fortune--2020-01-16--Lessons from a fugitive: What the tangled tale of Marc Rich tells us about Carlos Ghosn

The Carlos Ghosn saga of a storied mogul who fled prosecution in Japan to surface in Beirut as the world’s most famous white-collar fugitive strongly recalls the tale of another tycoon on the lam who also held multiple passports and won vast riches operating a global business empire. Thirty-seven years ago, Marc Rich—then the world’s leading commodities trader—bolted the U.S. for Switzerland to escape being jailed for allegedly orchestrating what Justice Department officials termed the biggest tax fraud scheme in U.S. history. For the better part of the next two decades, Rich proved the ultimate artful dodger, running his trading empire in exile, basking in a Saint Moritz ski chalet and Moorish mansion in Marbella, and traveling extensively, both to countries where he couldn’t be extradited and clandestinely to cities where he risked being nabbed. Guided by a former high-ranking agent in the Israeli Mossad and traveling under assumed names, Rich proved a genius at outfoxing his pursuers and was never caught.
If you know the reclusive Rich’s name at all, it’s probably because on Jan. 19, 2001, two days before he left office, President Clinton pardoned the fugitive trader, unleashing a torrent of outrage in the press and Congress. Clinton later confessed that the pardon “was terrible politics. It wasn’t worth the damage it did to my reputation.” In the surreal story of Marc Rich, who died in 2013 at 78, the cast of characters encompasses a sundry list of big names prominent in today’s news, among them former New York City mayor and presidential attorney Rudy Giuliani, who led the Rich prosecution and mined PR gold from case; ex-FBI director James Comey, who as a Justice Department official helped mastermind the plots to snare Rich, only to see the manhunt foiled at every turn; and President Obama’s Attorney General Eric Holder, who as a Justice Department official famously lent crucial support to Rich’s request for a pardon.
As tensions with Iran flare once again, it’s worth remembering that Rich was a powerful, though hidden, player when Iran’s Revolutionary regime first clashed with the U.S. During the 1979 hostage crisis, it was Rich who bolstered the Ayatollah Khomeini’s economy by secretly purchasing Iranian oil in defiance of a widespread boycott. It’s testament to Rich’s extraordinary business acumen that he successfully ran the world’s largest commodities trading business as a fugitive wanted on charges punishable by over 300 years in jail, and that the company he pioneered, renamed Glencore upon his retirement, still holds that top position and boasts a $50 billion market cap.
Is Ghosn the new Rich?
The Japanese government likely dreads that Ghosn will become the new Rich. Ghosn, former CEO of auto alliance partners Nissan of Japan and Renault of France, stands accused of hiding $80 million in pay, shifting $17 million in personal losses on his personal securities trades to Nissan, and channeling funds that Nissan paid to a dealership in Oman to benefit his family. The last spectacle the Japanese want the world to witness is Ghosn hopping from mansion to hotel particulier to villa in Lebanon, France, and Brazil, all nations where he’s a citizen and hence doesn’t risk extradition (while publicly accusing Japan of political conspiracy to block him from undermining the nation’s sovereignty by merging Nissan and Renault). While Rich generally remained quiet, Ghosn is already proving a nonstop insult machine, fulminating in a marathon press conference from Beirut on Jan. 8 that he’s been victimized by the “corrupt” and “inhumane” Japanese justice system that promises “zero chance of a fair trial.”
The morning after Ghosn’s press conference, Justice Minister Masako Mori fired back in a rare briefing: “He has been propagating both within Japan and internationally false information on Japan’s legal system and its practice. That is absolutely intolerable.”
By going public, Carlos Ghosn is daring Japan to capture him. But it’s not at all certain that Japan will mount Mission: Impossible–style schemes to nail Ghosn that the U.S. deployed in its pursuit of Rich. Ruses such as persuading old friends to betray him by promising a lucrative deal if he’ll take their helicopter, or meeting them on a yacht or city where he can be nabbed, are contrary to the Japanese law enforcement tradition, according to Don Ferrarone, the legendary retired DEA agent who investigated the French Connection case and brought down Harlem drug lord Nicky Barnes. “He’s been very outspoken. In some ways he’s asking for it,” Ferrarone told Fortune. “But I don’t see the Japanese taking taking [U.S.-style] actions to lure him. It’s not in their culture. When I was working in Southeast Asia, I didn’t find the Japanese that aggressive.” Ferrarone believes that Japan will follow “a very formal diplomatic route to get him,” meaning that its authorities will rely on its intelligence networks to learn when he’s traveling to a friendly country, then work with that nation to seek his arrest and extradition.
Indeed, the Ghosn case presents a cultural challenge for Japan. If Japan sticks to its customary by-the-book approach, it will be shunning the skulduggery that often works in nailing fugitives. Hence, Japan will be tempted to abandon its usual caution in chasing white-collar criminals and hatch the kind of spy-novel plots that dogged Rich. After all, it was such a bold escape scheme, orchestrated by a former Green Beret, that smuggled Ghosn out of Japan.
For 17 years, the U.S. authorities hatched a series of plots to capture Rich that would supply the scenarios for a Hollywood thriller and a few sequels. Indeed it was Rich who set the template for what the Japanese fear Ghosn will become: the untouchable tycoon on the run.
Becoming Marc Rich
Born Marcell Reich in Antwerp to parents raised in Germany, Rich escaped the Holocaust to the U.S. in 1940, settling at age 6 in Kansas City. The family later moved to New York City, where his father ran a successful trade purchasing jute for burlap bags. At 19, Rich dropped out of New York University to work in the mail room of legendary commodities house Philipp Brothers. The firm had advanced a large loan to the Fulgencio Batista government in Cuba for mining pyrite, a mineral used in jewelry. But when Fidel Castro swept to power in 1959, Philipp Brothers risked not getting repaid, and it dispatched its rising star to Havana to find a solution. Rich recognized that the Castro regime desperately needed foreign currency, and he proposed advancing more money to get the mine working so that Cuba could generate the cash it needed to buy oil and other essentials from abroad—with Philipp Brothers trading the pyrite. Rich hammered out a deal with Castro’s top lieutenant Che Guevara, whom he described to Daniel Ammann in his biography of the trader, The King of Oil, as “energetic and lively.” Overnight, the Cuba deal made the 25-year-old Rich one of the venerable firm’s top dealmakers.
In 1963, the firm sent Rich to Madrid, where he would head the office for the next 11 years. In mid-1967, Egypt closed the Suez Canal to punish the West for supporting Israel in the Six-Day War. At the time, Israel’s Prime Minister Golda Meir and Iran’s Shah Mohammad Reza Pahlavi were deep in secret negotiations for an oil pipeline to connect the two nations, a link that would bring Tel Aviv a steady supply of Iranian crude. The shah had been waffling, but the closure of the Suez Canal suddenly made the pipeline look highly appealing. Iranian oil could reach European customers only by circling South Africa’s Cape of Good Hope at great expense. The pipeline would not only supply Israel but also provide a short cut by moving crude from Israeli ports to Western Europe. Iran concealed its 50% ownership in the pipeline, and although it denied supplying oil to Israel, the arrangement was an open secret in the industry.
Rich sensed a historic opportunity. He offered Iran a long-term contract to purchase a large portion of its production each year. Rich was able to guarantee Iran such giant volumes because he had secured contracts to supply Spain, then hungry for oil to fuel its industrialization campaign, at far lower cost than Spain was paying for supplies that circled the Horn of Africa.
In early 1974, Rich quit Philipp Brothers after the firm refused to pay him the $500,000 bonus he demanded for delivering giant profits from the pipeline deals. He quickly opened his own shop, Marc Rich & Co., with just $2 million in capital in a four-room apartment in Zug, Switzerland, a foggy tax haven south of Zurich. His chief partner was his closest collaborator at Philipp Brothers, Pincus “Pinky” Green, a shipping and logistics genius who would cohead the firm for many years to come.
Rich’s timing was quicksilver. The Arab oil boycott in the wake of the Yom Kippur War left the West starved for oil. But Iran shifted its business from Philipp Brothers to Marc Rich & Co. and kept the number of daily barrels allotted to Rich at the ongoing gigantic levels despite the overall cutbacks mandated by OPEC. Suddenly, the oil majors, known as the “seven sisters” that had long dominated the business, were severely short of oil, while Rich had plenty. His customers, notably Spain, Israel, and South Africa, paid premium prices for his reliable supplies.
Instead of scotching his most lucrative deal, the Islamic revolution that deposed the Shah of Iran in early 1979 made Rich richer than ever and showcased his mastery at courting rogue regimes. The hostage crisis prompted President Carter to ban U.S. purchases of Iranian crude. Rich and Green quickly persuaded the new Khomeini regime to keep sending them large quantities of crude because, unlike the U.S. majors, they weren’t legally prohibited from trading with America’s new enemy—a position the U.S would famously dispute in indicting Rich and Green.
Rich also secured long-term contracts that assured him ample quantities of crude from Ecuador, Nigeria, and Angola. Once again, the West was desperate for oil, and Rich was flush. Rich’s rise helped break the seven sisters’ cartel and create the “spot” oil market. His willingness to sell customers all the crude they needed at the daily spot price won market share from the majors, forcing them to move away from their reliance on fixed-price, multiyear contracts with buyers.
By the early 1980s, Marc Rich AG reigned as the biggest trader in the world. He was buying and selling more crude a year than Kuwait was producing, according to The King of Oil, which is based on extensive interviews with Rich, his partners, and his competitors.
Giuliani targets Rich
But in early 1983, Rudolph Giuliani, who had just taken charge as the U.S. Attorney in the Southern District of New York, began aggressively pursuing a case against Rich and Green for what he viewed as epic criminal misconduct. When Rich learned from his attorneys that the prosecutors were demanding that any settlement require jail time, the two partners, who had been working from Manhattan for years, fled to Zug, still the firm’s global headquarters. Months later, Giuliani with great fanfare announced that the U.S. was indicting Rich and Green “in the biggest tax evasion case in U.S. history,” and that the charges carried 352-year jail terms. Giuliani employed a weapon that he had previously used only to fight organized crime: RICO penalties that gave the prosecutors powerful leverage by enabling the U.S. to freeze the defendants’ assets. The RICO innovation, and the publicity generated by the case against Rich, would enhance Giuliani’s brand as a slayer of white-collar criminals and build a platform for launching his career in politics.
Giuliani charged Rich and Green with 65 criminal counts that fell into three major categories. First, he accused the pair of reaping $105 million in illegal profits by violating price controls on oil enacted by the Carter administration. The Carter administration had established two regulatory categories for oil: Newly discovered crude could be sold at market prices to encourage new production, while barrels already in stock were subject to caps that fixed what they could fetch at one-third of the free-to-trade price. Since every barrel of oil, new or old, looks the same, the policy was a disaster that invited abuse. The majors regularly broke the rules, generating huge profits by simply mislabeling oil in storage as newly discovered and hence tripling the price. Rich and Green also violated the jerry-rigged rules in a big way, swapping labels to pocket that $105 million. Second, Giuliani charged Rich and Green with “trading with the enemy” by purchasing hundreds of millions of dollars in Iranian oil during the hostage crisis. The third charge turned out to be the most lasting and damaging: that Rich and Green shipped the $105 million in profits from the U.S., where they were earned, to Switzerland, evading $45 million in taxes.
Giuliani used RICO to freeze the Marc Rich companies’ assets, hobbling the trading business. Just one year after the ax landed, Marc Rich & Co. and affiliates agreed to a plea bargain that enabled them to pay over $200 million in fines in return for lifting the restrictions and allowing them to once again operate freely. But Giuliani wouldn’t agree to a deal with Rich and Green, whom the U.S. Department of Justice branded as America’s most wanted white-collar fugitives, with a reward of $750,000 each on their heads.
For many years, a battery of lawyers for Rich and Green argued that they had done nothing wrong and requested that the Justice Department agree to a plea arrangement. One of Rich’s attorneys, Leonard Garment, who defended Richard Nixon in the Watergate case, did persuade Giuliani’s successor as U.S. attorney, Otto Obemaier, to meet with himself, Rich, and Green for lunch at a restaurant in the posh Grand Hotel Dolder in Zurich. Obermaier was accompanied by Assistant U.S. Attorney James Comey. The two officials gave Rich and Green the answer they had been hearing for years: They had to agree to serve time in jail in any plea agreement or return to the U.S. for trial.
For Rich and Green, imprisonment was the red line they refused to cross. According to a U.S. State Department memo, a PR exec who had been representing Rich went to the U.S. consulate in Zurich and offered $100 million for each man if the U.S. would settle their case. Rich and Green never authorized the request, but the overture hardened the Justice Department’s oft-stated stance that “they can’t buy their way out of jail.”
Rich had been living in exile for just two years when I made my first request to interview him. In 1985, I met him briefly for an off-the-record lunch at Glashof, a restaurant the company owned in Zug, where Rich consumed two glasses of Johnnie Walker Black on the rocks, interesting because colleagues later told me that even in his prime, he sipped scotch in the office during working hours, and that the tippling did nothing to dull his super-sharp trading skills. A year later, Rich agreed to a full day of interviews at his headquarters in Zug.
As I described in the 1986 Fortune story from that encounter, Rich was extremely soft-spoken. “Sometimes when I fire people, they don’t seem to notice,” he told me. He exuded an air of dour refinement, his hair slicked back and his face framed by long sideburns. “I’ve been portrayed in a horrible way,” he said, “as a workaholic, a loner, a money machine. It’s not the true picture. I’m a quiet person who’s done nothing illegal.” During our talks, Rich chain-smoked Cohiba cigars imported from Cuba. For lunch, he invited me to his hilltop villa, adorned by museum-quality works by Georges Braque, Fernand Léger, and Alberto Giacometti, as well as a Rich favorite from Spain, 20th-century painter Antonio Quiros.
At the villa, I was introduced to his terrier, Macho, and learned that Rich spoke Spanish with his wife, Denise, and three daughters. Denise, daughter of a wealthy New England shoe manufacturer, was the antithesis of her husband, a sunny extrovert who gushed, “I’m surrounded by positive energy!” At the time Denise was making quite a splash as a songwriter: She penned the hit “Frankie” for Sister Sledge and performed her own tunes on her album Sweet Pain of Love, issued by MCA. Marc and Denise divorced in 1996; Denise won a $365 million settlement and is now a doyenne of New York society and big contributor to Democratic politicians.
Back at Rich’s office in mid-afternoon, I was amazed when the door between the two longtime partners’ suites swung open and in walked a tall, crew-cut Pinky Green, nicknamed “the admiral” for his expertise in shipping. I’m sure Green has never spoken to a reporter before or since. I’d been told Green’s extreme wealth hadn’t changed his frugal ways. Pinky tooled around Zurich and Zug in one of Switzerland’s rare Buicks, an import from his native Brooklyn. By this time Green had taken the precaution of becoming a Bolivian citizen. According to a former colleague, he would regularly wait in line to fly standby to get a cheaper ticket, explaining, “Why pay more, it’s the same airplane.”
That day in Zug, a magnetically likable quipster was suddenly peppering our solemn session with memorable lines. “You came to see Marc, so here I am!” announced the admiral. Flustered by his Groucho Marx–style repartee, I asked the blandest of questions: “So Pinky, how’s the oil business?” Green volleyed back, “Isn’t that the stuff you pack sardines in?” The dizzy atmosphere inspired my next inquiry: “What do you think of women’s liberation?” Green—who was lauded as a perfect gentleman and great to work with by colleagues both male and female—riposted in his best Brooklynese, “Never heard of it.”
Rich eludes every trap
During our interviews, Rich declined to disclose where he traveled, or how he weighed the risks of journeying to nations where he might be detained and extradited. But I learned from Ammann’s book that he was advised by a full-time security consultant who had served as a colonel in the Israeli Defense Forces, as well as an agent in the Mossad. He was untouchable in Switzerland, Spain, and Israel. Switzerland refused to extradite Rich because tax evasion is not a criminal offense in Switzerland, and hence is not included in its extradition treaty with the U.S. Nor did Switzerland accept that Rich and Green had “traded with the enemy” in buying Iranian oil, since their company was based in Switzerland and not subject to the U.S. ban. His citizenship status in Israel and Spain protected him from extradition when visiting those countries.
Still, it appears that Rich took a lot of calibrated risks to keep traveling widely. In The King of Oil, which benefits from the author’s extensive discussion with Rich, Rich tells Ammann that he journeyed to Portugal, Belgium, and Bolivia, as well as many nations in the Caribbean and South America, always on a private plane not registered to Rich or the company, and always booking at hotels under an assumed name. Virtually all countries, and nations in the Caribbean and South America, have extradition treaties with the U.S., so it appears that Rich could have been detained and extradited on many of his overseas trips—if the U.S. had learned where he was traveling. “Contrary to the myth, I was able to travel to a number of countries, so I did not feel too restricted,” Rich told Ammann, who notes that the trader appeared to take great satisfaction from his success globe-trotting as a kind of invisible man.
America’s most wanted white-collar fugitive ducked capture time and again while U.S. authorities were deploying every conceivable plot to nab him. The bring-Rich-home initiative was dubbed “The Oxford Project,” and one U.S. marshal, whom I had interviewed in the mid-1980s, worked valiantly on the case full-time for 17 years.
The other schemes usually took the form of clandestine nabbing outside of Rich’s safe haven in Switzerland. Ferrarone outlined to Fortune the basic strategy for capturing Rich. “I set up a number of operations to lure Rich to locations outside Switzerland,” he recalls. “We’d get information that he was going to a foreign country, and we’d send out teams to catch him.” He notes that some foreign governments turned hostile when informed of plots to target the fugitive on their soil. “We were en route to one such location,” says Ferrarone, “when we got word that we’d be arrested if we attempted to capture Rich.” It appears the nation wasn’t Switzerland, and Ferrarone declined to disclose which state’s policy threatened to arrest the marshals.
Rich didn’t fall for the “come visit my yacht” caper. According to an official to whom I spoke, a businessman of Middle Eastern extraction approached the U.S. marshals to say that he was willing to help them capture Rich. He had extended an invitation for the commodities mogul to meet him on his yacht, and Rich was pondering the offer. The marshals and the businessman plotted to pick Rich up in a private helicopter, then fly him to a ship in the Adriatic under command of the U.S. Coast Guard. In the end, the super-suspicious Rich declined the invitation.
In 1992, the FBI learned that Rich was planning to fly to Moscow and stay at the Interpol Hotel. The Russian authorities issued a provisional warrant for his arrest. But according to The King of Oil, Rich’s super-suspicious security adviser cautioned, “Who’s going to protect you in Russia? They don’t have any laws after the fall of the Soviet Union.” Rich heeded the warning and canceled the trip.
The FBI’s tip on Russia wasn’t Rich’s closest call. In 1987, the British police tipped the U.S. marshal on the case that on a certain date, Rich planned to fly to London for a meeting of the London Metal Exchange. The marshal waited in the lounge at Biggin Hill Airport, a former military base famous for its role in the Battle of Britain, which had been turned into a busy hub for private jets. As the day wore on the fog thickened, and Rich never arrived. As it turned out, Rich was sitting in a Gulfstream bound for London when the heavy fog forced the pilot to turn around and return to Switzerland. The turn in the weather was an incredible stroke of luck. Back in the U.S., James Comey was waiting to hear that Rich was finally in custody. The marshal called Comey to render the bad news. “Damn fog!” he lamented to Comey.
The next Christmas Eve, two visitors arrived at Biggin Hill with luggage tags for “Rich” and “Green.” The marshal got the page. Had the pair made that fatal misstep? It turned out that the travelers were two women disguised as men. Rich and Green had sent them as a Christmas prank to bedevil his pursuers. “So there was some humor involved,” notes the marshal.
What Ghosn’s future holds
When it comes to Ghosn, he has reason to be wary. Russia didn’t then have an extradition treaty with the U.S. and still doesn’t. That Russia was poised to arrest Rich shows that even though the nation that a fugitive is visiting—or planning to visit—lacks an extradition treaty with the state pursuing him, the pursuing country can secure an ad hoc agreement with the government where a Rich or Ghosn is visiting or living to detain and extradite him. In fact, Japan has extradition treaties with just two nations, the U.S. and South Korea. That won’t prevent the Japanese from trying to secure a negotiated arrangement with any nation to which Ghosn is journeying.
Marc Rich retired from Marc Rich & Co. in 1993 by selling his shares in the company he cofounded to his partners for $600 million. He outfoxed the U.S. authorities until the Clinton pardon lifted all restrictions. We’ll soon see if Ghosn can outfox the Japanese the way Rich foiled the Americans, or if Japan will use new and daring ruses to nab the fugitive they dread becoming the next Marc Rich.
More must-read stories from Fortune:
—Forget policymakers. Greta Thunberg and her allies are targeting CEOs now
—Investors see a 2020 recession coming—but think they’ll make money
—The Carlos Ghosn affair: A look inside the motivations of a fugitive CEO
—Laws meant to close down tax havens and shut loopholes could have opposite effect
—What a $1,000 investment in 10 top stocks a decade ago would be worth today
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fortune--2020-01-16--‘Family culture is like a pickle jar:’ What happens when a family business expert analyzes the #Megx

‘Family culture is like a pickle jar:’ What happens when a family business expert analyzes the #Megxit royal family drama

Everything you need to know before the 2020 Census starts next week

Sibling rivalries, new spouses, “transition periods,” and disgruntled heirs. Yes, the current House of Windsor drama involving Meghan Markle and Prince Harry stepping back from the royal family (and the queen begrudgingly granting their request) has all the makings of a soap opera. But the plot points also align with the challenges of another oft-fraught realm: that of a family business.
So who better to make sense of the #Megxit tabloid fodder than a family business expert. Nigel Nicholson, a professor of organizational behavior at London Business School and author of Family Wars: The Real Stories Behind the Most Famous Family Business Feuds, was up to the task, so Fortune asked him to analyze the scandal surrounding Buckingham Palace through his family-business lens. One piece of advice? Think of the royals like a pickle jar. Of course.
This conversation has been edited for clarity.
Let’s say we have a prominent, well-known family business. Their challenge isn’t determining a successor—that seems pretty obvious—but in finding a job for a child who doesn’t have a predetermined role. How should they map that out?
Remember, the family does not exist solely for the business, nor the business solely for the family. It’s not the family’s job to “map out a role” for its members, but to facilitate their choices, and ability to choose.
Governance has to be adaptive to the changing climate of the family and needs of the business. Time for them to use their wealth to support roles that might be desired, and [provide] clarity on exclusions (e.g. joining a rival royal family!).
The royal family, seen here at a Trooping the Colour ceremony, is under fire amid Prince Harry and Meghan Markle’s decision to step back from their prominent posts. Victoria Jones—PA Images/Getty Images
What’s the best way to integrate a new spouse into the family, particularly one that may not be deeply familiar with the family business ahead of time, or one who has their own business interests?
Embrace them as a source of new ideas and insights—remember, family culture is a bit like a pickle jar—members get pickled! This means outsiders often have the sharpest perceptions of what [the family] might need in terms of reform, so listen to them. You don’t have to follow their advice, but you will benefit from listening. Help them find a role that works for them. If a trial run doesn’t work, don’t get mad with them; learn and support them in some other choice or path.
If a family member wishes to leave the family business—but has little professional experience or source of income outside that role—what’s the best approach for the family to take in navigating the potential reputational impact and in providing the financial support the defector may need in the interim?
The [family business] can be part VC fund and part educational charity—put resources into helping the person train or acquire the capacity to follow their dream, so long as [the dream] meets the requirements of clarity, feasibility and acceptability (e.g. non-compete).
Say the family matriarch is supportive of the decision of a family member and his spouse to make a new life outside the family business, but she’s looking for a “transition period” with a potential middle ground. What options does a family have?
The transition period has to have a goal; forget “middle ground”—there is only acceptable and unacceptable ground. Transitions need to be have stages: Preparation (communications, resource allocation, initial specification of options), Encounter (trying out various options), Adjustment (learning and developing the best lines of advance), and Stabilization (firming up on institutional aspects). Don’t rush it and don’t do it in public!
Meghan Markle and Prince Harry visited South Africa in October 2019. For months, rumors of family tension has followed the couple. Pool/Samir Hussein/WireImage/Getty Images
At what point should a family business seek outside counsel for a problem regarding family roles in the business?
Outside advisors can be really helpful, but don’t ask them to solve your problem for you, but to help you solve it for yourself. It’s not their job to define the role, but to facilitate your deliberations—to help you be creative in your search for redefinition. Think outside the box—it’s your family, after all! Don’t copy other models—raid them for ideas, but every family is unique and you’re entitled to do what’s uniquely right for you.
For a family business that is deeply entwined with their home market, what are the opportunities and challenges of a branch being extended to a market abroad, even one in which the business has historical ties?
It is a big step to venture abroad for the first time into a new market, and it is a big step as well not to expose the business to reputational risk by trying to extend the domestic model and failing. Far better to do something bold, original and different that is ring-fenced and separate.
How can a family business navigate the disruption caused by automation, social media, climate change (and so on); in this regard, is being a family business a benefit or a negative?
Family businesses can thrive in the digital age by virtue of their longevity, commitment to the long term, ability to take radical decisions fast, and value-driven commitment. But they need to be savvy and have some reverse mentoring, so they can feel at home in the digital age through the advice and experience of the younger members. The senior [family member]’s job is to make sure the culture is in good shape, with the family values honored and respected—it is to these that people should defer, not age or seniority.
You haven’t asked what about the problem of the patriarch or matriarch who is reluctant to let go. They need to find a new role that honors their experience and achievements, draws on their wisdom, but takes them out of the firing line with good grace.
More must-read stories from Fortune:
—Geopolitical events just don’t bounce oil prices like they used to
—The Carlos Ghosn affair: A look inside the motivations of a fugitive CEO
—How the re-election of Taiwan’s president could reshape Asia’s economic landscape
—Laws meant to close down tax havens and shut loopholes could have opposite effect
—7 M&As that defined a decade of dealmaking and reshaped the economy
Catch up with Data Sheet, Fortune’s daily digest on the business of tech.


fortune--2020-01-16--Why some experts think auto loans are the next ‘red flag’ for the economy

Here is a spooky financial scenario: over seven million Americans are more than three months behind on their loan payments. Some owe much more than the asset is actually worth. And many of those loans are “subprime,” taken out by borrowers with poor credit.
Sound familiar? No, it’s not the housing crisis of more than a decade ago—it’s auto loans, circa 2020. And it’s making some economists very nervous indeed.
“There are a few things that are worrying: The amount being financed, the shoddy underwriting for consumers with weaker credit, and the negative equity being rolled over from one loan to the next,” says Greg McBride, chief financial analyst for personal finance website Bankrate.com.
“We’ve seen this movie before on the mortgage side—and it didn’t end well.”
So what’s going on? While headline economic numbers like stock-market averages have been faring well, and the wealth of the 1% has been ballooning by trillions, lower-income Americans are suffering—and it’s showing up in their car loans.
We haven’t heard much about these loans, since many politicians and activists are focused on other kinds of debt—like student loans, now at a whopping $1.6 trillion, according to the Federal Reserve. But auto loans aren’t far behind: They too have rocketed past a trillion, and now stand at around $1.2 trillion, according to a report by credit agency Experian.
And the condition of those loans is worrisome. Almost 5% of the total auto-loan balance is now more than 90 days delinquent, according to the Household Debt and Credit report from the New York Fed. That’s the highest share since the post-financial crisis days.
The portion of the total that is rising the fastest: “Deep subprime,” or those with credit scores between 300-500. Those debts rose 7.8% year-over-year, according to Experian’s “State of the Automotive Finance Market” report.
“In the mortgage market, the percentage of subprime loans is now very low,” says David Musto, a finance professor at the University of Pennsylvania’s Wharton School. “But with car loans, the percentage of subprime is right where we were before—and with a bigger balance. And with longer terms on those loans, it means people are spending longer time in a negative-equity situation.”
Why this is different
But while auto loan delinquencies may be reminiscent of the housing crisis, there are some important distinctions to be made. Though the overall number of Americans facing auto-loan delinquency is at a record high, the percentage of late payers is actually down, since the overall number of auto loans has increased significantly over the years.
And late auto payments aren’t quite as existentially threatening as late house payments.
For context, the size of the auto-loan market is approximately $1.2 trillion—about a tenth of the mortgage market, which stands around $10.3 trillion.
If auto loans start defaulting on a large scale, it will claim a couple of victims: Firstly consumers, who will find it more challenging to get to work and support their families. Secondly, lending institutions—primarily banks (comprising 35.9% of the auto loan market) and captive lenders (subsidiaries of the automakers themselves, with 34.8% of the market), followed by credit unions (19.5%).
Moreover, auto loans haven’t been securitized like mortgages were. So while bad home loans were chopped up and sold to countless investors—meaning the devastation showed up in 401ks and pension plans around the country, creating a nasty domino effect—the pain of bad auto loans is largely restricted to the borrower and the lender.
“Why the mortgage crisis caused so much trouble, was because of who ate that loss,” says Musto. “In the case of auto loans, it is harder for one person’s distress to become another person’s distress.”
Nevertheless, these troublesome numbers are indicative of one thing: Weakness at the lower end of the economy. It means many families are living paycheck to paycheck, and simply can’t meet the obligations of the monthly car note—reminiscent of that oft-cited statistic that 40% of Americans can’t come up with a $400 emergency expense.
A couple of notes for consumers: If you are locked in a high-interest car loan, you do have options. For one thing, with interest rates still so low, another lender might be willing to refinance your loan at a more reasonable rate, says Musto.
Or if you find yourselves in serious financial crisis, because of a medical event or job loss, you might be able to get some temporary forbearance from your lender. This is typically done on an ad-hoc basis, says Musto, and not under official auspices, such as the income-based repayment plan for federal student loans.
Finally, don’t take steps in the wrong direction by continually getting new vehicles and rolling your loans bigger and bigger. Instead, if your old beater still works, keep driving it until the wheels fall off, and that loan is paid off
One thing is sure: If families are falling that far behind on car loans during heady economic times, it doesn’t portend well for when we enter an inevitable slowdown.
“The average amount being financed is $31,000, which means around a $600-a-month payment,” says Bankrate’s McBride. “That is a budget-buster for anyone, and there is no wiggle room.
Adds McBride: “If at some point your paycheck stops, or a two-paycheck household becomes one paycheck, a $600 monthly obligation can cause a real problem, real fast.”
More must-read stories from Fortune:
—25 ideas that will shape the 2020s
—USPS could privatize as early as next year
—UPS’s $20 billion bet on e-commerce is paying off
—Airbnb copes with a bad trip on the road to a 2020 IPO
—The Trump administration is targeting anti-Trump Facebook users
Subscribe to Fortune’s forthcoming Bull Sheet for no-nonsense finance news and analysis daily.


fortune--2020-01-16--Germany agrees to pay utility companies billions to fast track coal phase out

Germany will pay utility companies billions of euros to speed up the shutdown of their coal-fired power plants as part of the country’s efforts to fight climate change, the government said Thursday.
The agreement reached after late-night deliberations between federal ministers and representatives of four coal-mining states removes a key hurdle in Germany’s plan to curb greenhouse gas emissions over the coming decades.
Some regions, particularly in the less prosperous east, are heavily dependent on mining lignite, or brown coal. Together with imported bituminous — or black — coal it provides about a third of Germany’s electricity needs but is also responsible for a big share of the country’s carbon emissions.
Finance Minister Olaf Scholz said that operators of heavily polluting coal-fired power plants in western Germany will receive 2.6 billion euros ($2.9 billion) in compensation for switching them off early, while 1.75 billion euros will go to those with plants in the east. The compensation is separate from up to 40 billion euros that the government has already promised to coal-mining regions to soften the blow of abandoning the fossil fuel.
The government said reviews will be carried out in 2026 and 2029 to determine whether Germany can exit coal-fired electricity generation in 2035, three years before the final deadline.
“What we have here is a good agreement for climate protection because it makes clear that we mean it seriously,” Economy Minister Peter Altmaier said. He added that the government plans to bring legislation to parliament at the end of this month.
Environmental campaigners criticized the decision though, noting that the agreement will see a new coal-fired plant — Datteln 4 — go on-line this year and allow for the expansion of the Garzweiler open-cast mine in western Germany, though a nearby forest that has been the target of long-running protests will be spared.
“Australia’s forests are burning, millions of people are demonstrating for climate protection and the German government is clearing the way for a new coal power plant,” lamented Martin Kaiser, the managing director of Greenpeace Germany. “Nothing shows more clearly than Datteln 4 that this government can’t find an answer to the climate crisis.”
“Chancellor (Angela) Merkel has missed a chance today to provide companies with long-term planning safety and to send a signal that Germany is reacting appropriately to the climate crisis,” said Kaiser.
The response from businesses to the agreement was mixed.
Shares in German utility companies E.ON and RWE, which both stand to receive significant compensation for shutting down their coal plants, were up over 2% on the Frankfurt exchange Thursday.
But Eric Schweitzer, who heads the Association of German Chambers of Commerce and Industry, said a key question is how the electricity coming from coal-fired power plants will be replaced in future. The government has set a target of generating 65% of Germany’s electricity from renewable sources by 2030.
Environment Minister Svenja Schulze acknowledged that Germany will need a “massive expansion of wind and solar energy” as the country is also in the process of exiting atomic power, with the last nuclear reactor set to go offline at the end of 2022.
“We are the first country that is exiting nuclear and coal power on a binding basis, and this is an important international signal that we are sending,” she said of Thursday’s agreement.
The head of Germany’s main industrial lobby group, BDI, urged the government not to wait until 2026 — three years after the shutdown of the last nuclear plant — to review the measures.
But Altmaier, the economy minister, said that while there would less “excess production” in Germany in the future, “we are very sure that we can ensure sufficient electricity supply for business but also for private consumers.”
More must-read stories from Fortune:
—U.S.-Iran standoff pushes Saudi Aramco shares into correction territory—and analysts expect it to drop further
—Greenpeace ranks China’s tech giants on renewable energy
—2020 Crystal Ball: Predictions for the economy, politics, technology, and more
—Climate change is hitting the insurance industry hard: How Swiss Re is adapting
—The Future 50 sustainability all stars
Subscribe to The Loop, a weekly look at the revolutions in energy, tech, and sustainability.


fortune--2020-01-16--No more free lunch: Food-delivery services feeling pressure to finally turn a profit

On-demand food delivery services are being pressured these days to do more than drop off burgers and fries. They must prove they can actually make money—a relatively new requirement for the industry that, for years, has lived large off of investors.
DoorDash, Uber Eats, Postmates, and Grubhub rapidly expanded as customers gobbled up the opportunity to have meals delivered to their homes for a nominal, and sometimes nonexistent, fee. But as the companies mature and venture capitalists tighten their purse strings, many wonder whether these venture-backed businesses will be able to continue their big-spending ways.
“Regardless of the unit economics, their launch and go-to-market strategy is almost entirely dependent on venture capital,” said Jordan Nof, managing partner of Tusk Ventures, which passed on investing in gig-economy companies. “Getting food delivered every day from whatever restaurant for lunch and dinner isn’t something, broadly speaking, that is sustainable in its current form.”
The shift in sentiment is a microcosm of the reduced appetite many investors have for risk. Following a big year of initial public offerings, some of which tanked, many investors have started to walk back their rapid-growth-focused investment strategies. Companies, especially those within the gig economy, are being held to a new standard: profits, and not just growth. And some on-demand food delivery services are starting to feel the squeeze.
Following lower third-quarter profits this year, Grubhub, one of the oldest competitors in the space, reportedly hired financial advisers to explore putting the company up for sale, according to the Wall Street Journal last week. Since the report, Grubhub has said that there is “no process in place” and “no plans” for a sale, even though it admitted that it always consults advisers about various issues including “potential acquisition opportunities.”
Meanwhile, Postmates delayed its IPO in October, blaming market conditions and providing fuel for speculation that the company is still hoping for a sale. A month later, Uber Eats announced plans to exit markets where it failed to become one of the top two players—a massive change from the previous serve-all-cities strategy it and most rivals had.
DoorDash, which has been rapidly expanding into new markets, has been relatively silent about its financial results. But based on reports that the company is readying for an initial public offering, the public soon may know more about its quarterly performance.
And even delivery services abroad are feeling the crunch. Deliveroo, based in the U.K., suffered a 2018 loss before certain expenses equivalent to $302 million—16% more than in the previous year. The company, backed by big investors including Amazon, reportedly needed a loan following a U.K. government probe into whether Amazon’s stake in the startup harms competition, according to Bloomberg. The latest loan, provided by Amazon and described as being of “significant” size, is expected to help Deliveroo continue its operations.
“What I know is, delivery is not profitable,” said Chris Webb, CEO of ChowNow, which provides software and support to restaurants for food delivery. “It’s been the same way since these companies started.”
The future of food delivery could play out a number of ways. Companies could refocus on dense, urban areas where they’re more likely to turn a profit because they could deliver more meals per trip, said Nof. They could also switch to offering more deliveries of fast food than restaurant meals, which, according to Webb, would help the companies lower their cost per delivery.
Additionally, delivery companies could sell themselves to larger corporations that are willing to take on losses like Amazon (even though Amazon shuttered its small food delivery service in June). Or, to earn more revenue, they could pivot into other services like renting space in shared kitchens.
In a worst-case scenario like venture capital drying up or the economy taking a downturn, some food delivery services may have to shutter.
At the very least, more consolidation is ahead, regardless of the economy.
Already, DoorDash completed its acquisition of Caviar, one of the smallest players in the food delivery field. But with Postmates, Uber Eats, and Grubhub, along with DoorDash, still in business, analysts expect to see more mergers within the next year or two.
If Grubhub were to sell, Uber Eats would be the most likely buyer, according to analysts at JMP Securities and J.P. Morgan. That’s because DoorDash and Postmates lack public equity as private companies, and therefore would likely need to raise more cash to afford it.
One thing that Grubhub has going for it, in addition to its size, is that it turned a profit during the first three quarters of 2019.
“That’s attractive for Uber as they march toward profitability,” said Ron Josey, JMP Securities analyst.
But even in the case of an acquisition, consolidation isn’t expected to end there. ChowNow’s Webb, who’s been participating in and monitoring the food delivery market for nearly 10 years, said he believes Postmates will also be sold.
“They’re likely going to have to sell themselves to someone who can take the losses or pare back and get to breakeven, which is a very hard task,” he said. “So they’ll likely get bought, but not for a whole lot of money.”
Josey expects companies will eventually curtail their expansions and discount fees, making it easier for them to become profitable. But Nof countered by asking how many customers would be willing to pay for food delivery that’s not subsidized by venture capitalists, particularly if there’s an economic downturn.
“This is the quintessential [example of] applications solving problems that really don’t exist,” said Nof. “This is nice to have; this is not something we need to have. These are convenience factors.”
More must-read stories from Fortune:
—Greenpeace ranks China’s tech giants on renewable energy
—Sex tech steals the spotlight at CES
—Why there are so many scooters in Los Angeles
—What a $1,000 investment in 10 top stocks a decade ago would be worth today
—Best of CES 2020? Tech sites’ opinions differ wildly
Catch up with Data Sheet, Fortune’s daily digest on the business of tech.


fortune--2020-01-17--Best Buy is investigating CEO Corie Barry’s personal conduct

‘ Congress , you ’ re our last hope.
’ Basecamp , PopSockets , Sonos , and Tile plead for @ @

Best Buy Co. said it’s investigating CEO Corie Barry’s personal conduct, a potential blow to the electronics retailer that comes eight years after a former CEO resigned amid a similar probe.
The board received an anonymous letter with the allegations against Barry, according to a statement. Best Buy hired the law firm Sidley Austin LLP to conduct an independent review and encouraged “the letter’s author to come forward and be part of that confidential process,” the company said.
“The board has my full cooperation and support as it undertakes this review, and I look forward to its resolution in the near term,” Barry, who is 45, said in the statement that was emailed to Bloomberg News. The company declined to comment beyond the statement.
Earlier, the Wall Street Journal reported that the Barry was in a romantic relationship with former SVP Karl Sanft, citing a copy of the anonymous letter that it said was delivered Dec. 7. The letter alleges the relationship occurred before she took over as CEO last year, the Journal said.
Best Buy shares fell as much as 2.3% after the close of regular trading before paring most of the decline. Sanft could not immediately be reached for comment when contacted on LinkedIn and email.
If the probe leads to Barry’s departure, her predecessor Hubert Joly, who’s currently leading the board as executive chairman, could return as CEO on an interim basis, according to Michael Pachter, an analyst at Wedbush Securities.
“I am not worried about future of the company at all,” he said. “But this does speak to something culturally odd about Best Buy. I just don’t get it.”
It’s not the first time Best Buy has had issues related to office romances. Former CEO Brian Dunn resigned in 2012 after an inappropriate relationship, with the founder stepping down as chairman shortly afterwards for failing to tell the board.
Holiday results
The announcement could be a distraction for the company as it prepares to release results for the all-important holiday period. The year-end shopping season was marred by a poor selection of electronics goods, experts say, which has dented the results of other retailers. Best Buy, given its market position, may be especially affected by the trend.
The company’s stock gained 66% last year—more than double the return of the S&P 500 Index—as the company expanded its array of services designed to help consumers integrate electronics in their homes.
Barrie took over as CEO last year after serving as chief financial and strategic transformation officer. She helped create plans to find new revenue streams, including an in-home advisory program she spearheaded to help customers with any tech-related issue. That focus on services, coupled with expanded e-commerce operations, have helped Best Buy to bounce back after years of losing market share to Amazon and other competitors.
This story was updated on Jan. 17, 2020 at 6:04 p.m. ET with additional information.
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—Retailers reuse and recycle the way to increased growth
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—How the 2010s changed retail forever
—Consumers are turning away from real fur, but faux fur isn’t a perfect fix
—After a decade of e-commerce, convenience just isn’t enough
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fortune--2020-01-17--‘Congress, you’re our last hope.’ Basecamp, PopSockets, Sonos, and Tile plead for antitrust action

Why Gap Inc. torpedoed its Old Navy spinoff

On Friday, members of Congress heard businesses complain about blatant intellectual property theft, predatory pricing, and other unfair business practices. The target of the complaints wasn’t China, however, but U.S. tech giants Apple, Amazon, Google, and Facebook.
One by one, executives of smaller tech firms pleaded for action to the House Subcommittee on Antitrust, which had traveled to the University of Colorado in Boulder to hear from entrepreneurs about the growing dominance of the biggest tech firms in the U.S.
“Venture capital firms are well aware of the kill zone that surrounds start ups that pass within striking distance of the dominant platforms,” Patrick Spence, CEO of smart speaker maker Sonos, told the committee.
Spence claimed his company had been browbeaten by Google, which he claims deliberately infringed on its patents and refused to provide access to its popular Google Assistant voice service, unless Sonos also blocked consumers from having simultaneous access to Amazon’s competing Alexa tool.
David Barnett, the CEO of phone accessory maker PopSockets, described how Amazon allegedly ignored blatant counterfeits to his company’s products, while also pressuring him to pay for discounts that PopSockets had never agreed to under contact. Barnett also described it as his “weirdest relationship” with a retailer.
“It’s bullying with a smile,” Barnett testified, adding that Amazon’s demands invariably came by telephone from representatives who followed a strict script. When PopSockets decided to terminate its relationship with Amazon, he said the Seattle giant responded by saying it wasn’t leaving the relationship, then punished it by withholding funds it owed and by cutting off all its licensed resellers. “I found this unbelievable,” Barnett said.
Barnett and Spence joined executives from two other small tech firms who detailed abusive behavior by the four giants, and who pleaded for lawmakers to act.
“Help us Congress, you’re our last hope,” said David Hansson, the founder of project software service Basecamp who also decried Google’s practice of showing ads for competing services when customers searched for his company.
Congress appears to be listening to the smaller businesses’ call for help. Committee members repeatedly expressed sympathy for the companies, and described their own misgivings that the tech giants may be stifling innovation and abusing their monopolies over data.
The most worrisome development for the big tech firms is that Congressional concern seems to be emanating from both sides of the aisle. Ken Buck (R-Co), a staunch conservative and small government advocate indicated Congress is ready to take concrete measures to address dominance by big players.
“There is great bipartisanship in the examination of this,” said Buck. “It’s clear there’s abuse in the marketplace and a need for action.”
Such words likely came as welcome news to Kirsten Daru, the vice president of Tile, which makes a gadget that helps consumers keep track of personal items like keys and wallets. She described how Apple has recently decided to create a similar product, and that it has tilted the scales in favor of its own service—a not uncommon complaint since last year when complaints arose that Apple promotes its own products first in its App Store.
Basecamp’s Hansson likewise decried Apple’s behavior in controlling the App Store, saying companies are at mercy of an app review process that “would make Kafka blush.”
All of this would seem to portend trouble for the big tech players, but for the fact that the members of Congress also expressed uncertainty about what the remedy should be. Buck and others raised the possibility of rewriting antitrust laws, or increasing funding to the agencies charged with antitrust enforcement, but offered few specifics.
In an interview with Fortune after the hearing, Buck said he was keen to obtain more information before committing to any specific actions. Meanwhile, subcommittee Chairman David Cicilline (D-RI), told Fortune he believes the antitrust agencies are sorely underfunded, but also suggested he was wary of drastic measures such as breaking up the large tech companies.
Cicilline pledged action in the coming months, saying the subcommittee would present its findings to Congress by the end of March.
It seems unlikely, however, that major legal challenges will affect the tech giants anytime soon. As of Friday, the share prices of Apple, Amazon, Google and Facebook were all at or near their all-time highs.
More must-read stories from Fortune:
—Food-delivery services feeling pressure to finally turn a profit
—Beware: Iranian cyberattacks may actually be false flags
—How to avoid the growing ‘fleeceware’ scam
—What $1,000 in 10 top stocks a decade ago would be worth today
—Jack Dorsey makes it clear: Twitter will never get an edit button
Catch up with Data Sheet, Fortune’s daily digest on the business of tech.


fortune--2020-01-17--The most active states in America

The most active states in America

This is the web version of Brainstorm Health Daily, Fortune’s daily newsletter on the top health care news. To get it delivered daily to your in-box, sign up here.
Hello and happy Friday, readers!
Do you live in an “active” state?
The Centers for Disease Control (CDC) is out with a new report on “adult physical inactivity.” The report was based on a combined effort between the CDC and American states’ various health departments, and the data was amassed via telephone interviews.
The findings? “[A]ll states and territories had more than 15 percent of adults who were physically inactive and this estimate ranged from 17.3 to 47.7%” between 2015 and 2018.
But, as always, there are significant nuances to these ranges based on demographics (and, keep in mind, this is based on self-reported data, which can itself be skewed). For instance, the most active states based on the studies were Washington, Orgeon, Utah, Colorado. D.C. was also among the bunch.
Many southern states, including Louisiana, Alabama, Mississippi, Arkansas, and others, fared much worse in the study. The Northeast also had a high prevalence of physical inactivity.
We’ve reported often on the social determinants of health, and how inequity across racial and geographic lines can literally eat away at someone’s chances of living a healthier and longer life. The new CDC report seems to add to that collection of knowledge.
Read on for the day’s news, and have a wonderful weekend.
Sy Mukherjee
sayak.mukherjee@fortune.com
@the_sy_guy
DIGITAL HEALTH
The deeply disturbing health implications of a Russian search engine. My colleague David Z. Morris is up with a crucial, and deeply disturbing, story that cuts at the intersection of technology, public and mental health, and basic norms of child protection and decency. David's deep reporting exposes the failures of Russia's largest search engine in preventing the scourge of child pornography. It's an incredible piece of work, and while the subject matter is stomach-churning, it is well worth the read. (Fortune)
INDICATIONS
Could we see a biosimilar burst in the coming years? As the JP Morgan Healthcare Conference comes to a close, South Korea-based Celltrion is mapping out an ambitious project: a launch of a new "biosimilar" drug every year for the next decade. Biosimilars are essentially the generic versions of often-expensive biologic drugs, and while they've been around in other nations for well over a decade, they haven't exactly dominated the U.S. market (and a lot of that has to do with IP lawsuits and patent-evergreening). The key element to watch out for over the next ten years is whether or not this is just a European and Asian phenomenon. (Pharmaphorum)
There was an $8 billion verdict against a Johnson & Johnson antipsychotic drug. It's been reduced to $6.8 million. Reuters reports that a Pennsylvania judge has cut an $8 billion verdict against Johnson & Johnson over allegations that its antipsychotic medication Risperdal could lead to breast growth in men (and that the company failed to warn patients about the side effect) down to $6.8 million. This isn't exactly rare in pharmaceutical jury cases—the extent of the reduction, however, is notable. Both the plaintiffs and the defendants reportedly plan to appeal. (Reuters)
THE BIG PICTURE
Obamacare and the issue of "severability." What makes a provision of a law "severable" from the rest of it? As in, could a statute work if one key component of it were later repealed—and would that change the constitutionality of the underlying law? These are the complicated legal questions at the heart of a major case that the Trump administration and House Republicans are using in an attempt to strike down the Affordable Care Act, or Obamacare. The thinking goes that the repeal of the ACA's individual mandate makes the entirety of the law unworkable and unconstitutional (i.e., the mandate cannot be "severed" from the rest of the law itself.). But a new report from the nonpartisan Kaiser Family Foundation (KFF) casts some doubt on that theory and rebukes the idea that the elimination of the individual mandate would lead to a "death spiral" in these insurance marketplaces. "Going into 2019, insurers reported that the reduction of the penalty to $0 drove premiums up by about 5 percentage points. Nonetheless, premiums were largely steady in 2019, on average, in part because insurers had priced too high in 2018. Despite concerns about the continuing impact of the loss of the mandate penalty, the individual market has remained fairly stable through 2019," wrote the study authors.
REQUIRED READING
We Asked 6 Experts to Parse the China Trade Agreement. Here's What the U.S. Won (and Lost), by Erik Sherman
Alphabet Joins the $1 Trillion Club, by Ryan Vlastelica & Bloomberg
Lessons from a Fugitive: What the Tangled Tale of Marc Rich Tells Us About Carlos Ghosn, by Shawn Tully
Sign up for other Fortune newsletters.


fortune--2020-01-17--Rep. Ayanna Pressley, bald and beautiful, discusses life with alopecia

This is the web version of raceAhead, Fortune’s daily newsletter on race, culture, and inclusive leadership. To get it delivered daily to your inbox, sign up here.
Pro-tip: Freshen up your LinkedIn if your boss doesn’t inspire you with their purpose-driven mindset and excellent communication skills. Also, the WNBA leads the way, Watchmen in limbo, and Rep. Ayanna Pressley will move you to tears.
But first, here’s your week in review in Haiku.
I love the pomp of
servants in procession, more
than the circumstance.
Swear an oath! Sign your
name! Silence all the bells and
tweets and photo ops!
While stage right, it is
still thumbs up, WhatsApp madness.
At least somewhere a
storm brings sweet relief;
others still on shaky ground.
Now, to address the
New World Disorder:
If we’re all on shaky ground
pomp won’t be enough.
Wishing you a sweetly relieving long weekend. RaceAhead returns Tuesday, Jan. 21, 2020.
Ellen McGirt
@ellmcgirt
Ellen.McGirt@fortune.com
On Point
Rep. Ayanna Pressley reveals she has alopecia in a poignant and powerful video op-ed The Massachusetts Congresswoman begins by saying how much her natural hair and braids meant to her. When she first got Senegalese twists about four years ago, "I felt I met myself for the very first time." What had been a transitional hairstyle became a statement—not of militancy or anger, but one of connection. “I was not prepared for the glorious gift of acceptance in the community.” And then one day, bald spots appeared. Then more. She lost her last piece of hair the night before the presidential impeachment vote before the House of Representatives. She delivered her vote managing a private grief. Now, she’s showing her bald head “to be freed from the secret and the shame that that secret carries with it,” she says. “It’s about self-agency. It’s about power. It’s about acceptance.”
The Root
A new LinkedIn poll says your EQ matters most More than half of the 14,000 respondents to a recent LinkedIn survey say that a mastery of soft skills—a purpose-driven and caring mindset, the ability to engage and inspire, and emotional intelligence—will be required to thrive in rapidly changing world. About the same amount say that their current leadership isn’t delivering. Leadership development folks, this is your moment.
Fast Company
A second Season of HBO’s The Watchmen is unlikely No drama, says series creator Damon Lindelof, he’s just not interested in a second act. While he’s given any studio follow-up his blessing, HBO is just sort of shrugging it off at the moment. "It would be hard to imagine doing it without Damon involved in some way," says HBO programming head Casey Bloys. The series garnered critical acclaim for its searing alternate-reality exploration of race and criminal justice (and superheroes and space villainy). It was a good run.
USA Today
On Background
When you go from being the office pet to the office threat This is a stunningly good assessment of a phenomenon that I had not fully considered before: The moment when the diversity hire, specifically a Black woman, stops being a novel delight and becomes “problematic” when she asserts herself and does her job. It happens when they "are embraced and groomed by organizations until they start demonstrating high levels of confidence and excel in their role, a transition that may be perceived as threatening by employers.” It’s backed up by a study published in 2013 by now associate dean at the University of Georgia, Kecia M. Thomas.
Zora
What the world can learn from the WNBA Britni de la Cretaz breaks down the league’s new collective bargaining agreement which includes truly groundbreaking benefits for women, including fully paid maternity leave, reimbursement for costs related to fertility, adoption and surrogacy, a child care stipend, and mental health services designed to meet the needs of new and working parents. While every employer should take note, de la Cretaz says it's important to note an often overlooked constituency. “[I]n a league like the WNBA, which has a high number of queer players, these benefits are even more important, guaranteeing that they have the ability to seek out whatever kind of family planning they would like,” she writes. Please read and share.
InStyle
A documentary charts the portrayal of “American Indians” in Hollywood Reel Injun is an outstanding 2009 documentary directed by Cree filmmaker Neil Diamond, that explores the portrayal of the "American Indian" through the Hollywood lens over the century-long history of film. There are many jaw-dropping surprises; some of the earliest films ever created were by Indigenous people celebrating their own culture. Then along came John Wayne. Though an inspiring Indigenous filmmaker movement continues to grow, the struggle to balance the deep cultural damage of John Wayne-era depictions of Indian heritage continues to this day. If you make time for one film outside your normal viewing habits, please make it this one.
Netflix
Quote
“Hard times are coming, when we’ll be wanting the voices of writers who can see alternatives to how we live now, can see through our fear-stricken society and its obsessive technologies to other ways of being, and even imagine real grounds for hope. We’ll need writers who can remember freedom—poets, visionaries—realists of a larger reality. Right now, we need writers who know the difference between production of a market commodity and the practice of an art. Developing written material to suit sales strategies in order to maximise corporate profit and advertising revenue is not the same thing as responsible book publishing or authorship.”
—Ursula K. Le Guin
The future of Fortune is here
In 1930, Fortune published its first-ever issue, featuring the goddess Fortuna and her wheel on the cover. This year, on our 90th anniversary, we’re celebrating with a new Fortune. Here’s what’s in store for you:


fortune--2020-01-17--Why Gap Inc. torpedoed its Old Navy spinoff

When Gap Inc. announced last February that it would spin off its massive Old Navy chain, shares rose 19%. But when the troubled apparel company said on Thursday it was calling off that plan, shares also rose.
The stock’s moves reflect just how badly Gap Inc.’s fortunes have deteriorated in the past year: Its flagship brand, Gap, continues to quickly decline; its CEO abruptly exited in November; and Old Navy, its biggest brand and until recently highly successful, is now in a slump. Shares last year rose as high as $31.39, but were trading at $18.03 Thursday before Gap announced its news.
The rationale for the spinoff had been that Old Navy, which generated almost half of Gap Inc.’s $16.6 billion in 2018, would flourish as a separate stock of a booming brand, not weighed down by the poor performances of Gap and Banana Republic. (Gap Inc.’s other bright spot has been Athleta, a Lululemon Athletica competitor it expects will soon hit the $2 billion sales threshold.)
But Old Navy, whose chief executive Sonia Syngal told Fortune last year she thinks the brand can hit $10 billion in sales within a few years and plans to add 1,000 stores, saw its comparable sales fall in each of the first three quarters of 2019 after years of fast growth, hurt by factors such as product misfires and the popularity of Target’s store brands. (Gap has long been a laggard, with only quarter of growth in the past five years.) Gap Inc. will report full fourth-quarter results on Feb. 27.
Gap was founded in 1969 in San Francisco, at first selling jeans from Levi Strauss & Co. and later starting its namesake brand that made it part of American culture. In the 1990s, it created Old Navy as a discount alternative to Gap and turned Banana Republic into the go-to chain for young adults seeking clothes for work and going out.
But more recently, the company has struggled with issues such as declining mall traffic, countless fashion missteps, and operational challenges. Old Navy, with its focus on fun, affordable clothing for the whole family, had for years been the exception, becoming the second largest apparel brand in the country after Nike.
Gap Inc. warned investors in September that the separation would create a one-time expense of between $400 million and $450 million and cost $300 million to $350 million in terms of capital over time as Old Navy built its own infrastructure, such as a technology platform. That, coupled with the poor sales results, made the spinoff seem more and more like expensive financial engineering rather than anything that would improve the brands, increasing the odds that the stocks of Gap Inc. and Old Navy would perform poorly. Wall Street recently had been clamoring for Gap Inc. to pull the plug on the plan.
Robert Fisher, interim CEO and son of Gap Inc.’s founders, said in a statement that “the cost and complexity of splitting into two companies, combined with softer business performance, limited our ability to create appropriate value from separation.”
Wall Street analysts agreed. “The market does not need two stand-alone negatively comping specialty apparel retailers,” Credit Suisse analyst Michael Binetti wrote in a research note on Friday.
What’s more, Gap Inc. had said that there would be “dis-synergies” from the split, given how many resources Old Navy and the rest of the company share in terms of buying fabrics, manufacturing facilities, and clout with landlords in negotiating rent.
The about-face, coupled with a number of executive departures (the CEO of Gap brand, Neil Fiske, is leaving the company, Gap said Thursday) and years of failed efforts to turn Gap and Banana Republic around, have created the sense of a distracted company adrift at a time of upheaval in apparel retail.
Still, there was a small glimmer of improvement in Gap’s announcement on Thursday: The company said comparable sales for 2019 would be at the higher end of its forecast, a forecast that nonetheless projected a sales decline. Gap Inc. also said its 2019 adjusted earnings would come in slightly above its previous outlook of $1.70 to $1.75 per share, crediting less discounting than expected at Old Navy during the holidays.
Fisher tried to put on a brave face about Gap Inc.’s 180-degree turn on a deal it had been hyping all last year, saying the preparation work for the spinoff had “shone a bright light on operational inefficiencies and areas for improvement.” He added: “We have learned a lot and intend to operate Gap Inc. in a more rigorous and transformational manner that empowers our growth brands.”
Gap Inc. investors have heard this multiple times before. But now, without a financial maneuver to distract anyone, the company can try to show that this time its pledge will amount to more than empty promises.


fortune--2020-01-17--In promoting Hulu documentary, Hillary Clinton says she ‘should have done more’ to repair her public

In promoting Hulu documentary, Hillary Clinton says she ‘should have done more’ to repair her public image

Journalists who’ve been parked inside the Langham Hotel in Pasadena, Calif. during the TCA Winter Press Tour for nearly two weeks were treated, temporarily, to a different brand of TV talent Friday morning when former secretary of state Hillary Clinton took the stage to promote her documentary Hillary, streaming on Hulu March 5.
Joined by filmmaker Nanette Burstein (The Kid Stays in the Picture), whose film chronicles the former first lady’s personal and professional history, Clinton fielded a slew of timely questions, starting with her thoughts on why female politicians so often must battle the notion of “likability.”
“There is an unfair double-standard and disadvantage to how women are interpreted [in the media],” said Clinton. “I’m in the camp that: The more women who are out there, the more we will realize that women have same rights to have a full range of emotions.”
Clinton explained that Hillary initially began as a way to chronicle her run for president in 2016. When she lost to Donald Trump, the project led by Burstein—who by then had gathered 1,700 hours of footage— showed potential as a more wide-ranging look at her life and place in history.
“The reason I wanted to… tell her life story is that she’s emblematic of our history and women’s rights. She was the tip of the spear; she’s a historical figure,” said Burstein. “When you get to know her, the intimate moments of her life…you realize how misguided we can be. That’s the intention of the film.”
“Through our 35 hours of interviews it was clear to me, and Nanette picked up on it early on, was that I became a Rorschach test for women when I burst onto the public scene. And I’d lived 40 years before that!” laughed Clinton, adding: “It’s really hard watching yourself for four hours, but the reaction that some have expressed on the film is gratifying; people saying, ‘Wow, I didn’t know that.’”
During the Q&A, Fortune asked Clinton to reflect what aspects of making Hillary were most humbling for her.
“The most humbling moments were about recognizing that I have been often mischaracterized and I have to bear some responsibility for that. I didn’t do a good enough job to break through a lot of perceptions.”
What could she have done to change those perceptions?
“I don’t know,” Clinton said. “You have to be careful…you realize that if you say something honest, then that has a backlash. I was constantly surprised [during the election] that things I said were taken out of context, and that caused me to be even more cautious and guarded. ‘If I say anything, it will be misinterpreted.’ So that was really humbling. I also know now I was this lightening rod who people were quick to judge, and that it often had nothing to do with me.”
On the subject of women in politics being unfairly mischaracterized, Fortune asked Clinton to comment on whether she feels first lady Melania Trump herself has fallen victim to that trend.
“I have no brilliant insight… I can’t speak to that,” said Clinton.
Burstein and Clinton, who will premiere their documentary next week at the Sundance Film Festival, said they hope Hillary will serve as a reminder to viewers to engage in the forthcoming 2020 presidential election.
“Vote. Please vote,” said Clinton. “It wasn’t long ago that we had a president when we didn’t have to wake up and worry about what would happen that day. Right now, we can’t even agree on basic facts. There needs to be a base reality that people can tune into.”
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—These Oscar Best Picture nominees are “problematic,” but will that matter?
—The oral history of Laura Dern—in her own words
—World War I takes the pop culture spotlight after years of being the “neglected war”
—Disney is ready to roll out new Star Wars sagas as one story ends
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fortune--2020-01-17--The free streaming option offered by NBC’s Peacock is a real threat to Hulu

NBCUniversal announced Thursday that Peacock, its soon-to-launch streaming service, will become the first major streamer to offer a free ad-supported option. The free version will come with around half of Peacock’s content library. To get full access to Peacock’s content, subscribers will have to pay $4.99-per-month, or $9.99-per-month for the version without ads.
A Fortune-SurveyMonkey poll conducted at the end of 2019 found that 11% of Hulu users are likely to subscribe to Peacock, compared to 8% of Netflix users, and 6% of Amazon Prime Video users. Those early poll numbers, prior to the free option being announced or a major national ad campaign, tell us both that Peacock has a lot of work to do before it debuts nationally on July 15 and that it is primed to give its biggest challenge to Hulu.
The fact Fortune found that Hulu has the most to lose from NBC’s Peacock makes perfect sense. Once launched, Peacock will have a heavy focus on active running broadcast programming, which has long been Hulu’s special sauce, and the Comcast and NBC content that proliferates Hulu will be pulled and moved onto Peacock. The free version free of Peacock will only further undercut Hulu.
“Hulu is an outlet for content makers who don’t have their own streaming service. But now that all these content producers have their own streaming service, why do they need a middle man?” says P. K. Kannan, a marketing professor at the University of Maryland. “In the streaming wars, the people who produce content have the power.”
Hulu does have a couple of factors working in its favor, including a growing slate of original content that will soon be accompanied by exclusive content via the “FX on Hulu” initiative. Also, owned by Disney, it’s being offered in the Disney+ bundle along with ESPN+ for $12.99-per-month. Prior to the Disney+ launch, 19% of poll respondents told Fortune-SurveyMonkey they are likely to subscribe to the Disney+bundle. Judging by the success of the Disney+ launch, it’s very possible Hulu is growing its total audience. (Hulu is offered for $5.99-per-month, and $11.99-per-month for its ad-free version.)
The Fortune-SurveyMonkey streaming poll found that more modest income households are most likely to subscribe to Peacock. Among household with incomes under $50,000, 12% said they are likely to subscribe to Peacock. That number is 6% for household over $50,000.
The Peacock streaming service will launch in April for Comcast’s Xfinity X1 and Flex customers, and launch for everyone else in July 15. NBCUniversal expects the streaming service to total more than 30 million active accounts by 2024.
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fortune--2020-01-17--Here are the best selling video games of the past 25 years

Tastes seem to shift regularly in the video game industry, but a look at the top selling games of the last 25 years shows just how loyal players have remained to some of the industry’s biggest franchises.
The NPD Group, which tracks video game sales, has released data showing the top selling games of every year from 1995 forward as part of its year end review of 2019. And, to be clear, 2019 was not a banner year for game companies.
December spending was down 15% to $3 billion, with no major franchise releases during the holiday season, aside from those with annual installments. For the year, overall sales were down 13%, falling from $16.7 billion in 2018 to $14.6 billion in 2019. Many consumers appeared to be waiting for the release of new console hardware, due later this year.
Call of Duty: Modern Warfare 2019 was the top selling game of 2019, the fifth time that franchise has held the top spot at the end of the year. Compare that to three Grand Theft Auto titles and three installments of EA’s Madden NFL franchise.
The top selling games show the evolution of the industry. In the mid- to late-90s, Nintendo titles ruled the charts, with Mario, Zelda and Donkey Kong taking the top spot. As the new century got going, Madden hit its stride, dominating the charts through the middle of the decade, unless a new GTA game happened to come out.
There was a brief detour into music games toward the end of the first decade of the 21st century, then Call of Duty began its run, only taking breaks for new releases from Rockstar Games, the developer of GTA and Red Dead Redemption.
Here’s a look at the best selling games of each year:
1995 – Mortal Kombat III
1996 – Super Mario 64
1997 – Mario Kart 64
1998 – Zelda: Ocarina Time
1999 – Donkey Kong
2000 – Pokemon Stadium
2001 – Madden NFL 2002
2002 – Grand Theft Auto: Vice City
2003 – Madden NFL 2004
2004 – Grand Theft Auto: San Andreas
2005 – Madden NFL 06
2006 – Madden NFL 07
2007 – Guitar Hero III Legends of Rock
2008 – Rock Band
2009 – Call of Duty: Modern Warfare II
2010 – Halo Reach
2011 – Call of Duty: Modern Warfare 3
2012 – Call of Duty: Black Ops II
2013 – Grand Theft Auto V
2014 – Call of Duty: Advanced Warfare
2015 – Call of Duty: Black Ops III
2016 – Call of Duty: Infinite Warfare
2017 – Call of Duty: WW II
2018 – Red Dead Redemption
2019 – Call of Duty: Modern Warfare 2019
The top selling games by year tell one story, specifically what was hot at that time, but the numbers don’t necessarily tell the full sales story.
A separate look at the best selling games of the decade show the staying power of some of those games. From 2000-2009, no game sold more than Guitar Hero III Legends of Rock. And Wii Fit, which was never a top seller by year was the second best selling game of that decade.
Grand Theft Auto V was the biggest seller of the past 10 years (and the game continues to be a cash generator for Take-Two Interactive Software). Various Call of Duty games occupy the 2-5 slots.
And while the Madden franchise is one of the top selling games every year since 1995, none of the games was among the top 20 best sellers of the past decade.
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fortune--2020-01-17--Verizon’s Super Bowl advertising will focus on, what else, 5G

Verizon’s marketing strategy for the Super Bowl will revolve around two of the carrier’s favored advertising themes from last year: first responders and 5G.
The largest wireless carrier said on Friday that its TV advertising during the remaining NFL playoffs and the Super Bowl will again take up the cause of promoting first responders like firefighters and EMTs, while adding a plug for its new super-fast 5G technology. In one commercial, for example, the carrier will show firefighters using 5G technology to obtain visual imagery during a smoky fire.
The ads come as Verizon and rivals AT&T, T-Mobile, and Sprint are still in the early stages of deploying 5G across their networks at a cost of tens of billions of dollars. Verizon has 5G available only in parts of 31 cities and only for customers who have purchased a 5G compatible phone. But the marketing push sets the stage for the fast expansion of the 5G network, which Verizon says will have nationwide coverage by the end of the year.
Any Verizon customers attending the Super Bowl who have bought a 5G phone should be able to connect. The Miami stadium hosting the game is one of 13 original NFL venues that Verizon wired for 5G last year (now up to 16). The carrier says it will be enhancing that 5G connectivity for fans in and around the game and network improvements will remain in place after the game.
Fox Sports, which will air the Super Bowl on Feb. 2, said weeks ago that it had sold out all of the ad spots for the game at rates of $5 million or more per 30 second slot.
Last year, Verizon’s Super Bowl ad campaign featured 11 NFL players and one coach whose lives were saved by first responders. In one of the commercials, Carson Tinker of the Jacksonville Jaguars describes how he was severely injured during a tornado in Tuscaloosa, Ala., and was rescued by first responders. The carrier used a similar theme in its 2018 Super Bowl ads, as well.


fortune--2020-01-17--What to watch (and skip) in theaters and on Amazon Prime this weekend

Whether you’re standing in the theater lobby or curled up in bed, deciding what to watch next is often the most difficult part of any pop-culture junkie’s day. And with dozens of films in theaters on any given weekend, plus virtually endless layers of streaming purgatory to sort through in search of your next binge-watch, there’s more out there—and tougher decisions to make—than ever.
Fortune‘s here to help you navigate the week’s latest offerings, boiling all the entertainment out there down into three distinct recommendations: should you see it, stream it, or skip it? Find out below.
SEE IT: ‘The Wave’ (In theaters/VOD)
When it comes to playing men in completely over their heads, there’s no one better than Justin Long, which might explain why both horror and comedy have so embraced him across the past 20 years. Long’s eyebrows are gloriously thick, capable of being raised practically into his hairline out of terror or confusion, and his pre-eminently affable grin lends itself equally to nice-guy romantic leads and pleasant-enough everymen about to have their worlds rocked.
He’s in the latter boat for The Wave, a psychedelic drug-trip odyssey from director Gille Klabin that’s pitched as something like The Hangover meets Primer with a healthy dose of Charlie Kaufman, and just about follows through on that screwy fusion of ingredients.
Long plays Frank, a corporate lawyer whose day-to-day involves scrutinizing the insurance policies of the deceased so that his company can wriggle out of paying out policies to their bereaved loved ones. Years of this have Frank callous, and he’s eager to deliver on a particularly coldhearted maneuver that will screw over a dead firefighter’s family, securing himself a promotion in the process. But when Frank goes out on the town with coworker Jeff (Donald Faison) to celebrate, the buddies intersect with two young women, Natalie (Katia Winter) and Theresa (Sheila Vand). Pairing off, Frank and Theresa try a mysterious drug offered by a maybe-real shaman-dealer (Tommy Flanagan).
What follows is a mind-bending excursion through time and space, Frank riding vividly colorful waves of hallucinogenic phenomena from boardroom meetings to strangers’ houses without a clue what’s happening. His wallet’s missing, as is Theresa, and Frank becomes convinced that finding both will help him come down, lending The Wave all the bearings of a quest story.
Visually speaking, Klabin has accomplished something quite special with his directorial debut, The Wave‘s bright neon palette and giddily discombobulating sense of circular momentum replicating the look and feel of a particularly glorious trip. In terms of narrative, there’s a little less there, Frank’s gradual journey toward change and self-betterment ending up a rather compact and simplistic arc. But The Wave‘s still a trip worth taking, and one that gives Long a chance to shine in a role that’s both hilarious and dramatic. He’s a skilled actor in both veins, and seeing him surf between the two tones at once is a welcome treat.
STREAM IT: ‘Little America’ (Apple TV+)
Apple hasn’t exactly roared out of the gate with its original programming, but Little America is, simply put, such a remarkable step forward for the platform that early misfires like The Morning Show, See, and Dickinson can be both forgotten and forgiven.
The anthology series (eight episodes, streaming Friday)—hailing from Lee Eisenberg, Kumail Nanjiani, and Emily V. Gordon—studies the immigrant experience in America with resolute grace and hopefulness, each half-hour episode looking at a different person struggling to overcome a challenge specific to their cultural heritage. Its stories were selected from a series by Epic Magazine. Though some creative liberties have been taken, there’s truth at the core of each story.
In “The Baker,” actress Kemiyondo Coutinho (in a stunning turn that should bring Hollywood knocking on her door) plays a single mother in Louisville, Ky., who eventually opens a storefront bakery that pays tribute to her father back in Uganda. In “The Grand Prize Expo Winners,” the nuances of the Chinese-American experience are gorgeously illuminated by the tale of Ai (Angela Lin), who struggles to accept her changing role in her teenaged children’s lives as the family vacations at sea.
There are high-water marks to be had in terms of specific performances and some exceptionally striking direction (each episode feels lovingly, singularly crafted), but each installment is a gem. Little America, across its first season, feels like a perfectly timed and sorely needed celebration of the aspirations common across all those living in the United States today, a reminder of ties that bind us and dreams that move us. Its politics are the politics of humanity and its spirit is profoundly generous. It’s the first great series of 2020, and you shouldn’t miss it.
SKIP IT: ‘Russell Peters: Deported’ (Amazon Prime)
If you know the stand-up stylings of yuk-yuk funnyman Russell Peters, little will surprise you about the contents of Deported, his Amazon Prime comedy special.
Peters was the first comedian to get a Netflix comedy special, Notorious, back in 2013. In the seven years since, the streaming giant has rapidly expanded its library of such specials, releasing standup at an unprecedented clip of around one a week, welcoming a range of comics from around the world onto its service.
From John Mulaney and Chris Rock to Ali Wong and Hannah Gadsby, dozens of comedians have triumphed on Netflix by personalizing the standup format, crafting creative, subversive, and often deeply hilarious sets that (in ways small and large) play to the streaming platform’s strengths as an audiovisual medium. The form has evolved, and many comedians have risen to the modern challenge of setting themselves apart in a nevermore crowded field.
Peters, alas, is not one of them. He’s achieved massive popularity through a reliance on patanking—actress Sakina Jaffrey’s term for the broad mimicking of South Asian accents and mannerisms perhaps best presented by Apu from The Simpsons—and otherwise lazy stereotypes, particularly surrounding brown and black men, that were outdated by the late 2000s and certainly feel moreso today.
But in Deported, recorded in Mumbai’s NSCI Stadium, Peters makes no attempt to update his schtick. From his first moments on stage, he’s yukking it up about Indians not wearing deodorant, having names that Westerners might find hard to pronounce, and lacking fashion sense. The rest of the special follows suit. One can only imagine his comedy contemporaries, from Hasan Minhaj to Mindy Kaling, cringing with secondhand embarrassment.
Throughout, as Peters trots out segments about fatherhood, sex, and doctor’s visits, he occasionally lands a few punchlines, the majority aided by his natural instinct for creating off-the-cuff moments with his audience. But the material he wrote for this special is so dismayingly tired across the board that such moments feel like blips more than highlights.
Deported takes an unwelcome detour into homophobia as well, with an interminable bit about endoscopies and colonoscopies in which he recalls repeatedly stressing to a doctor that he’s not gay and therefore opposed to being penetrated. Seldom is Peters particularly witty, nor does he appear embarrassed to be perpetuating such hoary tropes in a period where the potential for standup comedians to be bold and innovative has never been higher.
“My audience has grown with me,” Peters said in a recent interview with Forbes India. Watching Deported, it’s difficult not to be skeptical of both sides of that sentiment: the suggestion that Peters’s continued reliance on lazy stereotypes could constitute any form of growth on his part, and the more desperate insinuation that audiences haven’t already grown beyond his puerile provocations.
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—Phoebe Waller-Bridge and Fleabag cast reflect on love, religion, and saying goodbye
—These Oscar Best Picture nominees are “problematic,” but will that matter?
—The oral history of Laura Dern—in her own words
—World War I takes the pop culture spotlight after years of being the “neglected war”
—Disney is ready to roll out new Star Wars sagas as one story ends
Follow Fortune on Flipboard to stay up-to-date on the latest news and analysis.