fortune--2020-01-20--Medicine by machine: Is A.I. the cure for the world’s ailing drug industry?

This article is part of a Fortune Special Report on Artificial Intelligence.
When a Canadian company called Deep Genomics announced in September that it had used artificial intelligence to solve a long-standing mystery about a genetic disorder called Wilson’s disease—and, what’s more, had used another deep-learning platform to identify a potential treatment—there was a flurry of excitement in the drug development world. The apparent milestone, which the company hailed as the “first-ever A.I.-discovered therapeutic candidate,” got echoing headlines from dozens of news outlets, and in January, the five-year-old startup received a $40 million endorsement in the form of a fresh round of venture capital funding.
But the discovery itself is far more nuanced than most of the press reports have made it seem—and illustrates both the remarkable potential of A.I. in drug development and its inevitable limitations, at least in the near term.
The team at Deep Genomics began by feeding massive amounts of data related to more than 200,000 gene mutations into so-called training algorithms—teaching their computers to find connections between those misspelled snippets of human DNA and the faulty proteins they encode, which in turn seem to drive certain human diseases. “The A.I. learned to understand the molecular biology,” says Deep Genomics CEO Brendan Frey, who did his doctoral studies at the University of Toronto under A.I. pioneer Geoffrey Hinton and later became a leading researcher in neural networks himself.
In the case of Wilson’s disease, a rare disorder that prevents sufferers from metabolizing trace amounts of copper found in food (and which can lead to liver disease and a host of neurological and other problems), the company’s A.I. found just such a connection with blistering speed. It has deciphered precisely how a mutation known as Met645Arg leads to a crucial defect in an essential copper-metabolizing protein.
Next, the company used another set of A.I. tools to sort through billions of molecules and rapidly identify nontoxic compounds that could correct the error made by the genetic glitch and enable a functional protein to be produced. The algorithms came up with no fewer than 12 drug candidates, each of which appeared to work in both cell models and mice. Deep Genomics hopes to put one of them, known as DG12P1, into human clinical trials as soon as next year.
From a scientific perspective, “it’s a big leap forward,” says Dr. Fred Askari, who directs the Wilson’s Disease Program at the University of Michigan School of Medicine. And when seen through the traditional lens of the drug industry, it may seem to be an even grander achievement: The entire process took just 18 months, Frey says, compared with a more typical preclinical development timeline of three to six years. If this can be repeated again and again, as Deep Genomics claims it can, then the effect could be revolutionary. Shrinking the time to discovery, after all, means quicker help for patients—and, in theory, less cost to drugmakers.
No wonder much of Big Pharma is racing into the field. Novartis is now collaborating with Microsoft on A.I.-driven drug discovery; Pfizer is using IBM’s Watson; and others (including Johnson & Johnson, Merck, AstraZeneca, and GlaxoSmithKline) have inked drug development partnerships with smaller A.I. companies. All told, investors have put $2.4 billion into hundreds of such startups since 2013, according to data from PitchBook.
Yet as promising as all this sounds, there are caveats to consider before you grab those A.I. pitchforks and storm the barricades. First is that Deep Genomics’ drug candidate has yet to be tested in a single patient, so—as the company itself acknowledges—we don’t yet know that it works.
Dr. Eric Topol, a prominent cardiologist and geneticist at Scripps Research and author of the 2019 book Deep Medicine: How Artificial Intelligence Can Make Healthcare Human Again, has been carefully reviewing the A.I. hope and hype for years. “We’re long on promise and short on proof,” he says.
“A.I. is a term that conflates ideas that we’re pretty sure will work in the future with ideas that are really just proof of concept,” agrees the University of Toronto’s David Duvenaud, whose celebrated research was crowned “Best Paper” at last year’s largest academic A.I. conference, the NeurIPS. At the gathering, Duvenaud surprised many by giving a blunt critique of the shortcomings of his own theoretical paper—a commentary that data scientist Mostapha Benhenda says reflects the more sober view of the field that many of his colleagues now share. “Such open self-criticism was unthinkable a couple years ago,” marvels Benhenda, whose Paris-based crowdsourcing startup, Melwy, fact-checks and fixes drug development algorithms.
One critical limitation, say experts, is simply the lack of good data on which to train the machine-learning systems. There are academic sources on genetic and molecular interactions to plumb, but comprehensive information about many chemical compounds—and more important, patient data from many clinical trials—is often proprietary to drugmakers and is rarely shared. Much of the data that is available, moreover, is poorly characterized or poorly structured, says Dr. David Agus, professor of medicine and engineering at the University of Southern California and the founding CEO of USC’s Lawrence J. Ellison Institute for Transformative Medicine. “It’s garbage in, garbage out,” he says.
That said, if A.I. can truly slash the discovery time for new medicines by half, it might finally offer an antidote to ever-soaring drug prices. That’s because a big area of promise for the technology is in tackling the mysteries of genetic disorders, like Wilson’s disease, in which the patient population is relatively small and where Big Pharma isn’t likely to bother with investing in new medicines. (Wilson’s disease affects an estimated one out of every 30,000 people worldwide, and Met645Arg, the gene variant that Deep Genomics’ A.I. programs helped decipher, is just one of more than 500 mutations that may play a role in causing it—making the potential market for the company’s experimental drug likely even tinier.)
In the past two decades or so, drugs for such “orphan diseases” (those for which the U.S. patient population is fewer than 200,000) have represented an increasing share of newly approved medicines in the U.S., rising from 10% of the total in 1998 to 44% in 2017, according to a study this past fall by America’s Health Insurance Plans. At the same time, their prices have skyrocketed, leaping from an average per person annual cost of $7,136 in 1998 to $186,758 in 2017—a 26-fold increase over 20 years. Today, nine of every 10 orphan drugs cost more than $10,000 annually per patient.
If A.I. can reverse that frightening trend—and shrink both the time and cost of discovering new targeted treatments for these uncommon maladies—it will be worth all of the hype, and then some.
Panna Sharma, Lantern Pharma: “If we can do this faster, cheaper, and make drugs more personalized, then that changes everything.” | Brendan Frey, Deep Genomics: The Toronto company’s “A.I. learned to understand the molecular biology” of Wilson’s disease, he says. Abraham Heifets, Atomwise: “It’s just like testing a prototype of an airplane before making it,” he says. “You’ll test a thousand wings in the computer for every one you build.” Courtesy of Lantern Pharma, Deep Genomics, and Atomwise
A.I.’s pharm team
Entrepreneurs are employing machine learning for every phase of drug development—from identifying better biological targets and experimental compounds to designing smarter clinical trials. Here, a few pioneers.
Deep genomics: discovering medicines
In September, the Toronto startup claimed to have developed the first-ever A.I.-discovered therapeutic candidate, when it announced a new investigational compound for Wilson’s disease, a genetic disorder that limits a person’s ability to metabolize copper. CEO Brendan Frey says human trials on the compound will start next year. By then, he predicts, the company will have up to five new drug candidates in the works as well.
Atomwise: virtual drugmaking
The San Francisco company is employing “convolutional neural networks,” the same technology used in facial recognition and self-driving cars, to find new treatment indications for existing medicines. Its computers create a 3D grid of a disease protein’s biochemistry and then run it through various combinations of 11 billion different molecules—many of which are drawn from public sources, such as the National Institutes of Health PubChem library. The algorithms then identify combinations of molecules that would match that protein’s biochemistry.
The MIRO-1 protein structure which has been implicated in Parkinson’s disease. The area in white represents the screening site where AtomNet evaluated 6.8M molecules, identifying a drug-like molecule now known as Miro1 Reducer. Courtesy of Atomwise
Atomwise buys the promising compounds and sends them to academic and pharma researchers to test in cell lines and animal models; the company now has 550 projects with 250 research hospitals underway. “It’s just like testing a prototype of an airplane before making it, says Atomwise founder and CEO Abraham Heifets. “You run simulations to ensure the planes will fly, be quiet, and fuel-efficient. You’ll test a thousand wings in the computer for every one you build.”
Lantern Pharma: revitalizing discarded compounds
The Dallas company combs through data from hundreds of drugs in “failed” clinical trials to identify ones that might work for certain genetic subsets of patients. Such drug rescue isn’t new, but Lantern hopes its algorithms will dramatically speed things up. It recently acquired four compounds that were previously shelved by Big Pharma companies—including an abandoned chemotherapy agent that Lantern’s A.I. platforms suggest might be effective in a particular subset of patients with lung cancer. After digesting reams of clinical and other data, including some from the drug’s initial owner that was a decade old, Lantern’s A.I. engines identified a six-gene “signature” in a specific group of patients—females with adenocarcinoma who had never smoked in their lives—who were most likely to respond to the drug. (The company hopes to work with the FDA to design a new clinical trial to test the therapy specifically in this cohort of patients.)
Lantern’s investment so far: less than $2 million, a fraction of the typical outlay by drugmakers for a compound in late-stage testing. “Drugs shouldn’t cost $300,000 per dose,” says CEO Panna Sharma. “If we can do this faster, cheaper, and make drugs more personalized, then that changes everything.”
A version of this article appears in the February 2020 issue of Fortune with the headline “Medicine by Machine.”
More from Fortune’s special report on A.I.:
—Inside big tech’s quest for human-level A.I.
—A.I. breakthroughs in natural-language processing are big for business
—Facebook wants better A.I. tools. But superintelligent systems? Not so much.
—A.I. in China: TikTok is just the beginning
—A.I. is transforming HR departments. Is that a good thing?
Subscribe to Eye on A.I., Fortune’s newsletter covering artificial intelligence and business.


fortune--2020-01-20--A.I. is transforming the job interview—and everything after

This article is part of a Fortune Special Report on Artificial Intelligence.
In his Amsterdam offices, about an hour’s drive from his company’s largest non-American ketchup factory, Pieter Schalkwijk spends his days crunching data about his colleagues. And trying to recruit more: As head of Kraft Heinz’s talent acquisition for Europe, the Middle East, and Africa, Schalkwijk is responsible for finding the right additions to his region’s 5,600-person team.
It’s a high-volume task. Recently, for an entry-level trainee program, Schalkwijk received 12,000 applications—for 40 to 50 openings. Which is why, starting in the fall of 2018, thousands of recent university graduates each spent half an hour playing video games. “I think the younger generation is a bit more open to this way of recruiting,” Schalkwijk says.
The games were cognitive and behavioral tests developed by startup Pymetrics, which uses artificial intelligence to assess the personality traits of job candidates. One game asked players to inflate balloons by tapping their keyboard space bar, collecting (fake) money for each hit until they chose to cash in—or until the balloon burst, destroying the payoff. (Traits evaluated: appetite for and approach to risk.) Another measured memory and concentration, asking players to remember and repeat increasingly long sequences of numbers. Other games registered how generous and trusting (or skeptical) applicants might be, giving them more fake money and asking whether they wanted to share any with virtual partners.
Their results, measured against those of games played by 250 top-performing Kraft Heinz staffers, told Schalkwijk which candidates Pymetrics thought were most likely to succeed—because their traits, as represented by their gaming skills, most closely matched those of the risk-seeking, emotionally intelligent employees the company prizes. That data in turn helped decide job offers, creating a machine-assisted recruiting class.
Schalkwijk is one of a fast-growing cohort of human resources executives relying on artificial intelligence to recruit, assess, hire, and manage their staff. In a 2018 Deloitte survey, 32% of business and technology executives said they were deploying A.I. for “workforce management.” That share is almost certainly higher today—and it’s spreading to encompass some of the world’s largest companies.
A machine-learning algorithm is like a toddler; it will learn from its environment. We haven’t had a diverse group at the table creating this technology to date.
FRIDA POLLI, COFOUNDER AND CEO, PYMETRICS
As a job seeker, you might have your application vetted by a Mya Systems chatbot at L’Oréal or PepsiCo. You could respond to an A.I.-crafted job posting vetted by Textio, perhaps at Expedia Group or ViacomCBS. You could be asked to play Pymetrics games not only at Kraft Heinz but also at Unilever or JPMorgan Chase. You could record one of the automated HireVue video interviews used by Hilton and Delta Air Lines.
Your relationship with A.I. may extend past the job offer too. Once hired, you might find yourself filling out employee-engagement surveys designed by Microsoft’s LinkedIn, where your answers could help set your manager’s performance targets. Your employer could tap you for promotion opportunities identified by Workday’s A.I. If you work at an Amazon warehouse and miss your productivity goals, in-house systems could recommend that you be fired. On the other hand, if you work at IBM and plan to quit, in-house systems might guess your plans and warn your managers that they should try to make you happy.
Companies are delegating considerable responsibility to these machines, and the list of personnel tasks in which A.I. plays a role is likely only to grow. Low unemployment and tight labor markets are putting employers under pressure to take any technological advantage they can get in the war for talent.
In a LinkedIn survey of hiring managers and recruiters who use A.I., 67% said they embraced the tech because it helped them save time. And a smaller cohort, 43%, cited an arguably more important motivation: A.I., they said, would help them combat bias in their decision-making. “People are inherently biased,” says Schalkwijk. “I wanted less biased hiring decisions and more data-driven hiring decisions.”
At its best, its creators and adopters argue, A.I. can eliminate bias from the hiring process. This can foster greater gender and racial diversity—both of which are associated with better business performance and employee engagement. A.I. can also purportedly look past another kind of bias, providing more opportunities to applicants who don’t have expensive brand-name educations. Before using Pymetrics, Kraft Heinz recruiters tended to scan résumés looking for top-tier universities. Now, Schalkwijk says, “it doesn’t matter if you’re from Cambridge.”
More broadly, A.I. can help employers better perceive their workers’ strengths. Contenders including LinkedIn and enterprise-cloud specialist Workday have built A.I.-enabled tools that they say can help human managers better recognize or track employees’ skills. “We can use technology to find patterns that I wouldn’t as a team leader be able to find in the past, to coach and develop people in a more thoughtful way,” says Greg Pryor, a senior vice president overseeing Workday’s internal talent-management programs. (In addition to selling it, Workday uses this technology with its own employees.)
Still, for all its potential, many employers are approaching A.I. warily. They’re confronting the promise-and-peril irony of applying A.I. to human populations: Done correctly, it has the potential to eliminate bias and discrimination; done injudiciously, it can amplify those same problems. And in a new, very much unregulated market, such problems may be hard to spot until it’s too late. Even some executives who are using A.I. express skepticism in private about what the technology can do—or what its drawbacks might be.
“We’re in sort of the primordial ooze of how A.I. is going to find its way,” says Gordon Ritter, founder of venture firm Emergence Capital and an investor in several A.I. startups. “Is it friend or foe?” Ritter is betting that A.I. will prove beneficial, but for now, to many executives, the ooze still looks murky.
“A.I. is like teenage sex,” says Frida Polli. “Everyone says they’re doing it, and nobody really knows what it is.”
The joke has been making the rounds in A.I. circles for a while, and Polli, the cofounder and CEO of Pymetrics, has been around long enough to see the truth in it. After getting a Ph.D. in neuropsychology and working in Harvard and MIT research labs, Polli found herself divorced, supporting a young daughter, and burned out on academia’s low paychecks. She went back to Harvard for business school, and in 2013 she started a cognitive assessment company with a former MIT colleague. Pymetrics promises to help employers make better, more diverse hires, based on what applicants could do rather than what their résumé says or what college they graduated from. The venture-funded New York startup now has a valuation of $190 million, according to PitchBook, and between $10 million and $20 million in annual revenues; its games are used by about 100 employers.
A fierce A.I. evangelist, whose clear blue eyes and near-platinum hair match the intensity of her conversational speed, Polli acknowledges—and parries—critiques of the technology’s potential for misuse. Yes, bad A.I. actors exist, she says. But it’s not like humans are so much better, as demonstrated by enduring gender, racial, and class disparities. “There’s a front door to hiring and a back door,” Polli argues, “and the front door’s broken.”
Frida Polli’s startup, Pymetrics, designs games that work in conjunction with A.I. to assess job candidates’ personality traits. She says the system helps companies make more diverse hires—and, consequently, perform better. Photograph by DeSean McClinton-Holland for Fortune
Hiring is where A.I. currently is most widely used in personnel management. In this arena, “artificial intelligence” often gets lumped together with basic automation, such as keyword searches of résumés. But it more specifically refers to machine learning—where software teaches itself about correlations between applicants’ backgrounds and behavior and their potential performance.
The problem, notes Matissa Hollister, an assistant professor of organizational behavior at McGill University, is that a machine-learning system is only as unbiased as the information it learns from. “To the extent that the real world contains bias,” she says, “there’s the risk that the algorithm will learn that bias and perpetuate it.”
That has already happened in some prominent cases. Amazon spent years building a résumé-analysis algorithm—one that it never used, because it turned out it discriminated against women. Because most of the previously submitted résumés it assessed were from men, the algorithm taught itself that men were always preferable hires.
More recently, HireVue, which uses A.I. to vet video interviews, has drawn scrutiny around bias issues. HireVue’s system asks applicants to use smartphone or laptop cameras to record answers to automated questions; its software then analyzes factors including word choice and facial expression. The Utah-based vendor, majority-owned since October by private equity firm the Carlyle Group, introduced its facial-analysis product in 2014. It has since been used by roughly 100 employers to assess more than 1 million applicants.
Its use hasn’t gone uncriticized. A.I. that relies on facial recognition can often misidentify or misread faces of color, especially those of darker-skinned women. HireVue says that its facial-analysis technology doesn’t extend to facial recognition. But a prominent privacy watchdog has asked the Federal Trade Commission to investigate HireVue for “unfair and deceptive practices”—challenging its use of facial analysis and of algorithmic assessments that are not transparent.
HireVue CEO Kevin Parker downplays the importance of facial analysis to HireVue’s assessments, and he argues that his company is “very focused on eliminating bias.” By standardizing how candidates are assessed, he argues, HireVue provides a superior alternative to ordinary hiring. “It’s certainly better than the typical ‘I know it when I see it’ ” snap judgment, he says.
But the criticism HireVue faces points to the problem highlighted by Hollister: Machines are as likely to amplify biases as they are to sidestep them. That’s especially problematic when the people designing the tools are predominantly white and male, as is the case in much of the tech industry. “A machine-learning algorithm is like a toddler; it will learn from its environment,” Polli says. “We haven’t had a diverse group at the table creating this technology to date.”
Equally unsettling to labor advocates is that most A.I. technology is both unregulated and opaque to the workers affected by it. Employers and vendors have to comply with antidiscrimination guidelines from the Equal Employment Opportunity Commission, but the EEOC has no A.I.-specific rules. Illinois recently passed a law that requires disclosure when employers use automated video interviewing. Industry members and critics agree it’s a good first step—but only a first step.
“We may not have proof of bias. We also don’t have proof of benevolence,” says Meredith Whittaker, a former Google employee and cofounder of the AI Now Institute at New York University. A.I.-enabled hiring systems are “sold to employers, not to workers,” she points out.
Even so, employers are still figuring out whether A.I. will advance those interests. Most have been using A.I. in human resources for only a few years, if that. “It’s a trend that’s here to stay,” says Ifeoma Ajunwa, an assistant professor at Cornell who studies automation in hiring. “But A.I.’s still a blunt tool.”
In a tower at the heart of Times Square, with remnants of New Year’s Eve crowds still dispersing from the streets below, Eric Miller is talking back to his computer. It doesn’t love what he’s typed. “It’s currently ‘comparing this writing to 102 million job posts.’ So thank you for that,” Miller snarks, mock-offended. A few minutes later, a different bit of writing passes machine muster: “It liked me! That’s a first.”
Of course, Miller is one of the people who invited this critic into his company in the first place. He’s the vice president of global talent acquisition for ViacomCBS, and he’s scanning through Viacom’s library of more than 200 A.I.-assisted job listings. For the past year his team has fed these listings through A.I. technology produced by startup Textio. A Seattle-based company founded by Microsoft veterans, Textio makes what’s essentially a woke word processor.
Textio’s program compares job listings and other communications with those written by other employers throughout its system (hence those 102 million other posts). The machine-learning technology measures the response that different posts attract, and from whom, and constantly assesses whether certain words and phrases attract or repel candidates—owing to subtle linguistic bias or just plain bad writing.
HR is already looked at as ‘those people,’ the bad guys, right? If you start to introduce something that feels mechanical and employees pick up on that, that’s not a good look.
ERIC MILLER, VP OF GLOBAL TALENT ACQUISITION, VIACOMCBS
In the job description Miller is working on, the word “expert” is highlighted in light blue, to signify that it conveys a slightly masculine tone; swapping in “authority” makes the language more gender neutral. Loaded terms like “aggressive” are out, even though Miller may want recruits who can “meet aggressive deadlines.” (“You probably don’t think about that,” he explains, “but Textio thinks a lot about it.”) The software even flags corporate jargon like “drive results,” which can turn off potential applicants; Textio prefers asking them to “get results.”
Which ViacomCBS is doing. The company has seen a 28% increase in applications to jobs whose descriptions Textio rates as “neutral” in tone and is filling jobs with high Textio scores 11 days faster, Miller says. It’s seeing a measurable increase in gender diversity among applicants, too, including in traditionally male-dominated engineering roles.
It all seems like a benign first step in bringing A.I. into the HR process. Yet ViacomCBS has taken about a year to roll it out. And Miller has words of caution for fellow human resources executives who want to embrace A.I. “HR is already looked at as ‘those people,’ the bad guys, right?” he says. “If you start to introduce something that feels mechanical and employees pick up on that, that’s not a good look.” His advice for a better look? “Do your research. Check. Check again.” Miller’s biggest piece of advice echoes that of academics and critics: Make sure you or your vendors conduct regular audits, ideally by independent third parties, to ensure that the A.I. itself isn’t discriminating against specific groups.
But who exactly are the auditors? Cornell’s Ajunwa foresees a day when an independent agency gives out “fair automated hiring” certifications. For now, though, audits are largely self-imposed. Polli says she has an academic auditor lined up for Pymetrics and is in talks with a second; HireVue’s Parker says he hopes to hire an auditor by the end of March.
It all adds up to the kind of gray area that makes corporate legal departments nervous. “You have to be methodical about [A.I.], or you’re going to be doing damage,” Miller says. “But the rewards are huge if you get it right.”
A.I. providers haven’t proved that those rewards translate into bottom-line gains—but they say that day is coming. Pymetrics, for one, claims its technology can lead to better overall business performance. According to an anonymized case study provided by Polli, one insurance customer found that sales employees who had been “highly recommended” by Pymetrics generated 33% more annual sales than other hires.
In Amsterdam, Pieter Schalkwijk is measuring rewards by other metrics. Kraft Heinz has been able to hire talent with a broader mix of expertise: Before implementing the Pymetrics tests, about 70% of trainee hires had business degrees. Last year, only about half did, and around 40% had engineering degrees. Kraft Heinz has been so pleased with early results, Schalkwijk says, that it’s using Pymetrics tests in some U.S. hiring efforts.
Still, he too is proceeding cautiously. For example, Kraft Heinz will likely never make all potential hires play the Pymetrics games. “For generations that haven’t grown up gaming, there’s still a risk” of age discrimination, Schalkwijk says.
He’s reserving judgment on the effectiveness of Pymetrics until this summer’s performance reviews, when he’ll get the first full assessment of whether this machine-assisted class of recruits is better or worse than previous, human-hired ones. The performance reviews will be data-driven but conducted by managers with recent training in avoiding unconscious bias. There’s a limit to what the company will delegate to the machines.
A.I. “can help us and it will help us, but we need to keep checking that it’s doing the right thing,” Schalkwijk says. “Humans will still be involved for quite some time to come.”
Five ways that A.I. is remaking the workplace
More companies are relying on artificial intelligence (often created by nimble startups) to help with the more time-consuming and complex elements of finding and managing talent. Here are five arenas where A.I.’s role is growing.
1. Chatbot recruiters
These tools are aimed at big employers seeking to hire part-time or low-wage employees en masse: Think call centers, or retailers staffing up seasonally. A.I.-enabled chatbot Mya Systems helps clients including L’Oréal and PepsiCo do vetting and interview-scheduling.
2. Deep background checks
Think twice about that Tweet. Fama Technologies uses A.I. to analyze the social media feeds of potential hires and current employees, looking for signs of racism, misogyny, or toxic behavior. Checkr provides general A.I.-enabled background checks for employers including Uber and Lyft.
3. Employee advisers
More companies are deploying A.I. to monitor and help people they’ve already hired. Workday is rolling out technology to track workers’ skills (and proactively offer them chances for advancement); talent-acquisition startup Eightfold.ai says its similar platform can reduce unwanted attrition by 25%.
4. Management coaches
As employers try to improve employee engagement, many are enlisting A.I. to figure out and fix what’s wrong. Technology from Microsoft’s LinkedIn regularly surveys employees; it then flags a decline in morale or unusual underperformance and offers suggestions about how managers could improve.
5. Performance (review) artists
Employers have begun to introduce more A.I. into what remains a largely human-driven process. LinkedIn in September launched a product that allows employers and workers to check in on performance goals and feedback more regularly (and to compare accomplishments across an entire company).
A version of this article appears in the February 2020 issue of Fortune with the headline “Siri, Did I Ace the Interview?”
More from Fortune’s special report on A.I.:
—Inside big tech’s quest for human-level A.I.
—A.I. breakthroughs in natural-language processing are big for business
—Facebook wants better A.I. tools. But superintelligent systems? Not so much.
—A.I. in China: TikTok is just the beginning
—Medicine by machine: Is A.I. the cure for the world’s ailing drug industry?
Subscribe to Eye on A.I., Fortune’s newsletter covering artificial intelligence and business.


fortune--2020-01-20--Facebook wants better A.I. tools. But superintelligent systems? Not so much.

‘ May the best woman win : ’ New York Times endorses 2 Democratic candidates for president

This article is part of a Fortune Special Report on Artificial Intelligence.
In early January, Facebook released software that turns speech into text more accurately than previous systems and does it in real time, opening up the possibility of better captioning of live video.
The system, which uses a different kind of A.I. software design than had previously been tried for automatic speech recognition, is a good example of the sort of advances that Facebook’s A.I. research lab regularly churns out: ones that both push forward the state-of-the-art but also have clear implications for Facebook’s business.
Live captioning could be a useful feature for Facebook and Instagram posts. More importantly, it can help Facebook police that content for hate speech, bullying, and disinformation, which the social network is under increasingly intense pressure to prove it can do well.
It seems like a no-brainer that this kind of research would be beneficial to Facebook. So it’s surprising to hear Mike Schroepfer, Facebook’s chief technology officer, tell me the social network was initially reluctant to create an A.I. research lab.
For a long time, the company eschewed the idea of research not tied directly to a product, Schroepfer says. “It was a big change for the company,” he tells me of the company’s decision in 2013 to create Facebook AI Research (FAIR).
Yann LeCun, a pioneer in the kind of artificial intelligence known as deep learning whom Zuckerberg and Schroepfer recruited to establish FAIR, set the lab up with the explicit goal of creating human-like intelligence.
But Jerome Pesenti, who currently heads both Facebook’s research and applied A.I. efforts, hates the term “artificial general intelligence,” or AGI. That’s the industry terminology for kind of human-like—or even superhuman—intelligence. AGI is the explicit goal of many other advanced A.I. research organizations, such as OpenAI, which last year partnered with Microsoft, and DeepMind, which is owned by Google parent company Alphabet.
“I don’t believe in AGI,” Pesenti says. “I think it is a bad term.”
He says it is wrong to think of human intelligence as single, general-purpose system and he dislikes the way AGI has been caught up in debates about concepts like the Singularity—a kind of New Age concept about the significance of the moment that machine intelligence surpasses that of humans. Instead, Pesenti says, he prefers to talk about learning goals, such as software that can transfer skills from one task to another or can learn from less data.
Even though he pushed for FAIR’s creation, Schroepfer says, he still evaluates the research lab on the extent to which it impacts Facebook’s products—it is just that he is more patient than he would be with a product team. FAIR can operate on a longer timescale. “It is clear that they have delivered a whole bunch of things that are in production,” he says of FAIR. “So it is fairly easy to justify the impact they’ve had on the company to date.”
Pesenti points to four technologies in particular that FAIR has developed that have made a big difference to Facebook commercially: Pytorch, a popular deep learning programming language which Facebook invented and then open-sourced and which it uses to code most of its own machine learning applications; a computer vision system that allows for easy detection and classification of objects in images; automatic language translation; and RoBERTa, another language algorithm which allows Facebook to perform automatic content moderation for hate speech and bullying. RoBERTa has opened the possibility of using automatic moderation even for languages, such as Burmese, in which large amounts of digital content are not available to train a language-specific system.
It helps that as FAIR was getting established, Facebook began encountering an increasingly existential series of crises around content moderation—from hate speech to cyberbullying to political disinformation. Because Facebook’s social network is so large—with more than two billion users—the only economically-feasible way to tackle the problem is through machine learning, as Zuckerberg told Congress in 2018.
The problem was that reliable A.I. techniques to automatically screen content didn’t exist when Facebook first began trying in earnest to address these problems in the wake of the 2016 U.S. presidential election. It has been up to FAIR to help figure out those methods. “It has created urgency and it has created a much clearer path to impact for certain kinds of technologies,” says Schroepfer.
—Inside big tech’s quest for human-level A.I.
—A.I. breakthroughs in natural-language processing are big for business
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fortune--2020-01-20--What does ‘Parasite’s’ best ensemble win at the SAG Awards mean for the Oscars?

A few things seem crystal clear following the results of this year’s Screen Actors Guild Awards.
Joaquin Phoenix, Renée Zellweger, Laura Dern, and Brad Pitt are now all but locks for Oscar’s top acting prizes for their work in Joker, Judy, Marriage Story, and Once Upon a Time…in Hollywood, respectively.
But typically at least one—or a few—of Oscar’s top actors are also represented in the best ensemble-winning cast at the SAG Awards. And that winning ensemble often corresponds with the film that emerges most likely to win Best Picture at the Academy Awards.
This year? Not so much.
At the Golden Globes, the season’s most high-profile precursor to the Oscars, Sony’s Quentin Tarantino saga Once Upon a Time… and Universal’s World War I epic 1917 each took home a statue for Best Picture (Musical or Comedy and Drama, respectively).
Recent history shows that more than half of all Best Picture winners at the Academy Awards were also victors at the Globes. But in the two weeks since the Hollywood Foreign Press Association handed out its awards, the race for Oscar’s top prize has only gotten muddier.
On Saturday, the Producers Guild awarded its top prize, usually a reliable indicator of Oscar’s Best Picture, to Sam Mendes’s 1917—not to Korean filmmaker Bong Joon Ho’s now SAG-winning Parasite.
Considering that producers are the Academy voters who ultimately choose the Best Picture winner, this would seem to lend itself to an all-but-certain result at the Feb. 9 telecast. Right?
But 1917, which debuted to the industry in late November, making it a belated entrant to the Oscar race, has failed to garner any meaningful attention for its actors, including SAG and BAFTA noms for its lead actors, George Mackay and Dean-Charles Chapman.
Interestingly, Parasite, which has earned widespread acclaim for Bong including Oscar nominations for Original Screenplay, International Feature Film, and Best Picture, is also missing individual accolades for its all-Korean cast of actors.
This begs a bigger question about whether the Academy will, as it traditionally does, link its favorite movie of the year to at least one or two of its favorite individual performances.
Oscar’s aforementioned most-likely acting winners represent Warner Brothers, Roadside Attractions, Netflix, and Sony collectively. Yet it’s looking more and more feasible that this year’s Best Picture contest could become a free-for-all battle between a deeply personal WWI epic from Universal and a Korean-language satire/thriller about class from upstart studio, Neon.
For those who prefer a side of healthy dose of question marks with their golden statues, this couldn’t be better news.
More must-read stories from Fortune:
—Apple TV+ shows streaming-wars clout with renewals for series that haven’t yet debuted
—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”
Follow Fortune on Flipboard to stay up-to-date on the latest news and analysis.


fortune--2020-01-20--Apple TV+ shows streaming-wars clout with renewals for series that haven’t yet debuted

If Apple TV+ hadn’t already proven itself a formidable presence in the head-spinningly packed TV landscape—the tech giant did lure Jennifer Aniston back to series television—the streamer used its first-ever appearance at the biannual Television Critics Association Press Tour to reinforce just how confident its execs are in the company’s next wave of programming.
The final day of nearly two weeks of talent panels and executive presentations concluded in Pasadena, Calif. Sunday with Apple TV+’s announcements.
And there were many: the platform handed out early renewals for two series in advance of their premieres: the comedy Mythic Quest: Raven’s Banquet and drama Home Before Dark.
They join existing fare The Morning Show, which earned a second season out of the gate last year; the just-debuted Alan Yang/Kumail Nanjiani immigrant-anthology series Little America; M. Night Shyamalan’s Servant; and a slew of others (Dickinson, See, and For All Mankind) as the company continues to brand itself a home for A-list talent. (See also Julia Louis-Dreyfus’s just-inked overall deal with the company.)
Talent from a handful of series were present on Sunday to tout their work. Mythic Quest star and EP Rob McElhenney appeared with his writers and cast to chat about their silly-leaning video-game satire (those episodes drop Feb. 7). Producers Wanda Sykes, Wilson Cruz, and Ryan White also shared revelations about delving into Hollywood’s LGBTQ history in making Visible: Out on Television (all of those episodes premiere Feb. 14).
At least one panel on Sunday boasted equal-parts charm and tension. Morning Show talent Aniston, Reese Witherspoon, Billy Crudup, and EPs Mimi Leder and Michael Ellenberg were asked to defend their early cries of “fake news” over some less-than-flattering early reviews of the series upon its Nov. 1 debut. “I think that journalists and obviously everyone has a right to their opinion. And I think there was a lot of expectations for this series,” said Leder. “Some people are rooting you on and some people are wanting you to fail. It’s just kind of the nature of the beast.”
“Everyone on this panel engages with the press and respects the press. We’re also all passionate,” added Ellenburg. “Certainly no one holds anything against the press for engaging with us.”
“I have no problem hearing real opinions; it helps us make it better and work harder. I welcome the criticism,” Witherspoon said.
“Especially constructive criticism,” added Aniston.
Fortune asked latter, who garnered 16.5 million followers on Instagram just 10 days after she first joined the platform last fall, about the increasing demands on actors to promote their work in social media, a stress that didn’t exist during her broadcast-comedy days in the early 1990s. Aniston quipped: “I’m a newbie… I’m just glad I had something to talk about that wasn’t my breakfast or latest workout at the gym.”
Elsewhere on the scheduling front, Apple announced that Steven Spielberg’s 1980s episodic anthology Amazing Stories is (re)launching March 6; and April will see the debut of three other originals: Home Before Dark (April 3, three episodes), the real-estate docuseries Home (all episodes), and the Chris Evans-led crime drama Defending Jacob (April 24, three episodes).
And the animated musical comedy Central Park from Bob’s Burgers creator Loren Bouchard—who on Sunday defended his casting, again of male voice actors in female roles, as he’s done on his Fox comedy—will launch in early summer.
“Animation just makes you want to take this voice and have it come out if this face,” Bouchard said when asked to comment on the casting of male actors Daveed Diggs and Stanley Tucci in two key female parts. “Hopefully there’s something about it that makes sense.”
More must-read stories from Fortune:
—The free streaming option offered by NBC’s Peacock is a real threat to Hulu
—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”
Follow Fortune on Flipboard to stay up-to-date on the latest news and analysis.


fortune--2020-01-20--CEOs are more pessimistic about the global economy than they’ve been in 8 years

These new rules might end tech ’ s reliance on Chinese investors

So much for entering the new decade with optimism.
Chief executive officers the world over are showing a record-high level of pessimism about the global economy, according to a PwC survey released ahead of the World Economic Forum’s annual meeting in Davos, Switzerland on Monday.
A majority of CEOs—53%—predict a decline in the rate of economic growth in 2020, the highest share since the consulting firm started asking this question in 2012.
The firm attributes CEOs’ downbeat expectations to trade tensions, geopolitical issues, and a lack of consensus on addressing climate change. Considering those factors, “the drop in confidence in economic growth is not surprising—even if the scale of the change in mood is,” Bob Moritz, chairman of the PwC Network, said in a statement.
In 2019, 29% of CEOs expected a decline in the pace of economic growth; in 2018, it was 5%. It’s worth considering that the 1,600 CEOs from 83 countries who responded to the most recent PwC survey did so between September and October of last year, before the U.S. and China signed ‘Phase One’ of a deal aimed at ending their months-long trade war.
CEOs’ pessimism doesn’t stop with the global economy; in fact, it extends to their own companies’ prospects for the year ahead. Just 27% of chief executives say they are “very confident” in their own firms’ growth in the coming 12 months, a drop of eight percentage points since last year and the lowest level since 2009. CEOs’ outlook for revenue growth at their own organizations is especially notable since it’s been a reliable predictor of growth in the global economy in the past.
The PwC survey also identified what CEOs see as the most urgent threats to firm growth. The perennial No. 1 is over-regulation, followed this year by trade conflicts. Uncertain economic growth ranked No. 3; just one year before, it didn’t crack the top ten.
It’s also worth considering what issues CEOs don’t list as top concerns. Climate change remains outside the top ten, even as the world experiences unprecedented weather events and natural disasters. At the same time, CEOs increasingly see climate change action as an opportunity to boost their “reputational advantage” and to foster new product and service opportunities, according to PwC. This uptick is especially notable in China, where 47% of CEOs now see climate change leading to opportunities, versus 2% a decade ago.
Another recent survey by the World Economic Forum itself pointed to the misalignment between CEOs and other leaders on the matter of climate change. Whereas the wider world sees environmental disasters as top risks, chief executives responding to that survey saw other concerns like fiscal crises and energy price shocks as more pressing.
Nevertheless, climate change is likely to be a reoccurring topic for business leaders attending the World Economic Forum’s annual meeting in Davos this week. The 2020 theme? Stakeholders for a Cohesive and Sustainable World.
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fortune--2020-01-20--These new rules might end tech’s reliance on Chinese investors

CEOs are more pessimistic about the global economy than they ’ ve been in 8 years

If you are a technology company looking for capital and have some interested Chinese investors, you may want to broaden your sights.
On Jan. 13, the Treasury Department issued landmark regulations that will scrutinize foreign investments into critical technology firms—especially those from China. These rules will dramatically expand the scope of the Committee on Foreign Investment in the United States (CFIUS), a U.S. interagency committee that considers the threat, vulnerability, and potential impact on national security of a foreign investment transaction.
The new regulations constitute a seismic shift in the way the U.S. government views and regulates foreign direct investment (FDI). While this is not the first time that new FDI regulations have come into force with a sense of urgency, this update is the most comprehensive to date, from both the breadth of the U.S. economy addressed, as well as the effort to persuade and compel global partners to create similar regimes.
This move reflects a fundamental reassessment of what constitutes U.S. national security. From 1975, when CFIUS was established by executive order, until 2001, national security was defined largely in terms of the U.S. defense posture and capabilities. Post-9/11, this was enlarged to encompass homeland security and associated infrastructure. The 2020 regulations reflect a much wider view that economic security—based on technological superiority—is a central component of America’s national security.
As such, the regulations will not be limited to protecting U.S. defense and aerospace capabilities and commensurate supply chains, but also America’s technological edge, critical infrastructure, and sensitive data. Furthermore, the scope will extend to non-controlling investments—even some below 10%—not just majority investments and acquisitions.
So how did we get here? China’s efforts to gain strategic advantage through the legal and illegal acquisition of U.S. technology and intellectual property has become more aggressive, more comprehensive, and more public. In 2015, Chinese leaders announced the Made in China 2025 plan, a strategic roadmap to compete with and supersede the U.S. in advanced manufacturing and the development of advanced technologies.
Implementing this roadmap, China has ramped up its foreign investments in the U.S., favoring manufacturing (especially semiconductors and electronics), information technology, and financial services, but also displaying interest in health care and real estate. At the same time, Chinese academics have been sent to American universities and Chinese ministries have funded R&D projects in the U.S. China aspires to become one of the world’s top innovative countries by 2035, according to a speech by President Xi Jinping reported in Straits Times, and has been making significant strides toward this goal.
American and multinational corporations need to understand what this all means. First, businesses that are considering foreign investment, especially those involved with advanced technology, critical infrastructure, or sensitive personal data, need to become familiar with the new CFIUS regulations and the related, emerging Export Control Reform Act rules governing the level of control of a specific technology.
Second, investment from countries like China, which has a track record of violating U.S. intellectual property laws and export controls, will be reviewed and investigated with a very critical eye—and is likely to have difficulty achieving CFIUS approval if these investments are in the technology, infrastructure, or data sectors.
Third, penalties for violations are high—not just fines, but also transactional costs and loss of potential revenue from investments that are blocked or are forced to unwind. Recently, the $245 million acquisition of Grindr by Kunlun Tech of China was reversed, and prior to that Broadcom’s attempted takeover of Qualcomm, a $117 billion deal, was blocked by executive order.
Fourth, mitigation—which involves taking concrete steps such as firewalling sensitive information from foreign nationals and instituting third-party monitoring to assess compliance—is possible in some cases—but success is not guaranteed. The $1.2 billion MoneyGram-Ant Financial transaction failed in the wake of mitigation proposals being rejected by CFIUS.
Fifth, a strong compliance process and culture is essential. This is not just a requirement for general counsels, but for the C-suite and key employees. Failure to understand, internalize, and comply with the law can affect a company’s stock price and reputation. It can also affect the confidence CFIUS has in a firm and thus the trust necessary for potential approval or mitigation of future transactions.
So buyers and sellers beware: These regulations are not going away. There is strong bipartisan consensus for tightening FDI rules and even a change in administrations is highly unlikely to alter this new course. The number of investigations of foreign investment transactions by CFIUS grew from 25 in 2009 to 172 in 2017, as documented in the committee’s most recent annual report to Congress.
The prudent business course is to assess the risks associated with certain sources and types of foreign investment, and either avoid or manage those risks through corporate governance, due diligence, and realistic growth planning.
Mira R. Ricardel is a principal at the Chertoff Group and a former assistant to the president and deputy national security adviser.
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fortune--2020-01-20--‘A.I. needs to be regulated:’ Google CEO calls for coordinated U.S.-EU rules

Alphabet Inc.’s chief executive officer urged the U.S. and European Union to coordinate regulatory approaches on artificial intelligence, calling their alignment “critical.”
In a rare public speech in Brussels at an event hosted by European economic think tank Bruegel on Monday, Sundar Pichai, who is also CEO of Google, said “there is no question in my mind that artificial intelligence needs to be regulated,” but that “we don’t have to start from scratch” with entirely new rules in some cases.
The comments come weeks before the EU is set to unveil its plans to legislate the technology, which could include new legally binding requirements for AI developers in “high-risk sectors,” such as healthcare and transport, according to an early draft obtained by Bloomberg. The new rules could require companies to be transparent about how they build their systems.
While in Brussels, Pichai is also due to meet with Margrethe Vestager, the competition chief responsible for more than 8 billion euros ($8.9 billion) of antitrust fines levied against Google. In addition to competition, she now also oversees the bloc’s digital policies, including the plans to legislate AI.
Alphabet has battled intense regulatory pressure in Europe for years. The search giant is challenging the EU’s multi-billion-dollar antitrust fines and has sought to fight off copyright and other forms of platform regulation emanating from Brussels in recent years.
The Google chief cautiously welcomed plans for rules that take “a proportionate approach, balancing potential harms with social opportunities.”
Facial recognition technology and so-called deep fakes– or manipulated audio and video clips — are two areas where AI could be used destructively, and companies have a responsibility “to get this right,” Pichai said. He said Google has released open datasets to help researchers build better tools to detect fakes and that it has chosen not to offer general-purpose facial recognition application programming interfaces.
Pichai touted the company’s recent developments in AI, including a Google Health algorithm that can spot breast cancer more accurately than doctors and other research for accurately predicting the weather as well as advancements by its self-driving car unit, Waymo.
The Google chief said existing rules like Europe’s privacy legislation GDPR and regulation for medical devices like AI-assisted heart monitors would serve as strong foundations for governing AI in some areas, but that for self-driving cars, governments would need to establish regulations.
But Google has also come under intense criticism over how it handles users’ privacy with some of its AI projects. Google faces a U.S. federal inquiry after the Wall Street Journal in November reported how it collects the health-care data from millions of Americans to design new AI software. It’s also facing scrutiny over the methods it uses for training algorithms that run Google Assistant.
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fortune--2020-01-20--The mental health benefits of cow cuddling

“We are not a petting zoo,” says Suzanne Vullers, owner of Mountain Horse Farm in Naples, N.Y., when asked about cow cuddling, a therapeutic practice she offers at the 33-acre bed-and-breakfast that she co-owns with her husband, Rudi.
Similar to equine therapy, cow cuddling invites folks to brush, pet, and chat with the animals as a way to connect with nature, the bovines, and the inner self.
“It’s not about dominance, it’s not about making them do what you want them to do, but it’s about having a friendship with them, to be invited in,” explains Vullers, pointing out that the cows are not trained in any sort of way.
The couple first heard of “cow hugging” when visiting their home country, the Netherlands, in 2017. Upon their return to the United States, they settled on trying out the practice at the farm. They purchased Bonnie, now 2 years old, and Bella, now 3, in May 2018. Both are crossbreeds of Angus cattle and Scottish Highland cows.
“They can live to be 20 years old,” Vullers says, explaining that the cows’ life spans and general well-being are directly connected to the conditions in which they live.
Those conditions include a specific diet (grass in the summer and hay in the winter, in addition to alfalfa pellets as treats on special occasions) and the freedom to walk around the property. “We never close them at night,” Vullers says. “We do have a barn where they can go in and out as they please, [but] it’s totally their choice.”
Cow cuddling is just one of many wellness activities at this upstate New York bed-and-breakfast, but it may be enough to inspire people to take the trip. Mountain Horse Farm
Similarities between equine therapy—a more widespread practice that is also offered at this particular bed-and-breakfast—and cow cuddling are obvious. “Both animals are large [so] they command your presence. They command you to be right there; you cannot be distracted,” Vullers says. “Your mind won’t let you be distracted, and that is basically the definition of mindfulness: being right in the moment, not being distracted by your thoughts or anything else that is going on.”
There is, however, one key difference between cows and horses that defines the technical aspects of each type of therapy: Cows like to lie down, which they do for long periods of time while digesting their meals. “During that time, they get really quiet, and that’s a very wonderful time to sit with them,” Vullers explains. Horses, on the other hand, tend to relax when their owner is around, not feeling comfortable enough to do so while strangers are present.
That natural rhythm and character is what the farm owners rely on when setting up the various cuddling experiences, during which both Vullers and a second handler are present. “We’ll go into the field and slowly make our way to wherever the cows are,” Vullers says. “And I will go in first and explain and show to the people what the best way to approach [the animals] is, where to touch, and how to go from there.”
Following a general getting-to-know-each-other period, guests get to brush the cows and enjoy some private time with them, during which most people tend to pet, brush, talk to, or lean against the animals. “Some sing to them,” notes the owner.
According to Vullers, who is an equine therapist, familiarizing the bovines with their environment is just as important as treating them well. “We had Bella and Bonnie interact with people a few weeks after they came here [so they could] pick up on that change [in environment],” she explains, contrasting the experience with that of animals raised in farms to be milked or slaughtered. At Mountain Horse Farm, the bovines are never milked and will never be used as a source of meat.
The mission to provide above-standard quality of life is also the reason Vullers can’t imagine cow cuddling becoming a stand-alone business. “We only do one or two sessions a day and only on three or four days a week,” she says. “Because we don’t want to overwhelm the animals, and we want it to be something that they look forward to as well.” In addition to animal-related experiences, guests can also sign up for massages and revel in the overall wellness-retreat-like vibe that resonates across the destination.
As for who is interested in trying out cow cuddling specifically, Vullers mentions a rather diverse roster of customers. “Age-wise, it goes from early twenties to 80 years old,” she says. Although what fuels their enthusiasm differs. All those who sign up for sessions end up basking in the glory of a face-to-face meeting with such large animals. “A lot of people don’t have much of a connection with the natural world in their day-to-day lives,” says Vullers. “They live in cities, jump in their cars in the morning, drive to work, and barely know what the weather is like outside. So being able to get away once in a while and really get back to nature—they need that.”
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fortune--2020-01-21--How a beloved Seattle sandwich shop, originally owned by the Batali family, found new life

When it comes to the optimism divide between CEOs and investors , somebody ’ s wrong

For almost two decades, customers wanting to get their hands on Seattle’s favorite sandwiches and most-coveted meat were always in for a bit of an adventure. Salumi, the Pioneer Square storefront, was synonymous with long lines and the chance that it might be out of its famous molé salami, messy porchetta, or incredible meatballs that day.
The restaurant—and the cured-meat brand of the same name—started as a retirement project for Armandino Batali (yes, Mario’s father), and even on the busiest days, ran on the mentality of an Italian grandfather doing this for fun. And when he retired from his retirement project, it became his daughter and son-in-law’s retirement project. But in 2017, when they, too, were ready to move on, two longtime fans and customers bought the business with big plans to change both nothing and everything about Salumi—including part of the name.
Friends Clara Veniard and Martinique Grigg had been looking for a food business to collaborate on for a few years, researching hundreds of companies to find a good fit. Veniard’s family had owned an Italian confectionery in Argentina, and she’d worked in the food industry before going into international development, while Grigg had been the executive director of the nonprofit outdoors club The Mountaineers. When they got word that Gina Batali and Brian D’Amato were looking to sell, they saw the perfect opportunity: a business rooted in family and food, but in serious need of someone looking to run it as a company, not a passion project.
“They couldn’t supply their existing [wholesale] customers,” says Veniard. “December comes around, and 50% of orders were rejected. Most of the year they’re rejecting orders.”
Clara Veniard and Martinique Grigg Salumi/Coro
And when those wholesale orders did make it into the world, Veniard and Grigg identified a new problem: The company shared a name with the Italian word for their product. At grocery stores, customers would ask for Salumi by name and get salumi from other brands. “It was very confusing,” Veniard admits. They kept the name Salumi for the Seattle deli, but the packaged and wholesale salumi company is now called “Coro by Salumi.”
The name was chosen to celebrate the chorus of flavors in the products, but also the chorus of people behind the brand: “It’s Armandino and [his wife] Marilyn, Gina and Brian, and Irma and Melanie,” Veniard says, pointing to the women running the kitchen. Then there’s Veniard and Grigg themselves, who act as co-CEOs, enabling them to keep their home lives balanced with the demands of running a company. Veniard has three children under 10, and Grigg has two. “We were adamant about building a model of how to own a small business and be moms of young kids,” Veniard says. The partnership allows them to back each other up and to “take real vacations,” with their kids, where they get to totally turn work off—a rare thing for CEOs in today’s world.
Even though the pair bought the company in 2017, they just made the name change at the end of last year—and that was on purpose. For the first year, D’Amato and Batali stayed on, and Grigg and Veniard watched and learned—the sale was barely publicized until much later. They learned what people loved about the company and saw where they could make changes.
In year two, they opened a second production facility and ramped up to meet demand. When a new space opened nearby, Grigg and Veniard jumped on the opportunity to move the deli without leaving the neighborhood, converting the old location to an aging facility for their whole-muscle cured meats, like prosciutto.
The original Salumi is a beloved Seattle cured-meat producer and sandwich shop in Seattle’s Pioneer Square neighborhood. Salumi/Coro
But through all this, the day-to-day experience for customers remains as it always was, as Veniard underscores: “It’s still small-batch production.” The recipes are mostly still the ones for which Armandino and his daughter mined their family’s table. And the new deli kept a communal table, a nod to the tradition of the original, which lacked the space for individual tables.
The biggest change people think they see, though, is something that Veniard says has actually stayed the same. As the pair adds new flavors to the brand—including one with lemongrass inspired by Vietnamese cuisine—they’ve embraced, not rejected Armandino’s vision, she says. After all, he was the one who made molé-spiced salami seem to slide right into place among traditional Italian offerings.
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fortune--2020-01-21--How getting pregnant became a booming business

Good morning, Broadsheet readers! The New York Times’ editorial board backs two women, Best Buy’s CEO comes under fire, and we dig into Fertility, Inc. Have a terrific Tuesday.
Today’s essay comes to us from Fortune’s Beth Kowitt:
– Fertility, Inc. Last year, I began to receive a flood of emails from fertility companies announcing new rounds of funding and product launches. They came from standalone egg-freezing boutiques, companies that assist couples with IVF financing, startups that provide at-home hormone tests, wearables that help women determine when they’re ovulating—just to name a few. As a woman in my mid-30s and a journalist who covers health and wellness trends, I am definitely in the sweet spot for these kinds of pitches. But I was truly caught off-guard by the volume of activity, in large part because these companies fell within a category that had been all but ignored in the past.
I wanted to understand what was driving the creation of this new industry, one that not only has the potential to be a big business but also holds major implications for society more broadly. “Some people really care about having genetic children, which makes it a huge source of suffering—and a huge market,” Stanford Law School professor Hank Greely told me.
The culmination of my reporting is out this morning in a new feature, “Fertility Inc.” What I found is that the sector is in the midst of a rapid shift that’s redefining what fertility means and has the potential to change how families are formed. Fertility treatment historically sat outside traditional healthcare, essentially considered elective and a luxury. But today, even as access remains a huge issue, several big demographic trends are starting to move the industry into the mainstream. Millennials are aging into fertility treatment, women are having children later in life, the LGBTQ+ population is increasingly turning to assisted-reproductive technology to build their families, and infertility is losing its status as a taboo topic.
Women’s reproductive health has been severely under-researched and under-funded for all of the societal and political reasons you can imagine. As a result, most of the founders I talked to had started their companies after receiving ambiguous answers about their own reproductive health. A few doctors are skeptical about some of the startups popping up, but it is clear why women are looking for alternatives to a model that’s often failed them and ignored their pain in the past. “Navigating the medical system as a female is fraught,” says Ridhi Tariyal, CEO and cofounder of startup NextGen Jane. “There’s some mistrust there.” But Tariyal is also concerned that investors’ newfound focus on pregnancy and fertility will draw away what little attention the rest of women’s health has fought to garner. The maternal mortality rates of black women, for example, is a truly dire issue that’s been largely overlooked.
And yet despite all of the funding, progress, and legitimizing of the industry, fertility remains outside traditional healthcare in that it is so deeply personal and emotional in ways that other parts of medicine are not. As I write in my piece:
It’s a reminder that the fertility industry has yet to disentangle itself from the very paradigms that advancements in reproductive health were supposed to dismantle: the conflation of womanhood and motherhood, the belief that biological ties are the best way to create a family, the implication that the burden of reproduction lies with women. It remains unclear that any amount of investment could ever shift those archetypes. But for the industry overall, that would truly be a major breakthrough.
Read the full story here.
Beth Kowitt
beth.kowitt@fortune.com
@bethkowitt
Today’s Broadsheet was produced by Claire Zillman. By the way, Claire is in Davos this week for the World Economic Forum’s annual meeting. She’ll have more from the confab in coming days.
ALSO IN THE HEADLINES
- 'May the best woman win.' The New York Times' editorial board took the extraordinary step on Sunday of endorsing two Democratic candidates for the party's nomination: Sens. Amy Klobuchar and Elizabeth Warren. "Both the radical and the realist models warrant serious consideration," the Times wrote. "If there were ever a time to be open to new ideas, it is now. If there were ever a time to seek stability, now is it. That’s why we’re endorsing the most effective advocates for each approach." New York Times
- Best Buy probe. Best Buy CEO Corie Barry is the subject of a probe into whether she had an inappropriate romantic relationship with another executive, Karl Sanft, who's since left the company. The Best Buy board got word of the allegations in an anonymous letter in early December. Barry, who became CEO last June, told the WSJ she's cooperating with the investigation. Wall Street Journal
HR A.I. Here's another Fortune deep dive: Maria Aspan's piece on how companies are using A.I. in hiring. One reason managers are turning to technology is because it cuts down on bias in their decision-making. “People are inherently biased,” says Pieter Schalkwijk of Kraft Heinz. “I wanted less biased hiring decisions and more data-driven hiring decisions.” Maria's piece is part of a larger special report by Fortune on artificial intelligence. Fortune - Investigating Isabel. Some 700,000 documents obtained by the New York Times paint a fresh picture of Africa's richest woman, Isabel dos Santos, worth some $2 billion, and how she obtained her vast fortune. On Monday, the Portuguese bank EuroBic, an arm of a bank in which she is the largest shareholder, said it would end its "commercial relationship" with her. New York Times
IN CASE YOU MISSED IT
- See you in court. The trial of Huawei CFO Meng Wanzhou finally started in Canada on Monday. It will determine if the crime Meng is accused of in the U.S.—fraud linked to the alleged violation of American sanctions against Iran—would also be considered a crime in Canada. A judge must determine such "double criminality" before Meng can be extradited to the U.S. She maintains her innocence. BBC
- Bumble fumble. Bumble founder and CEO Whitney Wolfe Herd has talked at great lengths about wanting the women-focused dating app to make relationships more equitable. "Our mission, really, ultimately, is to stop misogyny," she says. But there's little evidence that—compared to competitors—the app is safer or its users less sexist. Bloomberg
- 'That's my husband, Joe Biden.' Joe Biden's clutch closer? His wife, Jill. She's been on the Iowa campaign trail for weeks now, trying to convince undecided voters to support her husband. She pitches him as the candidate who can restore stability in the White House. "A commander in chief that you can trust. A leader who brings people together. A president that you can feel proud of,” she says. “That's my husband, Joe Biden.” Washington Post
ON MY RADAR
49ers' Katie Sowers will be the first woman in NFL history to coach in a Super Bowl Bleacher Report
"Let's root for the boys:" The reimagining of the NFL cheerleader GQ
Would a 37-year-old woman be where Pete Buttigieg is? New York Times
In promoting Hulu documentary, Hillary Clinton says she ‘should have done more’ to repair her public image Fortune
PARTING WORDS
"I hope she’s having a delicious glass of wine somewhere warm."
- Writer and actress Phoebe Waller-Bridge on where we might find her Fleabag hero in 20 years. Waller-Bridge and members of the Fleabag cast spoke to Fortune about the Amazon series.


fortune--2020-01-21--What CEOs see as the top threats to their businesses

This is the web version of CEO Daily. To get it delivered to your inbox, sign up here.
Good morning.
PwC released its annual survey of CEOs this morning, which showed a majority—53%—are expecting a growth slowdown this year. That’s the most pessimistic they’ve been in the eight years the consulting firm has been asking the question.
In addition to slowing growth, the global group of 1,581 global CEOs cited regulation, trade conflicts, and cybersecurity as top threats to their business.
Climate change didn’t make the top ten, but 24% of the CEOs said they are “extremely concerned” about climate change—up 25% from a year ago.
The U.S. and China are still competing neck and neck as the top territory for growth for CEOs. And nearly two thirds say they expect government to introduce regulation over content on the Internet.
Separately yesterday, Alphabet CEO Sundar Pichai called on the EU and the U.S. to take a coordinated approach to regulating A.I., adopting rules that balance “potential harms with social opportunities.”
More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
TOP NEWS
Virus impact
The novel coronavirus that is spreading in and around China—it just claimed a sixth life—has knocked stocks in mainland China and Hong Kong. Tourism and retail shares were particularly hard hit. The Hang Seng was down 2.8% (which was also partly down to Moody's downgrading Hong Kong's credit rating) and the Shanghai Composite fell 1.7%. Shares in Chinese drugmakers and face-mask manufacturers are up, though. Financial Times
Tesla shares
As Tesla shares surge, investor strategies are diverging bigtime: some are urgently buying in, but others continue to bet against the stock, with Tesla currently being one the market's biggest shorts. Both sides have their case to argue, but analysts say the stock could hit at least $600 this month—it was at $178 just seven months ago. Wall Street Journal
Facebook jobs
Facebook is adding a further 1,000 jobs in the U.K. this year, bringing the total to over 4,000. COO Sheryl Sandberg will announce the hiring spree today in London. A key focus here will apparently be the handling of toxic content on the platform—so lots of "artificial intelligence" jobs then. CNBC
Digital tax
President Trump's threat of sanctions against France is on hold for now, after the countries agreed to extend talks on the issue of digital taxation until next year. That means no French 3% levy on Big Tech revenues, and no counterstrike from the U.S. (a move that would have elicited a collective response from the EU). Deutsche Welle
AROUND THE WATER COOLER
Most admired
Fortune's rundown of the most admired companies is out—and Apple tops the rankings for a stunning 13th year in a row. Meanwhile Microsoft is in the top five for the first time in 15 years, seizing the number-three spot. Who's off the All-Star list? Boeing, Facebook and Samsung Electronics. Fortune
Thunberg in Davos
Greta Thunberg appeared at Davos this morning, addressing a packed room—though one that featured only a few fossil fuel executives. Her message? There's lots of talk but not enough being done practically to address the climate emergency. Thunberg: "Since last summer I have been repeating these numbers over and over again in every speech. I know you don’t want to talk about this. I assure you I will continue to repeat these numbers until you do." Bloomberg
Ghosn countered
Japan has hit back at Carlos Ghosn's accusations of "hostage justice," following the former Nissan chief's escape to Lebanon. The justice ministry published an FAQ defending its treatment of detainees and maintaining that its criminal justice system "does not force confessions by unduly holding suspects and defendants in custody." Reuters
Fertility business
Big bucks are starting to flow into the fertility industry, with investors drawn by high margins and increasing success rates. The industry is booming largely because women are choosing to have children later. But some medical insiders warn it's an under-regulated field, with some players overpromising the benefits they can provide. Fortune
This edition of CEO Daily was edited by David Meyer.
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--2020-01-21--Why investors should pick the underdogs in sports gambling

A Supreme Court decision that wins bipartisan praise is about as rare as a backdoor cover on a seven-team parlay. And if you know what a backdoor cover on a seven-team parlay is, you may know which decision we’re referring to. In Murphy v. NCAA, in May 2018, the court struck down a federal law that had effectively banned commercial sports betting in most states—a move that earned praise from gamblers of every political stripe.
In the wake of the ruling, 14 states have passed laws allowing some form of sports betting. On Feb. 2, Super Bowl LIV will serve as the latest example of the shift’s financial impact. Last year, gamblers placed an estimated $6 billion in legal bets on the Super Bowl, up 26% from 2018. And in the past 12 months, the number of legal-wagering states has nearly doubled, meaning this year’s pot is virtually certain to be bigger.
This favorable legal climate has opened up broad new gambling markets. Major League Baseball, the National Basketball Association, and the National Hockey League have inked partnerships with gaming companies in pursuit of new revenue. Media companies that broadcast sports have added gambling programming to entice advertisers. Online betting sites have vastly expanded their businesses.
But investors who believed this wagering wave would lift the stocks of big casinos and gaming companies have wound up on the wrong side of the spread. Since the Murphy decision, the VanEck Vectors Gaming ETF, which tracks the global gaming industry, is down almost 10%, while the S&P 500 has returned 22.5%.
Sports gambling is “a low-margin business,” explains Matt Carey, who covers the subject for data provider GamblingCompliance. Commissions on sports wagers range between 5% and 10%. Even if you assume that Americans bet $150 billion illegally on sports each year (an estimate at the high end of the range), and that all of that money will eventually flow into legal venues, the resulting revenue would top out at $15 billion—penny-ante stuff in the $300-billion-a-year U.S. gaming industry. And the odds in sports betting don’t tilt dramatically in favor of the house the way they do in casino games like craps or slots.
The upshot is that the sports surge isn’t financially meaningful for casino giants like MGM Resorts International or Las Vegas Sands. To profit from the legalization boom, investors need to focus on smaller companies that can get a proportionally bigger revenue boost from sports wagering—including companies that aren’t chiefly known for gaming today.
To circumvent the headache of obtaining licenses in legal-betting states, the most popular online betting platforms partner with casinos. That has created a big opportunity for Boyd Gaming (BYD, $30), a small casino operator that has teamed with betting site FanDuel. FanDuel now runs some of its sports books under Boyd’s banner. In return, Boyd can market to FanDuel’s database of over 10 million customers—bettors whom it can woo to play blackjack or roulette in its casinos, or on its rapidly expanding online platform. The company has thrived—revenue jumped 25% in 2019, to $3.3 billion—but its stock still trades at reasonable valuations.
Eldorado Resorts (ERI, $59) owns a 20% stake in the U.S. subsidiary of London bookmaker William Hill, “one of the best retail sports books,” according to David Katz, an analyst at Jefferies. Hill now runs Eldorado’s sports-wagering business, giving it an edge in capturing new customers. And in June the company agreed to acquire the much-larger Caesars Entertainment, which has three times Eldorado’s revenue. In early 2019, Caesars signed a deal that lets it use National Football League branding in its casinos; that deal could give the company an inside track to win more business if the NFL eventually decides to more directly embrace betting.
Last September, Fox Corp. (FOX, $36), owner of Fox Broadcasting and Fox Sports, teamed with gaming company the Stars Group to launch online platform Fox Bet—one of the most direct efforts by a media company to profit from sports gambling. The hope is that Fox Bet will drive traffic to Fox’s extensive football, soccer, and college sports programming, and vice versa. Evercore ISI analyst Vijay Jayant believes Fox Bet alone could generate $1 billion in annual revenue by 2025.
Many analysts anticipate that jurisdictions that have legalized sports betting will also allow franchise owners to host gambling in their teams’ arenas. One of the only publicly traded companies with exposure to both teams and arenas is the Madison Square Garden Co. (MSG, $299), which owns New York’s famed Garden as well as the NBA’s Knicks and the NHL’s Rangers. As a play on gambling, the stock is a long-term bet: It’s not clear when or even if New York State will expand legalization. But Robert Routh of FBN Securities says MSG’s stock is significantly underpriced compared with the value of its business. That means any substantial surge in revenue, whatever its cause, could boost the stock. Think of it as an intriguing long shot—just like a seven-team parlay.
A version of this article appears in the February 2020 issue of Fortune with the headline “Placing the Right Bet on Sports Gambling.”
More must-read stories from Fortune:
—Wells Fargo is the big bank that investors like least
—What we can learn from the man who tried to sell the Eiffel Tower—twice
—Why it’s time for a futures market in health care
—Retailers reuse and recycle the way to increased growth
—3 things investors can bank on in the uncertain 2020s
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