscripted army only lost one, Vietnam.
“Where’s the winning?” he asks.
Embracing the gig economy
Another and perhaps more plausible option is a change to the way the military searches for new recruits. Instead of playing a numbers game, says Captain Long, it may be better to recruit more mindfully.
“Having 10,000 riflemen may be less effective for your individual objectives than having 10 truly great hackers,” he says.
As wars become more technologically complicated and battlefields become more hypothetical, the military will have a hard time recruiting the brainpower it needs away from tech companies and industries that can pay much more with significantly lower risks.
Instead of taking an all-or-nothing approach, Long suggests that it may be a better option for the DOD to rely on its reservists or to expand the way it utilizes private citizens.
“There are deep and fundamental philosophical shifts that need to happen, that perhaps aren’t happening, at the speed needed to make change today,” he says. The future of the military, he says, should look a bit like the gig economy.
“I would love to hear the conversation expand from ‘We need a draft’ to asking people how they can contribute in a broader sense,” Long says. “There’s immediate value if we break down the barriers to contribution and open it up to skilled people who want to help, but also want to continue building companies or working in the private sector.”
The military is actively working on embracing some of the innovations that Long suggests. They’ve created the Defense Innovation Board, manned with tech industry leaders like Alphabet’s Eric Schmidt and LinkedIn’s Reid Hoffman. The group advises the Secretary of Defense on artificial intelligence, machine learning, and the hiring and retention of I+STEM talent.
The Department of Defense has also been experimenting with pilot programs that include shorter, two- to three-year enlistment contracts.
But that doesn’t mean the military is ready to totally change its ways.
The shorter enlistments, notes Miller, come “with the expectation that once they have their foot in the door and they see how much we have to offer, that they’ll be more willing to commit to a longer-term contract.”
More must-read stories from Fortune:
—What happens to leftover campaign funds when a candidate drops out of the race?
—Putting politics aside to close the skills gap
—America’s heading for a tax on the middle class
—The case for a national primary
—Can Amazon convince a federal court to depose Trump over a $10 billion Pentagon contract?
Get up to speed on your morning commute with Fortune’s CEO Daily newsletter.


fortune--2020-02-20--How to failure-proof your diversity initiative

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.
In today’s raceAhead: Michael Bloomberg gets pummeled in his first debate appearance, a right-wing terrorist attack leaves at least nine dead in Germany, and the Royal Bank of Canada takes us to ally school.
But first, a guest opinion piece by Porter Braswell, co-founder and CEO of a diversity hiring startup.
***
While diversity is now seen by many companies as a business imperative, equity and inclusion in the workplace are too often treated as afterthoughts—only coming into focus when internal or external feedback forces leadership to wake up.
And the response usually unfolds in both predictable and alarming ways.
When a company begins to diversify, it faces (often for the first time) feedback, internal chatter, and built-up frustrations from employees on the real impact of microaggressions, unconscious bias, and the spotlight effect, a term used by diversity, equity, and inclusion (DEI) experts to describe how employees of color experience outsized attention to their every word and action from majority-group peers and employers.
The feedback employers receive will likely also come from external sources, with some companies facing criticism from the press, former employees, social media, or online reviewers about the lack of inclusion within their teams. It can be sparked by blowback from brands launching unrepresentative campaigns, former team members talking to the press about their experiences, diversity reports showing disappointing results, employees filing lawsuits, and negative Glassdoor reviews calling out personal experiences, to name only a few examples.
This is when companies often make a crucial mistake: to double down on diversity hiring as the solution.
This hiring impulse happens for many reasons. Some employers struggle to prioritize DEI solutions over other business objectives and some misguidedly believe the internal problems bubbling up can be solved by hiring more professionals of colors rather than addressing internal culture. Other companies are simply not prepared to tackle equity and inclusion without support from an outside resource.
But DEI should not only be looked at through the lens of hiring. In order to retain high-performing talent and build a company culture that invites everyone to bring their true selves to work, DEI must be treated holistically.
Here are three ways companies can start:
Listen. There is no one-size-fits-all solution for creating a culture of belonging. Leaders should start with a listening tour to understand what employees are experiencing and feeling at their companies. Use open door meetings or, if established, look to employee resource groups as forums for listening and learning. Companies should also consider leaning on outside DEI consultants to kick off or guide this process. Leaders shouldn’t expect to have solutions to their equity and inclusion challenges right away, but should start from a place of empathetic listening. In that way, companies can start to identify key DEI focal areas (such as unconscious bias training, employee feedback surveys, new internal communications policies, mentorship opportunities, compensation reviews, to mention some) and make changes that need to be made to create a more inclusive and equitable environment.
There is no one-size-fits-all solution for creating a culture of belonging. Leaders should start with a listening tour to understand what employees are experiencing and feeling at their companies. Use open door meetings or, if established, look to employee resource groups as forums for listening and learning. Companies should also consider leaning on outside DEI consultants to kick off or guide this process. Leaders shouldn’t expect to have solutions to their equity and inclusion challenges right away, but should start from a place of empathetic listening. In that way, companies can start to identify key DEI focal areas (such as unconscious bias training, employee feedback surveys, new internal communications policies, mentorship opportunities, compensation reviews, to mention some) and make changes that need to be made to create a more inclusive and equitable environment. Revamp your hiring process. The hiring process is the first look candidates have into the company culture—if the interviewers are not representative and the process is not inclusive, how can talent trust that the culture will be? Companies must evaluate their hiring process for barriers to entry. Hiring managers should work to understand if candidates of color are disproportionately dropping out in certain areas while compared to others during the process. Are these candidates making it to the interview round? How representative are the employees doing the interviewing? Do job descriptions overemphasize specific experience that may exclude talent with transferable skills?
The hiring process is the first look candidates have into the company culture—if the interviewers are not representative and the process is not inclusive, how can talent trust that the culture will be? Companies must evaluate their hiring process for barriers to entry. Hiring managers should work to understand if candidates of color are disproportionately dropping out in certain areas while compared to others during the process. Are these candidates making it to the interview round? How representative are the employees doing the interviewing? Do job descriptions overemphasize specific experience that may exclude talent with transferable skills? Empower diversity champions. Most companies already have internal diversity champions, people who are the driving forces behind culture change—empower those individuals by giving them a voice and trusted space to speak out. Equal parts educator, facilitator, and active listener, the diversity champion assesses needs, leads conversations, and organizes events focused on creating a more inclusive working environment. A diversity champion does not need to be from an underrepresented group or a high-ranking employee, but rather a passionate, hard-working individual who is able to evoke change with buy-in from executives and managers at a higher level. Diversity champions understand how to embrace uncomfortable conversations and allow people to bring their whole, authentic selves to work. Companies need to foster these individuals by acknowledging the important role they play in the company’s culture. Leaders shouldn’t shy away from outspoken voices in support of inclusion—make them a part of the solution by listening to their feedback, including them proactively in relevant internal conversations, providing budgets for events, and offering opportunities to meet with any external DEI consultants to learn and grow in their role.
Companies need to also regard equity and inclusion, like diversity, as business imperatives. This means that leaders must ensure accountability across the company, either by tying results to employee performance assessments or by having explicit conversations around what is expected of employees, or, at a minimum, hiring (and other) managers. According to the 2018 Deloitte Millennial survey, 83% of millennials and 80% of Gen Zers feel that companies should focus beyond “financial performance,” including fostering a diverse and inclusive culture. Companies that are focused equally on all three—diversity, equity and inclusion—will see higher performance, retention, and engagement, to name just a few of the benefits.
Porter Braswell is co-founder and CEO of Jopwell.
***
Ellen McGirt curated and wrote the blurbs in this edition of raceAhead.
On Point
The gloves came off during last night’s Democratic debate And that’s putting it mildly. It was a brutal slugfest all around, but former New York City Mayor Michael Bloomberg took the most direct hits, being called out sharply on his record on redlining, stop and frisk, and in a brutal exchange with an emboldened Senator Elizabeth Warren, on allegations of misogyny in his workplace and his use of non-disclosure agreements to silence women. “We are not going to beat Donald Trump with a man who has, who knows how many, nondisclosure agreements and the drip, drip, drip of stories of women saying they have been harassed and discriminated against,” she said. Recap below, fact-check of the debate here.
New York Times
At least nine dead in a suspected far-right extremist attack in Germany The suspected gunman, who has been identified as a 43-year-old German citizen, opened fire in two separate incidents, both in shisha bars, which are popular among people of Middle Eastern origin. At least five of the dead were Turkish citizens. German investigators are calling it terrorism; the suspect appears to have posted a video espousing right-wing theories and left a confessional note. After a tense manhunt, he was found dead at his home, next to the body of his mother. "There are many indications at the moment that the perpetrator acted on right-wing extremist, racist motives, out of hatred towards people of other origins, religion or appearance," said Chancellor Angela Merkel in a public statement.
BBC
A new ad from RBC encourages employees to “speak up” on bias It’s an excellent effort from the Royal Bank of Canada and Canadian ad firm Grip Limited, who have managed to elegantly demonstrate how bystanders to bias in the workplace can and should intervene. “That Little Voice,” is part of the bank’s “Speak Up For Inclusion” campaign, and introduces a variety of scenarios people struggle with when they observe problematic behavior in peers—sexism, racism, parenting bias, immigrant bias, and Islamophobia among them—then encourages bystanders to respectfully talk it out with their colleagues. “Having diversity is just one part of the story; how well that diversity works together is key,” Gopal Bansal, senior director of diversity and inclusion at RBC told Adweek. (Thanks to Katrina Jones for flagging.)
AdWeek
George Zimmerman sues Elizabeth Warren and Pete Buttigieg The suit, filed earlier this week, alleges that the two Democratic candidates defamed him on Twitter when they acknowledged what would have been Trayvon Martin’s 25th birthday. In the court filing, Zimmerman seeks a damages award of $265 million, and asserts the two candidates used their platforms “for political gain in misguided and malicious attempts to bolster their standings amongst African-American voters, all at Zimmerman’s expense.” Zimmerman was acquitted in the fatal shooting of 17-year-old Martin in 2012. Outrage around the decision was a key catalyst in galvanizing the Black Lives Matter movement. It will be 8 years since Martin’s death on Feb. 26.
USA Today
On Background
California set to apologize for detention of Japanese Americans On February 19, 1942, President Franklin Delano Roosevelt authorized the mass incarceration of over 120,000 Americans of Japanese descent, removing them from their homes and businesses. It is a dark day of remembrance, largely unacknowledged until now. Today, the California Assembly is expected to approve a formal apology to all Americans of Japanese descent for the state’s role in the internment program. HR 77, introduced by Assemblyman Al Muratsuchi (D-Torrance), is unsparing in its documentation of the pervasive racism of the era. It is just one such effort in a long line of reckonings California has undertaken to atone for actions taken against Indigenous, Mexican, and Chinese Americans.
Los Angeles Times
Diversity in tech shouldn’t just mean "hire more white women" Yet it often does, says inclusion expert Aubrey Blanche, then the Global Head of Diversity & Inclusion for Atlassian. Through the course of her career she’s been “tasked with designing diversity programs for leading tech companies that go beyond ‘just (white) women.’” It means mastering the nuances of intersectionality, she says. “[A] company dominated by men hiring women from similar racial and socioeconomic backgrounds is not diversity in a meaningful sense, it’s one small step away from homogeneity.” Her work has included developing “high touch” scholarship programs for Black, Latina, and Indigenous women, addressing age bias, and customized training relevant for teams in different parts of the world. “Diversity programs are often built from a local viewpoint, but what diversity means may vary drastically based on where you are in the nation or world,” she says.
Vox
Have you ever wondered what happened to the racist white people in those Jim Crow era photos? Do those pictures of Uncle Jimmy smiling in the foreground of a lynching, or Cousin Thelma spitting at an integrating student, ever make it into a family album somewhere? Photographer and writer Johnny Silvercloud answered his own question by positing that after the passage of civil rights legislation, those old racists simply went silent. Their ghosts keep popping back into the mainstream, he says, like when a millionaire peacefully takes a knee in protest, or at the sight of a Black Lives Matter t-shirt. “I highly doubt that the white faces in the first Civil Rights Era just automatically let go of their racist ideologies,” he writes. “White supremacy—racism in America—had to adapt, and it did.” (Disturbing photos ahead if you click through.)
Afrosapiophile
Tamara El-Waylly produces raceAhead and manages the op-ed program.
Quote
"We saw all these people behind the fence, looking out, hanging onto the wire, and looking out because they were anxious to know who was coming in. But I will never forget the shocking feeling that human beings were behind this fence like animals [crying]. And we were going to also lose our freedom and walk inside of that gate and find ourselves…cooped up there…when the gates were shut, we knew that we had lost something that was very precious; that we were no longer free."
—Mary Tsukamoto, on her experience in a World War II-era detention camp


fortune--2020-02-20--Nearly 6 million Contigo children’s water bottles recalled for possible choking hazard

For the second time in six months, Contigo is urging parents to stop using its water bottles, made specifically for kids, after learning—again—that the bottles could present a choking hazard.
Contigo, in conjunction with the U.S. Consumer Product Safety Commission, has recalled 5.7 million of its Kids Cleanable Water Bottles. Bottles that have a black spout base and spout cover are affected by the action. They come in 13-, 14- and 20-ounce sizes.)
The same product was previously recalled in August 2019. And the CPSC says any parent who received a replacement cap in that recall should contact the company for a new water bottle.
To date, the company has received 427 reports of the spout detaching from the bottle. Of those, 27 have ended up in children’s mouths. No injuries have been reported.
The bottles were sold in Costco, Walmart, Target and other retail stores between April 2018 and earlier this month. Prices ranged from $9 to $24.
Several children’s products have been recalled over the past 18 months. In December, 2018, infant ibuprofen was recalled over concerns the dosage was too strong. Nearly two months later, the same company recalled more ibuprofen for the same reason. And last August, Pfizer recalled children’s Advil on overdose fears.
More must-read stories from Fortune :
—2020’s 100 Best Companies to Work For
—How psychedelic drugs may revolutionize mental health care
—Microsoft CEO Satya Nadella on how the tech industry can win back public trust
—America’s heading for a tax on the middle class
—WATCH: Why CEOs are pessimistic about 2020 business outlook
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fortune--2020-02-20--Google updates terms in plain language after EU scrutiny

Google is attempting to make sure people know exactly what they’re signing up for when they use its online services — though that will still mean reading a lengthy document.
The company updated its terms of service on Thursday — its largest update to the general use contract since 2012 — in response to a pair of court orders in Europe.
Google has been updating its policies and tweaking what is and isn’t allowed on its sites for the past couple of years as scrutiny of the tech industry heats up across the U.S. and Europe. Google, Facebook, Twitter and other digital companies have been forced under a spotlight as regulators and customers examine just how much the companies know about their users and what they do with that information.
Facebook last year updated its terms of service to clarify how it makes money from user data.
Google says it hasn’t changed anything significant in the document, but rather used plain language to describe who can use its products and what you can post online.
“Broadly speaking, we give you permission to use our services if you agree to follow these terms, which reflect how Google’s business works and how we earn money,” the document reads.
The document is now about 2,000 words longer than it was before, in part because Google included a list of definitions and expanded it to cover Google Drive and Chrome. The new terms take effect in March.
Google’s privacy policy is separate and was substantially updated in 2018 after Europe enacted broad-reaching privacy laws.
The company also separately updated its “About Google” page to explain how it makes money from selling advertisements, often informed by the vast amount of customer information it collects.
As Britain prepares to leave the European Union, Google also announced it is switching the service provider for U.K. customers from one based in Ireland to its main U.S. provider. The company says that it won’t change how U.K. customers’ data is protected or used.
More must-read stories from Fortune:
—How Apple defied the odds to post the biggest quarterly profit ever
—Oracle and Google are about to face off in tech’s trial of the century
—Can San Francisco be saved?
—Did the ‘techlash’ kill Alphabet’s city of the future?
—Predicting the biggest tech headlines of 2020
Catch up with Data Sheet, Fortune’s daily digest on the business of tech.


fortune--2020-02-20--Amid ‘Anonymous’ fallout, National Security Council adviser reassigned

Victoria Coates, a top official on the National Security Council, is being reassigned amid fallout over the identity of the author of the inside-the-White House tell-all book by “Anonymous.”
Coates, who serves as national security adviser for the Middle East and North Africa, is being reassigned to the Department of Energy as a senior adviser to Secretary Dan Brouillette, the NSC announced Thursday.
The move comes amid renewed speculation about the author of the book, “A Warning,” and a New York Times essay that were deeply critical of President Donald Trump, written under the pen name “Anonymous.”
But a senior administration official insisted the move had nothing to do with the speculation, saying top White House officials reject rumors that have circulated in recent weeks suggesting Coates is the author. The move, they said, has been in the works for several weeks.
“We are enthusiastic about adding Dr. Coates to DOE, where her expertise on the Middle East and national security policy will be helpful,” Brouillette said in a statement. “She will play an important role on our team.”
“While I’m sad to lose an important member of our team, Victoria will be a big asset to Secretary Brouillette as he executes the President’s energy security policy priorities,” Robert C. O’Brien, who leads the NSC, added.
Trump this week renewed questions about the identity of Anonymous when he told reporters that he knew who it was. Asked whether he believes the person still works at the White House, Trump responded: “We know a lot. In fact, when I want to get something out to the press, I tell certain people. And it’s amazing, it gets out there. But, so far, I’m leaving it that way.”
White House spokesman Hogan Gidley declined to say Wednesday why, if Trump knows the person’s identity, they would still be working in his administration.
In the book, published by the Hachette Book Group in November, the writer claims senior administration officials considered resigning as a group in 2018 in a “midnight self-massacre,” but ultimately decided such an act would do more harm than good.
More must-read stories from Fortune:
—What happens to leftover campaign funds when a candidate drops out of the race?
—Putting politics aside to close the skills gap
—America’s heading for a tax on the middle class
—The case for a national primary
—Can Amazon convince a federal court to depose Trump over a $10 billion Pentagon contract?
Get up to speed on your morning commute with Fortune’s CEO Daily newsletter.


fortune--2020-02-20--Hyatt CEO Mark Hoplamazian on travel’s trendiest buzzword: ‘experiences’

Hyatt is expanding. In the traditional sense, yes, as the Chicago-based hotel chain recently announced plans to open 200 more locations in the Americas by 2022, for a total of roughly 775 properties in the region. But the chain is also trying to expand customers’ perception of its scope, by getting guests to see it as a company that does more than just provide a place to stay.
Hyatt and other hotel companies are increasingly offering experiences for guests that stretch beyond dinners in the lobby restaurants. How about, instead, a local culinary history walking tour? Or an espresso-making workshop from an Italian barista? Or, in Hyatt CEO Mark Hoplamazian’s case, a bonsai-trimming class from a professional horticulture expert.
Hoplamazian and I took this class together in New York last fall, when I interviewed him for a story about Airbnb and its push into travel activities and excursions. Hoplamazian offered the lowdown on Hyatt’s take on the same product, which is organized under the banner of “Find Experiences,” of which the bonsai class was an example. In contrast to Airbnb’s marketplace, which is open to anyone and covers a wide variety of activities, Hyatt’s experiences are offered only to members of the World of Hyatt loyalty program, and are centered on health and wellness.
The tours and activities market is expected to generate $183 billion in revenue in 2020, according to estimates by travel research firm Phocuswright, and remains a fractured and largely offline business. Travel companies like Airbnb, Expedia, and Booking.com are trying to capitalize on the opportunity, but hotels like Hyatt are pursuing the strategy as well.
On Wednesday, Hyatt reported better-than-expected earnings in its fourth quarter, but still posted only modest revenue growth in 2019. As a relatively new segment, Experiences could help the company achieve bigger growth going forward.
The following Q&A is from an October interview in New York City, and it has been edited and condensed for clarity.
FORTUNE: Where did the initial idea for centering your offered experiences around wellbeing come from?
Hoplamazian: It started several years ago. It was an insight that more and more of our customers, which tend to be higher-end customers, they’re spending more time and money and focus on their own holistic wellbeing. It’s not merely focused any longer in the fitness element of it, which when you say wellness to someone, they immediate think fitness.
So, we thought, we’ve got to get our own game into a much higher creative expertise. When we developed our digital platform, which we call Find, it was all derived through that lens, which was it has to be real and authentic. A lot of our offerings are actually our own colleagues in our hotels who are doing things. Which is super cool, I love that because that’s a way for them to express themselves and to be living out loud so to speak and impacting and connecting with more guests. And we thought that we should not limit this to things that we own. So we bought [spa companies] Miraval and Exhale to learn and to really have the opportunity to deliver very impactful experiences.
How does Hyatt view its experiences program? Is it something that is an essential part of the business, or arguably its own business entirely?
It’s another dimension in which we can fulfill our purpose, and also create a greater sense of fulfillment and loyalty from our guest base. And it’s loyalty derived from meaningfulness of the experiences that people have, not from being a prisoner of the points program of World of Hyatt. Two really different things.
When we launched World of Hyatt, we said we want to design this so that of course we’ll have a points program, because that’s sort of the currency base. But the intent of the program was really to engage the platform, to elevate the frequency and the relevancy of the things that our guests were finding through Hyatt so that they would have more connections to the brand. And that is what leads to loyalty, that is in turn what leads to frankly a much better customer base for our hotels, and elevates our performance in our hotels. So there’s a direct and clear linkage between fulfilling purpose and performance. And I think that connectivity is really important, because we are a business, and we need to pay attention to the outcomes.
What were your thoughts when you first saw Airbnb getting into the business of experiences?
I had two different thoughts. One was in the same way when Airbnb first launched. I thought the idea of connecting with a couple whose house you were going to stay in or a person whose house you were staying in and make a human connection was so powerful. At a human level, I think unfortunately over time that dissipated, because in many instances you’re not actually renting a house from a person anymore, it’s a corporation that owns tens or hundreds of apartments that are on the platform.
The experiences platform likewise initially I thought, that’s kind of cool, like you’ve got hosts that you’re enlisting to go and practice what they do. I can’t say how that’s evolved and whether that lends a level of authenticity and whether the host community’s actually still the primary provider. I doubt it because when you look at the number of experiences that they’re now offering which is vast, it’s hard to imagine that it’s all host driven. So I looked at it and I said okay, I like the ethos of it, the concept of it. Can you execute it and scale it the way they’re talking about?
In the vein of Airbnb’s open experiences marketplace, would you ever consider opening up Hyatt’s experiences to everyday people who do not have a World of Hyatt membership?
At this point we really have framed it in the context of World of Hyatt and believe that there are great benefits to membership and there’s no downside. So I guess what I would say is we would encourage people to sign up and leave it to them to explore other things. But that would be their vehicle to be able to have those experiences.
I think it’s something that we probably should consider over time as we grow the platform. So far it’s really been really focused on making sure that we are driving the areas that we focus on from what our own members are telling us and what our guests are telling us.
There are all sorts of competitors in the experiences space—Airbnb, Expedia, Booking.com, other hotels. Where does everyone fit into that? Is there a point where this has to consolidate, or do you see the industry remaining fragmented?
I think there’s a good reason for it to remain fragmented, and that is that there’s diversity in different types of things that people are practicing and different desires that different types of people have when they go traveling. So I would say that there’s probably a good rationale for it to remain distributed in terms of the providers. Now, how do you maintain relevancy and your value delivery as a brand? That’s the key issue.
We’ve got to make sure that thematically and quality-wise and authenticity-wise, we’re delivering something that’s got real value for those who are experiencing the things that we offer. And that’s going to I think define the brand over time. And I think that the proliferation and the seal of approval by seeing the Hyatt brand name associated with something matters. Because we’ve got a lot at stake. If you’re assuring that it will stand for quality and authenticity, I think that’s going to actually be one way to differentiate.
More must-read stories from Fortune:
—The drinks America’s best bartenders make for themselves
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—Inside the most influential fashion show in menswear
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fortune--2020-02-20--Billionaire Les Wexner gives up control of Victoria’s Secret after failing to fix the struggling bra

Billionaire Les Wexner gives up control of Victoria’s Secret after failing to fix the struggling brand

L Brands is selling a controlling stake in Victoria’s Secret after 82-year-old billionaire CEO, founder, and biggest investor Les Wexner proved unable to repair the once iconic lingerie brand.
The company, a leading mall-based store operator, said on Thursday it was selling a 55% stake in Victoria’s Secret for $525 million to retail-focused private equity firm Sycamore Partners.
L Brands also said that Wexner, the longest service CEO of any S&P 500 company with 57 years at the helm, would step down as chairman and CEO, taking the title of chairman emeritus. Andrew Meslow, a top executive at its much more successful Bath & Body Works chain, will take the CEO role at L Brands, which will now be primarily made up of Bath & Body Works. L Brands’ portfolio over the years has included names like Express, The Limited, and Abercrombie & Fitch, all spun out by their parent company.
The $1.1 billion valuation for Victoria’s Secret, a chain almost twice as big as Bath & Body Works in revenue, reflects how far the once high-flying brand at the center of American culture has fallen. Its annual prime-time fashion show every autumn (canceled last November after 20 years) used to attract big-name performers like Taylor Swift and Nicki Minaj, with supermodels vying to be a Victoria’s Secret “Angel.”
L Brands fell 4% in early trading as investors had expected Victoria’s Secret to fetch a better price that would help pay down L Brands’ $5.5 billion debt more quickly.
“A partial sale and this low price won’t help the company’s massive debt load and shows just how desperate LB has become to try to unload VS,” wrote Randal J. Konik, a retail analyst at Jefferies. At its peak in 2015, L Brands was worth $29 billion; on Thursday morning, its market value was $6.2 billion.
A mall-based fallen angel
Victoria’s Secret, which Wexner bought in 1982 for a pittance before turning it into a lingerie behemoth, hit its sales apex in 2016, when the brand reached $7.78 billion in sales and clocked massive profits. For 2019, it looks set to report $6.9 billion—and the declines have been accelerating lately.
On Thursday, L Brands reported holiday quarter sales results that show just how much Victoria’s Secret and Bath & Body Works have diverged in terms of financial performance: comparable sales rose 10% at Bath & Body Works, but fell by that same percentage at Victoria’s Secret.
When Wexner bought Victoria’s Secret, he tapped into fatigue at the time with the dullness and poor fits of most lingerie. But in more recent years, he proved out of sync with the times and with women’s growing focus on comfort, rather than a man’s approval, when it came to buying bras and panties.
Last year, Victoria’s Secret tried to remake its image to de-emphasize hyper-sexuality, but during this past holiday season, it was still selling wares that in some cases would fit in quite well in an adult store, as illustrated by a photo taken by Stacey Widlitz of SW Retail Advisors.
$LB #victoriasecret Problems summed up in holiday pics. THIS IS 2020 hello. So yes this can be fixed. Should have been fixed 3 yrs ago pic.twitter.com/VAwcKcwt9P — Stacey Widlitz (@StaceyRetail) February 20, 2020
Worsening the sense of Victoria’s Secret being a brand led by out-of-touch men in the #MeToo era, Wexner found himself tainted by his connection to Jeffrey Epstein, who for years had been his financial adviser and who died in a New York jail cell last summer while facing federal sex-trafficking charges. Earlier in February, the New York Times published an exposé about the culture of misogyny and harassment at Victoria’s Secret.
For all its glamour over the years, Victoria’s Secret had long become a discount driven, mall-based retailer in the same vain as The Gap and Aéropostale. It was reduced to offering tons of coupons and deep discounts to entice shoppers, something Wexner acknowledged in 2016, when he took direct control of Victoria’s Secret after dismissing its head. His moves, such as eliminating its swimwear line and catalog, were no match for the cultural forces he didn’t see coming and, in fact, worsened matters.
That made for fertile ground for a slew of new lingerie brands like ThirdLove and Rihanna’s Savage X Fenty to emerge, as well room for the likes of Target to make a bigger move in intimate apparel.
Sycamore—which typically buys up struggling retailers, cutting costs, then flipping them—will have its hands full trying to fix Victoria’s Secret. (Its acquisitions in the last few years have included The Limited, show brand Nine West Holdings, and its leveraged buyout of Staples.)
As Neil Saunders, managing director of GlobalData Retail, put it in a note: “The truth is that the Victoria’s Secret brand no longer attracts a premium in the way it once did.” And with customers walking away in droves, it’s not clear how Victoria’s Secret can regain that aura.
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fortune--2020-02-20--How to answer the dreaded “tell me about yourself” in job interviews

On anyone’s list of the trickiest questions in a job interview, the simple (and ubiquitous) request to “tell me about yourself” would have to rank among the most dreaded—right up there with, “What’s your greatest weakness?” and “Why did you lose your last job?”
It’s not that talking about oneself is hard to do. In fact, it can be so much fun that the tough part is knowing what to leave out. And that’s the problem, according to Fran Berrick, whose firm, Spearmint Coaching, has advised executives at Procter & Gamble, Unilever, LVMH, and elsewhere. The question is “so open-ended you could drive a truck through it,” Berrick notes. “So people really struggle with it.”
Although “tell me about yourself” may seem like a harmless-enough icebreaker, there are at least two common ways to blow it. The first is by giving your interlocutor a recap of your resume. “They’ve already read that, and so they have a pretty good idea of your credentials and experience, or you wouldn’t be sitting there,” says Berrick.
The second way to mess up is by talking about your personal life. In our social-media-steeped culture, the lines between private and professional sometimes blur, but resist the urge to share anything unrelated to the job at hand. An HR manager for a Fortune 500 company recently told Berrick that a candidate, invited to describe herself, launched into a thorough account of what she and her family did on their last vacation. She didn’t get the job.
So what exactly are interviewers hoping that “tell me about yourself” will reveal? Two things, Berrick says: Whether you’re likely to be great at the job you’re applying for, and how you’re likely to fit into the company’s culture. Sounds straightforward enough, but what you say will be most effective if it takes just 60 to 90 seconds and if, in that brief span of time, you come across as “succinct, authentic, and engaging.”
Clearly, this is going to take some careful preparation. Here are the 3 steps Berrick recommends:
1. Create a narrative
Do enough homework beforehand, on the role and the company, to form a fairly detailed idea of what success in this job would look like. Then think back over your career so far and find instances where you made the best use of your talents.
“Let’s say you identify yourself as a positive, results-driven salesperson,” says Berrick. “Give a specific example, along with a few words about how you see yourself adding similar value at this company.” The same approach goes for “any other trait you want to highlight, like analytical skills or effectiveness as a team player,” she says, adding that putting a 90-second limit on your remarks is not only a good way to stay focused, but also “gives the interviewer just enough information to make him or her want to continue the conversation.”
2. Make your answer consistent with your brand
Intentionally or not, each of us has a personal brand—the overall picture of our professional accomplishments, goals, values, and reputation. A resume is the most obvious place to sum up all of that, but sites like LinkedIn matter, too. Invited to “tell me about yourself,” keep your answer in line with the information about you that’s already out there in cyberspace.
That’s not to say you can’t emphasize different aspects of your brand, depending on who’s asking. “With a recruiter, you might stress specific job skills,” says Berrick, while “in an interview with a C-suite person, especially a CEO, you can talk more about the view from 1,000 feet—for instance, how you see yourself fitting into the company’s mission.”
3. End with a question
To finish up your 60-to-90-second narrative, ask something. Berrick recommends, “Can you tell me a bit about the kinds of people who are most successful here?” This not only gives you a clue as to the culture you’d be getting into if you’re hired, and whether you’d be likely to thrive in it, but “it helps you end your story,” says Berrick. “That can be hard for some people.” No one wants to keep an interview going for more than it’s necessary.
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—4 ways to get your resume noticed by companies like Google
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fortune--2020-02-20--Should CEOs stay on the board after they step down?

Investors applauded when former DuPont CEO Ed Breen abruptly reclaimed the job on Tuesday, with former CEO Marc Doyle dismissed immediately. But in a sense, Breen wasn’t the former CEO at all. He had been CEO of DowDuPont before it was split into three companies, and when DuPont became independent last spring, Breen took the role of the board’s executive chairman.
“Executive chairman means you’re CEO,” says Charles Elson, a corporate governance expert at the University of Delaware. “The person with the CEO title is really the chief operating officer.”
That is, Breen was always in charge. Now the company is ending the fiction that Doyle was the boss.
But why does this happen at all? If the incoming CEO isn’t ready for the top job, then why give it to him? And if he is ready, then why install a shadow CEO in a new position above him? Who’s in charge here?
It isn’t unusual for CEOs to become executive chairs after leaving the CEO job. It happened last year at Constellation Brands, Intuit, Kimberly-Clark, Pfizer, and other major companies; Ginni Rometty will become executive chairman of IBM’s board after she steps down in April. At many other companies, the departing CEO stays on as chairman, not executive chairman.
Getting the handoff right is increasingly important as CEO turnover rises to unprecedented levels. January set a new record for CEO departures in a single month—just as 2019 did for departures in a year—1,600 of them, reports Challenger Gray & Christmas, an outplacement firm that tracks public and private companies.
The trending opinion of the practice is clear. “It’s a bad idea,” says Elson, who has served on a half-dozen boards, none of which the ex-CEO stayed on as a director. “A good CEO recognizes that it’s not fair to the new person.” Marc Feigen, a New York–based consultant who advises CEOs and boards on succession, agrees. “It’s not a practice I approve of,” he says. “When Barack Obama walks into his first cabinet meeting, he shouldn’t see George W. Bush sitting there.” Noel Tichy, a longtime counselor to CEOs and a professor at the University of Michigan’s Ross School of Business, says bluntly: “It’s a stupid idea. All kinds of psychological factors get in the way. Maybe the new CEO owes his or her job to the predecessor. Or maybe the new CEO can’t stand the previous one. Maybe the old CEO brought all the other directors onto the board, and they feel loyal to him or her. It obstructs the new CEO from doing his or her job.”
They’re all describing the most fundamental problem. “How do you question what your predecessor did when he or she is sitting there?” Feigen asks. “It’s awkward, and it shouldn’t be awkward.”
Research by investigators at Georgetown University and the University of Pittsburgh finds that, unless the departing CEO is a founder, companies whose ex-CEOs stay on the board suffer lower stock returns than other companies during the two years after the turnover. The study doesn’t say why that happens. The cause could be those awkward dynamics in the boardroom. A darker hypothesis holds that before departing, the aging CEO may steer the succession process toward a less experienced candidate so the board will want the old-timer to stick around.
The Conference Board’s latest report on CEO succession practices, coauthored by Georgetown University professor Jason Schloetzer, finds that “while common in the past, this practice [keeping the departing CEO on the board] has become less prevalent.” The report says that among the biggest manufacturing and nonfinancial companies—those with revenue exceeding $20 billion—60% explicitly require the exiting CEO to resign from the board on departure. With or without an explicit policy, clean-break transitions happened last year at big companies including MetLife, Weyerhaeuser, and Schlumberger, for example.
A brief overlap of the old and new bosses rarely causes much harm, though. “A limited period of time until the chairman is replaced can make sense, say until the next annual meeting,” says Feigen. Yet continuity, the rationale most often cited for keeping the CEO around, doesn’t require that the old CEO remain on the board. At Weyerhaeuser, for example, exiting CEO Doyle Simons left the board but maintained continuity as a “special adviser” to new CEO Devin Stockfish for three months.
By far the toughest calls involve departing founder CEOs who can’t bear to leave. Results range from awesome to awful. The researchers from Georgetown and the University of Pittsburgh found that when founder CEOs stayed on the board after handing off the top job, company stock returns on average were no worse than those of other companies. Even Feigen believes that “in a founder-driven company, it makes sense for the founder to remain on the board for a period of time. The value of the founder is very high, and the value to the founder is very high.” When the founder’s net worth is largely or entirely in the company’s stock, incentives are aligned.
It can work out well, though the path is rarely smooth. Nike’s Phil Knight, Starbucks’ Howard Schultz, and Microsoft’s Bill Gates all remained chairmen after stepping down as CEO; all have since left their boards, and their companies have gone on to extraordinary success after significant stumbles. But the story isn’t always happy. Ralph Lauren stepped down as CEO of his fashion empire in 2015 while remaining executive chairman. His successor had been in the job for just 15 months when his departure was announced, and though another CEO was hired, Lauren remains executive chairman at age 80. As markets have surged, the stock remains well below its price in 2014.
Leaving the CEO job will always be a psychological crisis for some bosses. They’re leaving behind power, fame, income, even their identity—as one ex-CEO put it, “You’re going from Who’s Who to who’s he?” Inevitably some will want to stay on as board chair. Whether that happens is up to the board. Directors need to look deep inside themselves and answer honestly: For whose benefit are we considering this? The shareholders’? Or the ex-CEO’s?
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fortune--2020-02-21--Millennials are passing on wine when dining out. How the wine industry is changing its approach

‘ Looking more probable ’ —analysts up the odds of a markets correction as coronavirus fears surge

Imagine two tables of two people each at a relatively fancy restaurant in a big city. The first table seats a married couple in their sixties. The second table is occupied by a young couple in their twenties. Ask a server to bet on who will order wine. Twenty years ago, you would bet on the younger couple; today, you’d better put your money down on the older duo.
At least that’s what wine producers, marketers, and researchers are saying about millennial wine drinkers. They are passing on the wine list when dining out.
In January, Silicon Valley Bank’s wine division released an industry report on wine and in it noted the failure of the wine industry to capture the attention of the millennial audience. And they aren’t the only ones to find that the younger population is skipping past the wine aisle. Nielsen also noted a change in how millennials approach alcoholic beverages, with hard seltzer and artisan spirits on the rise and the wine trend line falling across categories. Mintel data shows that while 30% of millennials increased their wine consumption, 21% reported drinking less. That’s a lot of data to show that the younger generation isn’t sipping as much Pinot Grigio as their parents.
“There are distractions within the wine category, and in adjacent categories, that are impacting the wine market,” explains Mimi Bonnett, U.S. director for food, drink, and cannabis at Mintel. “A democratization is happening in alcohol that makes a product acceptable for whatever occasion calls: premium, casual, healthier, even low or no alcohol.”
Bonnett notes that consumers, especially younger ones, are willing to drink a variety of alcoholic beverages. Wine is a $70 billion industry, but wine brands are losing market share to other alcoholic beverages as well as to millennials’ increased desire to skip booze altogether. That creates a unique environment for wine sales, and marketers say that old-fashioned techniques should be tossed out the window.
“Wine is still considered an aspirational, luxury product to many, and much of the messaging in the industry reflects this,” says Juliana Colangelo, the West Coast director of Colangelo & Partners, a fine wine and spirits communications agency. She explains that millennials do purchase high-end products, citing the SVB report, which notes that 33% of millennials spend on luxury goods but that wine isn’t one of them. Only half that—17%—are throwing down cash on bottles of wine. “The messaging needs to be adapted to this consumer and their values,” Colangelo says. “They want messages of health and wellness, social good, sustainability, transparency, and experiences.”
Colangelo believes that wine marketing needs to change to meet millennials where they are. The wine industry has been successful at capturing the attention of baby boomers and members of Generation X: Both demographics have connected wine with a healthy diet and an affluent lifestyle. But the tactics used to acquire these customers don’t necessarily work with millennials. The inability of the wine industry to recognize changing consumer values has resulted in stalled demand from the next generation of wine drinkers. That includes acknowledging “mindful drinking” movements like Dry January and Sober October; communicating wine’s inherent natural production methods, unlike those of hard seltzer; aligning wine with health; and promoting wine’s craft and artisanal qualities as the beer and spirits sectors have done.
“These are terms that tap into their desire for transparency,” Colangelo says of “craft” and “artisan.” “These products are easier for millennials to understand; they know the ingredients in the cocktail or the flavor profile of the beer. The wine industry can improve upon the way information is shared: Make it simpler, remove technical jargon, and provide information through social media and videos.”
The 2018 Winc Cherries & Rainbows red wine from Languedoc, France. Courtesy of Winc
It’s an approach that has seen success with popular upstart brands like Winc, a direct-to-consumer wine purveyor with a variety of brands including Summer Water rosé, and Empathy Wines, a modern Northern California winery that sells direct-to-consumer without the traditional markups. “We need to move beyond talking about how my vineyard is different than your vineyard,” says Brian Smith, cofounder of Winc. “We need to do a better job of connecting with consumers in new ways.”
Smith believes those practices include rich storytelling, content creation, and the delivery of at-home experiences for customers. It all runs counter to the conventional wisdom that a physical tasting room and wine-pairing dinners are the only way to create an experience that will resonate with consumers. Rather, Winc spends time connecting with its customers on social media platforms.
Similarly, Empathy Wines has taken the digital route to control their story. Half of their customers identify as millennials. Cofounder Jon Troutman says Empathy makes it easy for consumers to contact company staff. Instead of being winemakers living in grand, imposing châteaus, they are reachable via smartphone: Consumers can simply text a wine concierge to help them decide which bottle is best for dinner. “Making a delicious bottle isn’t enough anymore,” Troutman says. “Wineries, especially at the more premium end of the category, can’t expect millennials to open their wallets. This isn’t Field of Dreams—just because you make good wine does not mean the millennials will come.”
Empathy’s wine club subscriptions start at three bottles per month, sent directly from winery to consumer. Courtesy of Empathy Wines
There is a certain mentality among traditional producers that wine critics, 100-point grading systems, and the U.S.’s three-tier system of distributors will do the tough work of building a brand and acquiring customers for them. Troutman says that Amazon has conditioned customers to expect “two-click purchasing and laser-fast delivery,” while fashion and beauty brands have drafted elaborate explanations of how their products are sourced and made. Wine, unfortunately, has not done the same. “There’s a real need for wineries to evolve digitally and not rely on others to sell it for them,” Troutman adds.
The SVB report noted that the baby boomer cohort has driven wine sales for the past 30 years, not only through the consumer stepping into the winery for a direct experience with the product but also around healthy messaging. The Mediterranean diet craze of the 1990s aligned wine with good health and put a glass on the table with your weekday meals. Much of that messaging, though, is lost on millennials. Now, their views on health include skipping alcohol entirely.
“The wine industry would benefit from cohesive messaging not only around the physical health benefits of wine, like natural ingredients, but the social and mental health benefits: bringing people together, socialization, and community,” Colangelo says. “Despite the digital prowess the millennial possesses, real-life community is still important for this generation.”
Colangelo hit on the idea that experience still matters, and at the end of the day, the consumer does want to taste the wine before identifying as a fan—or buying a bottle again. Single-serve packaging like canned wine and activations where millennials can try a sip do make a difference. For example, Long Meadow Ranch in Napa Valley eyes potential growth with its second label, Hunt & Harvest, and the expansion into a canned format for the single-variety wines. The company plans to launch a 250-milliliter canned rosé this spring, which can be sold individually or in a four-pack, and it currently sells a canned Sauvignon Blanc. The rosé will retail for just $6.99 per can.
“In our experience, many millennials are engaging with wine, just not yet at the same volume or spending level as Gen X and baby boomers,” says Jeff Meisel, vice president of brand development at Long Meadow Ranch. “This wine appeals to many of the values we see as important to millennials: freshness, convenience, approachability.”
Hunt & Harvest’s canned rosé, expected to launch this spring. Courtesy of Hunt and Harvest Wines
Many wineries have also begun to offer experiences on their properties that allow consumers to engage with the products, from comedy nights to pool parties. Long Meadow Ranch hosts a guest chef farm-to-table dinner series, and Colangelo highlights that Hamel Family Wines in Sonoma, Calif., includes a food pairing and customized spittoons with wine tastings.
There’s definitely not a lack of wine out there, so while data might hint at doomsday, producers and marketers are optimistic about the future. Producers are making great wines, experimenting with grapes and styles, launching new brands, and curating their portfolios for changing palates. “It’s never been a better time to be a wine consumer,” Troutman says. “The sheer quality and value available today is amazing. Now the onus is on wine brands to help drive the discovery, adoption, and loyalty for these wines.”
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