fortune--2020-09-30--What the health care industry needs from the 2020 election

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One might think, in 2020, the year in which a pandemic has drastically altered the daily lives of all Americans—and taken the lives of more than 200,000 of them—that this year’s election would be all about health care. Even before the onset of COVID-19, there was broad, bipartisan agreement that the bloated, inefficient, and costly U.S. approach needs fixing.
But a discussion about the shape and future of the country’s health care system has been largely absent in the presidential campaign in recent weeks. That changed in last night’s debate between President Trump and former Vice President Joe Biden, his Democratic rival.
Health care was the subject of one of the night’s first and most bitter exchanges—a signal that the subject is back on the candidates’ agenda. And none too soon.
This story is part of a special report examining what’s at stake for a wide range of industries—and for many workers—in this year’s election.
The Supreme Court is set to hear arguments over the constitutionality of the Affordable Care Act (ACA) in early November. That case recently took on new urgency with the death of Supreme Court Justice Ruth Bader Ginsberg. The shifting makeup of the court has added uncertainty to the ACA’s fate. At stake is the insurance of millions of Americans currently provided by the law.
While the two political parties are clearly divided over the law, however, the debate largely stalls out there. The nation is just not engaging on the subject in a substantive way right now. “Aside from COVID, we’re not really focused on policy,” says Gerard Anderson, a professor at the Johns Hopkins Bloomberg School of Public Health. Along with other experts, Anderson notes that the lack of policy debate is due in part to the fact that the Republican Party effectively doesn’t have a health care platform (other than the one it created in 2016) and hasn’t offered clear views on many issues.
While that makes the situation harder to parse, the 2020 election certainly represents a critical juncture for the U.S. health care system and the millions of Americans who use it. And for those who work in the health care industry, there are some clear priorities that need to be addressed. Here’s what is at stake.
Clarity on the Affordable Care Act
The first big issue relates to insurance coverage. President Trump excited many of his supporters in 2016 with his pledge to repeal and replace President Obama’s signature law, the Affordable Care Act, which protected Americans with preexisting conditions from being denied or excessively charged for coverage and that—in part, through the individual mandate—expanded health coverage to millions of Americans. According to the Commonwealth Fund, the percentage of uninsured Americans fell from 20% in 2010 to 12% in 2018; the number of people who were underinsured during that time increased, according to the study. While Congress repealed the individual mandate, weakening the ACA, the Trump administration has not articulated an alternative (though it has repeatedly said one is coming).
“The Republicans keep talking about a fix, and they’ve not come up with a fix,” says Bill Hoagland, a senior vice president and self-described “moderate Republican” with the Bipartisan Policy Center. He called President Trump’s executive order last week protecting Americans with preexisting conditions “silly.” Why? Because it didn’t actually change policy. “That’s what the law says now,” says Hoagland.
The Democrats, meanwhile, did have a robust debate about the future of health care during the primaries. Biden’s position involves building on the Affordable Care Act by creating a public health insurance option.
Get serious about controlling costs
A second pressing issue for the health care industry is America’s ever-growing medical bill, which at last count totaled $3.6 trillion in 2018, or roughly 18% of GDP. In other advanced economies, the rate is 8% to 10%.
That discrepancy is not justified by results, says David Blumenthal, president of the Commonwealth Fund, a nonpartisan foundation that researches health and social policy issues. “We do not do more stuff,” says Blumenthal, comparing the U.S.’s health system with that of other industrialized countries. “What we have are prices that are astronomically higher on a per-service basis. We pay a much higher rate per hospitalization, for drugs, for physician visits, for surgical procedures—multiples of what other countries pay.”
That costs are too high is not controversial. Both parties believe health care spending is out of whack. But they’re divided over the best way to address the issue. While the Republicans are generally in favor of more competition to control costs—price transparency has been an elusive goal of the Trump administration—the Democrats argue for a combination of competition and regulation, says Hopkins’ Anderson, who notes the debate hasn’t really changed or progressed in 40 years. “I honestly do not know what will change the trajectory,” he says, adding that one of the problems is that “there isn’t a strong champion for cost containment.”
While President Trump has been vocal about drug prices being too high—and there’s a growing consensus about the role of hospitals and increasing consolidation in the sector in driving up prices—experts like Anderson speculate the pandemic has given “some cover” in the near term to pharmaceutical companies and health systems because of their high-profile roles in responding to the pandemic.
Blumenthal suspects there is support across the ideological spectrum for reducing monopolies and oligopolies in health care but is less certain how it would work out politically in the current environment. “The health care industry is very powerful, just as the pharmaceutical industry is very powerful,” says Blumenthal.
He thinks U.S. companies may offer the best hope at effecting change. “Employers in the United States have never been effective purchasers of health care,” says Blumenthal. “One way for markets to resolve some of these issues would be for the purchasers to be more aggressive and effective in buying insurance.”
As for the ongoing pandemic that provides the backdrop for this election, Blumenthal believes that it raises questions about what sort of public health care system America should have going forward. Says Blumenthal: “For those who are sympathetic to government, the pandemic has provided another argument for its critical role in health care, and society in general.”
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fortune--2020-09-30--What business needs from the 2020 election

Meghan , The Duchess of Sussex : ‘ If you listen to what I actually say , it ’ s @ @ @

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Ask Catherine Monson what she wants most from the election, and her first words aren’t about issues like tax rates, trade, or regulation, at least not directly. She’s CEO of Fastsigns, a franchisor of stores that make custom signs and graphics products, with about 700 franchisees worldwide, so all those issues affect her business. But what does she want most? “What helps us is certainty, the ability to plan,” she says. “Every presidential election now, you don’t know what’s going to happen. We don’t want regulatory or policy whiplash. We want predictability.”
As America’s business leaders think about what they need in the postelection world, they keep coming back to the same words—stability, predictability, certainty. They’ve also got specific policy wish lists. But while the policies vary by industry, business leaders across the economy acknowledge the same overarching desire for a more temperate political climate. “The business community is a small-c conservative group,” says Douglas Holtz-Eakin, former director of the Congressional Budget Office and now president of American Action Forum, a center-right think tank. “They don’t like rapid and radical change.”
This story is part of a special report examining what’s at stake for a wide range of industries—and for many workers—in this year’s election.
That’s understandable; many companies grow by making large investment decisions that may take years to pay off. Yet as ardently as businesspeople want this election to produce greater policy stability, they’re unlikely to get it. The more probable outcome is that business will have to adapt to a disorienting new rule book in Washington and in government at all levels nationwide.
This is a crossroads election for business and the U.S. economy, which is why we’re examining what’s at stake for a wide range of industries, from Wall Street to Silicon Valley, and for many workers. (To see the full package of stories, you can go here.) Business leaders are uncertain of Vice President Joe Biden as President. They’re wondering if he’d be the moderate Joe of his Senate years, working across the aisle, or if he’d push the priorities of the Democrats’ left wing, whose support he needs. And the business community is grateful that Trump kept his two main promises to them—lowering taxes and reducing regulation—during his first year in office. But managers on the whole don’t like escalating trade wars, anti-immigrant policies, and chronic policy flip-flopping, which were at the core of Fortune’s argument last fall that Trump had become bad for business. His bellicose performance in the first presidential debate probably didn’t comfort businesspeople hoping for more orderly policymaking.
The Conference Board’s measure of CEO confidence reflects the change of mood. While CEOs are more confident than they were last spring, in the darkest days of the pandemic’s arrival, they’re still nowhere near as confident as they felt in Trump’s first year.
On the broad issue of uncertainty, it’s tempting to accuse business leaders of whining. After all, life is uncertain. Wasn’t it ever thus? Actually it wasn’t. Researchers from the University of Chicago, Stanford, and Northwestern University created a policy uncertainty index based on computer analysis of news reports going back to 1985. It shows that policy uncertainty has recently been higher than ever, by a hefty margin.
The tumultuous policies that have wearied so many businesspeople are highly correlated with President Trump’s mercurial nature. He has reset the plans of multibillion-dollar industries with a single tweet. Last December, for example, he tweeted, “effective immediately, I will restore the Tariffs on all Steel & Aluminum that is shipped into the U.S. from [Brazil and Argentina].” The Dow plunged 326 points on the news. Eighteen days later he took it all back. No tariffs. Trump, who has said his unpredictability gives him a competitive advantage, has made several such reversals.
In addition, while business has generally applauded Trump’s broad regulatory rollbacks, some companies have found them too impulsive. When he said he’d all but eliminate an Obama regulation reducing auto emissions, California said it would continue enforcing the existing rule. Four major carmakers—Ford, Volkswagen of America, BMW, and Honda—negotiated with California to adopt a new, slightly weakened rule that the manufacturers would apply to all their vehicles nationally. In a joint statement, they said the deal gave them “much-needed regulatory certainty.”
Craving compromise
But it isn’t just Trump. Lurching policy swings are inevitable as partisanship, tribalism, and extremism increase broadly in U.S. politics and society. Trump’s Tax Cuts and Jobs Act was enacted in 2017 with zero Democratic votes. President Obama’s Affordable Care Act was enacted in 2010 with zero Republican votes. Businesspeople now must struggle to make plans knowing that epochal legislation could be repealed the moment the other party gets a majority, as it someday will.
In that environment, some business leaders want this election to produce divided government. “They want more stability,” says a former Capitol Hill staffer who now advises major corporations, “and the most stable outcome would be a Biden win but a Republican Senate.” Divided government forces the two parties to engage and compromise in order to enact legislation. It has been the norm for most of America’s post–World War II history, and research has shown that it’s better than unified government for the economy and the stock market. But while divided government could continue, businesspeople shouldn’t get their hopes up.
Vote-splitting is in steep decline. In the 2016 election, for the first time since the direct election of senators began in 1914, every state that went for the Democratic candidate (Hillary Clinton in this case) and was also electing a senator chose a Democratic senator, while every state that went for the GOP candidate (Trump) and was also electing a senator chose a Republican.
The trend continued in the 2018 midterms. Elections analyst Geoffrey Skelley at FiveThirtyEight studied states that were electing both a governor and a senator. His conclusion: “Split-ticket voting hit a new low.” As Americans increasingly identify themselves as members of warring tribes, they’re less likely to see virtue in any candidate from the other side and far more likely to vote a straight ticket.
This year many business leaders have a particular reason for fearing that Democrats will win the White House and Senate while holding control of the House. One of the great moderating forces in federal legislation is the Senate filibuster rule, which requires 60 votes to end debate and advance an item to a floor vote. But Senate Democrats eliminated it for executive office appointees and judicial nominees below the Supreme Court in 2013, and Senate Republicans eliminated it for Supreme Court nominees in 2017 and 2018.
The filibuster remains in effect for legislation. But President Obama, Senate Minority Leader Chuck Schumer, and former Senate Majority Leader Harry Reid have all urged Democrats to consider ending the filibuster entirely if they gain control of the Senate. With control of the House and White House as well, the party could in theory enact any part of its agenda quickly and easily with simple majorities. Republicans could do the same if they eventually win the Washington trifecta.
That scenario badly worries business. “Change of some kind is likely no matter the political outcome,” says Steve Caldeira, CEO of the Household and Commercial Products Association, “but it just shouldn’t be radical change, especially during these volatile times.”
While voters generally think Trump would manage the economy better than Biden would, some prominent economists disagree. Recent number crunching by Moody’s Analytics forecasts that a Democratic sweep of the presidency, House, and Senate would produce much higher economic growth, more jobs, and higher real disposable income over the next decade than would a Republican sweep or divided government under either candidate as President. Goldman Sachs economists conclude that Biden’s policies “would likely result in a similar level of medium-term S&P 500 profits as our baseline forecast that assumes no major policy changes.” (For a detailed breakdown of where both candidates stand on eight major economic issues, see the table at the bottom of this article.)
The larger issue for business is the advent of a new model for dealing with government. For decades business has pursued its policy interests in a world where compromise and moderation usually prevailed, even after bare-knuckles combat. That’s what businesspeople yearn for after this election. “How do we get back to where we can disagree and be friends?” asks Monson. “The tribalism is terrifying. The balkanization is terrifying.” Yet virtually every trend is pointing toward greater division, not less.
4 big priorities
If the election’s winner can work with Congress, and Congress can stifle its internal warfare—big assumptions—here are four of the business community’s top priorities:
A substantial new pandemic relief bill.
“Measures to fully and quickly recover from the pandemic-induced recession” are the No. 1 priority for the U.S. Chamber of Commerce, Washington’s largest lobbying organization, says chief policy officer Neil Bradley. Many other major business associations feel similarly. It’s a sign of Washington’s debilitating partisanship that Congress can’t agree on a bill that any legislator ought to be happy to take home. “We’ve been surprised,” says Bradley. “Extending benefits is not just good policy, it’s good politics.”
Mostly open, low-tension trade agreements.
Business generally hates the trade war with China and hastily imposed tariffs on U.S. allies such as the European Union and Canada. For every industry protected by a tariff, several others are hurt by the increased cost of the tariffed item; for example, “End the trade war” is the No. 1 policy priority of the National Retail Federation, whose members rely on Chinese merchandise. Additional industries are hurt by tit-for-tat tariffs imposed by other countries.
Continued low taxes.
The Tax Cuts and Jobs Act of 2017 lets businesses expense certain capital investments, but that provision begins to phase out in 2023. In addition, the TCJA gives individuals several tax breaks—an increased child tax credit and standard deduction, for example—that are scheduled to expire at the end of 2025. Business wants those stimulus measures made permanent.
A major infrastructure bill, at last.
Congress’s failure to pass such a bill has become a running joke in Washington. Like the failure to pass a new pandemic relief bill, it’s puzzling. Seemingly since the dawn of time, legislators have loved sending federal money back to their districts. But in today’s hyper-partisan Washington, the two parties can no longer compromise on where the money will go, for what purpose, etc.
The business community wants large yet moderate economic action from Washington. But just trying to forestall rapid and radical policy change may no longer work. For business, come what may in November, it’s time to learn how to deal with it.
Where Biden and Trump stand on economic policy
Below is an overview of each candidate’s stated policy plans in eight key areas. Information for Biden comes largely from the Democratic Party Platform plus Biden’s speeches. Information for Trump comes from his campaign website and speeches; the Republican Party, for the first time in its 164-year history, did not issue a platform for this election.
Biden Trump Corporate taxes Would raise the corporate tax rate from 21% to 28%; would offer tax incentive to companies that bring overseas operations to the U.S. and make certain green investments, among other things. Would extend expensing of certain capital investments, currently set to phase out starting in 2023; would offer tax incentives to companies that bring overseas jobs to the U.S. Individual income taxes Would tax capital gains and dividends as ordinary income for high-income individuals, increase tax rates for high-income individuals, impose a 12.6% Social Security payroll tax on income over $400,000, limit tax benefit of itemized deductions. Would prevent tax rate increases, an increased child tax credit, increased estate taxes, and other changes by extending tax code provisions set to expire at the end of 2025; would index capital gains to inflation. Infrastructure spending Would increase it by $2.4 trillion during his term. Would increase it by an estimated $1 trillion. Health care Under the Affordable Care Act would establish a new public option available to all; low-income individuals could be automatically enrolled in no-premium coverage; Medicare could negotiate prescription drug prices; importing lower-cost drugs would be permitted. Would reduce Medicare payments for graduate medical education, uncompensated care, and other uses; would impose self-sufficiency and work requirements for Medicaid recipients. Workforce Would mandate paid family and medical leave for up to 12 weeks. Has advocated paid family leave but has not included it in his second-term agenda. Trade Would include standards for labor, human rights, and the environment in future trade agreements. Would “enact fair trade deals that protect American jobs,” according to campaign website. Regulation Would raise the federal minimum wage to $15; pass the Protecting the Right to Organize (PRO) act and facilitate union organizing in other ways; create a public credit reporting agency and require its use by federal lending programs; would “reinvigorate” the Consumer Financial Protection Bureau; would eliminate forced arbitration clauses in employment and service contracts; would increase scrutiny of mergers and acquisitions. Would continue to deregulate U.S. energy industry; would prohibit federal contracts for companies that outsource to China. Immigration Would increase protection for Dreamers; provide a roadmap to citizenship to undocumented immigrants; end workplace and community raids. Would “prohibit American companies from replacing U.S. citizens with lower-cost foreign workers,” according to campaign website.
More from Fortune ‘s special report on what business needs from the 2020 election :


fortune--2020-09-30--What working parents need from the 2020 election

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It was an imperfect moment, which is precisely why it captured the current state of parenting so perfectly.
In a purple shirt and gray mask that kept sliding down her face, California assemblywoman Buffy Wicks (D-Oakland) implored her colleagues to vote yes on a bill that aimed to expand affordable housing in the state—while simultaneously trying to soothe her newborn daughter. “We need to pass this bill,” Wicks pleaded from the floor of the State Capitol, as her four-week-old, draped in a striped blanket, squirmed and fussed in her arms. “Please, please, please pass this bill.”
Wicks later said that she did not plan to bring her baby to the floor. In fact, she hadn’t even wanted to bring her along to Sacramento, California’s capital, because of the then-rising cases of COVID-19 in the state. But despite her requests, she hadn’t been granted the ability to vote by proxy while on maternity leave. And so she made the trek from Oakland with her newborn in late August, the day of the vote. Wicks was in the midst of breastfeeding the baby in a private office when she heard that the housing bill, which she strongly supported, had come up for debate.
This story is part of a special report examining what’s at stake for a wide range of industries—and for many workers—in this year’s election.
“I quickly detached her, threw a blanket on her, and ran down two flights of stairs to the floor to speak,” the assemblywoman says in an interview with Fortune several weeks after the vote. “Elly [Wicks’ infant daughter] did not appreciate the moment.”
But many others did. By the time Wicks made it back home to Oakland, the video of her impassioned plea on the floor of the capitol, baby in arms, was going viral. (The bill she was pushing, which would have produced new housing and introduced increased protections for renters, did not ultimately get passed.) Over the ensuing days, Wicks’ inbox was flooded with thousands of emails from parents, both commending and commiserating. Former Democratic presidential nominee Hillary Clinton tweeted the story, putting even more of a spotlight on the assemblywoman—and the plight of parents everywhere.
“My hope is that this continues to drive a national conversation,” says Wicks. “From a policy point of view, we are failing families.”
Indeed, the pandemic has shone a light not just on Wicks but on a long-standing deficiency in the richest country in the world: The United States lacks both a federal parental leave policy and universal childcare. For decades, the caring of children has been viewed as a personal problem, something working parents—and maybe their employers—must solve for themselves. Now, with the pandemic forcing the issue into the forefront, the problem is being reframed as an economic one: If we don’t make it possible for working parents to return to work, our economy suffers, and we all suffer.
Of course, some suffer more than others: According to a recent survey from nonprofit LeanIn.org, working women are spending an average 7.4 more hours per week than working men on childcare. Parents of color are also at particular risk of shouldering more of the impact and are more likely to experience job disruptions owing to childcare issues than white families.
These issues are nothing new. But they are bubbling up with renewed urgency and could play a larger role in the upcoming presidential election than ever before. “This is an issue that resonates in red states and blue states,” says congresswoman Katherine Clark (D-Mass.) “And it is a true impediment to getting back to work.”
In mid-June, Clark introduced the Child Care Is Infrastructure Act in the House of Representatives, which was passed in July as part of a broader act. The bill aims to provide some stability to the hard-hit childcare industry by providing grants for facility renovations and a student loan repayment program for early childhood educators. But Clark says the proposal is about much more than providing relief for day-care centers, preschools, and the people who run them. In order for the economy to ramp up again, parents need a reliable and affordable place to send their children. She also says much more is needed.
The Senate, too, has tried to propose solutions, including the Safely Back to School and Back to Work Act, introduced by Sen. Lamar Alexander (R-Tenn.), which also aims to help childcare centers stay open, among other efforts like decreased student loan payments for American families. “The way to get back to work and back to school is to put politics aside and work together as well and as fast as possible to get a result for the American people,” Alexander said in remarks he made on the Senate floor on July 27. Alexander’s office did not make the senator available for an interview with Fortune.
Earlier this year, Congress did allocate $3.5 billion in emergency funds for childcare centers, as part of the sweeping CARES Act, the economic stimulus bill passed in late March. But, thus far, it has failed to agree on a follow-up relief bill that would provide a bigger and broader lifeline to the childcare industry and working parents—not to mention unemployed Americans.
“We’re seeing a lag in understanding how critical this issue is,” says Clark. “How are we going to safely reopen our economy? It just doesn’t work if we don’t have affordable childcare that people can access.”
What’s at stake? According to estimates from the Center for American Progress, nearly 50% of day-care centers could be forced to shut down if they don’t receive more public assistance. As the country looks to reopen, this could have a massive impact not only because of job losses in the childcare industry but also because of the added burden on working families across all sectors. Parents make up a third of the workforce in the U.S., and their livelihoods and spending capacities are directly linked to the health of our economy.
Perhaps that’s why many in the private sector aren’t waiting around for the federal government to get its act together. While the government has dragged its feet on passing another relief bill, companies that can afford to have stepped up.
“Employers are coming to us,” says Tim Allen, the CEO of Care.com, an online marketplace for caregivers. “They’re saying, ‘How can you help us help our employees?’”
The CEO says he has seen a huge increase in demand both from individual parents and from corporate customers. Care.com has signed on 100 new clients since March, who use the service to offer their employees free or subsidized care for children or aging relatives.
Some companies have even offered parents of school-age children parental leave if their kids’ schools are shut down. In April, Microsoft announced a program called Paid Pandemic School and Childcare Closure Leave, which grants employees up to 12 weeks of paid time off to care for their children. To be sure, not everyone can afford Microsoft-size benefits. And heads of human resources everywhere are struggling to fulfill the unprecedented needs of parents.
“We have to figure out how to solve for this on a broader scale,” says Tracy Platt, the chief human resources officer at Kansas City–based health care technology provider Cerner. “There has to be a broader intervention.”
That hasn’t happened yet. But many in the private and public sector say they are optimistic that now—finally—the time has come to truly make the childcare issue top of mind.
Presidential nominee Joe Biden has backed a bailout for the childcare industry, part of a broader proposal to help American caregivers and families. According to Biden’s campaign, the plan will cost $775 billion over 10 years and will be paid for by rolling back “unproductive and unequal” tax breaks for real estate investors with incomes over $400,000, among other means. The proposal also includes a federal parental policy that would grant parents up to 12 weeks of paid leave. “Families are squeezed emotionally and financially,” Biden said during a speech announcing the plan in July. “They need help, but too often they can’t afford it.”
President Donald Trump has also laid out several proposals that aim to fix the broken childcare system. Late last year, the Senate passed a bill backed by Ivanka Trump, his adviser and daughter, to fund paid family and medical leave for federal workers. Also last year, President Trump doubled the maximum for a child tax credit from $1,000 to $2,000. But ironically, some low-income families don’t qualify for the maximum benefit, because they earn too little. Trump’s administration also says it has established “bipartisan consideration of national paid family leave,” though Republicans have generally not backed caregiving policies that are paid for through tax increases, as Biden’s plan proposes—and as any real attempt at universal childcare would likely necessitate.
But both Republicans and Democrats have clearly understood that this is a key issue for many in today’s even more challenging environment, and that taking care of caregivers plays a key role in resuscitating the economy. Assemblywoman Wicks thinks that this could be the “sleeper” issue in the upcoming election. However, the childcare issue did not figure prominently in Tuesday evening’s slugfest of a presidential debate.
“We’re the only industrialized nation without a national paid leave policy,” she says. “Voters are feeling it acutely now, and voters need to demand more.”
While Wicks’ housing bill did not pass, another bill did: a new policy that allows Californians to use protected leave time to care for a child, parent or other family member that has a serious health issue. Wicks considered it a win.
What’s more, the assemblywoman also got a public apology from Assembly Speaker Anthony Rendon for not allowing her to vote by proxy. “The assembly needs to do better,” Rendon said. Wicks thinks the country needs to do better too.


fortune--2020-09-30--Stock market SPACs are here to stay, says NYSE’s Stacey Cunningham

Special purpose acquisition companies, or SPACs, have been all the rage in 2020—but do they have staying power?
Stacey Cunningham, president of the New York Stock Exchange, certainly thinks so.
“The SPACs of yesteryear are nothing like the SPACs that are listing today,” Cunningham said Wednesday during the virtual Fortune Most Powerful Women Summit. She had been asked if she thought the financing method—in which a shell company goes public with the purpose of acquiring a yet- unnamed business and effectively also taking that business public via reverse merger—was a fad that would come and go. ”The New York Stock Exchange did not use to list SPACs,” Cunningham noted. “We actually started listing them in 2017 with a change in our rule structure.”
SPACs have soared in popularity in 2020 as the pandemic has forced some companies to rethink their funding. That has encouraged some investors to create so-called “blank check” companies in the hopes of investing in a business impacted by the shift to technology being caused by the COVID-19 crisis. According to Refinitiv, a record $40.9 billion has been raised through 118 SPACs so far in 2020, about four times the amount raised during the same period a year ago. SPACs have been involved in the recent public offerings of controversial electric-truck maker Nikola, among others.
SPACs aren’t completely new: Blank check companies boomed in 2007, too, amid frothy capital markets, before receding into the background.
Cunningham notes that the trends that led to the popularity of the SPAC predated the pandemic (and hopefully will outlast it). Increasingly, investors and bankers see more innovation around the traditional IPO process. As private markets have grown flush, for instance, venture-backed businesses such as Spotify and Slack have found less need to raise cash in public markets. But they still require a way for their investors to cash out—and thus the direct listing, a process by which companies only sell existing shares and pay a smaller banking fee, has grown in prominence. On Wednesday, two more tech companies, Asana and Palantir, also made their public debut via direct listing on the NYSE.
“I think across direct listings, IPOs, and SPACs, we’re going to see people get more creative with what elements of each of those they want to leverage as they come to the public markets,” Cunningham said. “Now we have a menu [of options to go public]. Companies can choose an IPO if they want the infrastructure and the shareholder base, or a direct listing if they want to reduce their cost of capital, or a SPAC if they want control over negotiating terms with a single counter-party.”
In a way, the menu has become more customizable. Unity, a gamemaker, chose to go public through the traditional IPO route. But the company also shook up the process, also shook up the process, pricing the IPO themselves rather than relying on bankers, and also let employees sell shares from day one instead of instating the multi-month lockup period typical of most IPOs.


fortune--2020-09-30--This CEO’s advice for leading during crisis: ‘Focus on what you can control’

Ellen Kullman, CEO of 3D-printing startup Carbon, knows a thing or two about corporate crises.
She became CEO of chemical giant DuPont at the end of the 2008 financial meltdown. As she said during Fortune’s online Most Powerful Women Summit on Wednesday, “Nobody knew what was going to happen or how the recovery would start.”
Fast-forward to today, and Kullman faces a similar crisis in her new position at Carbon. Just a few months into her job, the startup—like many other businesses—was rocked by the coronavirus pandemic and the resulting economic downturn.
It was a tough position to be in for Kullman because, as a newcomer, she “didn’t have strong relationships across the board with the team.”
To build camaraderie and steer the ship, so to speak, Kullman has been busy holding virtual meetings with her employees. “I had to take the time to spend with others that were not only maybe a direct report but an important person at the organization,” she said.
As she learned from her previous experience during a recession, “you need to focus on what you can control.” Leaders can’t spend time “worrying about things you cannot impact,” she said.


fortune--2020-09-30--America is a Third World country now

America is a Third World country now

I was recently reminded of—or, perhaps I never really knew?—the original definition of the term “Third World” country. It was not intended to be a now disparaging designation of economic underdevelopment. To be a Third World country was to be on a short list of nations who were being asked to take a side amid the geopolitical chaos of the 1950’s Cold War. Are you democratic like the U.S. and its capitalist allies? Are you communist, like Russia, Cuba and other satellite nations? Or are you undeclared and up for grabs?
The term was coined by French demographer and social scientist Alfred Sauvy in an essay published in 1952 called “Three Worlds, One Planet.” (More about Sauvy here.) And while I’ve oversimplified things a bit, in short order, many of the countries still reeling from the European colonial experience in Africa, Latin America, Asia, and the Middle East were asked to assert their place within the new economic binary. That the “short list” was most of the world, or that the term ultimately devolved into an insult, seems unsurprising in retrospect.
And yet, the history of the term weighed heavily on me as I watched whatever that was that attempted to pass for presidential debate last night. Your feeds are likely filled with post-debate analysis, so I’ll spare you much of mine except to say that the big losers were anyone who cares about the U.S. and its role in the world. (I grudgingly spare a thought for moderator Chris Wallace, who lost control of an unhinged President Trump early and often. Perhaps replace him “with a mom who has been home with her kids since March,” suggested writer and humorist Wendi Aarons to universal Twitter applause.)
Watching a sitting U.S. president, bluster, bully, name-call, misdirect, interrupt and lie his way through a debate with so much hanging in the balance—much of which, like the under-managed pandemic, happened on his watch—was a new low in political discourse. It was like his Twitter feed literally roared to life. But he managed to get a few points out quite clearly, and no, I take little comfort in the fact that he says the quiet parts out loud.
When asked to disavow white supremacy by Wallace; specifically, if he would be “willing tonight to condemn white supremacists and militia groups and say that they need to stand down and not add to the violence in a number of these cities as we saw in Kenosha and we’ve seen in Portland?” he waffled, then tried to blame Antifa. When further pressed by Wallace, he choose the Proud Boys to decry, and then misdirected. “The Proud Boys,” Trump said. “Stand back and stand by. But I’ll tell you what, I’ll tell you what, somebody’s got to do something about Antifa and the left, because this is not a right-wing problem.”
Stand back and stand by? The Proud Boys, no stranger to effective messaging, are using the moment to recruit and rebrand. Antifa has no such marketing machine, since, according to FBI director Chris Wray, and repeated last night by Vice President Joe Biden, it is not a movement or an organization, but an ideology.
Depending on your own ideology, you may fixate on either the “stand back” or the “stand by” part of Trump’s response.
I would argue the latter is the crisis we’re now facing as a lower case “third world” country—one that seems increasingly out of alignment with the fragile democratic principles we’ve been talking up for so long. After last night, it now feels like we are fully undeclared and up for grabs.
In an attempt to sow doubt on the validity of the election (“This is going to be a fraud like you’ve never seen,” Trump said), he openly encouraged his fans to take matters into their own hands. “I’m urging my supporters to go into the polls and watch very carefully. Because that’s what has to happen. I am urging them to do it,”
The high-pitched scream I heard in my head was the wail of the ancestors who knew what this really means. And means. And means. And means.
He’s been doing this for a while now.
Worse, his abuse is coming at a time when the pandemic has caused a dangerous shortage of verified, trained, and nonpartisan poll workers, many of whom are older and in high risk health categories.
In a quest to bring you some good news after last night, let me point you to Power The Polls, a nonpartisan initiative working closely with more than 70 corporate partners to help match healthy, low-risk volunteers with the training and safety equipment they’ll need to serve as a poll integrity workers. It helps mightily that companies like Gap, Microsoft, Old Navy, and Target are giving employees paid time off to become volunteers, and a whole host of others are making voting easier for employees in a variety of ways via Time to Vote and Civic Alliance, two business-focused coalitions dedicated to ensuring people have the time and support they need to get to the polls.
Through their corporate partnerships, Power The Polls now has more than 350,000 people signed on to help, and just in time: Experts estimate that about 460,000 poll workers will be needed this year. That they may need to fend off alt-right poll-watching freelancers make their jobs even more necessary.
This kind of deep engagement is what it will take to affirm our collective commitment to participatory democracy, despite the renewed threat of interference at the polls. It’s time to and get this country out of the undeclared category once and for all.
Ellen McGirt
@ellmcgirt
Ellen.McGirt@fortune.com
Powerful women (and men) do the work
This year’s Most Powerful Women conference is in full swing, albeit virtually. The pandemic may have ruined the in-person party, but the conversations have been rich and on point. All of the speakers tackled some big questions, find some relevant highlights below.
Ever wonder why Black women are overlooked as Supreme Court nominees? Professor Anita Hill, who was there to give an update on her anti-harassment work in Hollywood, dropped some knowledge.
Meghan, The Duchess of Sussex, is working to make online communities safer. But she also had extraordinary advice for anyone who is preparing to stand up—against bots, trolls, even a bullying sitting president—for the greater good.
Diverse leadership helped Northrop Grumman CEO Kathy Warden steady the course during the coronavirus pandemic. “It really reflected what our organization needed to hear from us, because different people around the table had different perceptions of what is important. It highlighted for me that if you don’t have a leadership team that reflects the population, then you’re missing out on being able to lead all people within the organization.”
Still struggling with diversity? Set specific goals, says Goldman Sachs CEO David Solomon.
When it comes to hitting those goals, says Mellody Hobson, president and co-CEO of Ariel Investments, framing matters. "I think some people find the term 'quota' is a nonstarter for them. It ends the conversation before it begins," she said. "Targets are objective, something we're shooting for. Corporate America is very familiar with targets. There's a whole nomenclature around targets directly correlated to what we deliver and produce on a day-to-day basis. And in corporate America, if you don't hit targets, you don't have a job."
raceAhead is edited by Aric Jenkins.
Today's mood board
Todays' mood board comes via a tweet from the Center for Black Digital Research
This pamphlet from the early 1900s informs Black men how to vote in Southern states. Often they had to pay a poll tax of $1-2 (equal to $30-60 today), and being charged with ANY crime often caused Black voters to lose their right to vote "forever." #MobilizeNow for #votingrights!


fortune--2020-09-30--Tesla’s biggest profit center is dangerously close to running out of power

Tesla’s fastest-growing business isn’t putting owners in its Model S and Model 3. It’s selling environmental credits that enable its SUV- and truckmaking rivals to avoid big emissions fines.
That sumptuous stream of earnings—accounting for all of Tesla’s operating profits in the first half of 2020, by Fortune’s estimate—has probably peaked, and will begin a long slide before pretty much vanishing in a few years.
The big looming shrink in pollution permits raises questions about the sustainability of the EV-maker’s bottom line. And it comes as Tesla bulls puzzle over why the firm got the big fat snub last month by the S&P 500. In any case, with the permit revenue line shrinking, the pace of Tesla car sales must offset the difference. The visionary who’s pledging to launch the Plaid, which bolts from zero to 60 in two seconds, needs to deliver a parallel feat of acceleration in making and selling Teslas.
It’s hardly surprising that Elon Musk didn’t mention the boost from regulatory credits at his annual Battery Day on Sept. 23. As usual, Musk made elaborate promises that, besides the Plaid announcement, encompassed offering $25,000 Teslas in three years and getting to that bargain price point by manufacturing in-house a new generation of “tabless” battery cells that per kilowatt-hour cost half of today’s version. But Musk did address the issue of Tesla’s slender earnings, acknowledging, “It’s not like Tesla’s profitability is crazy high. Our average profitability for the last four quarters is maybe 1%. It’s not like we’re minting money.”
Tesla’s profits from selling environmental credits have probably peaked, and will begin a long slide before pretty much vanishing in a few years. Photo-Illustration by Fortune; Original photo: Tesla
By implication, Musk is including the over $1 billion in revenues from regulatory credits over that period, most of it pure profit, in asserting that Tesla is making money, though not a lot. But excluding that source, Tesla is actually taking losses on its core business of selling cars, batteries, and services that are probably a couple of points higher than the 1% Musk cites for profits. To assess the challenges Tesla faces in generating the huge earnings required to fund its epic plans for growth, it’s essential to understand how regulatory credits grew from a trickle into a substantial and growing contributor, then soared to multiples of their old heights in 2020, and why they’re destined to decline going forward.
From California to the EU
Tesla amasses tradable credits from four main sources. The first category is zero-emission vehicle (ZEV) programs run by the states, notably California. It also benefits from two U.S. federal standards, the greenhouse gas (GHG) emissions regulations imposed by the Environmental Protection Agency, and corporate average fuel economy (CAFE) rules established by the National Highway Traffic Safety Administration. The fourth is the European Union’s CO2 emissions targets.
All four regimes impose penalties on carmakers that lag in the proportion of their fleet that’s electric (ZEV), or in carbon emissions (EU and GHG), or miles-per-gallon (CAFE) benchmarks. In all cases, they bestow credits on manufacturers that exceed the standards. The players that earn those surpluses can trade their credits for cash to slow-to-go-green, over-the-limit manufacturers that need them to offset their deficits and achieve compliance. As a maker of only all-electric vehicles, Tesla accumulates loads of credits and sells more of them than any other carmaker. It’s good business to be so green. Customers from Honda to GM to Fiat Chrysler (FCA), among many others, have purchased Tesla credits. That’s enabled its permit customers to sidestep heavy fines while delaying introduction of low-margin EVs, and packing their fleets with lucrative, gas-guzzling SUVs, trucks, and vans.
The credits Tesla garners from the four regimes have changed dramatically in recent years and are set to shift again. Until recently, ZEV provided by far the biggest share of regulatory revenue. Then this year, a ramp-up in EU standards likely made Europe the top market, sending Tesla’s total take to fresh records. But as we’ll see, Europe’s contribution will fade after Tesla’s main customer, FCA, merges with Peugeot’s Groupe PSA, a maker of much cleaner cars. At the same time, the Trump administration reduced requirements for GHG and CAFE, making it easier for automakers to hit the mark and hence limiting the credits they’ll need from Tesla. (Unless, of course, a Biden administration restores or strengthens the much tougher Obama administration limits.) Meanwhile, the states are tightening, while the Feds ease, by stiffening the ZEV standards.
The future trajectory of Tesla’s regulatory revenue, now soaring, depends on two factors: first, the changing rules in the four jurisdictions and second, how fast the world’s automakers move to EVs, since the more all-electrics, hybrids, and plug-ins they produce, the fewer credits they’ll need to buy from Tesla.
In the U.S., the more lax CAFE and GHG rules probably mean that revenue from those sources will fall as U.S. regulators effectively will have removed the “stick” impelling U.S. carmakers to make more EVs in the coming years. By contrast, the tighter ZEV standards should lift Tesla’s credit sales in states like California. In Europe, the new CO2 regs are a big boon to Tesla right now. But they’re so stringent that European producers are rushing to make big portions of their fleets electric rather than pay billions in fines. That trend suggests that Tesla’s windfall will be short-lived.
Here’s the big picture: Tesla’s revenue from regulatory credits should fall in 2021—mainly owing to a reduction in Europe. It will keep declining from there, for a basic reason. The U.S. is moving much more slowly to EVs than Europe. But U.S. manufacturers have announced plans for electric and hybrid versions of many of their bestsellers over the next couple of years. So by 2023 at the latest, or around the time that $25,000 Tesla is scheduled to hit the streets, Tesla’s EV revenue should be heading downward, and the electric revolution in the years that follow will kill Tesla’s bounty from credits in the U.S.
Put simply, the profits that now put Tesla in the black in recent quarters will disappear just as the very industrywide transformation Musk pioneered gains speed. “Making these credit sales a big business has been a good strategy for Tesla, as a springboard to build its electric-car franchise,” says Matthias Schmidt, an independent auto analyst in Berlin. “But the biggest source will go away as the European market goes electric, and that’s happening fast. Tesla isn’t talking about it, but that will put tremendous pressure on them to sell a lot more cars, a lot faster than is happening now.”
Given that credits have proved so important to Tesla’s fortunes, let’s examine how those revenues have progressed over time, how the shifting rules governing the four major regimes are changing the outlook, and what its profits picture looks like without the big subsidy from its competitors that’s headed for extinction.
After contributing heavily for years, credit sales exploded in 2020
Tesla’s credit sales started off small, averaging $3.4 million per year through 2011, and rising to $1.049 billion through the last four quarters ended June 30, 2020.
Over the past three years, regulatory credits have been Tesla’s fastest-growing franchise, beating autos, energy generation and storage, and services. As we’ll see in the final section, credits are also the biggest factor in taking Tesla over that period from negative to moderately positive operating income.
Until at least 2019, it appears that almost all of Tesla’s sales of regulatory credits came from the U.S., flowing from the states’ ZEV programs, and the NHTSA’s CAFE and EPA’s GHG regimes. The biggest contributor was ZEV: From mid-2012 to mid-2019, ZEV credits accounted for $991 million, or 60% of the $1.66 billion in credits revenue, while GHG and CAFE furnished the balance of $668 million.
The ZEV regulations started in California in 1990 and over the years have expanded to 11 other states that adopt its requirements, including New York, New Jersey, Arizona, and Colorado. The ZEV penalties and credits are based on the share of electric vehicles in a manufacturer’s fleet. For credits, the top weights are reserved for all-electric cars, with lesser awards for hybrids and plug-ins. Manufacturers that generate surpluses can either trade their credits to rivals that don’t comply or bank them. For example, Toyota in the past has held on to credits until they expired, possibly to avoid aiding competitors.
The credits are traded privately, and the market is highly illiquid. They’re awarded once a year, and prices fluctuate widely depending on the volumes of credits made available by the “winners,” and how many the “deficit crowd” needs, which in turn depends on how their new model SUVs or trucks are faring in the ZEV states.
Remarkably, the Golden State’s eco-friendly drivers bought 77,000 Teslas last year, one in five of the vehicles it sold worldwide. So the EV maker has long collected fistfuls of credits and found lots of needy buyers, Honda among them. In its filings, Tesla has disclosed that it sells ZEV credits mainly in one-time transactions, often in big deals, and not on steady, long-term contracts. As a result, ZEV revenues arrive in clumps of $50 million or even $100 million in some quarters, and fall to zero in others. Even year to year, the numbers swing widely. For example, ZEV revenue totaled $279 million from mid-2016 to mid-2017, then dropped almost two-thirds to $103 million over the next four quarters. In Q2 of 2019, Tesla stopped breaking out ZEV versus GHG and CAFE sales, and now provides only a total for all revenue from environmental credits.
Led by California, states are stiffening the standards—and that’s welcome news for Tesla. For the 2020 model year, the weighted average for California is 9.5% of a manufacturer’s fleet must be electric; the higher the number over that threshold, the bigger the fine, or the more credits that must be purchased to comply. Credits work the same way: All electric vehicles exceeding 9.5% of a carmaker’s fleet in California earn the maximum. From this year’s bogey, the benchmark rises 2.5% a year, reaching 22% in 2030. “Tesla is getting credits on every car they sell in the ZEV states each year over the floor, since all of its cars are fully electric,” says Ben Leard, an environmental economist and an assistant professor at the University of Tennessee. So in California this year, Tesla is winning tradable permits on over 90% of the vehicles it delivers in the state.
Leard predicts that Tesla’s ZEV revenues, on average, will rise in the short term. “That’s because there aren’t a large number of electric versions of the bestselling models coming on the market for around three years,” he says. “So manufacturers will need those credits.” He adds that as the requirements rise, less of Tesla’s fleet each year will earn credits, but that higher permit prices will more than compensate, since automakers will need to buy a lot more as the floor for compliance keeps rising.
Still, he adds that starting around 2023, U.S. consumers will see a flood of electric cars. “That will be a game changer,” he notes. He cites that Ford plans to launch an all-electric version of its F-150 pickup, the bestselling vehicle in America, in 2022 or 2023. “When that happens, it will do a lot for Ford’s compliance, as will EV introductions by other automakers. They’ll no longer need to buy credits from Tesla.” He sees ZEV credit sales dwindling to much lower numbers by the start of 2024.
For Tesla, the credits that will probably stay high for longest are the ZEVs. And even those have only a few more years to run.
Tesla’s European adventure may not last long
The huge jump in Tesla’s credit sales—to over $1 billion in the past four quarters—appears to be coming mainly from Europe, and specifically, a new deal with FCA, maker of Jeep, Fiat, Maserati, and Alfa Romeo. For the 2020 model year, the EU lowered the ceiling on CO2 emissions on 95% of carmakers’ fleets from an average of 130 grams to 95 grams per kilometer. The rule goes to 100% starting in 2021. From there, the requirement will get another 15% tighter in 2025, and then at least 37.5% more so in 2030. Since the norm for most manufacturers is now around 120 grams, they’ve long been in compliance. The major exception was FCA. Despite the tougher rules, most of its competitors have developed technology that will bring them into compliance this year. FCA simply fell further behind.
Tesla is a big generator of tradable credits in Europe, since its CO2 emissions average per car is zero. The EU gave Tesla an extra boost by establishing “super-credits” that count electric cars as two vehicles in 2020, effectively doubling its awards. The EU allows players with surplus credits to “pool” with another producer whose average stands above 95 grams. The point of pooling is to lower the average across the entire, combined fleet to below the requirement, so that the partner in need becomes compliant and avoids paying stiff fines for exceeding the limits.
In January, Tesla joined a pool formed by industry laggard FCA, which has among the highest emissions per vehicle in the EU. Neither company has disclosed what FCA is paying Tesla for adding the EVs that, when combined with FCA’s Jeeps and Fiat SUVs, brings the average into the safe green zone. In its second-quarter report, FCA disclosed payments for regulatory credits of roughly $350 million for the first half of 2020, more than double the number from 2019—a large portion reportedly going to Tesla.
But Europe may not be Tesla’s cash cow for long. FCA plans to launch a number of hybrids, plug-ins, and EVs from 2020 to 2022, including new versions of the Jeep Renegade SUV, as well as the new, all-electric version of the Fiat 500. FCA’s leaders have stated publicly that they expect the automaker to be compliant with the new rules on its own by 2022, implying that it will no longer need Tesla. At the end of 2019, FCA agreed to merge with Peugeot, a deal expected to close next year. That union could bring FCA in line even earlier. “Peugeot set the standard by purchasing GM’s Opel, which produced among the highest emissions of any high-volume brand in Europe, and quickly bringing its cars into compliance,” says Schmidt. He expects that Peugeot will shift FCA’s higher-polluting models to its far more efficient drivetrains that greatly lower emissions, just as it did for Opel.
So it’s unlikely a FCA-Tesla pool will last beyond the close of 2021 and could end earlier. Of course, Tesla could join another pool. But Schmidt predicts that because the new rules are so tough—as opposed to the lax federal regs in the U.S.—European producers will go electric at such a rapid pace that they’ll virtually all be in compliance by the end of 2022. “Tesla will lose its sales from the FCA pool, and almost all credit sales should disappear over the next two years,” says Schmidt.
But he adds an important proviso. If Europe’s momentum to produce clean cars fades, the big jump in standards in 2025 could restore the market for Tesla’s credits.
Excluding regulatory credits, Tesla is losing money
In the second quarter of 2020, Tesla posted $1.137 billion in “gross profits” in its auto business, representing revenues of $5.179 billion less costs of materials and labor. Of that almost $5.2 billion in sales, $428 million flowed from regulatory credits. Those reg revenues, however, are mostly profit, so their margins are much higher than what Tesla makes on selling cars (if anything). It’s impossible to say precisely how much goes straight into earnings, because Tesla doesn’t disclose overhead expenses by business, and selling credits obviously involves personnel costs. But even assuming that the activity absorbs a proportion of selling, general, and administrative expenses equal to its share of total revenues, credits would still contribute over $400 million in pretax profits. Take out that number, and Tesla’s total net income from autos, batteries, and services drops from a puny $104 million to minus $300 million, or almost 5% of all-in sales.
Tesla’s been shrewd in exploiting a system in which rivals help fund its rise. Those subsidies will soon end as its benefactors start making more and more of their own EVs. Musk claims that Tesla will grow so fast and so profitably that the loss of credit sales will barely be noticed. But the credits brought hard cash, and, so far, the vision of fabulous performance is just a promise.
Additional reporting by Bernhard Warner


fortune--2020-09-30--Accenture CEO Julie Sweet tells companies to get out of the COVID ‘crisis mode’

Big companies need to get out of COVID “crisis mode” and acknowledge that business conditions have changed for good, Accenture CEO Julie Sweet said.
Be “brutal with your reality,” Sweet advised fellow executives on Wednesday during Fortune’s online Most Powerful Women Summit. Sweet, who took the top job at the consulting and outsourcing giant just over a year ago, has focused on helping companies rely more on software and automation—or what’s known in the business world as a digital transformation. The pandemic has accelerated the trend, as many white-collar employees work from home and use messaging apps like Slack and Teams to communicate instead of meeting in person.
But Sweet said companies can’t continue to rely on the pandemic to justify the change in how they work. Instead, companies need to focus on shifting back to a more typical business climate. “A lot of what people have done is still relying on being in the crisis mode,” she said. “But if you’re going to move with speed it can’t be a permanent crisis mode.”
“There’s a lot of discussion that we’re in a new reality,” Sweet added. “We don’t know when the vaccine will come and be available or whether it will be effective. There’s a lot of uncertainty about what kind of work is going to stay remote…The pressures will continue, but it’s almost more exhausting to constantly wait for when it’s ending.”
Inside Accenture, Sweet says the company is “turning the page” on the crisis to avoid that exhaustion and get back to business. “We are instead facing the new reality and expecting ourselves to return to pre-COVID growth [rates] over a certain time frame.”
Accenture’s stock has dropped about 4% over the past week, after the company reported quarterly results just short of analyst forecasts. Revenue fell 2% to $10.8 billion, including an 8% drop in lucrative consulting services. Still, the company’s stock is up 7% for the year.


fortune--2020-09-30--Nextdoor’s CEO wants to do for community what Jane Fonda did for fitness

Nextdoor, a social media platform designed to connect neighbors, has seen more than its share of troubling user behavior since its founding in 2008. Posts on the platform, ranging from the merely strange to toxic bullying, have been a regular topic of scrutiny for years. And its moderation, which relies on local volunteers, caused new headaches this summer when some moderators deleted Black Lives Matter content.
But Sarah Friar, who became Nextdoor CEO in 2018 after serving as CFO of Square, thinks her platform has learned valuable lessons as it works to balance open dialogue with civility. At Fortune’s Most Powerful Women summit Wednesday, Friar said those insights could help not just other tech companies, but also any company looking to upgrade its internal culture.
Some of Nextdoor’s interventions seem remarkably simple. For instance, users are now asked to agree to a “neighborhood pledge” including commitments to kindness and non-discriminatory behavior. And a “Kindness Reminder” pops up to notify users if what they’re writing seems likely to face review. Nextdoor is also adding a new role for volunteer “community reviewers,” a role Friar says has attracted volunteers who “tend to more reflect the diversity of [their] neighborhood” compared to Nextdoor moderators.
Those measures, many shaped in collaboration with social scientists, are showing real effects. For instance, Friar says one-third of the time, users who receive a Kindness Reminder edit their posts to remove insulting language.
Such nudges are preferable to simply letting moderators decide after the fact which content gets deleted and which can stay.
“What we didn’t want to do was shut people down,” Friar told Fortune’s Ellen McGirt, “because … we believe there is a really big place for people not being stuck in thought bubbles with their friends or colleagues, people who largely agree with them … People can disagree without being disagreeable.”
Fostering civil disagreement, in turn, is crucial to Nextdoor’s larger mission of strengthening communities and fighting long-rising social isolation, which the the coronavirus pandemic has sharply worsened.
“A lot of people are talking about being lonely,” said Friar of recent conversations with users. “I was hearing it from people in Australia, people in France … and it actually didn’t matter what age and what demographic you came from.”
Isolation increases the risk for a plethora of physical and mental health problems, ranging from depression and obesity to drug addiction. Friar predicts that combating isolation will become a major priority in the 2020s, which she compared to the way Jane Fonda raised awareness of the benefits of exercise in the 1970s.
The new emphasis on community, Friar predicted, will also apply to companies. For instance, she speculated that the kind of cautionary nudges Nextdoor gives its users could also help make emails within companies kinder. And she offered her own practice of having regular informal discussions with rank-and-file employees as an example of how good communication can cement bonds within a company.
“What we’ve learned with neighbors is, start small,” Friar said. “Often it’s these small moments that win people’s hearts, not just their minds.”


fortune--2020-09-30--This advice helped incoming Citigroup CEO Jane Fraser through a pivotal time in her career

Jane Fraser, currently president and global consumer banking chief at Citigroup, will make history as the first female CEO of a major Wall Street bank when she steps into that role at Citi in February. And the glass-ceiling-smashing executive credits a key piece of advice for helping shape a pivotal phase of her journey to the C-suite.
Before her Citi days, Fraser was named partner at consulting firm McKinsey just weeks after her son was born, and she decided to work part-time for the duration of her position. “I think the best piece of advice I got was: Why am I in such a hurry?” Fraser said at Fortune‘s Most Powerful Women virtual summit on Wednesday. “I remember one of my mentors saying to me, ‘Jane, you’re going to have several careers in your life, and your careers are going to be measured in decades, so why this sense of rush and trying to have everything at the same time? Just relax, chill, take a step back and enjoy the process more, and enjoy the different phases of your life.’”
One of corporate America’s most stubborn barriers shattered earlier this month when Fraser was named successor to Citi’s CEO job. The announcement has been impactful to women in business everywhere.
But for those watching her career journey (and perhaps hoping to clinch the title of the second female CEO of a major bank), Fraser advises that they needn’t fear being seen as vulnerable or wanting to take time for family. “I’m an example that it doesn’t need to sidetrack you from the longer-term goals. You can get balance in there,” she said. “I did feel the pressure to be Superwoman, and I’m sure there’s many people out there who feel the pressure to be Superwoman or Superman. You don’t have to be Superwoman, we can be normal.”
Of course taking the helm of a bank that had $103 billion in revenue last year may sound like a superhuman feat. But Fraser is adamant that being a superhero is “not life, that’s not the reality. I think part of the advice is: Give yourself a break, don’t set expectations at ridiculous levels, and take a bit of time and enjoy the different phases and make the most of them.”
While the CEO-designate has plenty on her plate as she prepares to head up Citigroup come February, she argues, “That phase for me of being part-time working, but being able to be with the kids when they were very little, was very precious, I’m so glad I did it.” Adds Fraser: “I honestly don’t think I would be here today if I hadn’t.”


fortune--2020-09-30--‘Very, very far apart’: Pelosi and Mnuchin fail to reach a deal on bill including stimulus checks an

‘Very, very far apart’: Pelosi and Mnuchin fail to reach a deal on bill including stimulus checks and enhanced unemployment

Stimulus negotiations between Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi fell apart on Wednesday.
“We’re very, very far apart,” Senate Majority Leader Mitch McConnell said after the meeting.
The White House went into the meeting with plans to up its stimulus offer from $1.3 trillion to $1.5 trillion—and include provisions that would allow the package to rise to $2 trillion if the pandemic persists beyond a certain point. Republicans acknowledged prior to the meeting that this was likely the last chance to get something done before the election.
It’s unclear if Pelosi lowered Democrats’ offer of $2.2 trillion.
And without a compromise stimulus deal, Democratic leaders said they’ll have a vote on a revised $2.2 trillion Heroes Act stimulus bill as soon as Wednesday evening. Back in May the first version of the Heroes Act, priced at $3 trillion, passed in the House. But it never got a vote in the Republican-controlled Senate.
The updated version of the Heroes Act contains $1,200 stimulus checks, $436 billion for aid to state and local governments, small-business aid, money for schools, as well as more aid for airlines. And it goes well beyond that, as Fortune has written, including everything from funding for the Post Office to Amtrak to money to help close the “homework gap” for kids without Internet access. A full list can be found here.
The House bill makes several tweaks to the direct payments or stimulus checks. Each individual would get $1,200, but dependents would qualify for $500 each (under the House’s original plan, dependents would have also gotten $1,200). However, there are a few important differences this time around. First, the bill specifies that dependents include full-time students under the age of 24 and adult dependents. Second, in order to receive a stimulus check one would only need a Taxpayer Identification Number, not a Social Security Number. And finally unlike the CARES Act payments, these would be exempt from levy or garnishment owing to past due child support. The payments would be determined based on 2018 or 2019 tax returns, the bill states.
The plan would also extend $600 supplemental unemployment benefits through January. Those originally expired during the summer and were replaced by $300 weekly benefits that Trump specified through an executive order. Those also were set to expire this month.
This $2.2 trillion Heroes Act is unlikely to get signed into law. However, it does give Democratic representatives a talking point as they go home during the October recess to campaign. On the flip side, vulnerable Senate Republicans will go home without having passed another stimulus bill since the spring.
The inability to get another compromise stimulus package signed into law spells bad news for the more than 25 million Americans still receiving unemployment benefits. The $600 enhanced weekly unemployment benefit, which expired in July, was replaced by a $300 enhanced weekly payment that President Donald Trump issued through a memorandum in August. But funding for the $300 payment is set to run out this week, and its extension or replacement was tied to Congress passing another stimulus bill.


fortune--2020-09-30--‘America faces a dangerous several weeks’: The world reacts to the first presidential debate

Head-scratching perplexity about U.S. democracy in Australia and Denmark. Disdain for “chaos” and “insults” between America’s presidential contenders in a Chinese Communist Party tabloid. A European market watcher’s warning of a “credibility deficit” in U.S. politics amid fears that a long tradition of peaceful, amicable transfer of power could be in jeopardy.
Many across the world looked on largely aghast as the first debate between President Donald Trump and Democratic challenger Joe Biden devolved into a verbal slugfest short on substance but heavy with implications for America’s international image.
Emotions and adjectives ran the gamut but few observers appeared to come away thinking that the last remaining superpower could rise above its bitter partisan rancor as the election looms barely a month away.
“If last night’s presidential debate was supposed to inform and educate, all it did was merely confirm the credibility deficit in U.S. politics, as President Trump, and Democrat nominee Joe Biden, engaged in what can only be described as a fact-free, name-calling contest,” wrote Michael Hewson, chief market analyst at CMC Markets UK.
While many in Europe fondly recalled the more even-keeled America of yesteryear, others in Asia were monitoring the markets — which were little changed mostly. Share prices slipped further in Japan and the dollar weakened against the Japanese yen and the euro. European bourses showed few initial tremors.
But one major worry to emerge from the debate was whether the election results might be challenged or delayed, in part because Trump raised concerns about ballots and possible vote-rigging that his critics say are a ploy to tamp down turnout or scare people away from the polls.
“A highly polarized and possibly legally contested U.S. election is just around the corner,” said Stephen Innes of AxiCorp, a foreign exchange trading services provider. “With mail-in votes likely to be too high (and potentially questioned), there is a chance that we still will not know the result by Inauguration Day, with constitutional chaos ensuing.”
Europe and Africa woke up to reports about the cacophonous showdown overnight.
“The comments I’ve seen from various European press (outlets) is basically: ‘I’m happy I’m not an American voter this year.’ It’s just a mess,” said Jussi Hanhimaki, a Finnish-Swiss professor of International History at the Graduate Institute in Geneva.
“That’s all extremely disturbing for many Europeans, who generally would think the United States would be a symbol of democracy — that’s been the oldest democracy in the world — that has this long, long tradition of, yes, very acrimonious debate, but there’s always been a winner and a peaceful transfer of power,” he said.
Kenyan commentator Patrick Gathara quipped on Twitter: “This debate would be sheer comedy if it wasn’t such a pitiful and tragic advertisement for U.S. dysfunction.”
Danish Prime Minister Mette Frederiksen wrote on Facebook: “An election debate in the States last night, where interruptions and quarrels were allowed to fill up way too much. Fortunately, this is not the case in Denmark. And I never hope it will be like that. The harsh words polarize and split.”
Amanda Wishworth, a lawmaker in Australia’s center-left Labor Party, said: “A lot of people would be scratching their heads, especially here from Australia, where, believe it or not, our politics is a little bit more gentle than the U.S. of A.”
Other government leaders tuned in — but kept their distance.
Steffen Seibert, German Chancellor Angela Merkel’s spokesman, said she was “informed about what took place last night,” but he declined to comment.
“We don’t want to comment on this, don’t want to provide an assessment, because it will be immediately perceived as an attempt to interfere,” said Dmitry Peskov, spokesman for Russian President Vladimir Putin. “The Russian Federation has never interfered in the internal affairs of the United States and never will.”
Walter Veltroni, a columnist for Italian newspaper Corriere della Sera and a former center-left mayor of Rome, said he had seen all the U.S. TV debates since Kennedy vs. Nixon in 1960, but “I have never witnessed a spectacle similar to the one last night.”
He said the debate showed how there are two Americas that appear irreconcilable.
“The impression is that of a country in stalemate, paralyzed by politics and tones that are foreign to its tradition,” Veltroni said.
Hu Xijin, editor of China’s nationalistic Communist Party tabloid Global Times, wrote in the paper’s microblog that the “chaos, interruptions, personal attacks and insults” on display were a reflection of America’s “overarching division, anxiety and the accelerating erosion of the system’s original advantages.”
“I used to admire this kind of televised debate in American politics, but I have much more mixed feelings when (I) watch it again now,” wrote Hu, who personally and through his paper routinely attacks American policies.
The editor-at-large of The Australian newspaper, Paul Kelly, described the debate as a “spiteful, chaotic, abusive, often out-of-control brawling encounter with both candidates revealing their contempt for each other.”
“America faces a dangerous several weeks,” he said.
Leslie Vinjamuri, director of the U.S. and the Americas program at the London think tank Chatham House, said many European observers already had “very low” expectations of Trump, but even so the debate was jarring.
“There’s still just a level of disbelief, just shock, frankly,” that the president and former vice president “were talking over each other, talking over the moderator, in President Trump’s case, telling each other off, going off-topic, off-script,” Vinjamuri said. “So I think it was something extraordinarily upsetting because people want to be able to look to America to lead and to guide and to role model.”
Foreign policy issues were largely absent from the debate, although Trump slung accusations that China had paid Biden’s son Hunter for consulting work and Biden attacked Trump’s trade deals with China for failing to deliver benefits.
Trump also repeatedly blamed China for the coronavirus pandemic that has killed more than 1 million people globally and ravaged economies around the world.
In the Mideast, the largely domestic debate drew raised eyebrows when Biden at one point said “inshallah” as Trump hedged on saying when he would release his tax returns. “Inshallah” in Arabic means “God willing.” It also can be used in a way to suggest something won’t ever happen.
Al-Arabiya, a Saudi-owned satellite channel based in Dubai, and The National, a state-linked newspaper in Abu Dhabi, both published articles noting Biden’s use of the word.
A Emirati political scientist, Abdulkhaleq Abdulla, wrote on Twitter that he saw the debate as a “tumultuous verbal battle.”
“How did America reach this level of political decline?” he wrote.


fortune--2020-09-30--Goldman Sachs CEO’s diversity advice: ‘Set very specific, aspirational goals’

When David Solomon started as chief executive of Goldman Sachs in October 2018, he spent his first couple days on the job at Fortune’s Most Powerful Women Summit.
During this year’s virtual event, Solomon returned to discuss the investment bank’s consistent diversity goal-setting. He also offered advice to companies seeking to make strides in gender equality for themselves.
“We’ve really learned that by setting very specific, aspirational goals and then holding people accountable with great transparency, you can advance forward,” Solomon told the event’s audience, which prominently features female executives.
Earlier this year Goldman announced that it would take companies public only if they had at least one “diverse” board member, with a special emphasis on women. Next year the Wall Street bank is raising that quota to two.
“The big benefit” of the requirement, Solomon said, is that it puts “more focus” on the issue of diversity in corporate boardrooms. (Two-thirds of board seats among the Fortune 500 are held by white men, although more women are beginning to fill open board roles.)
Goldman has raised internal standards for itself as well. Last year the company set a goal of aiming for half its new analysts and entry-level associates in the U.S. to be women, 11% to be Black, and 14% to be Latino.
This summer’s virtual cohort of 2,800 analysts “was the most diverse class we’ve ever had,” Solomon said, noting that the bank “reached and achieved goals we laid out.”
By 2025, Goldman aims for 40% of its executives bearing the title vice president to be women. The company also aims for 7% of the execs to be Black and 9% to be Latino. “We’ve got work to do,” Solomon said.
During the session, Fortune and Goldman jointly honored two South African entrepreneurs with leadership awards. One went to Emma Dicks, founder of CodeSpace Academy, a coding school, while the other went to Rayana Edwards, founder of Sari for Change, an organization that recycles used clothing and teaches business skills and needlecraft to women in poverty.


fortune--2020-09-30--Palantir shares are up big on first day of trading

Palantir began trading Wednesday as a public company, ending a 17-year tradition of secrecy surrounding the software business co-founded by Peter Thiel.
The data analytics company opened at $10 on the New York Stock Exchange, above the reference price of $7.25 that was set for the stock. Palantir listed its shares directly on the exchange, rather than raising capital through an initial public offering.
Palantir popped about 10% to a market value of $18 billion after the first trades. It failed to capture the $20 billion valuation private investors had given Palantir since at least 2015.
Companies are racing to go public in the U.S. where investors are welcoming new stocks ahead of a presidential election likely to drive volatility. Companies raised $61 billion from initial public offerings this quarter, the busiest on record, according to data compiled by Bloomberg. Software businesses were at the forefront of the listing boom, with Snowflake Inc. posting the biggest first-day pop in over a decade this month when it raised $3.9 billion.
Wednesday was a particularly active day for direct listings, an unconventional mechanism for taking a company public. Asana Inc., another software company backed by Thiel’s venture capital firm Founders Fund, began trading at $27.
Palantir traveled a long and sometimes rough road to its public debut. Thiel helped start the company in 2003 with early funding from an arm of the U.S. Central Intelligence Agency, but Palantir’s darling status among U.S. government agencies didn’t translate into success with businesses for well over a decade.
Named for the all-seeing stones in the fictional Lord of the Rings trilogy, Palantir combines myriad, ever-changing data streams into one centralized “source of truth.” Customers, including the U.S. Defense Department and pharmaceutical giant Merck KGaA, then mine that information and analyze it to make decisions. The results are presented as a series of spiderweb-like visuals, making information accessible to non-technical users.
For years, Palantir operated much like a consultancy, dispatching its engineers to customer sites to implement the software and build one-off applications. The model was expensive, and Palantir incurred heavy losses for most of its history. The business remains unprofitable.
When Palantir built a new software platform, Foundry, in 2016, the company cut costs by automating much of the grunt work and said it reduced time to set up customers from months to days. Palantir expects to deliver an adjusted profit this year on more than $1 billion in revenue.
Competition for global customers will be fierce. Palantir only began building a sales team in 2019. The company currently has about 125 customers, with the U.S. Army being the largest representing 15% of revenue.
Palantir’s chairman, Thiel, and its work for government agencies including U.S. immigration have sparked concerns among corporate watchdogs and human rights groups including Amnesty International. The company has also drawn rebukes from governance experts who point out that Thiel will have power with little accountability because of multi-class stock that grants him outsize power in perpetuity.
Palantir followed other tech companies in its decision to bypass a traditional IPO. Slack Technologies Inc. and Spotify Technology SA went public through direct listings in recent years, allowing employees and other shareholders to sell stock without issuing new shares to raise capital. Each company’s stock soared with Slack and Spotify ending the first day of trading at valuations of $19.5 billion and $27.8 billion, respectively.


fortune--2020-09-30--Trump’s 4 biggest lies about health care from last night’s debate

The first presidential debate of 2020 was a lot to parse through as President Donald Trump and former Vice President Joe Biden interrupted each other and barely touched substantive policy positions, an affair that multiple commentators called an embarrassment to the very concept of presidential debates.
The freewheeling and chaotic standoff was difficult to follow at times, but it was also filled with lies and distortions about health care policy, science, and the state of the coronavirus pandemic—fueled directly by President Trump.
Yes, children and young people can spread COVID-19
Trump has long downplayed the COVID crisis with dubious claims and outright false statements about how dangerous it is or isn’t. As of Wednesday, more than 205,000 Americans have died from COVID-19, representing nearly a fifth of all COVID deaths in the world.
The President has claimed that the coronavirus is only a true danger to the most vulnerable people. He doubled down on that claim Tuesday. “Now we’ve found that elderly people with heart problems and diabetes and different problems are very, very vulnerable. We learned a lot. Young children aren’t, even younger people aren’t,” he said during the debate.
While it’s true that people with respiratory conditions, older people, those with chronic heart conditions, and diabetes are at higher risk—and may have a more severe illness if they contract COVID-19—that doesn’t mean younger people or even children can’t become sick.
Over the course of the pandemic, according to the most recent Centers for Disease Control (CDC) numbers, nearly 1,800 Americans ages 15 to 34 have died of COVID-19; another 3,800 between ages 35 and 44; and more than 10,000 between 45 and 54.
The death count scales up considerably among older populations, but that’s true of just about any disease given the realities of aging. And numbers aside, Trump’s claim misses a central point about how a pathogen works: Just because you don’t become extremely sick or die doesn’t mean you can’t spread it to those who might.
It’s become apparent that you can carry the coronavirus and pass it on to other people while remaining asymptomatic, especially if you’re younger or a school-age child. But there are 3.3 million people over the age of 65 who live in a household with a school-age child, according to the Kaiser Family Foundation (KFF). That’s the vulnerable population that Trump referred to during the debate.
You can’t protect people with pre-existing conditions via executive order
The Trump administration hasn’t been shy about expressing its disdain for the Affordable Care Act (ACA), also known as Obamacare. In fact, it’s actively trying to scuttle the entire health law at the Supreme Court while promising to replace it.
The trouble is that what the administration will replace it with has never materialized. Even when the GOP-controlled Senate nearly repealed the ACA back in 2017, the replacement plan was essentially a blank check with a set of guiding principles and the details to be hashed out a later date. Obamacare’s requirement to carry health insurance or pay a fine, the so-called individual mandate, was eventually repealed and has driven the administration’s efforts to invalidate the law.
But that would have far-reaching consequences. The ACA’s Medicaid expansion has helped provide coverage to millions of low-income working Americans who otherwise wouldn’t have qualified. And, critically during a pandemic, Obamacare established that health insurers can’t discriminate against patients with a pre-existing condition.
That latter point became a big subject of debate on Tuesday night. As moderator Chris Wallace told Trump, the President had signed an executive order ostensibly meant to protect people with pre-existing conditions days before the debate. But, as Wallace and health policy experts have noted, that doesn’t really have any staying power. An executive order can’t control the whims of an entire private industry.
Trump pushed back on that notion. “Let me just tell you something. There’s nothing symbolic,” he said in response to Wallace. The facts say otherwise—and insurers would likely be able to discriminate against people who have contracted the coronavirus by price gouging or refusing coverage if the ACA were to be overturned in its entirety.
Trump also denied that there are more than 100 million people in the U.S. living with pre-existing conditions, even though multiple independent analyses have confirmed that statistic.
A COVID-19 vaccine will almost certainly not be available en masse before next summer
The President insisted that a COVID vaccine is just around the corner for widespread availability and contradicted the statements of both CDC director Dr. Robert Redfield (who is a virologist) and Moncef Slaoui, a former vaccines chief at the drug giant GlaxoSmithKline and the current scientific head of Operation Warp Speed, the Trump administration’s program to spur the development of coronavirus vaccines.
“I disagree with him. No, I disagree with both of them,” Trump told Wallace after the moderator pointed out that both experts have cautioned that a vaccine won’t be available to the public at a large scale until next summer.
Trump responded that companies such as Pfizer, Moderna, and Johnson & Johnson have told him otherwise. “Well, I’ve spoken to the companies, and we can have it a lot sooner. It’s a very political thing because people like this would rather make it political than save lives,” he said.
That’s not what industry executives and public health experts have said. The President may have been referring to statements from companies like Pfizer that they may know whether or not their vaccine candidates are effective by late autumn—but that’s nowhere near the same thing as Trump’s implication that a vaccine will just be out and accessible in the market by November.
If a vaccine proves effective, it may receive an emergency use authorization—but that’s not the same thing as a full Food and Drug Administration (FDA) approval. And then there’s the question of how such a vaccine will be prioritized. The most likely scenario is that it will be given to the most vulnerable populations at first as manufacturing and production of the COVID vaccine scales up. You’re not going to be able to waltz into a CVS and get your coronavirus shot this year in the same way you do a flu shot.
A virus doesn’t have a nationality
President Trump continued to lay the blame for the pandemic on China. He referred to it as “the China plague” during the debate, a tweak on his previous racist statements calling the virus the “kung flu” and the “China virus.”
The outbreak may have originated in China, but a pathogen has no ethnicity. India is now one of the pandemic’s hotspots, and, as mentioned above, the U.S. has done considerably worse than just about every other country in controlling COVID. Travel between continents has spread this highly contagious disease, and the first American cases likely originated from visitors who came from Europe.
The 2009 H1N1 flu pandemic, which killed hundreds of thousands of people worldwide—though nowhere near the number of COVID deaths—originated in the United States and then spread globally. It was not referred to as the “American virus.”


fortune--2020-09-30--Is Hong Kong still a bridge between East and West? HKEX chair Cha describes ‘a ‘difficult situation’

Hong Kong has long occupied an enviable perch as a bridge between markets in China and the West. But amid flaring tensions between Washington and Beijing, and controversy over a repressive new security law, many are asking whether the territory can keep its privileged position.
Laura Cha, chair of the Hong Kong stock exchange consortium HKEX, believes that it can. In an interview during Fortune‘s Most Powerful Women Summit, Cha acknowledged that current events have created a “difficult situation” but predicted that Hong Kong will will remain a pre-eminent destination for investors.
“People have questions about all the events that have taken place and like everyone else we are trying to weather it and go through it as well as we can,” Cha told Fortune‘s Claire Zillman.
Her comment came in response to a question from Zillman about whether trade tensions and Hong Kong’s new security law—which allows Beijing’s government to smother civil liberties—will cause investors to flee.
Cha added that Hong Kong remains an “excellent connector” between East and West, and said the territory’s stock markets are “stable and steady.” She also noted that Hong Kong has been the top destination for initial public offerings in seven of the last 11 years.
Cha’s fluid, diplomatic answers are unsurprising given her decades of experience as a senior executive with ties to China’s central government, and her role as a board member of major European companies including Unilever. Her optimistic assessment is belied, however, by recent reports of investors and multinational companies decamping for Singapore, and of wealthy individuals moving gold out of Hong Kong.
Cha also addressed the recent boom in secondary listings on Hong Kong. She acknowledged that this phenomenon has been driven in part by companies using those listings as an insurance policy against future TikTok-style clashes between the U.S. and China. But she also said the popularity of Hong Kong listings reflect HKEX’s reputation for clear and fair rules.
As for the possibility of a new U.S. administration led by Joe Biden next year, Cha maintained her diplomatic tone, saying “Issuers will choose the market that makes most sense for them.”