fortune--2020-12-02--Christmas trees are getting more expensive as Americans remain homebound

Colavita Christmas Tree Farm never before had someone show up in early November looking to buy a tree for the holidays—until 2020, that is.
“I said, ‘Thanks for the compliment, but that’s not going to last until Christmas,’” said Bob Colavita, 76, who has owned the business outside Philadelphia for 24 years. The customer ended up buying a 6-foot Frasier fir anyway. “She said, ‘I just want something happy in the house.’”
Christmas trees—along with wreaths, lights and other decor—are in high demand this year as many Americans embrace holiday festivity in the face of rising coronavirus cases and bleak predictions for the winter months.
Two consumer trends are buoying demand. U.S. households are sitting on about $1.2 trillion more in savings than usual, and when they’re spending, they’re specifically targeting items to spruce up their homes. The majority of U.S. consumers say they’re more interested in holiday decorations and seasonal items than usual this year because of the pandemic, according to a survey by the National Retail Federation.
For the tree industry, from the independent growers to the big home-improvement stores that sell them, there’s a lot on the line. Americans bought 26.2 million live trees last year to the tune of about $2 billion, according to the National Christmas Tree Association, a Littleton, Colorado-based trade group whose affiliates produce about three-quarters of the U.S. supply. While the figure was down slightly from 2018 amid growing demand for artificial trees, last year was the “first year in a long time that growers made a reasonable profit,” according to a report from the association.
Americans are also more likely to splurge on their purchase this year, the group said. The median price for real trees sold in 2020 is expected to be about $81, up 7% from last year and 23% from 2018.
Big chains are taking notice, with Lowe’s Cos offering free tree delivery this year for the first time to snag market share. The home-improvement retailer and rival Home Depot are trying to sell more holiday decorations and gifts this season to further capitalize on an already strong year, after the so-called essential retailers remained open throughout the pandemic.
It’s still several weeks until the holiday, but at Colavita Christmas Tree Farm, early indications are good. Last Friday through Sunday, traditionally the sales kickoff, was the farm’s best weekend ever, the owner said. He spotted an unusually large number of young couples, suggesting a new cohort is buying trees after years on the sidelines.
David Engle, who runs Christmas-tree farm Arbutus Glen in Gambier, Ohio, also noticed a majority of his customers were millennials with small children. A handful of the customers he spoke to were converts from artificial trees who wanted to switch things up this year as a way to do something special.
Beyond the decorative aspect, Engle said he believes the experience of buying a real tree—stomping through the mud, smelling the pine needles—offers something many people are craving after months spent mostly in front a computer. At his farm, there’s also an antique tractor customers can ride.
“The young millennial generation wants to go natural,” Engle said. “I think they’re looking for that outdoor experience.”
April Ward, a 38-year-old teacher in Windsor, N.C., just bought her first Christmas tree in four years. The 3-footer, which she picked up for $30, is a way to make the home she shares with her college-aged daughter more festive at the end of a tough year.
“We’ve been spending so much time in the house,” said Ward, who had COVID-19 earlier this year. “We’ve been spending so much time in this state of fear that I wanted to really try to bring the magic of Christmas into my home.”


fortune--2020-12-02--How governments can create a green, job-rich global recovery

Now that Pfizer is the vaccine front-runner , should you buy the stock ?

Climate change and the COVID-19 crisis have a great deal in common. Both are human tragedies and economic catastrophes: The pandemic has taken more than a million lives, thrown hundreds of millions out of work, and is projected to wipe out $28 trillion in output over the next five years; climate change’s effects, meanwhile, are upending lives and livelihoods. Both crises are most devastating for vulnerable people and communities around the world. And both punish nations for under-preparation and shortsightedness.
The two crises share something else in common: A strong, coordinated, green public investment push can help address both.
The world is in the middle of massive efforts to restart economies and get people back to work. World leaders gathered at the Paris Peace Forum some weeks ago to discuss next steps; that conversation continued some days ago at the G20 summit. We have an opportunity to make smart, coordinated decisions—ones that can catalyze green investments to jump-start the recovery and decrease the likelihood and impact of climate catastrophe.
In response to the pandemic’s economic devastation, the world’s largest economies have already committed over $12 trillion in fiscal spending for coronavirus recovery, and many have the capacity to do far more. As they make new investments, the importance of synchronization is clear. Strong evidence, including from the financial crisis of a decade ago, suggests that if G20 countries acted alone rather than acting together, it would take about two-thirds more spending to achieve the same outcomes.
Rather than invest in fossil-fueled technology like coal-fired plants that will accelerate climate change, we can choose a greener, better way. Job-rich projects include planting forests and mangroves, engaging in soil conservation, and retrofitting buildings to make them more energy efficient. Building climate-resilient infrastructure and expanding green public transportation, renewable energy, and smart electricity grids are also essential. And investing in off-grid renewables creates growth by connecting some of the 3.5 billion people who currently lack access to sufficient electricity.
The world must take advantage of the latest technological innovations, and we are already seeing action at scale. The European Union has pledged to spend more than $640 billion (€550 billion) on green projects over the next several years. Emerging market countries like Indonesia and Egypt are issuing green bonds. But every large economy, every international institution, every philanthropy, and every private investor can do more. Indeed, as the Organization for Economic Cooperation and Development has observed, the balance between green and non-green spending so far tilts too much toward the latter, risking further environmental degradation.
During the 2008 financial crisis, G20 leaders came together behind a coordinated recovery program. A similar move in the weeks and months ahead could mobilize new sources of capital for countries that need it, including low-income countries where much of the climate adaptation work must be done. The G20 would thus build on the actions it already took to help low-income countries during the pandemic: to suspend their debt service payments and to set forth a common framework for resolving unsustainable debt on a case-by-case basis.
Governments could also design policies that could unlock capital and ingenuity from the private sector. Right now, the returns on green investments are growing as costs drop. Still, an accelerated private sector shift to cleaner energy and greater energy efficiency requires a steadily increasing carbon price or equivalent measures. Some of the revenue can be used to ensure a “just transition” that protects people in poverty from higher energy prices and assists displaced workers. A debt-financed green investment plan combined with carbon pricing could actually boost economic growth for many years, creating around 12 million net new jobs through 2027.
If we take sustained action, starting now, history will remember one more commonality between the COVID-19 and climate crises: that we came out of them stronger and more resilient.
Kristalina Georgieva is the managing director of the International Monetary Fund. Dr. Rajiv J. Shah is the president of The Rockefeller Foundation.


fortune--2020-12-02--During COVID, immigrants are getting the job done

Every week, this newsletter will share analysis on the state of work by S. Mitra Kalita, a veteran media executive, author, and journalist.
Kalita recently launched a series of community ventures, including Epicenter and The Escape Home, and is building a network to connect niche media and big media. Both her startup experiences and background in larger organizations guide and inform Worksheet. She was most recently senior vice president at CNN and previously worked at the LA Times, Washington Post, Wall Street Journal, Quartz and Mint (India). She also frequently consults and speaks on diversity, management and digital strategy, and fashions herself an expert on where to eat in Queens.
Here’s what to expect in this inaugural edition of the newsletter.
In the first installment, Kalita explores how an immigrant mindset has helped some employees not only survive 2020, but make the most of an incredibly difficult year. Here’s an excerpt.
There’s a certain worker undeniably in high demand during this pandemic: multi-skilled, flexible, resilient, tolerant of risk and the great unknown.
Basically, immigrants.
“Immigrants are more likely to be people who inherently embrace uncertainty,” said Brian Laung Aoaeh, who was raised between Nigeria and Ghana and launched a fund, Refashiond Ventures, to invest in supply-chain innovation.“This is actually a phrase I use to describe myself—and it’s come up in job interviews in the past: ‘I embrace uncertainty.’”
The act of migration itself underscores an appetite for risk. Outsiders bring with them fresh perspectives, new ideas, and a certain hustle and hunger to survive. In the middle of this current and historic upheaval of the world order, some employers are finding that’s not just welcome but necessary.
To be sure, an entrepreneur’s birthplace or country of origin is not actually what makes immigrant workers so valuable. “Are you special because you are an immigrant? No, it’s more about the ethos of being an immigrant,” said Nitin Pachisia, founding partner of Unshackled Ventures, which invests exclusively in startups where at least one founder is an immigrant or the child of immigrants. “For us immigrants, there are creative ways of looking at a problem. When you come from another ecosystem, you question the why behind it. Then you take a variable and change it. That’s how big innovation happens.”
Kalita goes on to talk about specific strategies immigrant-founded businesses are using to pivot during COVID, and the surprisingly high number of Fortune 500 founders that are immigrants. (Can you guess how many?)
This week's reads
Emotional labor. From the 'office mom' who knows all the logins and reminds everyone about their deadlines to the millions of moms who keep a running mental list of, well, everything, the gap in who performs the emotional heavy-lifting has only accelerated during COVID. Writer Kathleen Davis and Gemma Hartley (author of Fed Up: Emotional Labor, Women, and the Way Forward) discuss how "how deep-seeded and detrimental the problem of unequal work at home is to women’s careers, relationships, and businesses, as well as to the economy." (Fast Company)
Leadership coaching. If you've ever had an uncomfortable office conversation and wished you could have a do-over, well, maybe you can. A pretty amazing new VR tool from a startup called Mursion lets you role-play difficult or challenging conversations with lifelike 'employees.' And hey, if things get awkward, you can talk it out afterwards with your moderator/coach—and try again later. (Fortune)
Hard time. This is the remarkable story of how Ed Hennings turned 20 years behind bars into a new chapter as a motivational speaker. “It started while I was in prison,” he notes. “I was telling the guys in there, 'Man, we need to change. We gotta push. We gotta go. We gotta better ourselves. We can’t end up like this. The last memories of us from our loved ones can’t be us being hauled away in handcuffs and that’s the last time they see us. We have to come back.'” (Black Enterprise)
Direct shot. Can your boss make you get a COVID vaccine? Fortune's John Jeff Roberts explores the tricky legal territory that's more than likely to dominate many workplaces as the vaccine rollout begins. Roberts writes, "Today, delivering a COVID vaccine is complicated by medical values that prioritize patients' consent combined with the growth of squirrelly conspiracy theories that reject long-held principles of immunization." (Fortune)


fortune--2020-12-02--England’s pre-Christmas lockdown is over. Now everyone is fighting about what comes next

On Wednesday, England marked the end of a monthlong, pre-Christmas lockdown—the second this year. But the easing of restrictions hardly spells the end for increasing divisions over the government’s COVID-19 strategy in one of Europe’s hardest-hit countries.
Those divisions are between England’s north and the south, which face widely differing restrictions as lockdown ends; between England and the U.K.’s other nations, which have increasingly charted their own course in managing the pandemic; and between factions within the ruling Conservative Party, over whether the restrictions go too far.
The news isn’t all bad. On Wednesday, the British government announced the U.K. was the first nation to approve a COVID-19 vaccine—produced by Pfizer and BioNTech—and said that it would be available by next week. The government also released the list of how the vaccine will be rolled out, with care home residents and their caregivers being vaccinated first, according to the BBC.
“We can see that by the spring we are going to be through this,” Health Secretary Matt Hancock told Sky News on Wednesday.
The monthlong restrictions have successfully managed to sharply reduce the daily infections and deaths in England, although levels still remain far above those in the summer. But the new restrictions have highlighted deeply felt regional divides.
While London will go into Tier 2—allowing more than one household to meet, even at outdoor pubs and markets, in groups of up to six—many cities in the north, including Manchester, face much tighter restrictions that barely differ from a full lockdown.
Manchester has been under local lockdowns since the summer, when cases in the area spiked, and is expected to remain heavily restricted until the spring. The exception is Christmas, when the entire U.K. will have what is essentially a five-day holiday from most restrictions.
But those rules have led to frustration, not just from leaders in the north of England, but also from a slate of Conservative Party backbenchers, who have grown increasingly critical of Johnson’s leadership. They argue that the rules are devastating local businesses and are not sufficiently targeted.
On Tuesday, 54 Tory MPs voted against their own party’s restrictions—a large enough number that the bill could have been defeated if Labour, the main opposition party, hadn’t abstained from the vote.
Meanwhile, Scotland, Wales, and Northern Ireland have increasingly set their own pace on restrictions in the months since the U.K.-wide six-week lockdown in the spring. That means Johnson, despite being Prime Minister of the entire U.K., in effect often speaks only for England. Scotland, for example, has its own five-tiered system.
Brexit and bankruptcies
Since March, the British government has seemingly hopped from one political crisis to the next, from scandals over testing equipment and PPE mismanagement to high-profile U-turns that followed widespread outrage over botched exam results and meals for underprivileged children.
That also appears to have had an impact on public support. As of Nov. 30, YouGov reported that 52% of Britons disapproved of the government’s record. At the start of November, that disapproval rating hit a pandemic-high of 56%.
But the government is also facing a slate of crises that go beyond infection numbers—including the prospect of a cliff-edge divorce from the EU, amid warnings from Parliament’s own watchdog that the government is still not prepared for Brexit, more than four years after the referendum result. Any post-Brexit U.K.-EU trade deal will need to be agreed, ratified, and in place on Jan. 1 if chaos is to be minimized.
Meanwhile, the U.K.’s economic crisis has deepened into what is expected to be the worst recession in 300 years—most recently signaled by stalwarts of the British high street, including the legacy department store Debenhams and Arcadia Group, the parent company of Topshop, going into administration earlier this week.
As of Wednesday, a cumulative total of 1.6 million people in the U.K. have tested positive for COVID-19, while 69,752 people have died.


fortune--2020-12-02--Did Salesforce just jumpstart a productivity dealmaking bonanza?

This is the web version of Term Sheet, a daily newsletter on the biggest deals and dealmakers. Sign up to get it delivered free to your inbox.
Why couldn’t Slack go it alone?
The maker of collaboration software went public just over a year ago and should have boomed amid the pandemic. But on Tuesday, Slack agreed to combine with cloud-based software maker Salesforce in a deal valued at about $27.7 billion, ending its short run as a standalone public company.
Here’s one part of the answer: The company has struggled with competition especially from Microsoft, even during the pandemic. Earlier this year, Slack filed a complaint with the European Commission accusing Microsoft of illegally quashing younger competition by bundling Slack competitor Microsoft Teams into the “market-dominant” Microsoft Office suite that includes Outlook and Excel. (And as one Term Sheet reader cheekily noted in a recent email, giants like Alphabet have increasingly emphasized their work-from-home tools, with “some jokes circling about how the Google Meets option appears bigger every time you see it.”)
In theory, by joining Salesforce, Slack too can also reach a broader audience. As Slack CEO Stewart Butterfield wrote in letter to employees, “Their scale will propel us forward.”
But if rollups of collaboration tools are the path forward in the space—then who will be the next acquiree? Here’s my colleague, Robert Hackett, on the topic:
“Analysts expect Salesforce’s move to spur competitors—from Microsoft and Google to Oracle and SAP—to make big moves of their own in the so-called cloud collaboration industry. Earlier this month Adobebought work management firm Workfront for $1.5 billion.
There are plenty of other potential acquisition targets. Some include Asana, Box, and Dropbox.”
It’s a trend Index Ventures Partner Sarah Cannon alluded to me back in May. Workplace collaboration an incredibly competitive space, and while the rare companies will be able to go it alone—as Zoom has managed—others may do better as features rather than full-out companies. Here’s the relevant excerpt of our chat:
“I think there will be a consolidation of a few tools. I was like, I think it is going to be Zoom, and Slack, and Notion, and I think it may be Airtable. Talk about the Balkanization of productivity tools—you could spend days interviewing the founders of productivity companies, and they all sound the same. So at the end of this, there are going to be a few that we choose to use.
I think we’ll see more consolidation and we’ll see market leaders being revealed.”
THE NASDAQ CALLS FOR MORE BOARD DIVERSITY: The tech and biotech-heavy stock exchange proposed new rules Tuesday that could potentially delist companies that lack at least one director that is female and another that identifies either as an underrepresented minority or as a member of the LGBTQ community. It would be no small overhaul: About 75% of companies listed through the exchange fail to meet the criteria, per the New York Times. Granted, the rule still needs to be approved by the Securities and Exchange Commission, and, after said approval, companies have as much as five years to fulfill those rules. Companies that fear that they cannot meet those requirements can avoid delisting by explaining publically why they were unable to fulfill those goals.
The rule would also require all companies listed on exchange to publicly disclose what it calls “consistent, transparent” diversity statistics regarding their board of directors.
Lucinda Shen
Twitter: @shenlucinda
Email: lucinda.shen@fortune.com
VENTURE DEALS
- ShipMonk, a Fort Lauderdale, Fla.-based shipping solution for e-commerce businesses, raised $290 million. Summit Partners led the round.
- Olive, a U.S.-based provider of A.I. to healthcare providers, raised $225.5 million. Tiger Global led the round and was joined by investors including General Catalyst, Drive Capital, and Silicon Valley Bank as well as GV, Sequoia Capital Global Equities, Dragoneer Investment Group and Transformation Capital Partners. It values the firm at $1.5 billion.
- Voi, a Stockholm-based scooter company, raised $160 million in funding. The Raine Group led the round and was joined by investors including VNV Global, Balderton, Creandum, Project A, Inbox, and Stena Sessan.
- Function of Beauty, a maker of customizable hair, skin, and body care products, raised $150 million from L Catterton. CircleUp and GGV also reinvested.
- Bizzabo, a New York-based event software company, raised $138 million in Series E funding. Insight Partners led the round and was joined by investors including Viola Growth, Next47, and OurCrowd.
- Flock Freight, a Solana Beach, Calif.-based logistics provider with shared truckload shipping services, raised $113.5 million. Softbank Vision Fund 2 led the round and was joined by investors including SignalFire, GLP Capital Partners, Google Ventures, and Volvo Group Venture Capital.
- Tallac Therapeutics, a Burlingame, Calif.-based biopharmaceutical company focused on cancer, raised $62 million in Series A funding. Investors included venBio Partners, Morningside Venture, Lightstone Ventures, Matrix Partners China, and MRL Ventures Fund.
- Genesis Therapeutics, a Burlingame, Calif.-based company with medicines for patients with severe medical needs, raised $52 million in Series A funding. Rock Springs Capital led the round and was joined by investors including T. Rowe Price Associates, Andreessen Horowitz, Menlo Ventures, and Radical Ventures.
- Step, a San Francisco-based financial services company for teens and families, raised $50 million in Series B funding. Coatue led the round and was joined by investors including Stripe, Crosslink Capital, Collaborative Fund, and Will Smith’s Dreamers VC. Other investors include Charli D’Amelio, Justin Timberlake, The Chainsmokers, Eli Manning, Kelvin Beachum, Larry Fitzgerald, and Andre Iguodala.
- Ridecell, a San Francisco-based fleet management software maker, raised $45 million in Series C funding. Fort Ross Ventures led the round and was joined by investors including Solasta Ventures. Existing investors Activate Capital, DENSO, LG Technology Ventures, and Initialized Capital.
- ConnexPay, an Atlanta-based payment technology company, raised $61 million in extended Series A funding. F-Prime Capital led the round.
- MEL Science, a London-based science education platform, raised $14 million in Series B funding. Investors include Mubadala Investment Company and Channel 4 Ventures.
- Caja Robotics, an Israel-based warehouse robotics company, raised $12 million in Series B funding. New Era Capital led the round and was joined by investors including Philip Spruch, Gigi Levy Weis, IAngels, and CRA fund.
- LambdaTest, a London-based cloud testing company, raised $6 million in funding. Sequoia Capital India’s Surge led the round and was joined by investors including Blume Ventures, Entrée Capital and Leo Capital.
- Loop Team, a Menlo Park, Calif.-based virtual office for distributed teams, raised $4.8 million in seed funding from ENIAC, Crosslink, Golden, Redpoint, and Precursor.
- CoreStack, a Seattle-based cloud governance and compliance SaaS startup, raised $4 million from Iron Pillar.
- Novakid, an English tutoring startup, raised $4.3 million in Series A funding. PortfoLion led the round and was joined by investors including LearnStart. Read more.
- Heru, a Mexico City-based worker service platform, raised $1.7 million USD pre-seed funding. Mountain Nazca led the round and was joined by investors including Flourish Ventures, YCombinator, Magma Partners, and Xtraordinary Venture Partners.
PRIVATE EQUITY
- An investor group led by Nat Turner, D1 Capital Partners, and Cohen Private Ventures agreed to acquire Collectors Universe (Nasdaq: CLCT), a Santa Ana, Calif.-based provider of grading for collectibles, for about $75.25 per share in cash, valuing the business at around $700 million.
- TCG invested $30 million in SurflineWavetrak, a Huntington Beach, Calif.-based surf forecasting company.
- Silversmith Capital Partners invested $30 million in Market Access Transformation, a Millburn, New Jersey-based healthcare company.
- AdaptHealth (NASDAQ: AHCO), a portfolio company of One Equity Partners, agreed to acquire AeroCare Holdings, an Orlando, Fla.-based provider of respiratory and home medical equipment. Financial terms weren't disclosed.
- Crest Rock Partners made a majority investment in Lumin8 Transportation Technologies, an Arvada, Co.-based provider of traffic and intelligent transportation systems. Financial terms weren't disclosed.
- H.I.G. Growth Partners invested in Pinnacle GI Partners, a Michigan-based affiliated management services organization for The Center for Digestive Health.
- KnowFully Learning Group, backed by NexPhase Capital, acquired The Income Tax School, a Glenn Allen, Va.-based provider of training programs, continuing education courses and certificate programs in tax preparation. Financial terms weren't disclosed.
- Spectrum Plastics Group, backed by AEA Investors, acquired Peelmaster, a Niles, Ill.-based converter of sterile flexible packaging to the medical device market. Financial terms weren't disclosed.
- Vector Capital agreed to acquire Mood Media, an Austin-based marketing company. Financial terms weren't disclosed.
EXITS
- DuvaSawko, backed by Varsity Healthcare Partners, will merge with abeo Management Corporation, a Dallas-based provider of outsourced practice management services to anesthesia practices backed by Parthenon Capital Partners. Financial terms weren't disclosed.
- Jacobs Engineering agreed to acquire a 65% stake in PA Consulting, a management consultancy. Carlyle will exit.
OTHER
- Bayer sold the majority of its stake in Elanco Animal Health, an animal healthcare provider, for $1.6 billion. Financial terms weren't disclosed.
- Bestow agreed to acquire Centurion Life Insurance Company, an Iowa-based insurer, from Wells Fargo. Financial terms weren't disclosed.
IPO
- JD Health International, the healthcare subsidiary of Chinese e-commerce company JD.com, raised HK$27 billion ($3.5 billion). Read more.
- Hydrofarm Holdings Group, a Petaluma, Calif.-based provider of hydroponics and yard equipment, plans to raise $130 million in an offering of 8.7 million shares priced between $14 to $16. Read more.
- Docebo, a Toronto-based provider of professional training, filed to raise $125 million. The business is already listed on the Toronto Stock Exchange. Read more.
SPAC
- View Inc, a California-based smart window company, will merge with CF Finance Acquisition Corp. II, a SPAC formed by Cantor Fitzgerald. The deal values View at about $1.6 billion.
- The Lion Electric Company, a Canadian electric car company, plans to go public via merger with Northern Genesis Acquisition Corp., a SPAC, valuing the company at about $1.9 billion.
-Capitol Investment Corp. V, a SPAC, raised $300 million.
-Altitude Acquisition, which is seeking a business in the travel industry, plans to raise less than previously expected: $250 million.
PEOPLE
- Owl Rock Capital named Amy Ward as managing director in the firm's new London office.


fortune--2020-12-02--Will Nasdaq’s board diversity push work? Canada provides some clues

This is the web version of The Broadsheet, a daily newsletter for and about the world’s most powerful women. Sign up to get it delivered free to your inbox.
Good morning, Broadsheet readers! Sephora ditches J.C. Penney for Kohl’s, Unilever tries out the four-day workweek, and we parse the latest board diversity news. Have a wonderful Wednesday.
– All about board diversity. Call it the board diversity news dump. The last few days have featured big announcements on new initiatives and research about gender diversity in the boardroom.
First and most noteworthy was Nasdaq’s announcement yesterday that it will ask the Securities and Exchange Commission for permission to implement a new rule requiring the 3,249 companies listed on its main U.S. exchange to have at least one female director and one “diverse” director, meaning a person who “self-identifies as either an underrepresented minority or LGBTQ+,” according to the Nasdaq statement.
Companies that fail to meet the requirements risk being delisted unless “they provide a public explanation of their reasons for not meeting the objectives,” the statement says.
Nasdaq President and CEO Adena Friedman said the purpose of the initiative is “to champion inclusive growth and prosperity to power stronger economies.” In the last six months, 75% of Nasdaq-listed companies did not meet the diversity requirements Nasdaq proposed Tuesday, according to The New York Times.
The move is a first for a major U.S. stock exchange, but it comes as players in the public and private sectors introduce new efforts to diversify boardrooms. Goldman Sachs earlier this year said it wouldn’t take firms public unless they had one diverse board member, and in 2018 California passed a law requiring public companies to have at least one female director, following up with a similar mandate on racial diversity this fall.
Will the initiative work? A study released the day before Nasdaq’s announcement provided some clues.
Starting in 2014, companies on the Toronto Stock Exchange had to disclose the number of women in senior roles and their plans to improve diversity. After introduction of the so-called “comply or explain” approach, women’s presence on public boards increased considerably. At the time the regulation went into effect, 67% of the 100 largest public companies in Canada had at least one female director. As of May this year, 96% had such representation, with about half of those companies seating three or more women in director roles.
The study, conducted by KPMG, did unearth some lingering shortcomings. There are still two men for every woman among corporate directors and three men for every woman at the executive level. Half of the men who snagged senior executives roles landed in the C-suite, compared to 39% of women.
Still, one of the biggest worries about board quotas—that directorships will go to “token” women who are under-qualified—didn’t materialize.
In Nasdaq’s announcement, it said it included in its proposal more than two dozen studies that found an association between diverse boards and better financial performance and corporate governance.
On Tuesday, there was another study to add to the list.
Energy research organization BloombergNEF and the Sasakawa Peace Foundation found that companies with at least 30% female boards have a better track record of developing policies and methods to address climate change.
Claire Zillman
claire.zillman@fortune.com
@clairezillman
Today’s Broadsheet was curated by Emma Hinchliffe.
ALSO IN THE HEADLINES
- Settling the score. The U.S. Women's National Team and U.S. Soccer settled the part of the team's gender discrimination lawsuit about working conditions. As part of the settlement, U.S. soccer will implement new policies related to hotels, staffing, and travel. Wall Street Journal
- Big-box beauty. Sephora flipped from one woman-led Fortune 500 retailer to another. The beauty chain abandoned Jill Soltau's struggling J.C. Penney in favor of Michelle Gass's Kohl's as its department store partner. Sephora will open 850 permanent shops inside Kohl’s stores by 2023. Fortune
- Future forecast. Every December, Fortune makes predictions for the upcoming year in our Crystal Ball package. Our bets for 2021? Nancy Pelosi's last tour as House speaker, 2 million women lost from the U.S. labor force, and the rise of singer-songwriter Ashnikko. Fortune
- Go IPOs. At Fortune Brainstorm Tech yesterday, New York Stock Exchange president Stacey Cunningham weighed in on the 2021 IPO market. "The value of the public markets was on display" as companies went broke records, going public in droves in 2020, Cunningham says, and she expects that to continue in the new year. Fortune
MOVERS AND SHAKERS: Karey Burke, president of ABC Entertainment, will take over as president of 20th Television as part of a studio restructuring at Disney. SoulCycle hired Evelyn Webster, former CEO of Guardian News & Media's international operations, as its own chief executive. Katharine Weymouth, the former publisher of the Washington Post, joins the board of journalism nonprofit SpotlightDC. Blue Apron hired Charlean Gmunder, former VP of catering operation at United Airlines, as COO. Rite Aid hired Engage U founder Texanna Reeves as VP of diversity, equity, and inclusion. Cecile Richards will step down as executive director of Supermajority, staying on as cofounder and board member; managing director of politics and organizing Amanda Brown Lierman will be the organization's new executive director. Wendy Gonzalez's position as interim CEO of Samasource will become permanent; she stepped into the role after the death of founder Leila Janah in January.
IN CASE YOU MISSED IT
- Activating a fan base. Agnes Chow is known as the "goddess of democracy" in Japan, where her language skills and enthusiasm for Japanese culture have earned her a large following. But the 23-year-old activist still faces prison in Hong Kong after being arrested under Beijing's national security law. Washington Post
- The Kiwi way. The four-day workweek policy that was championed by Prime Minister Jacinda Ardern in New Zealand is seeing interest from other countries and companies. Unilever is the latest business to commit to trying out the new working model. Fortune
- Ready on Day One. Jen Psaki's return to the White House as President-elect Joe Biden's press secretary was surprising to some, after the former Obama communications staffer and State Department spokeswoman said she didn't plan to join the administration. Her decision to come onboard reflects a trend in Biden's appointments: prioritizing experience above nearly all else to hit the ground running during a crisis. Politico
ON MY RADAR
Elliot Page, Juno star, shares transgender identity CNN
The underside of Silicon Valley's cofounder mantra The Information
Ellie Goldstein always wanted to be famous. Now she is Allure
PARTING WORDS
"That was a screwup."
-President Barack Obama on not awarding Dolly Parton a Presidential Medal of Freedom during his time in office


fortune--2020-12-02--No sign of a slowdown in the 2021 IPO rush

This year’s Brainstorm Tech conference is, obviously, being held virtually. While that removes some of the fun elements (wait til next year, bike ride to Maroon Bells), it puts the focus on the content.
The speaker lineup on Tuesday included New York Stock Exchange president Stacey Cunningham, Accenture CEO Julie Sweet, and Assistant Attorney General for Antitrust Makan Delrahim. I kept my head in the clouds, interviewing IBM CEO Arvind Krishna and Google Cloud CEO Thomas Kurian. As is often the case at Brainstorm Tech, a few themes started to emerge:
The IPO wave shows no signs of cresting. “2021 has a pretty high bar to beat, but it’s looking busy so far,” NYSE president Cunningham said. There may be too much money floating around in special purpose acquisition companies, or SPACs, though. “It’s a heartbreak looking for a place to happen,” warned Lise Buyer, the founder of Glass V Group, a consultancy that provides advice about public listing.
Cloud computing is getting to the hard part. For a few years, companies that had no need of running their own data centers were the prime customers of cloud providers. But a lot of the remaining corporate computing workloads are running on private networks due to regulations governing data in finance, healthcare, and other industries. So the catchphrase of the day is “hybrid cloud,” both Krishna and Kurian agreed. Krishna also discussed IBM’s push to develop quantum computers, while Kurian explained a new pandemic management tool, the on-site offsite.
We also heard from some newsmakers trying hard not to make too much news. Are ads finally coming to Facebook’s third platform, WhatsApp? “At some point we’ll be excited to have that in WhatsApp,” Will Cathcart told Robert Hackett. Assistant attorney general Delrahim generally defended suing big tech companies but didn’t get too specific. He did mention that upgrading his phone this week sent him to customer service hell for hours trying to get it activated. He felt “practically paralyzed” and even more cognizant of how much we depend on those companies to run our lives now.
Day two brings more big players on stage, including Jennfier Tejada, PagerDuty’s CEO, Apple SVP Deirdre O’Brien, and Hans Tung, managing partner at GGV Capital.
Aaron Pressman
@ampressman
aaron.pressman@fortune.com
NEWSWORTHY
I think it's gonna be a long long time. It's official. Salesforce is buying Slack for $27.7 billion. It is Salesforce CEO Marc Benioff largest acquisition ever and should give him even more fuel to fight Microsoft in coming years. Whether the combo can beat Teams and Zoom and other wannabe workplace messaging platforms competing to be the virtual workplace of the future, we shall see.
Rocket man burning out his fuse up here alone. In other "it's official" news, Fortune named Elon Musk as its businessperson of the year. The Tesla and SpaceX CEO has led two of the most successful businesses of the year, while also stepping into more than his share of controversies, as my colleagues Michal Lev-Ram and Andrew Nusca report. Winning on another front, Musk and Tesla are settling a case with a former employee who leaked info about delays at the company's Gigafactory. Martin Tripp will admit to violating trade secret laws and pay $400,000.
Not the man they think I am at home. Lame duck president Donald Trump is not going quietly, as you may have noticed. Last night, he tweeted that he would veto the almost $1 trillion defense authorization bill unless Congress repealed Section 230 of the Communications Decency Act (the bit that protects online platforms from liability for their users' posts).
All this science I don't understand. While we were busy holding Brainstorm Tech, some small cloud company held its own conference. Amazon made a bevy of announcements, such as adding Apple's Mac mini servers in its cloud and offering its own custom chip for machine learning. Monitron and Panorama are a slightly scary-sounding sensor for monitoring factory machines and a computer vision service to track workers, respectively. What could go wrong with that? Amazon is also getting deeper in quantum computing. New York Times chip ace Don Clark explores the implications of Amazon and Apple increasingly moving away from Intel's processors.
It's just my job five days a week. After running into a wall of regulatory resistance, the digital currency effort started by Facebook is doing what every good brand strategist might recommend: re-branding. The Libra Association is changing its name to the Diem Association, as in the Latin phrase "carpe diem."
Touch down brings me round again. Sure, a few whiny VCs may have announced their intentions to abandon Silicon Valley and move to other states, but now one of the OG SV players is pulling up stakes. Hewlett Packard Enterprise, one half of the original HP, says it's moving its headquarters to Houston.
(Headline reference explainer video in honor of Mr. Musk and for those not familiar with one of Elton John's best.)
FOOD FOR THOUGHT
More people than ever are listening to podcasts, and now Amazon is getting into the market. Omdia analyst Georgina Howes assesses the entry.
Amazon is the latest major player to add podcasts to its Amazon Music service with original and third-party podcast content. Amazon is looking for a slice of an advertising market set to be worth nearly $3.5 billion globally by 2025...The number of monthly podcast listeners has also accelerated worldwide, with growth in 2020 higher than previously forecast.
Amazon’s cross-sector presence will help drive this rollout, as it can offer a fluid listening experience to its customers, with people tuning in via its Amazon Music app on the go and then transitioning to listening through Amazon smart speakers when arriving home. Kintan Brahmbhatt, Director of Podcasts for Amazon Music said in a statement that “never before has listening to podcasts on the move, in the car, or at home, been so simple.” Amazon could be placed to control the entire podcast listener experience for users of its ecosystem, as consumers stream original content produced by Amazon through the Amazon Music platform via Amazon smart speakers.
IN CASE YOU MISSED IT
Cruise CEO: Self-driving car market is ‘literally trillions of dollars’ By Robert Hackett
One side effect of the crisis? Employees of color risk losing their networks, Accenture CEO Julie Sweet warns By Emma Hinchliffe
To address health disparities, we need better data By Erika Fry
All Raise lands $11 million to fuel its fight for equality in tech By Emma Hinchliffe and Kristen Bellstrom
Crystal Ball 2021: Predictions for the economy, politics, technology, and more By Fortune Staff
Shares of China smartphone maker Xiaomi were up 143% this year. They plunged on Wednesday By Eamon Barrett
Big Chocolate’s trip to the Supreme Court could have big implications for corporations By Vivienne Walt
(Some of these stories require a subscription to access. Thank you for supporting our journalism.)
BEFORE YOU GO
As we near the end of the year, expect to see a proliferation of lists. Writer/designer Tom Whitwell published his collection of 52 things he learned in 2020 and it's chockfull of fascinating factoids (hat tip to Jason Kottke). About 10% of the economy of the Polynesian island of Tuvalu comes from fees for the .tv domain, he notes. Warsaw is using sensor-laden clams to protect its water supply. And so on. It's midweek—stay curious.


fortune--2020-12-02--Vaccines, tech, and climate: Europe pitches a new partnership to President-elect Biden

With the “America First” President heading for the exit, Europe hopes to build a new transatlantic partnership with his successor, President-elect Joe Biden—and it would like to start with vaccines.
On Wednesday, the European Commission publicly set out its wish list for the future EU-U.S. relationship. At the top of the list: an invitation for the Biden-era U.S. to join the COVAX initiative, a global pact for the equitable distribution of COVID-19 vaccines. After China joined a couple of months back, the U.S. became the only major holdout.
Also on the list: a “transatlantic green trade agenda” and a “green tech alliance,” regulatory cooperation on labor rights and tech, finance, and tax reform, plus a joint effort to reform the World Trade Organization.
“We are taking the initiative to design a new transatlantic agenda fit for today’s global landscape,” said European Commission President Ursula von der Leyen in a statement. “The transatlantic alliance is based on shared values and history, but also interests: building a stronger, more peaceful, and more prosperous world. When the transatlantic partnership is strong, the EU and the U.S. are both stronger.”
The tenure of incumbent President Donald Trump has seen constant tension between the U.S. and the EU over everything from trade and defense, to foreign policy on Iran, the climate emergency, tech regulation, and tax policy.
Biden, by contrast, is a multilateralist whom Europe hopes to find more cooperative—though the Trump era has also accelerated a European push for “sovereignty” from its traditional partner, and that isn’t going away.
Here’s a quick rundown of the European Commission’s proposal.
Vaccines
The COVAX financing instrument is supposed to make sure there are 2 billion coronavirus vaccine doses available by the end of 2021, with low- and middle-income countries being able to benefit. The Commission says that “U.S. participation and financial contribution to COVAX would be a strong message, help make up the funding gap, and improve our collective chances of success.” It also wants the U.S. and EU to jointly build global logistics networks for vaccine distribution.
WHO and WTO
The Commission says it wants to work with the U.S. to both reinforce and reform the World Health Organization (much criticized by President Trump) to “strengthen its independence, transparency, accountability, and effectiveness.” It’s also calling for “joint leadership on reforming the WTO” and delivering a collective kick-start to the body’s dispute-settlement function, which has been effectively jammed by the Trump administration.
Climate emergency
The U.S. adopting a net-zero-by-2050 climate policy “would mean about two-thirds of the global economy, and more than a half of the world’s emissions, would be accounted for,” the Commission said. This is something Biden has already said he wants to do. The Commission also wants to cooperate with the U.S. on designing sustainable-finance regulation—to support green investments—and is calling for a “green tech alliance” covering areas such as renewables, clean hydrogen, carbon capture, and energy storage.
Tech
The Commission thinks the combination of rapid technological change and “the challenges of rival systems of digital governance”—think China—creates an opportunity for a “joint EU-U.S. tech agenda.” It’s talking about things like A.I., 5G and the futuristic 6G, cybersecurity, antitrust, and data protection. This seems like one of the proposal’s more optimistic elements, given the EU’s much more proactive approach to tech regulation and the importance of Big Tech to the U.S. economy. But the reining-in of tech giants is a popular subject in U.S. policy circles these days, on both sides of the aisle.
Taxation
Trump’s U.S. has been very much against the “digital taxes” being introduced in France and elsewhere in the EU, and has paused OECD negotiations over a global solution to the issue of where tech multinationals should pay tax on their revenues. The Commission would like the U.S. to rejoin the discussion; this will be a real political hot potato for Biden, given the American nature of Google, Amazon, and the rest.
The Commission has asked the European Council—the group of EU national leaders that sets the bloc’s overall political agenda—to now endorse its proposal.
The Biden transition team had not responded to a request for comment at the time of writing.


fortune--2020-12-02--Why an immigrant mindset is such a valuable asset during COVID

There’s a certain worker undeniably in high demand during this pandemic: multiskilled, flexible, resilient, and tolerant of risk and the great unknown.
Basically, immigrants.
“Immigrants are more likely to be people who inherently embrace uncertainty,” said Brian Laung Aoaeh, who was raised in Nigeria and Ghana and launched a fund, Refashiond Ventures, to invest in supply-chain innovation. “This is actually a phrase I use to describe myself—and it’s come up in job interviews in the past: ‘I embrace uncertainty.’”
The act of migration itself underscores an appetite for risk. Outsiders bring with them fresh perspectives, new ideas, and a certain hustle and hunger to survive. In the middle of this current and historic upheaval of the world order, some employers are finding that’s not just welcome but necessary.
To be sure, an entrepreneur’s birthplace or country of origin is not actually what makes immigrant workers so valuable. “Are you special because you are an immigrant? No, it’s more about the ethos of being an immigrant,” said Nitin Pachisia, founding partner of Unshackled Ventures, which invests exclusively in startups in which at least one founder is an immigrant or the child of immigrants. “For us immigrants, there are creative ways of looking at a problem. When you come from another ecosystem, you question the why behind it. Then you take a variable and change it. That’s how big innovation happens.”
As Pachisia describes, it is more an embrace, intentional or not, of hardship and struggle that immigrants’ displacement represents. To be sure, other groups within the United States have similarly faced adversity and demonstrated perseverance. Too many Black Americans, for example, have not tasted the political and economic stability of many of their white counterparts; the median wealth of Black families ($17,000)—is less than one-tenth that of white families ($171,000), according to one congressional report.
So employers might consider the idea of hiring immigrants as shorthand for hiring people who’ve worked outside traditional systems to advance, who’ve grappled with trauma or uncertainty, who’ve seen some life. They know that there is no going back to what used to be—only plotting a path forward.
Losing her father at a young age, for example, defines Lori Shao’s worldview as much as her migration from China during middle school. “That has really shaped a lot of my decision making,” said the CEO and founder of Finli, a payments platform for schools and small businesses. “I always have a sense of urgency.”
She connects this to the pivot she’s had to take in recent months to save her business. Finli manages payments among families and businesses through its app; think of, say, a tutor who runs a homeschooling pod and the six sets of parents who need to pay him.
“Our biggest competitor pre-COVID was the traditional way of doing things,” she said. “It was businesses saying to me: ‘I am okay with a wall calendar. I am okay with a landing page as my online presence. I am okay with checks in an envelope. I don’t need to reach a wider audience.’”
COVID changed everything.
Now, she says, having to adapt is being forced upon clients such as day cares, karate studios, or art academies. “They all recognize, ‘I need to change in order for me to put food on the table,’” she said. “Life really begins outside of your comfort zone. It’s not even about growth. It’s surviving.”
That’s a familiar mindset in so many parts of the world, where daily life forces adaptation in ways big and small.
“There’s much more uncertainty outside the United States,” said Aoaeh, of Refashiond Ventures. “You wake up in the morning, and you make your plan, and that’s when Lagos traffic decides to act up.”
He connects this background and an ability to respond to crises (often with good cheer and on-the-fly workarounds) with his professional success. Besides the fund, Aoaeh runs a supply-chain networking group and teaches in the engineering school at New York University.
This approach has certainly helped immigrants ascend in corporate America, even in the golden years before the Armageddon of 2020. A 2011 study found two out of every five U.S. Fortune 500 companies had at least one founder who was an immigrant or child of an immigrant. Last year, that number grew to an even higher share—45%.
In the meantime, entrepreneurship is on the rise: Applications for employer ID numbers were already at 3.2 million in September, according to the U.S. Census, compared to 2.7 million a year ago. And those numbers are only going up—77% more business applications were filed in the third quarter of this year than the second.
This trend is one Unshackled’s Pachisia notes as well. “There is more entrepreneurial activity,” he said. “Every period of uncertainty does that. There are more problems to be solved.”
He traces Unshackled’s founding in 2014 to his discovery that workers on a temporary visa, such as the H-1B, could not launch companies because their stay in the U.S. was contingent on an employer. “The entrepreneur in me did not like that answer,” he says. “Immigration was not being solved for by VCs. And there’s a lot of documented history that immigrants have built some great companies.”
About 150 to 180 companies a month are seeking financing from Unshackled, compared to 100 to 120 last year, he says.
There’s similar energy around Aoaeh’s fund. “When something like COVID happens and you can’t get toilet paper or rice, Americans start to understand and care about supply chain,” he says.
Rapid-fire decisions Aoaeh made in March allowed him to go fully virtual without losing time. Friends commented on his ability to go with the flow. “It seems like you’re thriving,” they said to him.
Chaos, change, and uncertainly? Of course he was.


fortune--2020-12-02--Billions use WhatsApp, but it makes little money—that’s about to change

In February, Facebook-owned WhatsApp surpassed 2 billion users. A global pandemic and countless stay-at-home orders later, that number has only grown.
Zoom may have been the communications startup darling of the pandemic, but WhatsApp has quietly shattered some impressive milestones. At a peak in April, the messaging service was exchanging more than 100 billion messages a day. Users spent 15 billion minutes talking between voice and video calls. WhatsApp is Facebook’s fastest growing property—yet it makes very little in the way of revenue. (Facebook does not break out precise figures for its various business segments.)
The user base is in place, however, and those inside the company feel WhatsApp is now poised to capitalize.
“It turns out that people would much prefer to contact businesses via messaging them than they would through the traditional channels of calling a 1-800 number and waiting on hold or going to a website and filling out a form,” said Will Cathcart, head of WhatsApp, during a panel on Tuesday at Fortune’s virtual Brainstorm Tech conference.
Cathcart pointed to WhatsApp’s development of an application programming interface for large businesses, from which the company currently generates revenue. “It’s great for business because it’s way more efficient. The [return on investment] is much higher on customer support activity or commerce activity,” he said.
WhatsApp is also looking toward advertising as a source of revenue, similar to Facebook’s strategy with Messenger and Instagram. “But instead of the advertisement pointing to a website, point it to a WhatsApp thread,” Cathcart said. “So, say, ‘Here’s what I’m selling. If you’d like to learn more, message me.’ People prefer that. It’s a much easier user experience. Businesses prefer that because the sales close better.”
The company eventually hopes to expand the presence of advertising even more, Cathcart said, with the addition of ads in the app’s “Status” tab—similar to Instagram Stories. And just this week, Facebook announced the $1 billion acquisition of Kustomer, the customer relationship management platform, with the aim of providing more tools for businesses.
“The vision we have here is that if you are someone who uses WhatsApp, and you want to reach a business, you should be able to do it over WhatsApp,” Cathcart said. “Doing that means we have to give businesses tools that help them organize their customer services operations and plug into WhatsApp.”


fortune--2020-12-03--Quantum computing is entering a new dimension

WhatsApp is on its way to becoming the world ’ s next super-app

Software developers on a conference call are trying to get a quantum computer, a buzzy successor to today’s supercomputers, to do some of its magic. They want to see how well the experimental machine can reproduce a simple pattern of bars and stripes.
After the team tees up some software code, a scientist with dreadlocks clicks a button to put the computer, located in a lab outside Denver, into action. A laser generates a magnetic pulse in the machine that sets atoms inside a vacuum chamber—the computer’s brain, of sorts—into motion.
Engineers with Zapata Computing, a startup that helps business customers create algorithms to use on quantum computers, are conducting the test. The company is renting use of a machine owned by industrial giant Honeywell, which considers quantum computing to be a huge business opportunity.
And recently that opportunity—requiring years of painstaking tinkering on the necessary technology—is starting to generate revenue. Time on Honeywell’s quantum computer is fully booked for months. “You can talk about all the innovation you have and how great your technology is, but if no one is willing to pay for it, how valuable is it?” says Honeywell CEO Darius Adamczyk.
The half dozen or so companies that are serious about developing quantum computers, including Google, IBM, and Intel, plus startups such as Rigetti and IonQ, are reaching an important new phase: Customers are lining up and paying to use their machines.
While quantum computers are still largely inferior to today’s basic desktop computers, the experiments give customers a taste of what’s possible. The challenge will be to improve the machines enough in the coming years so that they produce better results at a lower cost than any other kind of computer.
Quantum computers are designed to harness the strange and powerful physics properties of so-called qubits (pronounced “cubits”), or quantum bits. Traits such as “superposition” and “entanglement,” when combined with “interference,” have the potential to solve problems in science and industry that are otherwise intractable, even to state-of-the-art supercomputers.
Experts expect full-blown quantum computers to be ready in a decade, or longer. But in the meantime, the machines being built now could provide an edge—a “quantum advantage,” as IBM likes to say—in certain scenarios as soon as 2023.
The quantum computing industry is currently small in terms of revenue, but it could grow very big over time. The total market for quantum hardware rentals is projected to rise to $9 billion in 2030 from $260 million today, according to research firm Tractica.
The real value, however, lies in the potential business opportunities that quantum technology is poised to unlock. For that reason, and for fear of falling behind rivals like China, the federal government along with private businesses in August promised to pour $1 billion into the fledgling industry.
Major tech companies are already tussling for quantum dominance. And those that got an early start have a growing list of customers; IBM has more than 130 of them across business, academia, and government, for example. “Some people ask, ‘When are we going to have a real industry? When is commercial quantum going to be real?’ ” says Dario Gil, director of IBM research, during my visit to his mad-scientist-like lab in September. “That’s already started.”
Some people ask, ‘When are we going to have a real industry? When is commercial quantum going to be real?’ That’s already started. Dario Gil, IBM Research director
Cloud-computing behemoths are latching onto the trend. Microsoft, which is working on its own moonshot quantum-computing hardware, started offering select Azure customers remote access to other partnering companies’ quantum computers in May. “We’re making this technology really accessible and lowering the barriers to adoption,” says Julie Love, Microsoft’s head of quantum computing business development.
Amazon opened the quantum gates in August to all customers of its huge Amazon Web Services cloud-computing division. The offering, which, like Microsoft’s, uses partners’ hardware, has made it easier than ever for just about anyone to gain access to the technology.
Another member of the Big Tech club, Google, made waves last fall when it claimed to have achieved “quantum supremacy,” a term that describes when a quantum computer outpaces a classical supercomputer at a specialized task. Although that result is disputed by rival IBM, it speaks to the technical battle between companies vying for their own supremacy in the nascent industry.
Recently, Google used a 12-qubit quantum computer to simulate a chemical reaction involving hydrogen and nitrogen atoms, a record-breaking achievement that graced the cover of the journal Science. The previous record holder was IBM, which three years earlier had modeled a molecule of half the size on a six-qubit machine (more qubits mean more sophisticated modeling).
Such data crunching, in general, could one day lead to improved batteries and carbon-capture technologies, which explains why companies like Volkswagen (a Google partner), Exxon Mobil (IBM), and Daimler (both) are so keenly interested in the tech.
Earlier this year, Honeywell, a dark horse, surprised many people by bursting onto the quantum computing scene with a version of its own technology. The company is using a different hardware approach that replaces the specially designed, supercooled silicon chips favored by Google and IBM with laser-guided atoms in the machine’s guts.
Precisely controlled lasers are at the heart of the operation of Honeywell’s quantum computer. Courtesy of Honeywell
JPMorgan Chase, German shipping titan DHL, and pharmaceutical giant Merck are the latest big names to join Honeywell’s public list of customers. Kam Chana, director of computational platforms at Merck, explains that his company wants to use the computer for early-stage R&D so it can produce newer, more effective drugs and distribute medicine more efficiently at less cost.
Marco Pistoia, who leads research at JPMorgan’s “future lab,” says quantum computing could enhance his bank’s analysis of risk, a prime concern. Goldman Sachs, Wells Fargo, and Visa are also exploring the tech, including for pricing complex financial derivatives and bolstering cybersecurity.
Stefan Woerner, IBM’s quantum applications lead, raises the possibility of quantum computers being used for smarter vehicle routing, the safer management of investment portfolios, as well as a better understanding of protein folding, a complex area of biology with medical implications.
With its bars-and-stripes experiment, Zapata’s team must wait hours to receive the final results from Honeywell’s computer, which, in these early days of quantum, is painfully slow. When they finally receive the finished product, they compare it to what an ideal quantum computer would have produced, to gauge the new technology’s limits when it comes to machine learning. The verdict? The pattern is as close to perfect as Zapata’s team could have hoped to see.
Such trials, while simplistic and plodding today, could eventually yield better techniques for detecting financial fraud or diagnosing diseases from MRI scans. In the meantime, quantum computers have a tendency to err, and accounting for and correcting those errors is the industry’s top priority.
Still, despite the current shortcomings, getting real value from quantum is inevitable, says Chris Savoie, Zapata’s chief executive, and that’s coming sooner rather than later. “If you’re not preparing for that and doing these experiments now, you’re not going to be able to catch up.”
Quantum speak
Like many futuristic fields, quantum computing comes with its own complex vocabulary. The following are some key terms to know.
Qubits
Not the biblical unit of measure, though it’s pronounced the same. Qubits are “quantum bits,” a turbocharged version of classical computing’s bits. Composed of atoms, photons, or other materials, they are the basis of quantum computing’s exponential potential.
Superposition
Whereas classical bits, or “binary digits,” encompass just two states—often represented as “0” and “1”—qubits can assume any shade in between. Peculiarly, qubits can maintain this state only when no one is looking.
Entanglement
This flavor of superposition describes a shared state in which one qubit’s fate depends on another’s. Quantum-computer makers hope they’ll be able to harness entanglement to one day achieve bewilderingly fast, parallel processing power in their machines.
Noisy
Today’s quantum computers aren’t loud, per se, but they are error-prone (or in scientific lingo, “noisy”). That’s partly because qubits are highly sensitive, even to the mildest disturbances, like a glancing photon.
Quantum supremacy
A theoretical milestone that describes a quantum computer performing a calculation no classical computer can replicate in any reasonable amount of time. Google claims to have achieved it last year, but IBM argues otherwise.
Quantum competition
The battle for dominance in the nascent quantum computing market is fierce. Here are some of the main players:
Google
Last year, the search giant said it achieved a major milestone: “quantum supremacy.” But since then, it has lost some prominent members of its quantum team.
IBM
Big Blue has become one of the leaders in these newfangled business machines. It recently set a new goal: creating a 1-million-qubit machine by 2030, more powerful than any currently available.
Honeywell
The industrial giant’s “trapped ion” hardware is a departure from the superconducting qubit machines pursued by IBM and Google.
Microsoft
The company’s development of a quantum computer has been slow going. In March, it began offering cloud-computing customers access to the machines of others.
Alibaba
In 2018, the Chinese company started offering access to a 12-qubit quantum processor through its Aliyun division. U.S. policymakers are alarmed by China’s gains in quantum.
A version of this article appears in the December 2020/January 2021 issue of Fortune with the headline, “Quantum enters a new dimension.”


fortune--2020-12-03--Why the power to change the female-founder double standard rests with VCs

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Are female startup founders held to impossibly high standards—or are their male counterparts just generally more able to get away with bad behavior?
Yes and yes, according to their employees. And they lay much of the blame for that fact with the venture capitalists who back these founders and join their company boards.
Whether in anonymous social media collectives, news stories, or lawsuits from former executives, startup and tech workers are becoming more vocal—and more powerful—about the shortcomings of their employers, especially those that promise a mission-driven purpose and then fail to follow through. Some of these worker complaints have contributed to CEO resignations this year, including the Wing’s Audrey Gelman, Away’s Steph Korey, and Reformation’s Yael Aflalo. But also this year, employee complaints against other high-profile founder-CEOs—including Everlane’s Michael Preysman, Carta’s Henry Ward, Pinterest’s Ben Silbermann, and, most recently, Coinbase’s Brian Armstrong—haven’t yet led to any CEO resignations or demotions. (A spokesman for Coinbase says the company “strenuously denied” allegations in a New York Times article last week, reporting 23 current and former employees’ accusations of anti-Black treatment.)
Each of these companies and their situations is unique, of course. Still, there’s one very noticeable difference between these two groups.
“I do think it’s unfair how women are definitely [judged] so much more harshly than men. But it’s also not fair to say, ‘Men have gotten away with this for so long, so women should, too,’” says Leslieann Elle Santiago, a former Reformation employee whose viral Instagram post alleging anti-Black behavior at the retailer contributed to Aflalo’s June resignation as CEO. (A Reformation spokesperson says that a later independent review “did not find any evidence” that Aflalo’s behavior toward employees was racially motivated.)
There is ample evidence of a gendered double standard facing female founders on several fronts, as I report in a new feature for Fortune’s December/January issue. Many in the startup ecosystem blame the media and employees for enforcing this double standard—but the power to uphold or shatter it lies with venture capital investors, especially those who sit on private startups’ boards of directors.
“I would like to see some consequences for male founders, and a large part of it goes to investors,” says Aerica Shimizu Banks, a former public policy manager at Pinterest, whose allegations of racist discrimination at the public social media company have been widely reported. Pinterest is also facing a headline-grabbing gender-discrimination lawsuit from one of its top executives, former chief operating officer Françoise Brougher.
And in this case, Pinterest’s public investors are starting to agree with Banks: On Monday, shareholders filed a lawsuit against top executives, including CEO Silbermann and his cofounder, Evan Sharp, for allegedly enabling a “systematic culture, policy, and practice of illegal discrimination on the basis of race and sex.” (A company spokesman says that the company is undergoing an independent review of its culture, and that Pinterest’s leadership and board “take their fiduciary duties seriously.”)
Aerica Shimizu Banks, a former public policy manager at Pinterest, has alleged racist discrimination at the public social media company. Now shareholders are suing its founders. Minh Pham
Pinterest, which went public last year, is in a slightly different situation than privately held startups, where venture capital investors sit on company boards and generally have the most power to back up an embattled founder—or not—when directing a company’s response to employee complaints and critical press coverage. This VC community is also overwhelmingly male, and overwhelmingly reluctant to invest in women and underrepresented groups in the first place: 88% of VC partners were men as of last December, according to women-in-VC nonprofit All Raise, and only 2.6% of all venture capital invested in 2019 went to women-only teams, according to data firm PitchBook. (The numbers are even more dismal for Black and Latinx women, who received less than 0.7% of all VC invested in 2018 and 2019, according to a new report from digitalundivided’s ProjectDiane.)
Yet at the same time, VCs are eager to pour money—and guarantee “founder-friendly” protections—into what they consider to be the biggest and most promising (and, again, overwhelmingly male-led) startups. Sometimes this commitment to founder-friendliness can backfire and make a widely criticized CEO difficult to oust even once boards do decide to act—as the prolonged and very public exits of WeWork’s Adam Neumann and Uber’s Travis Kalanick amply demonstrated.
“Startup boards generally start from a place of wanting to preserve the founder’s role in the company—but this doesn’t seem to be happening in the case of female founders,” says Charlie O’Donnell of Brooklyn Bridge Ventures, a venture capitalist and an early investor in the Wing (where he did not sit on the board).
“I don’t think that boards entirely made up of partners at VC firms are serving these companies well,” he adds, arguing that especially when investors back young and inexperienced entrepreneurs, they have a responsibility to train them to become better managers. When employee complaints become public, for example, they are often the result of “many, many micro decisions along the way, made by people up and down the cap table,” O’Donnell says. “So when it gets to, ‘Should the board save this CEO?’—well, where was the board in helping to prepare the CEO?’”
All of this is leading some startup employees, founders, and Silicon Valley executives to call on investors to rethink what qualifies as acceptable leadership behavior at all high-growth, venture-backed startups.
“There’s no excuse for workplaces that treat employees unfairly and discriminate, harass, or abuse employees—regardless of who the CEO is,” says Emily Kramer, the former vice president of marketing at fintech startup Carta, who is now suing the company for gender discrimination.
Emily Kramer, the former vice president of marketing at fintech startup Carta, is suing the company for gender discrimination. Courtesy of Emily Kramer
“I don’t necessarily think that we’re being too harsh on women founders and CEOs. I think we’re being too lenient on male CEOs,” she adds.
During her time at Carta, which helps startups manage and track their founders’ and employees’ ownership stakes and which has widely promoted its efforts to provide “equity for all,” Kramer oversaw its well-publicized study of how little equity female founders hold in their startups, compared to their male counterparts. But she also faced “increasingly hostile, sexist harassment in response to her complaints of sex discrimination,” and personal insults from Carta CEO Henry Ward, her lawsuit alleges.
Ward, who remains atop his company, has disputed Kramer’s account but acknowledged that he and his company “deserve criticism for our failures,” including his board’s lack of diversity. Carta has also disputed the lawsuit’s allegations, and declined to comment for this story.
As her lawsuit winds through the courts, Kramer is advocating for the VC community to worry less about being founder-friendly and worry more about worker conditions at the high-growth startups where they invest. By directly soliciting employee feedback at these companies, for example, board members could become more aware of internal complaints before they bubble up to the level of viral social media posts or splashy news stories.
“Boards and investors really want to appear founder-friendly. It’s talked about all the time as a badge of honor. We need to shift that to, ‘We’re employee-friendly,’” Kramer argues. “Taking this approach and holding companies accountable consistently would lead to both a decline in these egregious and business-disrupting exposés and crises—and an increase in long-term performance and returns.”


fortune--2020-12-03--Female founders under fire: Are women in the startup world being unfairly targeted?

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Last fall, Audrey Gelman seemed to be on top of the business world—or at least one pale-pink corner of it. At 32 years old, the former political operative and well-connected New Yorker had raised more than $117 million in venture capital for the Wing, the upscale women’s club and coworking startup she had cofounded in 2016. Women from Los Angeles to London flocked to the Wing’s pastel-painted offices and star-studded events, where movie stars and presidential candidates alike talked about “asking for what you want” and “blazing your own trail.”
By September 2019, Gelman was celebrating her professional and personal triumphs by appearing, eight months pregnant and unquestionably powerful, on the cover of an issue of Inc. magazine devoted to female startup founders. “My hope is that women see this and feel the confidence to take greater professional risks, while also not shelving their dreams of becoming a mother and starting a family,” she told the Today show on the morning that the cover was released.
Then it started to crumble. Some Black customers were already sharing on social media and in the press the discomfort they sometimes felt at the Wing and its “majority-white” space. And in March, The New York Times Magazine published a long feature about what employees called the Wing’s “toxic culture,” including complaints about pay and scheduling for hourly workers and Wing managers’ poor handling of incidents, such as one in which a customer referred to Black and brown employees as “colored girls.” Then, as COVID-19 shut down the Wing’s physical locations and threw its business future into question, George Floyd’s killing by Minneapolis police sparked a national reckoning over racism—amplifying the voices of women who said the Wing had failed to live up to its feminist rhetoric of sisterhood for all. Current and former workers, including many laid off amid the pandemic, protested the company’s attempted response to the Black Lives Matter movement and Gelman’s leadership.
TAKING WING: The Wing cofounder and former CEO Audrey Gelman (left) and cofounder Lauren Kassan (right), with actress and producer Kerry Washington at the Wing’s SoHo location in New York City in December 2018. Dolly Faibyshev—Redux Pictures
By mid-June, amid mounting pressure and scrutiny, Gelman stepped down as CEO. “Ultimately the prioritization of growth over culture came at the expense of women of color feeling empowered,” she later wrote on Instagram. “I didn’t live up to the values I set.”
Gelman’s fall from grace was dramatic—but not singular. Amid employee allegations of mismanagement or mistreatment—often amplified by the press—each of these founders has stepped down or been forced out of her company in the past 18 months: Tyler Haney of activewear startup Outdoor Voices; Steph Korey of luggage company Away; Christene Barberich of women’s digital publication Refinery29; Yael Aflalo of dressmaker and fashion brand Reformation; Jen Gotch of retailer Ban.do; Shannon Spanhake of workplace-benefits platform Cleo; and Nancy Lublin of mental-health platform Crisis Text Line.
While each ouster has its own twists and turns, there’s a lot that unites these companies and founders. All are fast-growing startups that emphasized feminist or socially driven missions. All have venture capital backing or have been sold to private owners. Most provide consumer-facing products. The vast majority were started by young, wealthy, white, or Asian founders who had become the celebrity faces of their businesses. And—some would argue, most crucially—all were founded by women.
To many in Silicon Valley, the toppling of so many of the industry’s most prominent female founders signals something much bigger and more disconcerting than the usual game of startup musical chairs. “There are very few women leaders who rise to the level where they get press and attention, and at some point, they’re all disappearing,” says Sara Mauskopf, the cofounder and CEO of Winnie, a San Francisco-based childcare platform that has raised $15.5 million. Throw in a slew of other female founders who remain atop their companies but who have faced pointed scrutiny of their management styles and cultures—including the CEOs of skin care startup Glossier, retailer Rent the Runway, dating app Bumble, and lingerie company ThirdLove—and it’s hard not to wonder, as Mauskopf does: “What the heck is going on? And why is this only happening to women?”
To understand the alarm expressed by Mauskopf and many of the 24 other founders, investors, executives, and startup employees who spoke to Fortune for this story, it helps to start with a big-picture view of the state of women-led startups. Female founders have a track record of success—one 2018 BCG study found that women-owned businesses earn twice as much revenue per dollar invested as male-owned businesses do—but the overwhelming majority of investors shun them. Women-only founding teams received only 2.6% of all venture capital invested in startups in 2019, with Black women receiving less than 0.3% of VC in 2018 and 2019. Women who do get funding raise about a third of the amount that men do, on average, and are less likely to raise subsequent rounds. They also retain less equity in their companies, thus ceding more control to the investors who have the power to fire or protect them.
Female founder-CEOs run only 4% of the “unicorn” startups valued at more than $1 billion, according to Crunchbase. Which means that, proportionally, these successful venture-backed female founders are even more rare than female Fortune 500 CEOs, who currently run 7.4% of the country’s largest companies.
2.6% Share of total VC dollars going to companies with all-female founding teams
The pandemic, which has created an economic catastrophe for women writ large, has made this challenging situation still more difficult. In October, data firm PitchBook reported that VC funding for companies founded by women dropped to $434 million in the third quarter, its lowest level in three years—and about 1% of the $37.8 billion invested in all startups during the same period.
Investors and entrepreneurs say the current global uncertainty has reinforced the insular, pattern-matching nature of venture capital, in which 88% of those making investing decisions are male and male-founded companies are seen as the default “safe” bet. “In a time of stress, there are people who are just falling back to pattern recognition and their standard operating behavior” of investing in male founders, says Pam Kostka, a veteran Silicon Valley executive who now runs All Raise, a nonprofit devoted to female VCs and founders.
These trends, married with the cascade of high-profile founder ousters, are fueling a growing debate among startup industry insiders over whether female founders are facing a backlash—one that makes them more subject to public scrutiny and, ultimately, more likely to be forced out of their companies than their male counterparts.
“There’s absolutely a double standard for women,” says Alex West Steinman, the cofounder and CEO of the Coven, a Minneapolis-based women’s coworking startup. “We do walk around with a target on our backs, and people are looking for us to fail.” There’s copious social science research—and widespread real-world experience—that agrees. Women in the business world face what’s been dubbed the “double bind,” which penalizes them for “unfeminine” behaviors that are expected and often applauded in male leaders. One 2007 study led by a New York University researcher found that when two managers were described using identical personality traits but different genders, “women are decidedly more disliked” and “are found to be less desirable as bosses.” Where male leaders are seen as strong, determined, and decisive, women who behave the same way are judged to be aggressive, abrasive, or strident.
What the heck is going on? And why is this only happening to women? Sara Mauskopf, cofounder and CEO, Winnie
Still, not everyone sees a gender backlash at startups. “Being a founder is so hard, but the playing field felt relatively fair,” says Alexa von Tobel, who at age 31 sold her financial planning startup, LearnVest, to Northwestern Mutual and who now runs her own early stage venture capital firm, Inspired Capital. Naysayers dispute the idea that, as Mauskopf put it, such falls from grace “happen only to women,” pointing to the high-profile exits of WeWork cofounder Adam Neumann and Uber cofounder Travis Kalanick, and the more recent departure of Nikola founder Trevor Milton. Meanwhile, employees have complained this year in the press, on social media, and in a couple of lawsuits about the leadership of and workplace cultures created by the male founder-CEOs of companies including Pinterest, Everlane, and Carta (all of whom have, at least thus far, retained their jobs).
“Culture is top of mind for anybody interviewing now,” says Jennifer Fitzgerald, the cofounder and CEO of Policygenius, whose insurance company has raised more than $162 million from private investors. She argues that when workers criticize CEOs on social media or in the press, it’s “less of a gender thing and more that there’s just a shorter fuse and a bigger public platform, and a lower tolerance for it among employees.”
The reality of the situation may—not surprisingly—be a little more nuanced. In many of these cases, it’s worth asking whether the female founder in question helped set the very traps she walked into. Outdoor Voices founder Tyler Haney, for example, started her Instagram-friendly activewear company in 2014 and within five years raised more than $60 million. She seems to have been reading from the same playbook as Gelman, sitting for multiple magazine covers, participating in a long 2019 New Yorker profile that anointed her the “brand’s best model,” and announcing her pregnancy that July on Good Morning America with her own message of feminist empowerment: “As a young female founder and CEO, it’s so cool to show that you don’t have to choose career or family.”
But in February, while still on maternity leave, Haney revealed she was leaving the company. Soon after came the reports that under her watch, Outdoor Voices had been burning through cash, delaying store openings, and losing seasoned executives. Employees complained, anonymously, to BuzzFeed News that having come to work for a young female founder one called “so inspiring,” they instead found Haney presiding over a dysfunctional culture of favoritism.
Haney, who returned to a diminished role at Outdoor Voices, has acknowledged in an interview with Inc. that the brand “definitely pulled that [female founder] narrative out when it suited us … We really leaned into that story to grow this thing, and we became press darlings. But that’s all great until it’s not, because we also made ourselves targets.”
Like Haney and Gelman, many of the female entrepreneurs who have resigned or come under criticism recently founded consumer-oriented brands and became the very public faces of their companies in a way that’s more common if you’re selling leggings than, say, cloud-based enterprise software. These businesses often “get more press, because they’re more relatable to the general reader,” says Theresia Gouw, founding partner of Acrew Capital. “That can cut both ways.” And while there are certainly women who start hard-tech companies, they are in the minority: Last year, 30% of the VC investments in retail and consumer companies went to startups with at least one female founder, according to data from PitchBook and All Raise. Among tech startups, that share drops to 19%.
30% Share of VC investment in retail and consumer startups with a female founder
The retail/consumer space is a crowded one, so embracing the idea of founder as star and adopting a marketing message that preaches feminist uplift has been one way for women-led startups to cut through the noise. But it also publicly ties female founders to their companies’ failings, especially around promises of creating better spaces for underrepresented customers and employees. “It’s a very, very difficult territory to walk, to build a unicorn-scale business based on feminism. To be seen as inauthentic around that is dangerous,” says Catherine Connors, a serial entrepreneur who’s currently the CEO of the League of Badass Women, a networking startup.
Several entrepreneurs told me that this sort of founder-centric, by-women-for-women marketing is often a mandate from the VCs who invest in startups—forcing founders to choose between pitching their startups as another girly lifestyle business or not getting funding at all. “We’re the pink portfolio,” Connors says. “The assumption is that we’ll use femininity and access to the female customer for the bottom line—and to get to the $1 billion exit.”
Mauskopf says that while she and her female cofounder were raising money for their software platform, one potential investor asked why they “weren’t out there in the press more” and asked if they could try “to build a brand like TheSkimm”—a media company with little in common with Winnie, aside from its being founded by two women. “We just need people to use Winnie,” Mauskopf says. “They don’t need to care about me or my cofounder.”
Which brings us to the tech industry’s love/hate relationship with the press. Many in the startup ecosystem blame reporters for building up young, photogenic female founders only to eventually tear them down. And it’s true that the rise of these women has been partially enabled by business publications including Fortune and by the largely female journalists who cover women in business, including me. (Before joining Fortune, I edited the Inc. package on female founders tied to Gelman’s pregnant cover photo.) It’s also our responsibility to report on the failings of these companies—but when a woman is in charge, such reporting often draws accusations of bias or clickbait.
In December 2019, after the Verge reported on intense and “bullying” Slack messages that Away CEO Steph Korey sent to employees late at night and her expectations that they cancel holiday vacations to work, Korey briefly stepped down. This summer she hit back on Instagram: “The incentive isn’t to report what’s happening. It’s to write things that will be shared on social media,” she wrote. “Why are women being targeted specifically? Because readers find their takedowns even juicier.”
Korey, who in January returned as co-CEO and in October stepped back again, declined to comment. But many startup insiders argue that male leaders get away with similar demanding behavior—or worse—all the time. (See also Elon Musk, Fortune’s 2020 Businessperson of the Year.) “The dirty secret is that being in a growth-stage company, it’s not for everyone. And a lot of these companies have problematic cultures,” says Leslie Feinzaig, founder of the Female Founders Alliance, a startup community.
Instead, the rare women who secure significant VC money—whether they opt to lean in to the idea or not—are inevitably put on what All Raise’s Kostka calls “the perfection pedestal,” closely scrutinized by media, workers, and investors. With that spotlight comes the visceral fear that they could be next.
“Every time there’s a teardown, I get text messages from female founders that are just like, ‘What the hell?’ And, ‘When is it going to be me?’” says Vanessa Larco, a partner at venture capital firm NEA. “It’s scary—and it’s just not fair.”
Even some of the startup employees whose complaints have led to founder resignations acknowledge that they expect more from female founders—in part because the few who do reach the “perfection pedestal” tend to be privileged white women who often promise that their business will be the one to finally provide better opportunities to the Black and brown hourly workers they employ.
“Women are a lot more harshly held accountable. That’s part of being a woman in a male-dominated society,” says Leslieann Elle Santiago, a former assistant store manager at Reformation who is a Black-identifying Puerto Rican. “But they have a responsibility to create businesses that are not only for white women.”
The anti-racist reckoning of 2020 has both accelerated the female founder backlash and provided more of a window into how the gender double standard plays out. Direct comparisons between male- and female-led companies aren’t easy to make, but the case of Reformation comes close. Founded by former model Yael Aflalo, the “sustainable fashion” startup is a celebrity favorite that in 2019 claimed it was on track to post more than $150 million in revenue. Last July, Aflalo sold a majority stake to private equity firm Permira Advisers, telling the New York Times that her company catered to “a powerful customer who wants to be both brand- and style-conscious but also be a good person.”
But in June, after Reformation expressed social media support for Black Lives Matter, Santiago responded fiercely on Instagram, alleging that Aflalo had treated Black employees with “disgust” and denied them professional opportunities, including promotions and travel, that were offered to white Reformation employees. A week later, after Aflalo apologized and said she had “failed all of you,” she resigned as CEO. (Reformation says a third-party investigation later cleared Aflalo of being “racist”; she remains on the board.)
The outcome was a bit different at Everlane, another venture-backed retailer that promises “radical transparency” and that this summer also faced employee allegations that it had allowed anti-Black language and behavior. In June, cofounder and CEO Michael Preysman acknowledged on Instagram that he had “fallen short of addressing issues of institutional racism both inside the company and in how we present ourselves to the world.” He remained CEO and, three months later, LVMH-backed private equity giant L Catterton led a new $85 million investment in the company.
Preysman—like Pinterest’s Ben Silbermann and Carta’s Henry Ward, both of whom have also weathered allegations of discrimination this year—is proof that male founders who rely on marketing that touts their companies’ social missions are also vulnerable to damaging charges of hypocrisy. But unlike Aflalo, none faced significant consequences.
4% Share of startups valued at $1 billion or more run by female founder CEOs
“Female founders 100% deserve to be removed from their posts for horrific behavior, but the fact that there are no repercussions for men who are running these companies is crazy,” says Ifeoma Ozoma, a former Pinterest public policy manager whose claims of racism have been widely reported. “I can’t imagine a situation where a woman in Ben’s position would still be there.” (A Pinterest spokesperson says the company is conducting an independent review of its culture.)
The two men most often trotted out to refute claims that women founders are more likely to be ousted are former Uber CEO Travis Kalanick and former WeWork CEO Adam Neumann. Both were pushed out of their companies in the midst of reports of bad behavior, but only after months or years of being able to shrug off the allegations—and amid circumstances that went beyond claims of “toxic culture” or employee mistreatment. Kalanick, whose company was the subject of well-chronicled regulatory and customer complaints by 2014, didn’t step down as CEO until 2017, months after former employee Susan Fowler’s blog post about the company’s rampant sexual harassment went viral. At WeWork, a stalled IPO did what internal and external reports of Neumann’s hard-partying leadership and fostering of a “frat-boy culture” couldn’t, and WeWork’s board finally pushed him out in September 2019. (Uber did not respond to a request for comment; WeWork declined to comment.)
The cases of Kalanick and Neumann are a harsh reminder that it takes more than some bad press and a soured public opinion to fire a founder. Ultimately, the most power to purge or protect lies with investors, especially those who make up the company’s board of directors. “Boards do have an accountability and a responsibility here,” says All Raise’s Kostka. “There’s just a different standard. When something does happen, it seems like they will allow more evidence and more time for a man.”
Further complicating the issue is the question of how much control a founder has managed to retain after selling stakes to investors. Both Kalanick and Neumann maintained controlling stakes in their companies throughout fundraising, from investors willing to grant “founder-friendly” terms that few women say they feel able to ask for. (According to a study last year, the average female founder owns 48¢ in equity for every dollar owned by a male founder.) That means the bias women face while raising money can come back to bite them later by placing them at the mercy of their board.
For many of those watching the female-founder shakeout, the real question is what comes next. Investors have a long history of giving disgraced men—including Kalanick, who has raised more than $700 million for his new venture, CloudKitchens—another shot. But while some of the women who have left their CEO roles in the past 18 months have rejoined their companies in some less influential form, none have yet moved on to their next big thing.
And none would speak on the record, expressing fear and fragility about how closely they now know they’re being watched. “This is not just a ‘dust off your pants’ experience. It’s really psychologically scarring,” says one founder who was forced to resign from her company.
While this founder wasn’t ready to discuss her next move, she, like many of the other women who have spent their careers trying to navigate a system stacked against them, says she’s worried about the long-term implications of her public downfall. If women leaders come to be seen as a risky bet for funders, what little money is going their way could dry up. And then there’s the effect on would-be entrepreneurs themselves.
“Is watching all of this go down this massive deterrent for women to start companies?” this founder asks. “They’re watching all these other women and wondering: ‘If that’s the price of admission, why do I want to do it?’”
A version of this article appears in the December 2020/January 2021 issue of Fortune with the headline, “Female founders under fire: It’s hot in the spotlight.”


fortune--2020-12-03--State budgets on the brink: 2 maps of America’s looming deficits

By the dubious standards of government finance, the past decade was almost a model of prudence in statehouses across the U.S. After the financial crisis of 2008—a rare instance when collective state revenue fell—many states created new (or supplemented existing) “rainy day” funds. As a result, state and local governments entered 2020 with a combined $119 billion in such savings, according to the Brookings Institution. But the economic slowdown caused by COVID-19 has blown up budgets from coast to coast, and the impact will be lasting. Moody’s Analytics estimates that state and local government budget shortfalls could be a combined $450 billion over the next three years even as the economy recovers. Below, a state-by-state breakdown of the looming deficits.
A version of this article appears in the December 2020/January 2021 issue of Fortune with the headline, “State budgets on the brink.”