fortune--2020-07-31--How the U.S. IPO of a Chinese electric vehicle maker defied Washington’s roadblocks

Chinese auto maker Li Auto raised $1.1 billion in an IPO on Nasdaq on Thursday, valuing the five-year-old electric vehicle maker at around $10 billion. The Beijing-based firm is the latest China EV manufacturer to join the American market and comes at a time when Chinese stocks are facing greater scrutiny in the U.S.
Li Auto, alternatively known as Lixiang, was founded in 2015 by its CEO and chairman Li Xiang, for whom it’s named. The company is backed by China’s largest consumer services app, Meituan, as well as Beijing Bytedance, which owns short-video app TikTok.
Unlike most other electric vehicle makers, Li Auto specializes in so-called extended range electric vehicles (EREVs), which can be powered by either electricity or gasoline. The hybrid engine compensates for China’s sparse EV-charging infrastructure, Li Auto says, and serves as a better gateway for weaning consumers off of petrol-powered cars. Since shipping its first model in late 2019, the company has sold around 10,000 units.
Li emerged on the Nasdaq two years after Chinese rival Nio listed on the New York Stock Exchange. Unlike Li, Nio deals exclusively in electric vehicles; it’s sold upwards of 40,000 cars since it was founded in 2014.
Nio’s shares have risen 70% this year, after plummeting 80% in the 12 months following its 2018 IPO. The EV maker’s stock is now trading above its IPO price.
Li Auto’s shares surged 43% on its first day of trading.
Another Chinese electric automaker, Xpeng, is reportedly also planning for a U.S. IPO this year.
“The U.S. market clearly still has a large appetite for electric vehicles, but it’s frothy and there is probably a bubble,” Tu Le, founder of consultancy Sino Auto Insights, told the Financial Times. The interest in Chinese EV companies appears to be fueled, in part, by Tesla’s stock performance, which has soared 500% this year to become the world’s largest auto maker in July.
The timing of the Chinese EV IPO streak is curious, since it comes at a time when Washington is less welcoming of Chinese stocks than Wall Street is.
Following Nasdaq’s move to delist Luckin Coffee in May after the company was found to have fabricated sales worth $310 million, the Senate passed a bill that would hold U.S.-listed foreign firms—primarily Chinese ones—to greater accountability. (Luckin dropped its appeal against delisting in June.)
Specifically, the bill proposes that foreign firms be delisted if the Securities and Exchange Commission (SEC) is unable to obtain company audit documents for three years. Beijing opposes turning over company audits to the SEC, claiming the documents contain state secrets. The legislation is currently waiting to be reviewed by the House.
A number of U.S.-listed Chinese firms have either delisted or sought secondary listings closer to home since Washington increased its focus on market regulation. China’s largest chipmaker, SMIC, delisted from NYSE last year; China’s largest travel agency, Trip, is reportedly planning to delist from Nasdaq; and Alibaba, China’s leading e-commerce site, had a secondary listing in Hong Kong last November.
In its filing with the SEC, Li Auto admits that the SEC currently isn’t able to inspect the company’s audits and warns that, should the Senate bill turn into law, they could be required to delist. But the Peterson Institute for International Economics, a U.S. think tank, points out that delisting Chinese companies from the U.S. won’t cut them off from U.S. capital.
If a Chinese company shifts from the U.S. market to another, existing shareholders will be given the option to swap for shares in the new listing. Alternatively, if the company is brought private, current shareholders will be bought out at a premium
Hopes for a premium buyout are likely why shares in Luckin continue to trade over the counter—meaning not through Nasdaq’s official channels—as investors still believe there’s money to be made.
Similarly with Li Auto—there’s a risk it will be forced off Nasdaq in the future, but investors still see the benefit of getting in on the ground floor.


fortune--2020-07-31--LeBron James and the NBA picks up where Colin Kaepernick left off

Even as a lowly office grunt , you can do a lot to improve workplace diversity

This is the web version of raceAhead, Fortune’s twice weekly newsletter on race and culture. Sign up to get it delivered free to your inbox.
NBA players and coaches keep up Kap’s work with the anthem, prison walls can’t keep in the coronavirus. Elsewhere, the Esselen tribe gets back what’s theirs in Big Sur, while the amazing MacKenzie Scott gives away her wealth.
But first, here’s your holiday-inspired week in review, in Haiku.
Long distance pilgrims
on a social distant quest.
The kitchen table
joys of food, chatter,
family delight subdued:
Eid during COVID.
This year’s feast is a
sacrifice for those who grieve;
loved ones lost,
rituals curtailed
in an Eid Mubarak Zoom.
Still, there are blessings
to be found in the
world, and a wish for love and
peace, moments of joy.
Wishing you many moments of joy this weekend.
Ellen McGirt
@ellmcgirt
Ellen.McGirt@fortune.com
On point
The Esselen Tribe goes home Some 1,200 acres of undeveloped private property near Big Sur, California, are being transferred to the Esselen Tribe of Monterey County, who will return to their ancestral home after being driven off the land over 250 years ago. “We are back after a 250-year absence – because in 1770 our people were taken to the missions,” Tom Little Bear Nason, chairman of the Esselen Tribe of Monterey County said. “Now we are back home. We plan on keeping this land forever.” The property known as Adler Ranch was sold via a $4.5 million grant from the California Natural Resources Agency, awarded last fall. The Tribe plans to build a traditional village on the property which will be available for use by several Central Coast tribes, including the Esselen, Rumsen, Chalone, Sureño, Chunchunes and Guatcharrone. The property is a pristine ecosystem of endangered species and old growth redwoods, and home to the Little Sur River, a spawning stream for endangered steelhead trout.
Monterey County Weekly
NBA players and coaches kneel during the national anthem In the first professional games to be played in the COVID-delayed season, players and coaches the Los Angeles Lakers, Los Angeles Clippers, New Orleans Pelicans, and Utah Jazz, all took a knee to support the movement started by Colin Kaepernick. "I hope we made Kap proud, I hope we continue to make Kap proud,” Lakers star LeBron James said in a post-game interview. “Every single day, I hope I make him proud on how I live my life, not only on the basketball floor but off the floor. I want to always speak out against things that I feel like are unjust," James said. See? Not so hard. Also, the Lakers beat the Clippers 103-101.
CBS News
COVID-19 jumps prison walls to communities In this eye-opening interview hosted by Reuters, Lawrence Bartley of The Marshall Project and author/activist Piper Kerman discuss the alarming relationship between coronavirus hotspots in prisons and broader communities. Prisons are not designed for social distancing; even the director of the Ohio prison system has tested positive, they note. “There are more than 7,000 prisons, jails and detention centers in the U.S. and nearly half a million workers pass through them every single day,” says Kerman. “I can’t overemphasize that it’s impossible to keep COVID-19 behind prison walls.” Find The Marshall Project’s essential state-by-state tracker of coronavirus infections in state and federal prisons here, more on the conversation below.
Reuters
The wonder of MacKenzie Scott Last year, the author and philanthropist, who also played an important role in the founding of Amazon, pledged to give away the majority of her wealth, and do it thoughtfully. This week, she did just that — giving money to 116 organizations, most of which directly promote racial, gender, and LGBTQ equity, and which had been vetted and selected for their transformative work. “There’s no question in my mind that anyone’s personal wealth is the product of a collective effort, and of social structures which present opportunities to some people, and obstacles to countless others,” she wrote in a Medium post. While many of the individual gifts, like her contribution to Howard University, have been well-publicized, it’s worth spending a little time with her entire list, filled with remarkable people working on important ideas. She really did something here.
MacKenzie Scott on Medium
On background
It’s time to rethink White Jesus Robert P. Jones, author, CEO and co-founder of PRRI, a nonpartisan religion and public policy research organization, is unsparing in his assessment. Decades of research confirm a difficult truth. “White Christians are consistently more likely than whites who are religiously unaffiliated to deny the existence of structural racism,” he says, and racist ideas are most strongly associated with frequent attenders of church. He melds a history lesson with his own research—his Racism Index sounds fascinating—which leads him to the appalling conclusion that racist ideas are tightly bound with white Christian identity and a central part of the white Christian worldview. “The unsettling truth is that, for nearly all of American history, the light-skinned Jesus conjured up by most white congregations was not merely indifferent to the status quo of racial inequality,” he says. “[H]e demanded its defense and preservation as part of the natural, divinely ordained order of things.”
NBC News Opinion
Wake up, sheeple Annie Lowrey has written an essay that will make you laugh…until you cry. If you’ve spent even a minute online you’ve already met Facts Man, the prolific user of every communications medium, aiming to bring order to the chaos with the unvarnished truth. “The conclusions that the social-justice warriors and sheeple professors will not let you reach. The conclusions that mere mortals, including lauded subject-matter experts and the people who have actual lived experience of the topic at hand, have not yet grasped.” Yeah, that guy. And the business world generates plenty of ‘em. While she breaks down the stereotype pretty handily, it leaves you with a pretty tough question: What to do about a “guy” who grabs the mantle of authority and then ruins the conversation for everyone? Seriously, not a hypothetical.
The Atlantic
The enduring whiteness of recipe writing Cookbook authors Priya Krishna and Yewande Komolafe recently took to FaceTime to dish, not about food so much, but about how hard it was becoming to present their recipes to American audiences without whitewashing them. Part of the problem, says Komolafe, is that lots of home cooking doesn’t use exact amounts of ingredients. “I think too often the expectation is that if you as a home cook follow a recipe exactly, then it's going to look like the picture,” says Komolafe, who has been called the “voice of Nigerian cooking.” She says that sort of Western expectation misses the point. “A recipe should be more like a set of guidelines.” The pair also dig into the power dynamic associated with colonization, and the practice of taking credit for the recipes of enslaved people. And what to do with oral traditions? “[I]n Nigerian cooking there's this process where you take a starch and you pound it, but there’s no technical name for it,” says Komolafe. “I think the way we write recipes now almost demands that we have one word for a given technique.”
Bon Appetit
raceAhead is edited by Aric Jenkins.
Today's mood board
I picked you some wildflowers from the summit of Huckleberry Knob, part of the Unicoi Mountains in North Carolina. Wish you were here.


fortune--2020-07-31--James Murdoch resigned from the News Corp. board, signaling a rift in the powerful media family

James Murdoch, the son of Rupert Murdoch, has resigned from the board of News Corp., the media conglomerate that includes the Wall Street Journal, The Times in the U.K., and the New York Post.
A resignation letter was included in a News Corp filing with the Securities and Exchange Commission that was released on Friday.
“My resignation is due to disagreements over certain editorial content published by the Company’s news outlets and certain other strategic decisions,” Murdoch wrote without elaborating on the differences.
Murdoch and his wife Kathryn Murdoch have publicly criticized the media operations of various News Corp.-owned publications that they believed expressed doubts about climate change, an issue dear to the couple. Kathryn Murdoch is a noted climate change activist who once served as director of strategy and communications for the Clinton Climate Initiative, a nonprofit established by former President Bill Clinton.
In January, the couple publicly rebuked several News Corp.-owned Australian publications, including The Herald Sun and The Australian, for publishing pieces belittling the relationship between climate change and the massive fires that swept the country in late 2019 and early 2020.
“They are particularly disappointed with the ongoing denial among the news outlets in Australia given obvious evidence to the contrary,” a spokesperson for the couple told The Daily Beast in January.
A longtime media executive, Murdoch’s most prominent position was CEO of 21st Century Fox from 2015 through 2019, when it was sold to the Walt Disney Company.
In 2019, Murdoch founded the private investment firm Lupa Systems, which has invested in a variety of companies, including media outlet Vice Media and research firm Morning Consult.
In June, Lupa Systems agreed to take a financial stake in the MCH Group, the Swiss firm that host several high-profile exhibitions, including the Art Basel fair. The deal is expected to close on Aug. 3, and Lupa Systems will own about one-third of the company.
Murdoch is also a board member of the Elon Musk-led electric vehicle company Telsa.
James Murdoch’s brother Lachlan remains the executive chairman and CEO of Fox Corporation.
In June, James and Kathryn Murdoch reportedly donated $615,000 each to Democratic presidential candidate Joe Biden, underscoring the political divide between James and his father.
In a wide-ranging interview with Fortune in 2013, Murdoch discussed a number of topics including the role of journalism in a “free society.”
From the interview:
But in a free society you take the good with the bad, and you try to do that. And I think the business of journalism is one that starts I hope from a noble basis, and making that pay and making that self-sustaining is really important. So all the more reason to have investors that are aligned with the opportunities.
The last thing you want is a — I’ve sort of controversially talked about this in other countries — having the business of journalism being beholden to other interests as opposed to its own ability to self-sustain itself through profit is the most dangerous place we could be.


fortune--2020-07-31--Even as a lowly office grunt, you can do a lot to improve workplace diversity

How Apple , Alphabet , Amazon , and Facebook fared on the stock market after a very big week

Broadside writer Kristine Gill offers advice from experts on how you can improve workplace diversity, even if you’re not high up. Then, scroll on for job opportunities from Lowe’s, Trader Joe’s, Waymo and more.
Black Lives Matter protests are changing things. Big brands have been updating the names of their products, banning confederate flags, and unearthing and punishing racist comments. Companies are making ambitious pledges to tackle diversity with renewed vigor.
If you’re low on the ladder at your workplace, though, you may feel like you’re cheering from the sidelines instead of helping the charge. But there’s plenty to do in the office, especially for white allies, even if you aren’t in charge of hiring decisions or diversity task forces—a good thing, perhaps, considering they don’t really work.
“This is about personal accountability,” says Risha Grant, a diversity, inclusion and bias expert based in Tulsa, Okla. “Whether companies do anything at all—and don’t get me wrong, they should—you have to be personally responsible for the things you do and the things you put out there.”
Here’s how experts say you can effect change at your job and within your industry, no matter where you fall in the ranks.
“Say, ‘So and so had a great idea earlier.‘”
As women, we’re frequently interrupted during meetings and even in one-on-one conversations. It happens even more to Black women.
Nonblack women: If you witness it, interject on their behalf.
UK-based author and anti-racism activist Sophie Williams talks about this and other issues only Black women face in the office in her upcoming book Millennial Black. Due out spring 2021, it is geared toward white allies. Her other title, Anti-Racist Ally will address similar issues when it’s published this fall.
“We talk a lot about amplifying voices online, but you also have to amplify in your day-to-day life,” she says. “So if someone gets cut off, you can say, ‘I don’t think Sophie was quite finished with that.'”
You can also make room for your Black colleagues at these meetings by giving them the floor.
“Maybe earlier that day you had an exchange with someone and they had a great idea. You can say, ‘So and so had a great idea earlier,’ and allow that person to finish their thought,” Grant also says. “It’s truly important that their voices are heard around the table.”
And be sure to use your voice when it’s perhaps most critical: standing up to racist comments.
“You can let someone know, ‘I do not stand with you,'” Grant says. “And we don’t do that. We’re really passive about it and we let it go.”
“Start this informal network.”
If your office is lacking diversity, don’t give up hope. There are plenty of ways to network with fellow industry professionals as a Black employee or nonblack ally.
Try starting a happy hour or conference meet-up with employees of other companies in your industry. Or, plan something more formal. Williams points to Pocc, a group in London that originally started as a WhatsApp chat for people of color to vent about what they were experiencing as minorities working in media and the arts. It eventually grew to become a community of talent working to further each other’s careers for the benefit of their industries.
“That sort of validated their experiences. It showed that they weren’t in wrong; they were being gaslit,” Williams said. “And then they were able to start this informal network, which is now a place where brands are coming to [in order] to hire people, where people are coming to [in order] to find like-minded people.”
You don’t have to feel stuck in a silo. There are good groups out there doing the work, and, if you do have to leave your workplace, good companies out there happy to have you.
“Strike up a friendship.”
When Dee Poku Spalding, a New York-based entrepreneur and women’s advocate, started her first job, she was the only woman of color in her office. At times, that fact caused anxiety. Having a friend would have eased the burden.
“Certainly you’re not going to go over and say, ‘Hey, I recognize you’re a minority.’ That’s awful,” she says. “But you can strike up a friendship the way you would any other friendship and go from there. It’s not about weird overtures for people, but about recognizing that they’re alone and being there for them.”
Then, take it a step further. Even if you aren’t in charge of hiring, Spalding says to suggest friends of color for positions at your company when they’re a good fit.
“It’s going to be easier for them to rise to the top of the pile if they’ve come from an internal connection,” she says.
Put simply, Grant adds: “You can be human. No one is insignificant in this movement.”
“Be open about pay.”
Williams says one of the biggest ways Black women suffer in the workplace comes down to their paychecks. Black women are paid 39% less than white men and 21% less than white women, according to the Institute for Women’s Policy Research.
“The way that we find out about disparity is by talking to people who are different from us. So if you’re not a marginalized person, being open about [pay] can allow other people to see sort of those gaps,” she says. “That can show what the playing field is.”
Armed with that information, Black women can leverage for better pay when it comes to annual review or future hiring negotiations. (It’s worth noting, though, that Black women do ask for promotions and raises at about the same rate as white women, but still get worse results.)
“Seek out a mentee.”
This goes for everyone—men and women of all colors, says Poku. If there’s a young person of color in your office who is new to the field or the gig, offer to meet up for coffee to talk about their career. Make it casual if you’re unsure the offer will be well-received, but offer to network on their behalf if it is.
“That sort of mentorship is incredible,” she says. “I definitely had white men who were sort of informal mentors to me and I found that incredibly valuable. There wasn’t anyone inside my company but outside my company. And we didn’t talk about race ever, but they certainly opened doors, [and] just gave me another perspective on things that I found really helpful.”
Since the Black Lives Matter movement heated up, Poku Spalding has heard from several colleagues offering to mentor Black women in their fields, and she’s been making those connections.
“It’s very well-received for a mentor to seek out a mentee,” Poku Spalding says. “I think they’d love an offer, so they don’t have to be the one to ask. When it’s the other way around, you sometimes feel that you’re imposing. When a mentor seeks you out, there’s something really empowering about that.”
“Start a sort of internal pressure group.”
Those task forces and initiatives can be empty gestures that don’t effect much change.
Instead, Grant suggests employee-led initiatives with supervisor buy-in. Called employee resource groups or business resource groups, they’re typically broken down into different minority groups: Black women, LGBTQ groups, Latina women, etc.
If you start a sort of program within your workplace, try to get approval from the top dogs.
“If the top-level leadership is not engaged, it’s hard to go anywhere. I don’t care what your initiative is, it typically stalls with mid-level managers because they’re not trained to deal with it and they have so much going on,” Grant says. “You have to empower them and it has to come from the top. People need to know this is how our CEO feels.”
In fact, Williams suggests a more disruptive approach.
“You can start a sort of internal pressure group. You’re joining forces and you’re saying, ‘The ways you’ve tried to dismiss me aren’t going to work,'” she says. “Troublemakers are great. Troublemakers make change.”
Facing pushback? Companies still working at diversity and inclusion need to be reminded that they too benefit when minority employees are able to perform their best.
“If I’m at work all day in a toxic environment, I cannot give you the best that I have,” Grant says. “So how does our workplace culture need to change so that I’m safe, I’m comfortable, I can authentically show up as who I am every day?”
— Kristine Gill
Making money moves
Almirall is hiring an Associate Director of Marketing based in Exton, Pa.
DSR is hiring a Regional Sales Manager for Nutrition based in San Francisco, Calif.
Global Channel Management is hiring a Project Manager II based in Mason, Ohio.
Goldstone Partners LLC is hiring a ScrumMaster based in Broomfield, Colo.
Hunter Technical Resources is hiring a Project Manager based in Atlanta, Ga.
IFCO Systems US LLC is hiring a Senior National Sales Accountant based in Bakersfield, Calif.
JMJ Phillip Executive Search is hiring a Director of Sales based in Philadelphia, Pa.
Lowe's is hiring an Online Visual Designer based in Mooresville, N.C.
Missouri State University is hiring an Admission Counselor for Diversity Outreach and Recruitment based in Springfield, Mo.
Nityo Infotech is hiring a Director of Technology base in Hoboken, N.J.
TAG Inc. is hiring a Manager of Business Development based in Chesterfield, Mo.
Teva Pharmaceuticals is hiring an Associate Director for Brand Engagement based in Parsippany, N.J.
Trader Joe's is hiring a Director of Diversity and Inclusion based in Monrovia, Calif.
The Transgender Law Center is hiring a Director of Communications based in Oakland, Calif.
Waymo is hiring a Senior Industrial Designer, among dozens of other positions, based in Mountain View, Calif.
Events and other opportunities
Aug. 11-13: Professional BusinessWomen of California (PBWC) will host its Twenty20 Conference virtually.
Aug. 18: The Founder Institute will host How Startup Organizations Can Help Black American Entrepreneurs: An Open Discussion virtually.
Aug. 20: The Founder Institute will host Growth Strategy for Product Development in the Time of COVID-19 virtually.
Aug. 24-28: Ellevate Network will host its Mobilize Women Summit virtually.
Sept. 15: Applications are due for GoSkills' female-founded business scholarship for high school- and college-aged women.
Sept. 29-Oct. 1: The Network of Executive Women is hosting the NEW Leadership Summit 2020 in Dallas, Texas.
Sept. 29-Oct. 1: Fortune will host its Most Powerful Women Summit virtually.
Oct. 14-16: TBEX North America 2020 will hold its summit in Lafayette, La.
Nov. 5: The annual Women in Negotiation Summit will be held in New York City. The daylong event empowers women through negotiation-skills building.
Nov. 16-20: The Women of Silicon Valley's Women in Tech World Series will take place virtually.
Want to share a hiring or networking opportunity from your organization or elsewhere, or just have feedback about The Broadside? Email Kristine Gill.


fortune--2020-07-31--The S&P 500 gained 5.5% in July—despite a historically bad U.S. economic downturn

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Recession? What recession?
The S&P 500 registered a 5.5% gain in July, as America’s largest corporations shrugged off one of the worst economic downturns on record. The benchmark index is now up 1.25% on the year, having rebounded from March’s historic correction to claw back all the value it lost amid the ongoing coronavirus pandemic.
Retail group L Brands led the way among the S&P’s constituent companies with its stock gaining 63% in value in July thanks to a positive earnings report. Walmart, the largest company on the index by revenue, climbed 8% on the month, while tech giants Apple (+16.5%), Amazon (+14.7%), and Alphabet (+5%)—all of them with market capitalizations of $1 trillion-plus—helped drive the market upward.
A second-quarter earnings season that, by most metrics, has exceeded expectations undoubtedly contributed to the S&P’s exceptional month. Of the 312 companies on the index that had reported their earnings as of Friday morning, 82% delivered results that beat analysts’ targets—and did so with earnings that, on aggregate, were nearly 22% above expectations, according to Refinitiv data. Both of those metrics are the highest on record dating back to 1994, per Refinitiv.
Corporate America’s outperformance comes amid devastating indicators for the state of the U.S. economy at large. The nation’s GDP contracted 33% on an annualized basis in the second quarter, according to data released by the government Thursday—a second consecutive quarterly decline that officially sent the U.S. into a recession. The pandemic has shut down huge swaths of the nation’s economy, pushed the unemployment rate above 11%, and forced tens of millions of Americans to rely on federal unemployment benefits that expired at the end of this month.
Though many observers are worried that matters may only get worse for those on Main Street, Wall Street remains on an unabated tear. The tech sector’s success drove the Nasdaq Composite up 6.8% in July, while the Dow Jones Industrial Average gained 2.4% this month.
Still, there are signs that investors have one eye on the abysmal economy at large and its potential impact on the stock market. The value of assets like gold and U.S. Treasury bonds—traditional “safe havens” that investors usually flock to amid bearish market conditions—have uncharacteristically climbed in lock-step with equities, with gold prices hitting all-time highs and Treasury yields plunging to historic lows.


fortune--2020-07-31--How Apple, Alphabet, Amazon, and Facebook fared on the stock market after a very big week

Shares of Apple, Amazon, and Facebook are soaring while shares of Google parent Alphabet are plunging in the aftermath of a busy week for the tech giants, driven largely by a congressional antitrust hearing.
On the Friday after the tech giants reported quarterly earnings, and just a few days after their top executives faced an interrogation into alleged anti-competitive behaviors, the combined market cap of the tech giants jumped 4% to a whopping $5 trillion from $4.79 trillion.
Despite fielding tough inquiries from lawmakers about questionable acquisition strategies and the potential stifling of competing businesses, the companies came out fairly unscathed, at least from a stock-market perspective. The blowout quarters from Apple, Amazon, and Facebook alleviated investor concerns that the congressional hearing would damage their respective businesses, albeit in the short term.
Consider Facebook, whose CEO Mark Zuckerberg arguably faced the toughest scrutiny from politicians. The social network’s $18.69 billion in fiscal second quarter earnings easily surpassed analysts’ estimates of $17.4 billion. The earnings led to Facebook shares being up 8.2% by the market’s close on Friday to $253.67, representing a 10% jump from end-of-day trading on Tuesday when the company’s shares were $230.29.
As Debra Aho Williamson, an eMarketer principal analyst, explained in a statement, while Facebook’s online ad business was hurt by the coronavirus pandemic, “the impact was much less than many had expected.” Investors cheered the beat.
Meanwhile, Apple’s sales grew 11% year-over-year to $59.7 billion, which was particularly noteworthy considering analysts believed that the iPhone-maker’s sales would decline 2% year-over-year to $52.6 billion. As a result, Apple shares were up 10.5% by the market’s close on Friday to $425.04, marking a 12.2% jump from end-of-day trading on Tuesday when Apple shares were $373.01. On Friday, Apple topped Saudi Aramco as the world’s most valuable company, Bloomberg News noted, another sign of how the company has thrived so far amid the coronavirus pandemic.
Geoff Blaber, the vice president of research, Americas for CCS Insight, said in a statement that “COVID-19 has demonstrated that Apple is a more diversified and resilient business than many gave them credit for.”
“The unique dynamics of the pandemic saw the usual growth dynamics reverse with Mac and iPad flying high whilst iPhone and Watch slowed,” Blaber said.
Amazon also had a blockbuster quarter, particularly regarding its booming profits, which doubled year-over-year to $5.2 billion in its latest quarter at a time when analysts were expecting a decline. As a result, Amazon shares were up 3.7% during end-of-day trading on Friday to $3,164.68, which is a 5.5% increase from end-of-day trading on Tuesday when its shares were $3,001.04.
As Mark Mahaney of RBC Capital Markets said in an analyst note, “Amazon raised the bar even higher.”
“In our upside scenario, Amazon could see higher-than- expected Revenue growth rates over the next two years, driven by catalysts such as international growth, Alexa device adoption, AWS, and Advertising Revenue growth,” Mahaney wrote.
Then there was Alphabet.
Unlike the other tech giants, Alphabet reported an 8.1% year-over-year decline in online advertising sales to $29.9 billon in its fiscal second quarter. The drop in online ad sales marks the first time that Alphabet’s crucial business unit has declined, which investors found concerning.
Alphabet shares were down 3.3% by the market’s close on Friday to $1,487.95, marking a 1% drop since end-of-day trading on Tuesday when Alphabet shares were at $1,503.65.
Mahaney described Alphabet’s quarter as a “modest beat” but the company’s “fundamentals were clearly weak and negatively impacted by COVID.” That said, he said that RBC Capital views Google as “as among the most resilient ’Net Advertisers.”
“We expect Search ad revenue to rebound as macro fundamentals improve, with the company’s investments in AI, Cloud infrastructure, ads and monetization innovation around YT, and Other Bets to pay off longer-term and set the company up for more years of premium, high-margin growth,” Mahaney wrote.


fortune--2020-07-31--Sanofi, GlaxoSmithKline reach multi-billion dollar deal with U.S. for coronavirus vaccine

This is the web version of The Capsule, a newsletter monitoring advances in health care and biopharma. Sign up to get it delivered free to your inbox.
Happy Friday, readers. And on a housekeeping note, this will be the last daily missive of the Capsule for the foreseeable future. We’re going back to a weekly format next week and will be in your inboxes every Thursday afternoon. (Don’t worry, this was all planned. We’re not going anywhere.)
Operation Warp Speed, the U.S. effort to spur coronavirus vaccine candidates, added some new players to its roster on Friday. Sanofi and GlaxoSmithKline, two European pharma giants with heavy footprints in the infectious diseases space, struck a deal worth up to $2.1 billion with the U.S. government that could provide 100 million doses and potentially up to 600 million of an experimental COVID vaccine (if it’s effective, that is).
This partnership, meant to spur manufacturing and development and secure supplies for Americans, is the largest of its kind under Operation Warp Speed.
That telegraphs an inevitable issue countries will have to face: Fighting over a limited supply of vaccine resources once one proves reliable.
Read on for the day’s news, have a wonderful weekend, and we’ll be in your inbox again on Thursday.
Sy Mukherjee
sayak.mukherjee@fortune.com
@the_sy_guy
DIGITAL HEALTH
Digital health companies see revenue spikes in Q2. Companies including Teladoc and Dexcom (virtual doctor visit and continuous glucose monitoring firms, respectively), saw big rises in revenues this year as demand for digital health services grew. Teladoc specifically has benefited from the coronavirus pandemic but, as we've previously reported, such firms are confident that these changes will outlast the outbreak.
INDICATIONS
Merck paints a rosy earnings picture on cancer drug strength. Pharma giant Merck on Friday said that sales of its blockbuster cancer immunotherapy Keytruda raised its earnings in the second quarter of the year despite challenges from the coronavirus pandemic. “As expected, social distancing measures in many regions negatively impacted second-quarter volumes for many of our products,” said Merck CEO Ken Frazier in an earnings call. “However, customer access to care is steadily improving, including in our portfolio of vaccines, which was hit particularly hard this quarter.” Keytruda, specifically, saw sales jump nearly 30% during the quarter even while sales of other drugs dropped due to fewer hospital visits from patients. (CNBC)
THE BIG PICTURE
Children can carry the virus even if they have mild symptoms. A new study published in JAMA Pediatrics finds that children younger than five with just mild to moderate COVID symptoms actually carry higher loads of the virus, raising concerns about a push to re-open schools. My colleague Katherine Dunn reports that just because these children don't become severely ill doesn't mean they may spread the disease at a higher rate to those who may become severely ill, per the study. (Fortune)
REQUIRED READING
The economy is no longer the top issue going into the election, by Nicole Goodkind
Health experts on how to run errands safely during the pandemic, by Brooke Henderson
U.S. GDP falls by a historic 32.9%, by Lance Lambert
Sign up for other Fortune newsletters.


fortune--2020-07-31--Microsoft is said to be exploring the acquisition of TikTok in the U.S.

Microsoft Corp. is exploring an acquisition of TikTok’s operations in the U.S., according to a person familiar with the matter. A deal would give the software company a popular social-media site and relieve U.S. government pressure on the Chinese owner of the video-sharing app.
The Trump administration has been weighing whether to direct China-based ByteDance Ltd. to divest its stake in TikTok’s U.S. operations, according to several people familiar with the matter. The U.S. has been investigating potential national security risks due to the Chinese company’s control of the app.
While the administration was prepared to announce an order as soon as on Friday, according to three people familiar with the matter, another person said later that the decision was on hold, pending further review by President Donald Trump. All of the people spoke on condition of anonymity because the deliberations are private.
Microsoft is in talks to purchase TikTok’s U.S. operations, according to the person who asked not to be identified because the discussions are private. Spokespeople for Microsoft and TikTok declined to comment. The software company’s interest in the app was reported earlier by Fox Business News.
“We are looking at TikTok. We may be banning TikTok,” Trump told reporters Friday at the White House. “We are looking at a lot of alternatives with respect to TikTok.”
Any transaction will face many regulatory hurdles. In recent years, the Committee on Foreign Investment in the U.S., which investigates overseas acquisitions of U.S. businesses, has taken a much more aggressive role in reviewing and approving deals that may threaten national security.
A purchase of TikTok would represent a huge coup for Microsoft, which would gain a popular consumer app that has won over young people with a steady diet of dance videos, lip-syncing clips and viral memes. Microsoft has dabbled in social-media investments in the past, but has never developed a popular service of its own in this lucrative sector.
TikTok has repeatedly rejected accusations that it feeds user data to China or is beholden to Beijing, even though ByteDance is based there. TikTok now has a U.S.-based chief executive officer and ByteDance has considered making other organizational changes to satisfy U.S. authorities.
“Hundreds of millions of people come to TikTok for entertainment and connection, including our community of creators and artists who are building livelihoods from the platform,” a TikTok spokeswoman said Friday. “We’re motivated by their passion and creativity, and committed to protecting their privacy and safety as we continue working to bring joy to families and meaningful careers to those who create on our platform.”
ByteDance bought Musical.ly Inc. in 2017 and merged it with TikTok, creating a social-media hit in the U.S — the first Chinese app to make such inroads.
As TikTok became more popular, U.S. officials grew concerned about the potential for the Chinese government to use the app to gain data on U.S. citizens. CIFUS, which investigates overseas acquisitions of U.S. businesses, began a review in 2019 of ByteDance’s purchase of Musical.ly.
On Thursday, U.S. Senators Josh Hawley, a Missouri Republican, and Richard Blumenthal, a Connecticut Democrat, wrote the Justice Department asking for an investigation of whether TikTok has violated the constitutional rights of Americans by sharing private information with the Chinese government.
A deal with Microsoft could potentially help extract ByteDance from the political war between the U.S. and China.
–With assistance from Dina Bass, Jennifer Jacobs, Saleha Mohsin and Jenny Leonard.


fortune--2020-07-31--Congress in disagreement as 30.5 million go first week without $600 federal unemployment benefit

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Congress has yet to come to an agreement for extending or replacing the $600 weekly federal unemployment benefit, which paid its final benefit for the week ending July 25.
That means the 30.5 million jobless Americans who were receiving the benefit will go their first week without the $600 check.
“On certain issues we made progress, on certain issues we’re still very far apart,” treasury secretary Steven Mnuchin told reporters on Capitol Hill after leaving a meeting with Democratic leaders on Friday without a deal or short-term fix.
On Monday, Senate Republicans rolled out their stimulus bill, which included reducing the federal unemployment benefit bonus—which is paid on top of state benefits—from $600 to $200 per week for the next two months. After that period, the benefit would transition into covering 70% of the unemployed person’s previous income, up to a max of $500, through the end of the year,
As debate ensues on the wider stimulus plan, Republicans pushed Thursday to pass a short-term extension of the $600 unemployment benefit. But Democrats rejected that temporary fix.
“[A] one-week extension is good if you have a bill, and you’re working it out, the details, the writing of it, legislative counsel, Congressional Budget Office, Rules Committee. That’s what a one-week extension is about. It’s worthless unless you are using it for [that] purpose,” House speaker Nancy Pelosi told reporters Friday after meeting with Republicans.
Pelosi and Senate minority leader Chuck Schumer would like to see the $600 benefit extended through the end of the year as apart of a wider stimulus bill. The $3 trillion Heroes Act passed by House Democrats in May would’ve done just that, extending the $600 weekly benefit into January 2021.
Republicans have opposed extending the extra $600 weekly unemployment payment through the end of the year, given that the payment means 7 in 10 jobless Americans are making more not working than they did while employed. Republicans and some business leaders believe the benefit deters jobless Americans from searching for work. Meanwhile, Democrats believe the $600 weekly payment is boosting household incomes and staving off deeper drops in consumer spending.
But the enhanced unemployment insurance provisions are not the only item holding up the wider stimulus bill. Republicans and Democrats are also divided on funding for state governments—something Democrats demand—and COVID-19 lawsuit immunity, a demand by the GOP.
Americans who were receiving the $600 weekly benefit include the 17 million Americans on state unemployment rolls. But there were also 12.4 million getting it through Pandemic Unemployment Assistance benefits and the 1.1 million on Pandemic Emergency Unemployment Compensation. In all, 30.5 million Americans were receiving the $600 bonus before it expired.


fortune--2020-07-31--Investors are treating Apple like a growth stock. But the math doesn’t add up.

Apple’s strong Q3 earnings announcement––drawing kudos on Wall Street and sending its price surging to record highs––underscores the puzzle that faces anyone thinking about buying the shares.
Until recently, Apple was a value stock. So cheap was the iPhone maker that even without growing, it was on autopilot to deliver double-digit returns. Now, it’s viewed as a “growth stock,” sporting a valuation approaching the likes of Facebook and Alphabet. Here’s the worm in the Apple: Driven by this sudden metamorphosis in the eyes of investors, the price Apple commands for each dollar of earnings has exploded. For years, its profits have been flatlining, so that its valuation made sense. Now, its earnings must shift to a sharp upward trajectory, and stay there for years, for investors to make money. Right now, it looks like the hill has become just too steep for Apple to remotely generate the big gains its boosters expect.
For enthusiasts, the Q3 results, unveiled after the market close on July 30, marked a new phase of much faster growth. The gains over the third quarter of 2019 were particularly impressive, and those were the numbers that got the most attention. Total revenues jumped 11% to $59.7 billion, led by an almost 14% advance in high-margin services, such as commissions on App Store sales. A slight increase in revenues from China was a welcome surprise, since CEO Tim Cook had warned that a decline was probable. Earnings-per-share of $2.58 and free cash flow of $16 billion both set quarterly records.
The report won practically universal cheers from analysts, many of whom raised their price targets. RBC’s Robert Muller lifted his 12-month forecast from $390 to $440, and Daniel Ives of Wedbush lauded the “blowout” performance and reiterated his $450 marker, 17% above the closing price of $385 on July 29. All four traders on CNBC’s popular 5 PM show “Fast Money” gave excellent reviews. A guest on the broadcast, tech investor Gene Munster of Loup Ventures, called Apple’s shares “still relatively inexpensive,” and foresees a growth rate of 10% to 15% going forward, meriting a price-to-earnings multiple on par with Facebook and Alphabet. Munster joins many Apple supporters in predicting that the introduction of its new 5G iPhone will launch a new super-cycle for expansion. Money managers and analysts deemed CFO Luca Maestri’s update on the conference call that the model’s launch will be delayed a few weeks, until sometime in October, only a minor disappointment.
On July 30, Apple shares waxed 10.5% to an all-time high of $425, adding over $175 billion in market cap, to $1.84 trillion. Apple gained the equivalent of 87% of Intel’s value in a single day.
It’s possible that if what’s expected as the “iPhone 12” proves a blockbuster, and the mega-hits keep coming, Apple could generate the huge earnings gains needed to keep its share price growing briskly. But at this heady valuation, if it doesn’t get there, folks buying its shares today are in for a rough ride. Put simply, the good Q3 results are far from strong evidence that Apple is embarking on a durable phase of much faster growth.
That’s because over longer periods, Apple has achieved only minimal yearly gains in sales and profits, casting doubt on whether it can suddenly reinvent itself as a sprinter. And that includes the last twelve months. For investors, the rub is that most of the gigantic spike in Apple’s price that started in mid-2019 wasn’t driven by a rise in profits, but by a leap in what folks and funds are paying for each dollar of those shares––in other words, an explosion in its P/E multiple that’s arguably made this one-time bargain exorbitantly expensive.
To understand how Apple went from a terrific buy to a high-priced gamble, it’s instructive to see how its earnings and share price have evolved over the past half-decade for the four-quarters ending in June. By using that timeframe, we can compare Apple’s annualized performance for the 12 month period that just ended, with how it fared for the full year, June-to-June spans from 2015 to 2019. As we’ll see, the fundamentals and the stock plodded in tandem for years, until the valuation took a moonshot.
In the year ended June of 2015, Apple posted GAAP net profits of $50.8 billion, and EPS of $8.66. At $125 a share, Apple was selling at a P/E of 14.6, and its dividend yield was 1.7%. Those metrics screamed “buy!” Why? Because Apple’s great advantage is that while its earnings historically only grow a bit faster than inflation, it returns over 100% of those profits to shareholders, mainly in the form of repurchases. So in 2015, because its P/E was so low, each dollar Apple spent on buybacks went a long way, raising EPS by 6.8 cents, or 6.8%. Add the 1.7% dividend, and assume 2% earnings growth, and your total return would be 10.5%. And that’s projecting that the P/E remained at the same modest sub-15. Adding a couple of points to that lowly multiple would send returns even higher.
A year later, in June of 2017, Apple was even cheaper. Its P/E had dropped to 11. But in the periods ended in mid-2017, 2018, and 2019, the multiples were all in the still bargain 16.4 to 16.9 range, with dividend yields of 1.6% to 1.7%, meaning that even if Apple barely grew, you’d pocket 10% yearly returns.
The seismic shift started in mid-2019. From June of last year to July 30 of 2020, Apple’s share price bolted from $198 to $425, a rise of 115%. That brings the increase from June of 2015 to 240%. What should concern investors is that EPS over those five years rose less than one-fourth as fast, by 52% from $8.66 to $13.17. Hence, the overriding driver of the almost three-and-a-half times rise in Apple’s price in the past half-decade wasn’t advancing profits, but a more than doubling of its P/E from 14.6 to its current 32.3.
In fact, total profits from mid-2015 to Q3 of this year increased only 2.1% a year, from $50.8 to $55.3 billion. Most of the improvement in EPS came from the biggest series of share buybacks in corporate history. Over our five year period, Apple spent a staggering $337 billion on repurchases. That campaign lowered its float from 5.73 billion to the current 4.35 billion shares, a drop that accounts for over 60% of the rise in EPS over that period.
For all the excitement over the new Q3 report, Apple’s total profits were actually flat over the trailing four quarters, easing a touch from $55.7 to $55.3 billion. Apple’s 12% gain in EPS came exclusively from more gigantic buybacks. Profits were a slight headwind. The increase in revenues, when measured over the longer stretch of four quarters, registered 5.8%, a lot less impressive than much-praised 11% for Q3 alone.
Apple’s outlook
Let’s examine the gains investors can expect from here versus the outlook in mid-2015, assuming that Apple’s earning follow their longstanding trend of matching inflation. At today’s 32.3 P/E, each dollar spent on buybacks returns 3.1 cents or 3.1%, less than half the 6.8% five years ago. The dividend yield has shrunk from 1.7% to .77%. Using those parameters, the total return investors can anticipate going forward is 5.9% (3.1% from repurchases, .77% from dividends, plus profit growth of 2%). You’re likely to garner returns that are 40% lower now that Apple’s priced as a “growth stock” versus its days as a value play.
You’ll only pocket that just under 6% return, however, if Apple’s multiple remains at today’s 32.3 P/E, which is 90% higher than the P/E of under 17 awarded as recently as mid-2019. Five years ago, investors braved little risk that Apple’s multiple would shrink, simply because it was so low, and harbored pretty good prospects it would rise. Indeed, that’s what happened, on steroids. Today, investors are facing a new danger: That Apple won’t nearly generate the double-digit profit growth its fans are counting on, and once that’s clear, that the P/E craters back into value territory. The falling premium would overwhelm the gains in EPS coming mostly from buybacks, and the shares would plunge.
Apple is a great company, and will remain so. And it was a great buy until a year ago. We don’t know how Apple will perform going forward, but the momentum that’s driven its share price skyward dictates what it has to do in the form of achieving far more challenging feats, for investors to make money.
In their enthusiasm, the believers have simply set the bar too high for even this champion to reward them.


fortune--2020-07-31--What to watch this weekend on Netflix, Disney+, and more

Between traditional television, video-on-demand releases, and a growing number of streaming services, it can be hard to keep up with what one should watch week to week. Fortune is here to help you keep track of new releases as well as the occasional older title worth checking out. Take a look at this weekend’s notable arrivals, a couple you may have missed earlier in the week, and what else is coming soon:
Netflix
Ellen Page stars in the second season of Netflix’s “The Umbrella Academy.” Courtesy of Netflix
The Umbrella Academy: The Hargreeves family is back in the second season of this series, arriving on Netflix July 31. The new episodes take the characters back to the ‘60s, and it sounds like the latest season sees the show hitting its stride.
For some nostalgia, the original Jurassic Park trilogy is also coming to Netflix on Aug. 1, and ‘90s hit sitcom Moesha is also arriving on the streamer that day.
Disney+
Beyoncé in “Black is King” on Disney+. Travis Matthews
Black Is King: Beyoncé’s “visual album,” a celebration of Black identity that’s also based on the music of The Lion King: The Gift, arrives on Disney+ July 31. The film was in production for a year and was written, directed, and executive-produced by Beyoncé.
Muppets Now: Miss Piggy, Kermit, the Swedish Chef, and more are back on our TV screens via this new series for the streaming era. The six-episode season debuts on Disney+ July 31.
Hulu
Brassic: The U.K. comedy-drama sees its six-episode first season arrive on Hulu on July 31.
A couple of other U.K. series joined Hulu’s roster earlier this week, as well: Ladhood and In My Skin.
Apple TV+
A brand new series, The Oprah Conversation, debuted Thursday on Apple TV+ with an episode titled “Uncomfortable Conversations with a Black Man.”
On VOD
Summerland: Gemma Aterton and Gugu Mbatha-Raw star in this World War II-centered film about a writer in Southern England. When a young evacuee from the London Blitz enters her life, she finds herself thinking back to the last major relationship in her life. The film is available on demand July 31.
Yes, God, Yes: Natala Dyer of Stranger Things fame stars in this teen comedy about youthful lust, which will also be available on demand July 31.
The Fight: The documentary, which includes Kerry Washington as one of its executive producers, focuses on four cases involving the ACLU and the Trump administration. It’s available on VOD starting July 31.
On TV
The Go-Go’s backstage at a Rolling Stones gig in Rockford, Ill. on Oct. 1, 1981. (Left to right): Kathy Valentine, Jane Wiedlin, Gina Schock, Charlotte Caffey, and Belinda Carlisle. Paul Natkin
The Go Go’s, a documentary about the all-female New Wave group, will air on Showtime Aug. 1 at 9 p.m. ET. The documentary, which premiered at the Sundance Film Festival earlier this year, covers the band’s rise to fame in 1981, as well as subsequent career moments, while featuring candid interviews.
HBO’s I’ll Be Gone in the Dark, the docuseries chronicling true-crime writer Meredith McNamara’s quest to expose the Golden State Killer, will air its finale Aug. 2 at 2 p.m. Read Fortune’s June interview with director Liz Garbus and McNamara’s researcher Paul Haynes here.
Coming Soon
Star Trek: Lower Decks gives viewers a half-hour animated comedy version of the beloved sci-fi franchise. The series will premiere on CBS All Access Aug. 6.
Update: The title of the first Oprah Conversation episode has been changed.


fortune--2020-07-31--We haven’t even seen the coronavirus’s full impact on consumers, says this VC

This is the web version of Term Sheet, a daily newsletter on the biggest deals and dealmakers. Sign up to get it delivered free to your inbox.
Early on during the pandemic, I heard a common refrain: This time, unlike in 2008, Main Street was getting stung first and foremost—meaning consumers would initially face the brunt of the downturn.
It seems as if the fallout was less than what many had feared. Certainly the unemployment rate has risen dramatically: The figure stood around 11.1% as of June. But while some consumer-facing startups have suffered from the pandemic, consumer spending has actually shown increases. However, uncertainty looms over the rest of the year.
To dig into this, Term Sheet spoke with Rick Yang, general partner at New Enterprise Associates and head of the firm’s consumer investing practice.
Yang has made notable bets: He currently sits on the board of fintech company Plaid, which Visa announced plans to acquire for $5.3 billion, as well as MasterClass, which sells classes taught by successful and famous people. Other names include Robinhood, Lyric, and Opendoor. Most recently, Yang helped form Connect Ventures, a joint venture between NEA and Hollywood talent agency Creative Artists Agency.
We hopped on the phone to chat about what he is seeing in the consumer space and why, even though deal activity appears to be bouncing back, he’s still operating conservatively.
Here’s our conversation, lightly edited for clarity.
Give me an overview of what happened to your portfolio as the coronavirus ramped up.
A lot of venture firms did the same thing as us in the April and March time frame, which was locking down and figuring out how we scenario plan for something that is very unknowable. There are a handful of companies that were very hard hit by the pandemic and what has happened with consumers. Our companies that were more indexed towards more physical locations or were in the travel or hospitality space were deeply affected. I would say the vast majority of our portfolio, though, has a certain acceleration in their business and there was certainly a lot more consumer engagement and awareness that led to better revenue in some cases.
So for MasterClass, even as revenue is rising, it’s not business as usual for the company. What has that been like?
We closed a strong round with a nice balance sheet (Editor’s note: The company raised $100 million in Series E funding announced in May). But it doesn’t mean they’re going to go out and spend all that money right now. The company is growing really well through a pandemic. On the flipside, production for any sort of content right now is pretty tight in the U.S., [and it’s hard to] find places to shoot classes. So we have to balance out the scenario: If we were looking to produce x number of classes this year, that might actually be 50% of that now. And what does that mean for our business? It’s really hard to predict what that means over the next six months. So you have to always be ready to jump on the opportunity to shoot a class or bring out a new instructor.
[In terms of conserving cash]: Every single company is a little bit different. But I think you want to be capitalized because ultimately that is going to be the best leverage for a company if you go out for fundraising.
Overall, I think people are going to be more conservative on how they spend on things. So typically our venture-backed businesses spend ahead of where they think they are going to be, given their growth curve, and in some cases you are not able to do that. So it’s about how we build flexibility into our businesses and how we build flexibility into our spending models to make sure we can adjust to things. If things recover faster than we’d thought, we’d love to allocate those resources quicker. If things don’t, we want to make sure we’re not overburdened with costs.
There seems to be a disconnect between the unemployment rate and what we’re hearing among consumer tech startups. What is happening?
I do think there is a disconnect there, and we do think there is a little bit of a lag there in terms of the real economic impact. From an economic standpoint, we haven’t really seen what the real effects are given the federal and local and governmental stimulus. We don’t know what it will be, but we are taking a pretty cautious view of it, and so we want to make sure our companies are thinking about it and we are planning pretty conservatively.
What are some of the consumer-facing investor trends you’ve been thinking about more with the coronavirus?
One of the trends we are seeing accelerating is the rise of the side hustle. Previously, the side hustle was a complement in some cases. Now it is becoming a main source of income. So now we think about what are those things that pop up that can sustain someone’s livelihood when they may have lost a job as part of the pandemic.
Traditionally, you think of companies like Uber. But they’ve taken a big hit from a ridesharing perspective with COVID-19. So then we think of delivery and last-mile services such as Instacart, Uber Eats, and DoorDash.
We’re also finding ways to invest in the rise of the creator class. There’s always been a huge tailwind, especially among younger demographics who want to be creators, and that is almost a viable career path now. And I think what we see is that there is a huge rise in the creative class where you can reasonably be a creator without being super famous, but you can monetize through different platforms like Patreon, Substack, Instagram or TikTok. So I think that is something that is really interesting and ties into this idea of, maybe instead of taking a summer to work a retail job, maybe spending a summer and trying to sell some short stories or get some patrons on Patreon. It’s the modern lemonade stand.
We’re looking at that whole stack to find ways of investing, from social platforms to creator tools, and I’ve been spending a lot of time in fintech to understand the benefits and payments flows. Those are some of the things that we think about.
Connect Ventures’ first investment was in Spire Animation Studios. What was the thinking behind investing in a company like that at a time when there is huge disruption in Hollywood productions?
The Spire investment is coming together at a time when there are a ton of new companies spending on content. And historically, animated content, which is very popular, has also been very tedious and costly to produce. But there’s been an evolution in the tech infrastructure for creating that content: To do it in a more efficient and high-velocity way, you can borrow from existing pipelines for animation studios, with what is happening in the visual effects world and gaming and game engines—and if you combine all that together, you can build something quite interesting when it comes to building full-featured animation films with the same story and emotion but that pulls from existing successful folks.
Then combine that with a third accelerating trend specific to this pandemic: There are a lot of kids and families that want to consume content.
We made the investment in Spire before COVID-19 hit, but all of these trends were already happening. And the team really liked that NEA was thinking about how we make things more efficient and how we scale software and tech. The team also really liked CAA’s work in the entertainment space and with distributing content.
The investing process is already changing as a result of the coronavirus. How has due diligence changed, especially after something like WeWork?
There have been a number of high profile cases, with WeWork and Theranos being among these. There are certainly a lot of cautionary tales—especially now when you’ve potentially never met in person and you don’t get to visit an office and see what the vibe is like. There’s certainly more scrutiny placed on due diligence.
[In terms of due diligence in the coronavirus]: It’s a lot of Zooms. We always do reference checks, but now it’s even more reference checks and finding as many backchannels as you can on people, and trying not to get bullied into timelines for funding rounds because it is still a competitive market out there.
It’s not just because of WeWork or Theranos. The world is a little bit of a different place with cancel culture and with so much being online—you want to do as much homework as you can.
Lucinda Shen
Twitter: @shenlucinda
Email: lucinda.shen@fortune.com
Anne Sraders curated today’s Term Sheet.
VENTURE DEALS
-AUTO1 Group, a Berlin-based online used car marketplace, raised €255 million ($303 million) in funding via convertible notes. Farallon Capital Management and the Baupost Group led the round, and were joined by investors including the Softbank Group. Read more.
-Moonbug Entertainment, a London-based children’s educational entertainment company, raised $120 million in funding. Goldman Sachs Growth Equity (GS Growth) and Fertitta Capital led the round, and were joined by investors including The Raine Group and Felix Capital.
-LINE MAN, a Thailand-based delivery unit of Japan-based messaging app LINE Corp, raised $110 million in funding from BRV Capital Management, and also merged with Thailand-based restaurant review platform Wongnai Media. Read more.
-Lemonaid Health, a San Francisco-based telemedicine platform, raised $33 million in Series B funding. Olive Tree Ventures led the round, and was joined by investors including Artis Ventures, Correlation Ventures, Hikma Ventures, and Sierra Ventures.
-Buildots, a U.K. and Israel-based AI construction management company, raised $16 million in funding. TLV Partners led the round, and was joined by investors including Innogy Ventures, Tidhar Construction Group, and investors Ziv Aviram, Zvika Limon, Benny Schnaider, Avigdor Willenz and Gil Geva.
-Aquicore, a Washington, D.C.-based cloud-based software provider for commercial real estate energy management, raised $14 million in funding. Keyframe Capital led the round, and was joined by investors including A/O Proptech and The Westly Group.
-MomentFeed, a Santa Monica, Calif.-based provider of location-based mobile customer management software, raised $10 million in funding. Level Equity led the round, and was joined by investors including Signia Venture Partners, Draper Nexus, and DFJ Frontier.
-JetClosing, a Seattle-based mobile title and escrow company for home closing and refinancing, raised $9 million in Series B funding. T. Rowe Price Associates led the round, and was joined by investors including Pioneer Square Labs (PSL) and Trilogy Equity.
-Immertec, a Tampa, Florida-based real-time virtual surgery training company that uses VR, raised $6 million in extended Series A funding from investors including Revolution’s Rise of the Rest Seed Fund, Benvolio Group and PAR. Read more.
-Spyderbat, an Austin-based cybersecurity company, raised $4.2 million in seed funding. LiveOak Venture Partners and Benhamou Global Ventures led the round, and were joined by John McHale. Read more.
-CAPS Medical, an Israel-based medical device company that makes non-thermal plasma devices used to treat cancer, raised $3.5 million in Series A funding. Chasing Value Asset Management and Israel Investment Fund Group (IIFG) led the round, and were joined by investors including Technion Research and Development Foundation and XACT Robotics.
-LOOM, a Los Angeles-based online sexual and reproductive health education platform, raised $3 million in seed funding. Slow Ventures led the round, and was joined by investors including Precursor Ventures, GSV, Moxxie Ventures, General Catalyst, Maveron, and several angel investors. Read more.
-Epic CleanTec, a San Francisco-based onsite wastewater treatment and reuse company, raised $2.6 million in seed funding from investors including Elizabeth Cutler and Dr. Kathy Fields.
-New Age Meats, a Berkeley, Calif.-based producer of lab-grown meats, raised $2 million in extended seed funding. TechU Ventures led the round, and was joined by investors including ff Venture Capital, SOSV, Sand Hill Angels, and the Losa Group.
-Autumn Adeigbo, a New York City-based women’s fashion brand, raised $1.3 million in seed funding. Fuel Capital led the round, and was joined by investors including Katrina Lake, Sonja Perkins, the Pipeline Angels, and Christopher Elliott. Read more.
PRIVATE EQUITY
-FoodChain ID, owned by Paine Schwartz Partners, acquired Nutraveris, a Brittany, France-based scientific, health and nutrition regulatory consultancy and technology provider. Financial terms were not disclosed.
-Hivest Capital Partners acquired CRYOPDP, a France-based temperature control logistics company focused on healthcare and lifesciences, from Air Liquide. Financial terms were not disclosed.
-Stanley Capital acquired Noden, a Dublin, Ireland-based pharmaceutical company, from PDL BioPharma for a total of up to $48.3 million in cash.
-Corsair Capital agreed to acquire MSTS, an Overland Park, Kan.-based provider of commercial credit and payments services, from World Fuel Services Corporation. Financial terms were not disclosed.
-Advent International agreed to acquire a controlling stake in RA Chem Pharma Limited, an India-based pharmaceutical company, from Micro Labs Limited. Financial terms were not disclosed.
-3Cloud, backed by Gryphon Investors, acquired Applied Cloud Systems, a Pittsburgh-based Microsoft cloud technologies consultancy for customers. Financial terms were not disclosed.
-Summit Interconnect, owned by HCI Equity Partners, acquired ITL Circuits, a Toronto-based printed circuit board provider. Financial terms were not disclosed.
OTHERS
-Nvidia is in talks to acquire Arm, a U.K.-based chip maker from SoftBank Group, Bloomberg reports citing sources. SoftBank bought Arm for $32 billion in 2016. Read more.
-Strategic Education (NASDAQ: STRA) agreed to acquire Baltimore-based educational institutions network Laureate Education’s (NASDAQ: LAUR) Australia and New Zealand businesses for $642.7 million in cash.
-Enova International agreed to acquire OnDeck, a New York City-based online small business lending platform. The deal is valued at approximately $90 million in cash and stock.
-Sampo is exploring a bid for Hastings Group Holdings (LSE: HTSG), a U.K.-based general insurer, per Bloomberg.
-Atlassian acquired Mindville, a Sweden-based platform to help companies track and manage assets. Financial terms were not disclosed.
BREAKUPS, HANGUPS, AND BANKRUPTCIES
-California Pizza Kitchen, a Los Angeles-based food chain backed by Golden Gate Capital, filed for bankruptcy protection.
-Tonopah Solar Energy, a Nevada solar power plant owner, filed for bankruptcy protection. Read more.
IPOS
-Affirm, a San Francisco-based online lending platform for shoppers, may be preparing to go public at a valuation of as much as $10 billion, The Wall Street Journal reports citing sources. Read more.
-Churchill Capital Corp IV, a New York City-based blank check company and fourth of its kind founded by Michael Klein, raised $1.8 billion in an IPO. It plans to list on the NYSE as “CCIV.U.” Read more.
-Li Auto, a Chinese electric vehicle SUV manufacturer, raised $1.1 billion by offering 95 million American Depositary Shares (ADS) priced at $11.50 in an IPO. It plans to list on the Nasdaq as “LI”. Read more.
-E.Merge Technology Acquisition, a Burlingame, Calif.-based blank check company led by former Kodak CEO Jeff Clarke, raised $522 million by offering 52.2 million shares at $10, 2.2 million more than expected, in an IPO. It is targeting investments in software and technology. It plans to list on the Nasdaq as “ETACU”. Read more.
-Vasta Platform, a São Paulo, Brazil-based online educational curriculum provider for K-12, raised $353 million by offering 18.6 million shares priced at $19 in an IPO. It plans to list on the Nasdaq as "VSTA". Read more.
-AlloVir, a Cambridge, Mass.-based developer of viral disease novel cell therapies, raised $276 million by offering 16.3 million shares priced at $17 in an IPO. It plans to list on the Nasdaq as “ALVR”. Read more.
-one, a San Francisco-based blank check company led by the co-founder of Eventbrite Kevin Hartz, plans to raise up to $200 million in an IPO. It is targeting investments in technology. It plans to list on the NYSE as “AONE.U”. Read more.
-INSU Acquisition II, a Philadelphia-based blank check company and second of its kind formed by Cohen & Company, plans to raise up to $175 million in an IPO. It is targeting investments in the insurance industry. It plans to list on the Nasdaq as “INAQU”. Read more.
-NewHold Investment, a Houston-based blank check company formed by NewHold Enterprises, raised $150 million in an IPO. It is targeting investments in industrial technology. It plans to list on the Nasdaq as “NHICU”. Read more.
-Nano-X Imaging, a Neve Ilan, Israel-based low-cost digital X-ray and medical imaging developer, plans to raise up to $125 million in an IPO. It plans to list on the Nasdaq as “NNOX”. Read more.
-Fathom Holdings, a Cary, North Carolina-based virtual real estate brokerage that uses cloud-based software, raised $34 million by offering 3.4 million shares priced at $10 in an IPO. It plans to list on the Nasdaq as “FTHM”. Read more.
-1847 Goedeker, a Ballwin, Mo.-based home goods and appliances e-commerce retailer, raised $10 million by offering 1.1 million shares priced at $9 in an IPO. It plans to list on the NYSE as “GOED”. Read more.
EXITS
-40 North Ventures acquired investments in 11 companies from General Electrics’ GE Ventures portfolio. The acquired companies are Carbon, Desktop Metal, Aras, Proterra, Volta, Enbala, Catalant, Upskill, Menlo Micro, Nexar, and Tamr. Financial terms were not disclosed.
-Ardian acquired Finaxy, a France-based insurance broker, from Equistone Partners Europe. Financial terms were not disclosed.
F+FS
-Preservation Capital Partners, a London-based private equity firm, raised £309 million ($405 million) for its debut fund, Preservation Capital Partners Fund I.
-United Ventures, an Italy-based venture capital firm, and TIM Ventures, an Italy-based venture capital arm of TIM, will raise €150 million ($178 million) for a new fund UV T-Growth, focused on late-stage companies in Europe.
PEOPLE
-TZP Group added Erin O'Brien Edwards as a partner in growth equity and Justin Kulla as a partner in impact investing. Edwards was previously at North Castle Partners, and Kulla was previously at Weld North.
-Triago added Andrew Rosato as partner and Simeon Ketchum as principal. Rosato was previously at MVision, and Ketchum was previously at Astor Place Holdings.
-NaviMed Capital added Josh Boylan as vice president and Henry Oelsner as associate. Boylan was previously at Epsilon Health Investors, and Oelsner was at Primus Capital.


fortune--2020-07-31--Ellen DeGeneres apologizes to talk show staff amid complaints of a difficult workplace

Ellen DeGeneres apologized to the staff of her daytime TV talk show amid an internal company investigation of complaints of a difficult and unfair workplace.
“On day one of our show, I told everyone in our first meeting that ‘The Ellen DeGeneres Show’ would be a place of happiness — no one would ever raise their voice, and everyone would be treated with respect,” DeGeneres wrote. Something changed, she said, “and for that, I am sorry.”
In a separate statement, the Warner Bros. studio said the investigation’s “primary findings” revealed what it called some flaws in the show’s daily management.
DeGeneres’ memo and the probe by the studio’s parent company followed a BuzzFeed News report in which one current and 10 former show employees complained about issues including being fired after taking medical or bereavement leave. One worker said she left because of comments about her race.
Most of the complaints were tied to executive producers and senior managers, BuzzFeed News said, but one ex-employee said DeGeneres need to take more responsibility for the work environment. The people making the allegations were not identified.
The complaints contrast sharply with the show’s upbeat tenor and DeGeneres’ own public demeanor and exhortations for people to be kind and caring.
In its statement, Warner Bros. said it and DeGeneres take the allegations about the show’s “workplace culture very seriously” and that its parent company is seeking to determine the validity of the publicly reported allegations and understand the show’s daily workings.
“As a result, WarnerMedia interviewed dozens of current and former employees about the environment at ‘The Ellen DeGeneres Show’ … . And though not all of the allegations were corroborated, we are disappointed that the primary findings of the investigation indicated some deficiencies related to the show’s day-to-day management.”
Steps are being taken to make several staffing changes and implement other steps, the studio said, without citing specifics. The internal investigation was first reported by Variety.
DeGeneres wrote that she has “deep compassion” for people who are treated unfairly or disregarded. That comes from someone who has been judged for “who I am,” said DeGeneres, who has detailed the price she paid for being openly gay.
“As we’ve grown exponentially, I’ve not been able to stay on top of everything and relied on others to do their jobs as they knew I’d want them done. Clearly some didn’t. That will now change and I’m committed to ensuring this does not happen again,” she said in the memo.
“It’s been way too long, but we’re finally having conversations about fairness and justice,” DeGeneres said, adding that she would push herself and others to “learn and grow.”
She said the COVID-19 pandemic kept her from delivering her comments in person to staffers. She signed the message, “Stay safe and healthy” and “Love, Ellen.”


fortune--2020-07-31--Oprah Winfrey’s Breonna Taylor tribute and the power of female platforms

Good morning, Broadsheet readers! We learn about the woman challenging Jacinda Ardern, Poland tries to withdraw from a treaty on domestic violence, and Oprah Magazine puts Breonna Taylor on the cover. Have a wonderful weekend.
– ‘She was just like me. She was just like you.’ For 20 years, Oprah Winfrey has appeared on the cover of O: The Oprah Magazine. That will change in August for the first time ever, with the media mogul ceding the space to an image of Breonna Taylor, the 26-year-old Black woman who was shot and killed in her home by Louisville police in March. The cover features a rendition of a selfie Taylor took of herself, created by digital portrait artist Alexis Franklin.
Demands for justice for Taylor, who was an EMT, have become a central theme of Black Lives Matter protests; ‘Say her name: Breonna Taylor,’ is among protesters’ rallying cries. The police officers involved in her killing have not been prosecuted; two of the three remain on Louisville’s police force.
Winfrey explained the decision to feature Taylor in an essay that includes an interview with Taylor’s mother, Tamika Palmer; it’s worth your time.
Courtesy of O Magazine
“She was just like me. She was just like you,” Winfrey writes. “And like everyone who dies unexpectedly, she had plans. Plans for a future filled with responsibility and work and friends and laughter.”
The online edition of the essay also features ways to take action on behalf of Taylor: petitions to sign, officials to call, bail funds to donate to.
One hopeful development in recent months is prominent women using their platforms to amplify voices that have been ignored for too long. Some of those efforts, of course, have been more successful than others. O Magazine‘s tribute to Taylor and other Black women killed by police is arguably the boldest so far and underscores the power that female decision makers wield in directing the narrative of this painful, unprecedented age.
“What I know for sure: We can’t be silent. We have to use whatever megaphone we have to cry for justice,” Winfrey writes. “I cry for justice in her name.”
Claire Zillman
claire.zillman@fortune.com
@clairezillman
Today’s Broadsheet was curated by Emma Hinchliffe.
ALSO IN THE HEADLINES
- The opposition. New Zealand Prime Minister Jacinda Ardern is experiencing record-high popularity amid her country's mostly-successful containment of the coronavirus. The opponent trying to crack her hold on the office is Judith Collins of New Zealand's National party. Nicknamed “Crusher Collins” for her reputation as a hard-line police minister, Collins is set to challenge Ardern in the Sept. 19 election. Bloomberg
- Three centuries later. Lloyd's of London, the insurance marketplace, has set the first gender-based targets in its 334-year history. Insurance companies that work in the market must have women in more than a third of senior leadership roles by the end of 2023. Financial Times
- Original content. Bela Bajaria is Netflix's VP of local-language originals—an important job when more than 50% of the company's revenue in the first half of 2020 came from outside North America. "When I read a script, I imagine a brown girl as the hero of the story," Bajaria says of how she views entertainment. Variety
IN CASE YOU MISSED IT
- Convention decision. The Polish government is considering withdrawing from Europe's Istanbul Convention, a treaty meant to protect women from domestic violence. The suggestion prompted widespread protests. New York Times
- Lockdown casualty. During coronavirus lockdowns, women who sought surgical treatment for their miscarriages were turned away and told to miscarry at home. As the coronavirus crisis continues, advocates worry more women could face the same fate. New York Times
- She's not Buy-ing it. Sarah Tremblay, a former "Geek Squad" employee at Best Buy, says that customers groped and kissed her without her consent and even stalked her. She's suing Best Buy, which is led by CEO Corie Barry, for sex discrimination and retaliation. Best Buy didn't respond to the reporter's request for comment. HuffPost
ON MY RADAR
'It’s like a war zone': Anti-trafficking organizations struggle under COVID-19 The Fuller Project
When did recipe writing get so...whitewashed? Bon Appetit
Snap unveils diversity numbers, plans to double women and minorities on staff Fortune
PARTING WORDS
"Let a double portion of what John Lewis's life was about fall upon us, so we can continue to get into good trouble."
-Bernice King at Rep. John Lewis's funeral


fortune--2020-07-31--Big Tech’s rough day is followed by Big Tech’s amazing day

This is the web version of Data Sheet, Fortune’s daily newsletter on the top tech news. To get it delivered daily to your in-box, sign up here.
Wednesday was Big Tech’s right-brain day, a day of storytelling, counterprogramming, and fending off creatively-told congressional attacks on their virtues.
Thursday was dominated by the numbers, the left-brain analysis that showed how at least three of the big four are faring in the world’s darkest times. In a word: well. Amazon, Apple, and Facebook surged in the second quarter, each for their own reasons.
Amazon’s cloud business soared, and it bore fruit from its investments in delivery, satisfying sheltered-in-place customers. Apple sold a little bit of everything, including, not that surprisingly, Mac computers. The word computer used to be in Apple’s name and for the last decade it has been a slow-growth annuity for the iPhone maker. Homebound workers need computers. Facebook proved that users and advertisers aren’t that interested in how much the company harms democracy and decency. For now.
Only Google’s numbers gave reason for pause, as advertising revenue declined. Google’s ad business is so big that it’s probably the best proxy for the economy of its cohort. That it didn’t grow in a quarter when parts of the global economy were improving bodes ill.
***
I’ll be off for a bit, though you’ll hear from me now and again. And of course you’ll be in good hands with our colleagues when Aaron takes a breather too.
I realized I had neglected to share what I’ve been reading in lockdown. I spent a fair amount of time reading Jon Krakauer’s Where Men Win Glory, the tragic account of the life and death of football star and gutsy soldier Pat Tillman. The Bush administration and U.S. Army in Afghanistan look like quaint schoolyard fibbers in comparison with the shameful denizens of today’s White House.
For lighter fare, I turned next to 10 Innings at Wrigley, Kevin Cook’s ingenious account of a 1979 slugfest between the Philadelphia Phillies and the Chicago Cubs. The book, with its nearly literal pitch-by-pitch account of the game and back-story recollections of some of its stars, is a tonic for nostalgic baseball fans who can’t get out to the ‘ole ballpark.
Adam Lashinsky
@adamlashinsky
adam.lashinsky@fortune.com
This edition of Data Sheet was curated by Aaron Pressman.
NEWSWORTHY
Leave a message at the tone. I'll be on vacation next week, too, but you can still get a look at some of the newest gadgets. Google says it will unveil a new phone on Monday, expected to be the Pixel 4a, an update to its Pixel 3a low-budget phone. And on Wednesday, Samsung will have some new products, likely including an update to the Galaxy Note 10. It didn't wait to update one of its folding phones, however. The Galaxy Z Flip 5G available to order now adds, you guessed it, 5G capability to the original Z Flip and costs about $100 more at $1,500.
Nothing but blue skies. In the kind of statement that probably sends chills down the spines of competitors, Amazon senior VP Dave Limp on Thursday said his company is "off to the races" and will spend more than $10 billion on its satellite Internet service called Project Kuiper. The declaration followed federal regulatory approval of Amazon's plan to loft over 3,000 satellites for the service.
Lit up like a crystal ball. Is the electric vehicle stock-market bubble back on? China's Li Auto went public on Thursday in the U.S. at $11.50 a share, valuing the company at around $10 billion. It closed up another 43% in its first day of trading. In other IPO news, fintech lender Affirm, founded by PayPal OG member Max Levchin, is getting ready to go public at a $5 billion to $10 billion valuation. The startup was valued at $3 billion in a private fundraising last year.
A bunch of fish covered in feathers. In the streaming wars, Comcast said its new Peacock service got off to a strong start, gathering 10 million users (the free-with-ads offering still isn't available on the Roku and Amazon Fire TV platforms). Meanwhile, Comcast lost another 477,000 cable TV subscribers in the last quarter, as the pandemic continues to accelerate cord cutting.
Going to war is not a game. Relating to very different kinds of streaming wars, lawmakers on Thursday rejected an amendment from Rep. Alexandria Ocasio-Cortez to ban the military from advertising and recruiting on Amazon's Twitch and similar video game services. After the proposal went down to defeat, Ocasio-Cortez tweeted: Imagine trying to explain to your colleagues who are members of Congress what Twitch is 😭
FOOD FOR THOUGHT
The question-and-answer session at Wednesday's Big Tech hearing may or may not have been very enlightening. But CNBC tech reporter Steve Kovach was among those who noticed that lawmakers also released a massive batch of previously unseen internal emails and documents collected from Apple, Amazon, Facebook, and Google. Here's just one fascinating exchange he highlighted:
As for Facebook, the documents show that its $1 billion acquisition of Instagram in 2012 was at least in part due to Zuckerberg’s desire to quash a buzzy and growing competitor. (Zuckerberg argued in his testimony Wednesday that there was no guarantee Instagram would be a success back then, and that its position today as a dominant social media app is because it had Facebook’s endless resources to work with.)
But in emails with then-CFO David Ebersman, Zuckerberg discussed the advantages of buying Instagram. Zuckerberg agreed with Ebersman that acquiring Instagram would help “neutralize a potential competitor.”
“Instagram can hurt us meaningfully without becoming a huge business,” Zuckerberg wrote in another email released Wednesday.
FOR YOUR WEEKEND READING PLEASURE
A few long reads I came across this week:
How Not to Deal With Murder in Space (Slate)
A bizarre 1970 Arctic killing over a jug of raisin wine shows that we need to think about crime outside our atmosphere now.
There’s No Such Thing as Family Secrets in the Age of 23andMe (Wired)
DNA tests are cheap and ubiquitous. For some donor-conceived people, they can unearth long-buried truths about their ancestry—and lead to unorthodox reunions.
R.I.P. Cable TV: Why Hollywood Is Slowly Killing Its Biggest Moneymaker (Variety)
As subscribers and viewers flee, media companies that once relied on cable TV are chasing streaming dollars instead.
Murder, Inc: the rise and fall of New York City’s mafia hitmen (HistoryExtra)
Nige Tassell explores the emergence of Murder, Inc – the mob of hard-as-nails hitmen tasked with bringing down the New York City mafia’s most wanted – and how this organisation of contract killers was eventually brought down.
IN CASE YOU MISSED IT
The tech titan testimony: CEOs are overlawyered and underprepared By Jeffrey Sonnenfeld
VC icon Alan Patricof and SoulCycle vet Abby Levy launch fund to invest in aging By Jeff John Roberts
Verizon enters the rural home Internet market with 4G wireless By Aaron Pressman
U.S. CEOs now see a double-dip recession as more likely than a V-shaped recovery By Lance Lambert
Health experts on how to run errands safely during the coronavirus By Brooke Henderson
(Some of these stories require a subscription to access. Thank you for supporting our journalism.)
BEFORE YOU GO
It's been eight years since Alanis Morissette released new studio music, but she got some help from one of her toddlers as she debuted the first song from her new album, Such Pretty Forks in the Road, on the Tonight Show on Thursday. Don't miss the super cute reactions and suggestions from Morissette's daughter in this video performance of the song "Ablaze." My Fortune colleagues take over these duties while I'm on vacation, so have a great weekend and see you back here in a few weeks.
Aaron Pressman
@ampressman
aaron.pressman@fortune.com


fortune--2020-07-31--COVID-19 is compounding housing inequities worldwide. How to fix that

The historic global crisis that we are facing has sent shockwaves throughout all strata of society. While the impacts of COVID-19 have been widespread, they have been disproportionately borne by individuals without access to adequate health services, with informal jobs and insufficient savings, and with limited digital connectivity. The pandemic has compounded these existing inequities such that many households are struggling more than ever to afford their housing—as is especially visible in cities around the world.
Globally, almost half of the population lives in cities and this share is expected to rise to 55% by 2050. Cities also concentrate the majority of countries’ economic activity, job creation, and innovation. But the rising costs of urban housing have placed an increasing strain on households: Between 2005 and 2018, rent prices increased in all but two OECD countries, as did real house prices in the majority of Organization for Economic Cooperation and Development (OECD) countries over the same period.
To a large extent, urban sustainability and housing affordability depend on how people live, work, and move within cities. In this context, cities that are sufficiently compact and connected have distinct advantages. They offer easier access to jobs, services, and amenities, while reducing greenhouse gas emissions from transport and construction. However, housing in compact and connected cities is typically more expensive than in sprawling, disconnected urban areas, and this can have negative impacts on certain households. Earlier OECD research in partnership with the Coalition for Urban Transitions has found that the negative impacts of excessive housing costs on renters and first-time homebuyers can outweigh the wider benefits of compact cities, unless housing affordability is tackled in parallel. In OECD countries, one in three low-income renters in the private market spends more than 40% of their disposable income on rental costs alone.
New OECD research in partnership with the Coalition for Urban Transitions, Housing policies for sustainable and inclusive cities, is among the first to examine how national governments can deliver more affordable homes in sufficiently compact cities. The research is one of the key contributions to the whole-of-OECD project on housing started in 2019. It recognizes the difficult tradeoffs governments face and identifies three key interventions that can simultaneously reduce housing costs and nurture vibrant, sustainable urban neighbourhoods. These interventions relate to fiscal tools and rental housing markets, as well as institutional capacity and policy coherence.
First, in order to promote more sustainable housing development, national governments can use fiscal tools to better reflect the real costs of urban sprawl. For instance, single-family detached homes require more space, material, and energy per household than apartment buildings, especially when located in low-density neighborhoods at the urban periphery where associated infrastructure costs are also higher. In the absence of fiscal tools, developers and homeowners do not pay the full costs of the infrastructure needed to service such new developments, or of the loss of agricultural land and forests.
As a result, such developments appear cheaper than their true social and environmental cost, which incentivizes more urban sprawl. To remedy this, national governments can redesign property taxes or introduce impact fees. Ensuring that house prices reflect their true costs to society would incentivize denser development that is more climate-friendly. In parallel, through measures such as inclusionary zoning, national governments can require new developments to reserve a portion of housing units at below-market rent prices. Implementing a split-rate tax, where land is taxed at a higher rate than the buildings on it, is another measure that can deter land speculation, while encouraging more efficient use of space. These approaches have already been applied successfully in several OECD countries, for example in France and the U.S.
Second, national governments should tap further into the potential of rental housing markets to create affordable cities. Certain incentives currently put in place for promoting home ownership, such as preferential tax treatment on home sales or mortgage interest deductions, typically benefit high-income households and contribute to urban sprawl by spurring demand for larger housing units and for single-family detached housing. Measures to support rental housing, such as housing allowances and rent subsidy vouchers, can increase access to affordable housing without directly influencing urban form, although they must adequately target specific and limited constituencies to be efficient and be accompanied by appropriately flexible supply to avoid the fact that the subsidies over time get absorbed by higher rental prices.
Establishing clear and balanced tenant-landlord regulations to ensure that both parties have equal access to information and recourse is another important measure that can bolster a more affordable and transparent rental market. Such measures are especially important given the increases in rent prices over the past decade in nearly all OECD countries. There is also a need for well-designed social rental housing to ensure such housing is accessible to households in need, while avoiding spatial segregation and lock-in effects.
Third, national governments should strengthen institutional capacity and build coherent policy frameworks across levels of government, for instance by defining a national strategy for infill development or by providing technical assistance to local governments to catalogue underdeveloped urban land. National governments can also champion reducing restrictions, such as minimum lot areas and maximum building heights, and utilize land use regulations more effectively to promote denser, mixed-used urban development.
These policy reforms are key for long-term housing affordability, as they can enable markets to make better use of land, increase the supply of housing in inner city neighborhoods and around transport hubs, and reduce house price differences between cities and other areas. To facilitate implementation of these measures, policymakers should consider introducing mechanisms to ensure policy coherence across multiple municipalities, for example on the design of impact fees. This would align the efforts of different ministries and levels of government behind a shared vision for their cities.
Cities around the world are grappling with soaring house prices, the looming climate crisis, and the current COVID-19 pandemic. Changing the way people live, work, and move within cities is key to boost the quality of urban life and reduce our environmental footprint. Instead of addressing one challenge and exacerbating the other, our new and groundbreaking research shows that it is possible for national governments to do both—tackle the housing and climate crises simultaneously and thereby make our cities both more inclusive and more sustainable.
Angel Gurría is secretary-general of the OECD.