fortune--2020-08-24--Brynne Kennedy could be the first female tech founder to serve in Congress

According to Brynne Kennedy, only 6% of current members of Congress have any sort of background in the technology industry. And never has a woman who founded and served as CEO of a tech startup served in Congress.
Kennedy, the founder and former chief executive of human resources software platform Topia, calculated that statistic before launching her congressional campaign—because she’s hoping to be the first. A moderate Democrat, Kennedy is taking on a 10-year GOP incumbent in California’s fourth district. (The Congressional Research Service in July reported that the House and Senate combined have eight former software executives, 11 engineers, and four venture capitalists.)
After a career in finance, founding and running Topia for a decade, wrangling $110 million in venture capital funding, and, in 2018, stepping down as the company’s CEO (she remains on Topia’s board), Kennedy—having reached the ripe old age of 36—began her campaign for office.
While Kennedy in an interview was mostly eager to discuss her California district, she’s also paying attention to what her technology background would bring to Washington—and why it would matter for Congress to welcome its first female tech founder.
The move from Silicon Valley to the campaign trail has been a bit of a transition. “When you’re a tech founder or CEO everyone wants to talk to you and says, ‘Come to my dinner party.'” Kennedy says. “The minute you run for office everyone’s like, ‘Why would you want to do that? Are you an alien?'”
The former chief executive faces a tough general election race in November against Republican Rep. Tom McClintock (Democrat Jessica Morse ran an ultimately unsuccessful campaign to oust him in 2018). Kennedy spoke to Fortune about her decision to enter the political fray, Congress’s need for more lawmakers who understand technology, and her centrist worldview. This interview has been edited and condensed.
Fortune: Why did you decide to enter politics?
Brynne Kennedy: I spent the last 10 years building a human resources software company, building tools to help people connect with jobs, manage distributed and mobile workforces—in many ways what we’re working through right now. Through that experience, I did some policy work in Washington around the innovation economy. I was pretty horrified by how disconnected so many of our representatives are from the future of our economy and working families, how divided they are in fighting instead of problem-solving. I thought, if I ever did my job like this as an entrepreneur and a businessperson, I would be fired pretty darn quickly.
I’d be the first female tech founder and CEO to serve in Congress. Just 6% of Congress today has any tech or software background. Which is horrifying when you think about the opportunities or challenges we face as a nation with respect to innovation and technology.
A lot of your campaign highlights your record as a businesswoman. That’s a label that has traditionally been claimed by Republican politicians. Why did you want to run as a businesswoman and a Democrat?
There should be more voices from the business world, from a new generation, and more courage to be pragmatic instead of appeal to extremes in both parties. I think it’s important we have voices from people who have actually built businesses, run businesses, and understand innovation. I would love for there to be more voices [from the business world] in the Democratic Party.
You’ve said you believe in running the country like a business. Our country has been run by a businessman for the past four years; how does the Trump administration influence your view of that idea?
I worked with some people who were incredible businesspeople—who ran their businesses incredibly well, and were ethical in how they did business and how they thought not only about profit or personal gain but broader society, employees, customers, and the environment as stakeholders in that. I believe that I did that [at Topia]; we had paid parental leave, we contributed a percent of our revenue to support refugees, we had a very diverse team.
But I also have seen some people in my career that, frankly, were horrible businesspeople and could be considered pretty horrible human beings, who put their own personal gain above anyone else’s, who ran their employees into the ground and got rich themselves on their employees’ backs, who didn’t think about anyone else. I don’t think it’s fair to say everyone is a particular type of businessperson, every business is the same, the President is a businessperson, therefore that’s the only example we have.
I bring the experience of having built a business—starting and growing a business as an entrepreneur, having built pretty strong values into that company of supporting employees, valuing diversity, and being a good actor in the world beyond just profit.
There are principles that can be applied. We can modernize our systems and ensure our programs improve people’s lives. We can apply technology not for an individual person’s gain but for our entire country’s gain. We have an opportunity to apply some of the principles of running an efficient business, balancing a budget, modernizing systems to the government today. There’s a lot of work to do to unlock funds and make sure our government is run as efficiently as some of the best companies.
Why is it important to have more representatives in Congress who have technology backgrounds?
It’s difficult to legislate when you don’t actually understand what’s going on in the economy. These are incredibly hairy problems. It’s an incredibly difficult problem—how you deal with Big Tech, how you deal with social media platforms, how you balance freedom of speech with some of the societal impacts we’re seeing, how you navigate the publisher-versus-platform debate. These are issues that not a lot of people have answers to. It’s super important you understand what’s going on so you can make decisions for the future.
What would it mean to you to be the first female founder of a technology company to serve in Congress?
It’s horrifying that in 2020 we’re talking about that. I had the incredible honor of building a technology company from an idea at a kitchen table to a business operating in 100 countries with customers in 12 countries and $110 million in venture capital funding, leading the business through two acquisitions.
It’s something I never would have traded for anything in the world, but it was also incredibly difficult to be a woman and working in finance on Wall Street and in Asia and then being one of the few women in tech.
That voice is important in Congress. Sharing those experiences in an authentic way is important for women and girls to hear. It’s important to see you can work in finance, you can build a business, you can be a congresswoman.


fortune--2020-08-24--A peek into Palantir’s financials

A peek into Palantir’s financials

PepsiCo CEO : ‘ Black Lives Matter , to our company and to me.
’ What the food and beverage @ @ @ @

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Palantir, the big data government contractor that has also branched out into commercial ventures, filed plans to go public confidentially in July.
Which begged the question: It’s been 16 years since the company was co-founded by Peter Thiel, a much more mature age for a company seeking to go public than most startups. So how much is the company, which was last valued at $20 billion in 2015 and is credited with helping the U.S. military find Osama bin Laden, actually making?
Well, per some numbers that were circulated privately with investors, it’s still not profitable: Net loss in 2019 numbered at about $580 million on revenue of $742 million. Revenue growth was not as aggressive as those of other companies that have gone public recently, rising 25% from a year earlier. Meanwhile losses, though still huge, have moderated, staying steady compared to 2018, per TechCrunch.
Numbers in 2020 are currently trending in the right direction: Revenue in the first half of the year grew to $481 million, a 49% uptick from the same period a year earlier. That comes as Palantir reportedly told investors to expect $1 billion in revenue this year.
IPO filings are also one to watch out for this week: Snowflake, Unity, and Asana are among those names that could make their filings public in coming days.
Private Equity titans get tangled with the law: On Friday, it was reported that Vista Equity Partners CEO and founder Robert Smith is facing a criminal tax probe from the U.S. Justice Department and the Internal Revenue Services over whether Smith moved assets offshore and thereby failed to pay taxes on $200 million in assets. In a coincidence of timing, and in a completely separate case, the U.S. Virgin Islands plans to issue a subpoena to Apollo Global Management cofounder Leon Black over business dealings with Jeffrey Epstein. Black has previously said that Epstein had no work with Apollo, though Epstein had provided Black with financial advice. That comes amid a larger backdrop and question as to how exactly Epstein made his money. Read more.
Lucinda Shen
Twitter: @shenlucinda
Email: lucinda.shen@fortune.com
VENTURE DEALS
- Dataiku, a New York-based Enterprise A.I. and machine learning platform, raised $100 million in Series D funding. Stripes led the round and was joined by investors including Tiger Global Management, Battery Ventures, CapitalG, Dawn Capital, FirstMark Capital, and ICONIQ.
- Checkerspot, a Berkeley, Calif.-based maker of bio-manufactured materials that go into skis, has raised $36 million in Series B funding. Viking Global Investors led the round, joined by Cavallo Ventures, Builders VC and Breakout Ventures. More here.
- Brightline, a Palo Alto, Calif.-based pediatric behavioral health care company, raised $20 million in Series A funding. Threshold Ventures led the round and was joined by investors including Oak HC/FT.
- Motiv Power Systems, a California-based provider of software for trucks and buses, raised $15 million in additional funding from GMAG Holdings.
- Klara, a New York-based patient engagement platform for doctors and clinics, raised $15 million in funding. Gradient Ventures and Frist Cressey Ventures co-led the round and were joined by investors including FirstMark Capital, Lerer Hippeau, Project A, and Stage 2 Capital. Read more.
- Commonstock, a social platform for stock traders, raised $9.7 million in seed funding. Floodgate, QED, Upside, and Resolute invested.
- Trellus Health, a New York-based digital health solution for chronic conditions, raised $5 million of seed funding. Mount Sinai Health System and EKF Diagnostics invested.
- Lootcakes, a New York-based platform aggregating in-app purchase information in return for virtual currency, raised $2 million in seed funding. Konvoy Ventures led the round and was joined by investors including SOSV and GAN Ventures. Read more.
- Synapse, a Toronto-based corporate remote training platform, raised $2 million in seed funding. Investors include BDC Capital as well as existing investors Generation Ventures, Differential Ventures and Ripple Ventures.
PRIVATE EQUITY
- Warburg Pincus and TPG agreed to invest in Visma, a Norweigian software maker, valuing it at about $12.2 billion including debt. Hg also reinvested, putting up the majority of the new funding.
- Madison Dearborn Partners completed its acquisition of Benefytt Technologies, a Tampa, Fla.-based health insurance technology company. Financial terms weren't disclosed.
- Serent Capital invested in Quorum, a Washington, D.C.-based public affairs software platform for legislative tracking, stakeholder engagement, and grassroots advocacy. Financial terms weren't disclosed.
- L Catterton Latin America agreed to invest $150 million in Despegar.com (NYSE: DESP), a Buenos Aires-based travel bookings company.
- Cryoport agreed to acquire CRYOPDP, a Paris-based provider of temperature-controlled logistics solutions to the clinical research, pharmaceutical and cell and gene therapy markets. Financial terms weren't disclosed.
- Platinum Equity is in advanced talks to acquire HNA Group’s Ingram Micro, a distributor of tech products, for about $7 billion, including debt, per Bloomberg. Read more.
OTHERS
- MobileIron (Nasdaq: MOBL) is reportedly considering options including a potential sale, per Bloomberg. Read more.
- Apple acquired Camerai, a maker of AR technologies, about a year and a half ago, the Calcalist reports. The deal was reportedly for “tens of millions of dollars.” Read more.
IPOS
- DoorDash, the food delivery startup, is aiming for an IPO in the fourth quarter, per Bloomberg. The company, which was previously reportedly seeking to raise via direct listing, is instead seeking a traditional IPO. Read more.
- Xpeng, an Guangzhou, China-based electric luxury car maker, now says it plans to raise $1 billion in an IPO of 85,000 ADSs priced between $11 and $13. It posted revenue of $328.5 million in 2019 and a loss of $657.6 million. Firms including GGV and Taobao backed Xpeng.
- Corsair Gaming, a Fremont, Calif.-basd supplier of gaming hardware, filed to raise $100 million in an IPO. It posted revenue of $1.1 billion and a loss of $8.4 million in 2019. EagleTree Partners backs the firm. Read more.
- Bentley Systems, an Exton, Pa.-based provider of software for construction projects, filed to raise $100 million. It posted revenue of $736.7 million and a loss of $103.1 million in 2019. Siemens Corp. backs the firm. Read more.
- Outset Medical, a San Jose, Calif.-based provider of a hemodialysis system, filed for a $100 million IPO. It posted revenue of $15 million in 2019 and a loss of $68.3 million. Backers include Warburg Pincus, Fidelity, and D1 Capital Partners. Read more.
- Software Acquisition Group II, a blank check company targeting a software company, filed for an $150 million IPO. Read more.
- Ant Group plans to file for dual listings in Hong Kong and Shanghai in the next few weeks, targeting a valuation of about $225 billion. Read more.
- Luminar Technologies, an autonomous vehicle startup, plans to go public via merger with blank-check firm, Gores Metropoulos, for about $3.4 billion.
EXIT
- ASGARD Partners & Co. sold Wild Things, a Virginia Beach, Va.-based maker of outdoor gear and apparel, to National Safety Apparel. Financial terms weren't disclosed.
- Centerbridge Partners is exploring a sale of KIK Custom Products, a maker of household cleaning products, in a deal that could value the company at over $3.5 billion, including debt, per Reuters. Read more.
F+FS
- Goldman Sachs Group is considering raising a venture and growth fund of around $2 billion, per Bloomberg citing sources. Read more.
- Andera Partners, a Paris-based life sciences firm, is seeking €450 million ($530.2 million) for a venture fund. Read more.
- Exeter Capital, a consumer-focused private-equity firm, is seeking $400 million for its debut fund, per the WSJ. Read more.


fortune--2020-08-24--Facebook coughs up $125 million to settle French tax dispute

Facebook will pay €106 million ($125.5 million) to settle a dispute with the French tax authorities, the company confirmed on Monday.
Initially reported by France’s Capital, the settlement covers the period from 2009-2018. The publication reported that the sum included a €22 million fine, although Facebook has not confirmed this.
“We take our tax obligations seriously and work closely with tax authorities around the world to ensure compliance with all applicable tax laws and to resolve any disputes, as we have done with the French tax authorities,” a company spokesperson said.
This is the latest in a string of similar Big Tech settlements with the French tax office. Last year, Google paid €465 million in back taxes and €500 million in fines, and Apple agreed a settlement with a value of around €500 million.
The core issue is that of where taxes should be paid. France has long been bullish on the idea that profits generated there should be taxed there, rather than in other countries—specifically, Ireland.
Facebook, Google and Apple all have their international headquarters in Ireland, which has a relatively low corporate tax rate of 12.5%, compared with France’s rate of up to 31%. Until recently, they have been happily optimizing their tax bills by booking profits from across Europe in Dublin. But in the last couple years, France and other European governments have been cracking down on this practice.
“We pay the taxes we owe in every market we operate,” Facebook’s spokesperson said. “Since 2018, we have changed our selling structure so that revenue from advertisers supported by the team in France is now recorded in this country. This year, we are paying €8.46m in tax revenue in France, a nearly 50% increase on last year.”
Capital estimated that Facebook’s annual revenues in France total €1.3 billion ($1.5 billion).
Apart from launching those tax cases against big American tech firms, the French government is also preparing to introduce a special 3% “digital tax” on the French revenues (rather than profits) of such companies.
The introduction of the tax was delayed due to hopes that the taxation-location issue could be agreed at a global level, under the auspices of the Organization for Economic Cooperation and Development (OECD). Indeed, the French tax was only intended as a stopgap measure, until such an agreement could be reached. But it is unclear whether the OECD talks will bear fruit and, with the pandemic straining its coffers, the French government said in May that would launch the digital tax either way by the end of this year.
Other countries, such as the U.K., are also due to debut a digital tax along the same lines. It was reported on the weekend that the British government would scrap the idea, so as to mollify the U.S. as the two countries negotiate a post-Brexit trade deal, but the government denied those reports on Monday.
If and when European countries do introduce their digital taxes, the U.S. is likely to retaliate with tariffs on their exports.


fortune--2020-08-24--Scientists to Wall Street: You don’t really understand how COVID vaccine tests work

Earlier this month, shares in Novavax, a small biotechnology company, jumped 10% when its COVID-19 vaccine candidate showed promise in an early stage clinical trial.
Among the results that most excited investors were the high level of antibodies researchers had found in blood samples of those injected with the vaccine. Comparing the antibody counts—known as quantitative serum titers, or often simply “titers”—between vaccine candidates has become a parlor game of sorts for stock analysts, investors and venture capitalists seeking an early indication of which of the more than 165 vaccine candidates currently under development might prove most effective, and become the preferred inoculation for much of the world’s population.
In one bullish assessment, Evercore ISI analyst Josh Schimmer noted that Novavax’s antibody levels were “well above” what Novavax’s competitors had reported. J.P. Morgan analyst Eric Joseph wrote that “it’s not too far a stretch to conclude the [neutralizing antibody] activity of [Novavax’s vaccine candidate] looks best-in-class.”
Differences in reported neutralizing antibody titers also explains why, during the third week in July, when both Oxford University’s COVID-19 vaccine team and startup BioNTech both reported positive results from Phase 1 clinical trials of their respective vaccines, shares in AstraZeneca, which is working with Oxford, slumped while those of Pfizer, which is working with BioNTech, leapt: the titer figures were higher in the BioNTech research.
But scientists who study vaccines say there’s a major problem with such comparisons: they are, at this stage, completely invalid.
No “meaningful value”
Currently, it is impossible to make an apples-to-apples comparison of immune responses in blood tests between Covid-19 vaccine candidates. So far, each vaccine candidate has been tested using a different procedure—known as an assay— conducted in different labs. And it turns out that tests conducted this way produce wildly different results, even for the same vaccine.
“I don’t believe the neutralizing antibody numbers being reported right now have any meaningful value,” says John Moore, a professor of microbiology and immunology at Cornell University medical school who has written about the difficulties of comparing COVID-19 vaccine research results. “We don’t even know what a protective titer actually is: is a titer of 100 good or bad? We don’t know.”
Wayne Koff, the chief executive of the Human Vaccines Project, a nonprofit that is trying to speed the development of vaccines for numerous, says that most research teams working on Covid-19 vaccines are testing them on assays of their own choosing, often in their own labs. “This provides every opportunity of hyping a candidate and making it appear that one vaccine is better than another vaccine, when actually we don’t have the data to reach those conclusions,” he says.
Many research groups have been publishing comparisons of the antibody titers from the blood of people inoculated with their vaccine candidates to the antibody titers found in the blood of people who have recovered from Covid-19. The implication is that if the vaccine elicits a similar or higher antibody titer, and if people who’ve recovered from Covid-19 are immune from catching the disease again for some period of time, then the vaccine should also provide temporary immunity.
But even this analysis is flawed, Koff says. That’s because at the moment there is no standard panel of blood from recovered Covid-19 patients against which to assess the titers. The blood samples in some studies might have come from patients who were much more sick than in other studies and the level of antibody production can vary immensely between individuals depending on factors ranging from age to genetics.
A familiar problem
The problem of assay disagreement—that different tests produce different results—is well known among vaccine researchers. Moore and Koff, who both studied HIV/AIDS earlier in their careers, said that similar problems once plagued attempts to develop a vaccine for that disease. But, over the past decade, with encouragement and funding from the Gates Foundation, the field has agreed on a standard assay and designated just a few laboratories that are certified to carry out standardized testing for all vaccine candidates.
Some researchers want to replicate that system for COVID-19. Scientists at Oxford’s Jenner Institute, in publishing results of their Phase 1 human clinical trial, noted that they had tested blood samples on four different types of assay, and while the results correlated, the titers varied widely. In the paper, they called for a central lab to be set up to assess all Covid-19 vaccines.
Sarah Gilbert, one of the Oxford researchers, says a standardized assay and a central testing lab could accelerate getting multiple Covid-19 vaccines into production, something most analysts now think will be essential in order to distribute a vaccine to enough of the world’s population to end the pandemic. If one vaccine completed human safety-and-efficacy trials, and its neutralizing antibody titers were known, and a second vaccine showed the same or higher antibody titers on the same assay performed in the same lab, then this would be reasonable evidence that the second vaccine was also effective.
As a result, she says, the second vaccine might potentially be able to win regulatory approval without having to complete large scale Phase III testing. (The vaccine would still have to undergo human safety testing, of course.) “You don’t want to have to do Phase III studies for every vaccine out there,” she says.
Operation Warp Speed
The U.S. government effort to accelerate development of an effective Covid-19 vaccine, known as Operation Warp Speed, has specified that all vaccines seeking a Food and Drug Administration license must be evaluated on the same neutralizing antibody assay in the same lab. That’s one of the reasons Operation Warp Speed’s findings will be so important to the global effort to find an effective vaccine.
John Mascola, the head of vaccine research for the National Institute of Allergies and Infectious Diseases, who has helped set up Operation Warp Speed, says that the project is currently in the process of creating and validating standardized assays. This includes designing strict procedures for how a lab should conduct the tests. He says this work should be completed “in the next few months, or sooner.” He says the lab designated by Operation Warp Speed for assessing vaccine candidates should also be named in the next few months.
He says the Operation Warp Speed is also hoping to eventually see a standardized panel of blood from recovered Covid-19 patients that can be used to compare the immune response the vaccines elicit to the immune response the actual virus creates, but that creating this panel was a lower priority and was being worked on in collaboration with the World Health Organization and European health agencies.
The issue of standardized antiboday assays is further complicated by the fact that different types of assays may be needed. True neutralizing-antibody assays, which are the gold standard, use a live SARS-CoV-2 virus, which means they have to be conducted in a specialized lab with heightened safety and security protocols. In practice, this often means a government facility. In the U.K., the neutralizing-antibody testing is being carried out at the Centre for Applied Microbiology and Research, which is housed within the Defence Science and Technology Laboratory at Porton Down, near the town of Salisbury. Porton Down is also where the U.K. conducts much of its biological and chemical weapons research.
The protocols needed to handle a live virus, Gilbert says, makes true neutralizing-antibody assays slow to run. “It is never going to be a high throughput assay,” she says. To speed up testing and make assays available to more labs, the U.S. and other governments are also working to create a standardized “pseudovirus neutralizing assay.” This uses a harmless virus, usually a retrovirus, that is modified to produce the same external envelope of carbohydrates and proteins as the SARS-CoV-2 virus. If the antibodies a vaccine induces can neutralize this modified retrovirus, it is a reasonable guess—although not a guarantee—that they will also be able to knock out the coronavirus itself.
Blinding assays
Finally, there are what are known as “binding assays.” These simply test whether antibodies produced by a vaccine can latch on to the spike protein SARS-CoV-2 has on its surface. They do this by mixing the appropriate chemical proteins—unattached to any kind of virus—with the antibodies. Binding assays are considered less reliable indicators of a vaccine’s power than the two types of neutralizing-antibody assays, but they are simpler, cheaper and faster to perform.
Many of the same issues that bedevil comparing neutralizing antibody assays, apply equally to assays for T-cell responses. T-cells, which hunt down and neutralize infected cells and also signal the immune system to ramp up its response to a disease, are thought to be able to remember certain pathogens they’ve battled before. Many of the groups working on COVID-19 vaccines believe their inoculations will elicit a strong and long-lasting T-cell response that could confer immunity on those vaccinated, even if the antibodies prove short-lived.
But Mascola says efforts to create standardized T-cell assays are, if anything, even more fraught than creating standard antibody assays. That’s because, he says, T-cell assays require a more complex blood sample that preserves both the serum—or fluid part of blood—and the individual blood cells. These blood samples then have to be carefully frozen and unfrozen, creating a trickier protocol for standardization. Despite these difficulties, there are plans to create a standardized T-cell assay, Mascola says, but it is likely to take more time than the antibody assays.
Mascola also emphasizes that while the assay titers are important and might one day allow the short-circuiting of full Phase III clinical trials that Gilbert hopes for, the data that will determine which vaccines initially receive licenses from the FDA, and probably from most other government regulators around the globe, will be the efficacy results from large, Phase III human trials. Those trials track an inoculated group of individuals against a control group and compare how many people get COVID-19 in each.
It is only after some vaccines have proven themselves in Phase III trials that the antibody titers and T-cell numbers, performed on standardized assays, will provide a way to judge the strength of subsequent vaccine candidates against those already licensed, he says.
“There’s really no substitute for a Phase III trial,” he says.


fortune--2020-08-24--The next global tech giant may come from India

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It occurred to me slowly, then all at once during the aughts, that I wasn’t paying sufficient attention to Alibaba and Tencent. I had a good excuse: the twin giants of the Chinese Internet had no impact on my life, business or personal. I couldn’t use their products, and they made little or no effort in the U.S. market.
Over time, I came to understand why it was so important to be mindful of the duo anyway. Alibaba and Tencent (and Alibaba’s affiliate Ant Group and Tencent’s WeChat service) are innovators and mega-cap powerhouses in the world’s second largest economy. That they’ve built their businesses with discriminatory protection from the Chinese government is a fact that doesn’t minimize their importance.
I raise this now because there’s a similar Internet goliath that has suddenly sprung up in India that absolutely bears watching. It’s called Jio Platforms, and it is the subject of a revelatory feature by Vivienne Walt in the current issue of Fortune.
Jio is the brainchild of Mukesh Ambani, India’s richest man and head of a petrochemical-focused empire, Reliance Industries. The story of how Ambani built a modern cell-phone network from scratch, attracted hundreds of millions of subscribers (many of whom had never had a cell phone before), and then raised billions from a who’s who of global strategic and financial investors is epic. As Egon Durban, co-CEO of Jio investor Silver Lake puts it, Jio is “the world’s greatest private tech company hidden in plain sight.”
And yes, there’s a political component to the Jio story. India, like China, has a record of favoring homegrown talent and frustrating outsiders. And Jio, like Alibaba and Tencent, is highly attuned to the vagaries of its own government.
Jio is a just-in-India phenomenon for now. You’ve got plenty of time to catch up with its importance.
***
A couple comments on recent news:
1. Maybe I didn’t pay close enough attention, but could someone please explain why there’s any reason Oracle, an enterprise software company that wouldn’t know a consumer interaction, let alone a teenage user, if it saw one would buy Tik Tok? Was this just a run-of-the-mill Trumpian stable genius comment?
2. It’s certainly arguable that California’s law requiring Uber and Lyft drivers be classified as employees is a bad law with unintended consequences. What’s inarguable is that it has been the law of the state since Jan. 1, 2020, and the ride-hailing and contractor delivery companies chose not to abide by it—while also paying for a ballot initiative to overturn it. (Engadget’s Nicole Lee makes this point and has a good summary of the issue here.) Their contention that they didn’t have time to prepare for a more recent court order (since stayed) and therefore needed to shut down temporarily in the state is laughable on the face of it.
Adam Lashinsky
@adamlashinsky
adam.lashinsky@fortune.com
This edition of Data Sheet was curated by Aaron Pressman.
NEWSWORTHY
Bobbing and weaving. Speaking of Tencent, protestations by the likes of Walmart, GM, and Apple appear to have had an impact. The White House reportedly will allow U.S. companies to continue doing business with the dominant Chinese messaging app in China. As for TikTok, a majority of Americans, 50%, oppose President Trump's possible ban of the app, while 41% support it and 9% are unsure, according to a poll by Fortune and SurveyMonkey. TikTok is expected to file a lawsuit to block the ban any minute. And count me highly skeptical of the Wall Street Journal story blaming Facebook CEO Mark Zuckerberg for Trump's anti-TikTok moves.
Every battle is won before it is fought. While we're in battle mode, Apple on Friday defended terminating Epic Games' iOS developer account, saying it was the Fortnite publisher that sought improper special treatment. In newly disclosed emails to Apple CEO Tim Cook, Epic CEO Tim Sweeney asked if his company could offer its own games store on the iPhone. In my nomination for best cut-and-paste error of the year, Sweeney's big email ends with: "Apple is not willing to make the changes necessary to allow us to provide Android customers with the option of choosing their app store." That would be quite a change for Apple to give options to Android customers. Nice.
Epic also got some reinforcements as Match.com took its side and Microsoft went so far as to file its own brief in court opposing Apple's moves. "Ensuring that Epic has access to the latest Apple technology is the right thing for gamer developers & gamers," Xbox boss Phil Spencer tweeted.
Publish or perish. In not unrelated Apple news, Apple rejected the mobile app of popular blogging platform WordPress, seeking to force the free app to add some kind of in-app purchase capability, but then reversed course after a public outcry. "We have informed the developer and apologize for any confusion that we have caused," Apple said in a statement.
King Kong, kick the drum. In considerably happier news, the K-Pop group BTS broke the record for the most views of a video on YouTube in a single day. The South Korean group's music video "Dynamite" racked up more than 101 million view in its first 24 hours online.
I know it when I see it. We can debate whether the IPO market is heading into dangerous bubble territory yet, but this headline made me think, hmm, yeah, maybe: Paul Ryan jumps onto the SPAC train. And Peter Thiel-backed autonomous car startup Luminar is going public in a SPAC deal. In less weird IPO news, DoorDash wants to go public the usual way with Wall Street banks in the fourth quarter, following expected debuts from its unicorn brethren Airbnb and Palantir.
You will see that my piranha fish get very hungry. The summer shortage of Elon Musk news comes to an end on Aug. 28. That's when the Tesla master and world's fourth richest person plans to unveil the new version of his direct interface between the human brain and computers, called Neuralink. Expect lots of speculation about whether we're living in a computer simulation and a meme or two about which comic book super villain Musk now most resembles.
FOOD FOR THOUGHT
Social distancing has a serious emotional cost, as people socialize less and don't hug or shake hands anymore. Our Fortune colleague Danielle Abril spoke to some mental health experts about what's been lost and what people can do to feel better.
David Spiegel, a Stanford University School of Medicine professor and director of the school’s Center on Stress and Health, said that physical touch often has soothing effects, as it lowers the stress hormone cortisol that can weaken the immune system. Touch also increases levels of serotonin, dopamine, and oxytocin—the hormones related to happiness. Just like a child often needs to be held to be soothed, adults often need human touch to be reassured. At a time when adults might be more stressed than normal, given the global pandemic, people who live alone are going without that reassurance.
“Let’s just be realistic: it’s a real loss. It’s a real need,” Spiegel said. “We’re social creatures, and our most intimate connections are physical.”
IN CASE YOU MISSED IT
Who is Dave Clark, the new chief of Amazon’s giant retail business? By Aaron Pressman
A pair of twin YouTubers offer a lesson in openness By Ellen McGirt
5 companies that want to track your emotions By Miri Polachek
‘There’s going to be a selloff in the stock market’ if Congress doesn’t pass more stimulus By Lance Lambert and Anne Sraders
Uncharted’s Jessica Matthew’s has a plan to revive America’s crumbling infrastructure By Brooke Henderson
Why are local governments paying Amazon to destroy Main Street? By Pat Garofalo
(Some of these stories require a subscription to access. Thank you for supporting our journalism.)
BEFORE YOU GO
We might not have Siri or Alexa without her. Psychologist and computer science researcher Ann Syrdal, who passed away last month, was a pioneer in developing synthetic voices that sounded like women. A key innovation was to abandon generating sounds from computers and instead patching together bits of real human speech. Have a chatty start to your week.
Aaron Pressman
@ampressman
aaron.pressman@fortune.com


fortune--2020-08-24--Why it’s not a bad sign that companies aren’t talking about Black Lives Matter anymore

This is the web version of The Broadsheet, a daily newsletter for and about the world’s most powerful women. Sign up to get it delivered free to your inbox.
Good morning, Broadsheet readers! Greta Thunberg meets with Angela Merkel, AOC shares her beauty routine, and Frances Frei knows how to turn around corporate America. Have a productive Monday.
– Next steps. If you have a problematic corporate culture on your hands, call Frances Frei.
The Harvard academic is best known for being brought in to turn around Uber’s company culture in 2017; now, with businesses nationwide eager to examine where they have fallen short in supporting their Black employees, her expertise is more in demand than ever.
I spoke to Frei earlier this month about what companies should be doing right now to follow through on the bold promises many made in June. I wanted to know if it was worrying to her that companies’ contributions to public discussion about Black Lives Matter have drastically quieted in the past two months.
Frei says that being quiet can actually be a good sign. One of the first steps for any organization reckoning with its culture is “standing, walking, and talking,” she says—a stage that includes the kind of societal conversations corporations engaged in earlier this year. The next step, says Frei, is to take action internally. “I don’t mind if they’re not talking as long as they’re busy at work improving things,” she said in answer to my question. “If less talking means they’ve graduated to this third phase of justice, I consider it progress.”
But, of course, there’s a caveat: Progress should be visible very soon. If it’s not, that’s when public pressure comes back into play. “Meaningful change,” she says, “happens quickly.”
Read the rest of our interview—and Frei’s guidance for how companies should support working mothers (hint: stop having so many meetings!)—here.
Also, a bit of housekeeping: We’re in the final days of accepting nominations to Fortune‘s Most Powerful Women in Business list. Use this form to apply or submit candidate by the end of the week.
Emma Hinchliffe
emma.hinchliffe@fortune.com
@_emmahinchliffe
ALSO IN THE HEADLINES
- 'Less drama.' Kellyanne Conway, an advisor to President Donald Trump, says she will leave the White House at the end of the month. Conway's husband George, a lawyer and Trump critic, will also step back from his role at The Lincoln Project, a group of Republicans dedicated to defeating Trump. Conway cited her four children and the challenges of at-home learning in explaining her departure. "For now, and for my beloved children, it will be less drama, more mama," she said. Washington Post
- Meetup. Greta Thunberg and fellow youth activists Luisa Neubauer, Anuna de Wever van der Heyden, and Adélaïde Charlier met with German Chancellor Angela Merkel last week to push for action on climate change in Europe (Germany right now holds the rotating EU presidency). "It feels good, I would say," Thunberg said after the 90-minute meeting. Associated Press
- Sibling dynamics. Maryanne Trump Barry, the former federal judge and sister of President Trump, was secretly recorded by her niece Mary Trump (author of Too Much and Never Enough: How My Family Created The World’s Most Dangerous Man), saying that her brother "has no principles." In response to the recordings, the President said, "Every day it’s something else, who cares." Barry didn't respond to request for comment. Washington Post
- Clock's Tik-ing. As TikTok says it will sue the Trump Administration over a ban, learn more about the woman running the shortform video app's U.S. operation. Vanessa Pappas, former global head of creative insights for YouTube, remembers the first TikTok she ever saw ("a man wearing a cardboard box, scuttling around his apartment like a crab") and is now tasked with keeping up with the lightning-speed paces of both the platform and regulation surrounding it. Marie Claire
IN CASE YOU MISSED IT
- Medical emergency. A new study tracking 1.8 million hospital childbirths over more than two decades finds that Black newborns are three times more likely than white newborns to die when cared for by white physicians; when they're cared for by Black doctors, Black babies are far more likely to survive. Fortune's Maria Aspan has more details here: Fortune
- The protesting cycle. Now that it's been a few months since protests over George Floyd's death began, some women who regularly protested and encountered tear gas report experiencing troubling symptoms related to their menstrual cycles. Shorter- or longer-than usual period, extreme cramps—"we have the same uterus-type things going on," one protester says. Marie Claire
- Kagan court. When conservative justices sided with liberals on recent Supreme Court decisions, unhappy conservatives blamed Justice Elena Kagan. The "silent strategic genius" behind the "Kagan court" is adept at working with those she disagrees with—whether you view that as a good thing or not. Bloomberg
ON MY RADAR
Lori Loughlin gets two months in prison after judge accepts plea deal in college bribery scandal Fortune
Congresswoman Alexandria Ocasio-Cortez on self-love, fighting the power, and her signature red lip Vogue
Reading Elena Ferrante in English? You’re also reading Ann Goldstein New York Times
PARTING WORDS
"I have survived the revolution. I have survived the economic crisis. And now this."
-Maria Halios, a Beirut furniture designer, on the recent explosion in Lebanon and the survival of her business


fortune--2020-08-25--What the first confirmed COVID-19 reinfection tells us about a future vaccine

Top CEOs are more confident about growth now than they were before the pandemic

Researchers at the University of Hong Kong confirmed the world’s first known case of coronavirus reinfection on Monday.
The reinfected person is a 33-year-old man from Hong Kong who was hospitalized with COVID-19 and discharged in April. The man tested positive for the virus again earlier this month after flying back to Hong Kong from Spain. He was asymptomatic the second time he was infected. His reinfection was detected by coronavirus testing that Hong Kong requires of all arriving travelers.
The researchers’ findings have several implications for any future coronavirus vaccination program. A vaccine aims to mimic the natural immunity to the coronavirus a human develops after contracting and recovering from COVID-19. The reinfection case is worrisome because it raises the question: if natural immunity wears off to the point that a patient can be reinfected, will immunity from a vaccine diminish too?
Universal need
At the very least, the reinfection finding underscores the universal need for a coronavirus vaccine. It suggests that coronavirus management tactics like the controversial herd immunity approach—in which health officials allow the disease to spread unchecked in hopes that a population will become naturally immune—won’t be sufficient. It also suggests that those who contract and recover from COVID-19 shouldn’t be exempt from a vaccine.
“Patients who have recovered from COVID-19 should not assume that they will not be infected again,” said Kelvin Kai-Wang To, a clinical associate professor in microbiology at the University of Hong Kong (HKU) and one of the researchers who headed the reinfection study. “They should still receive COVID-19 vaccine when it becomes available.”
Adjusting expectations
To is careful to draw a likely distinction between the immunity from a vaccine versus the natural immunity gained from an infection: the former is expected to be stronger, To said.
“Based on the data reported from vaccine studies, it’s likely that vaccination can induce a more potent and prolonged immunity than natural infection,” To said.
At the same time, though, the reinfection case should “adjust our expectations” for a vaccine since it suggests that any immunity to the coronavirus is finite, says Siddharth Sridhar, also a clinical assistant professor in microbiology at HKU. He wasn’t involved with the reinfection study but has been conducting research on the coronavirus.
“[The confirmed reinfection] might in fact be a signal that COVID-19 and the virus SARS-CoV-2 is actually here for good, because it is able to establish reinfection, and there will be no such thing as 100% immunity against the virus,” Sridhar said.
But even if it can’t elicit 100% immunity, a vaccine can be effective in “[priming] our immune response” to a coronavirus infection, Sridhar said.
That “priming” appears to have happened in the instance of the reinfection. The 33-year-old man displayed symptoms the first time he contracted COVID-19, but not the second time, perhaps because his immune system had learned how to suppress the virus. That’s “good news,” Sridhar said, since it suggests that even if the immunity from a vaccine can’t prevent reinfection, it might stop symptoms from flaring up a second time around.
“Even if the reinfection is symptomatic, it is hopeful that an earlier encounter with the virus—or an earlier encounter with a vaccine—will prime our immune responses somewhat and help to prevent a very severe reinfection,” Sridhar said. “As long as any of the vaccines currently in development can achieve this, really, mission accomplished.”
Targeted vaccination
The reinfection case raises new questions as it answers others. One big unknown is whether the reinfected patient was contagious the second time around.
Another is how long the immunity from his first infection lasted. Four and a half months elapsed between his two coronavirus infections, but there isn’t enough data yet to know whether his case is representative of the broader population.
The case suggests that vaccine trials should be monitoring for the duration of protection against the coronavirus, which is still unknown, To said.
What’s more, the reinfected man is healthy and relatively young; his experience with reinfection may not translate to more vulnerable population groups like elderly people and immunocompromised people.
“Theoretically, those with poor immune systems may have a higher chance of reinfection, but we don’t have the proof yet,” To said.
If the coronavirus starts to regularly circulate like viruses that cause the common cold and seasonal influenza currently do, future vaccination programs might encourage more vulnerable populations to receive periodic vaccinations. Regardless, as many people as possible should be vaccinated when a vaccine becomes available, Sridhar said.
“This patient could be an outlier … or [reinfection] might actually be quite a common occurrence,” Sridhar said.


fortune--2020-08-25--Protests continue in Wisconsin after police shooting of Jacob Blake

Anger over the shooting of a Black man by police spilled into the streets of Kenosha for a second night Monday, with police again firing tear gas at hundreds of protesters who defied a curfew, threw bottles and shot fireworks at law enforcement guarding the courthouse.
The southeastern Wisconsin city became the nation’s latest flashpoint in a summer of racial unrest after cellphone footage of police shooting Jacob Blake—apparently in the back, as he leaned into his SUV while his three children sat in the vehicle—circulated widely on social media Sunday. The 29-year-old was hospitalized in serious condition.
The shooting drew condemnation from Democratic Gov. Tony Evers, who also called out 125 members of the National Guard on Monday after protesters set cars on fire, smashed windows and clashed with officers in riot gear the previous night.
Police first fired tear gas Monday about 30 minutes after the 8 p.m. curfew took effect to disperse protesters who chanted, “No justice, no peace” as they confronted a line of officers who wore protective gear and stood shoulder-to-shoulder in front of the courthouse entrance. But hundreds of people stuck around, screaming at police and lighting fires, including to a garbage truck near the courthouse.
Tensions had flared anew earlier Monday after a news conference with Kenosha Mayor John Antarmian, originally to be held in a park, was moved inside the city’s public safety building. Hundreds of protesters rushed to the building and a door was snapped off its hinges before police in riot gear pepper-sprayed the crowd, which included a photographer from The Associated Press.
Police in the former auto manufacturing center of 100,000 people midway between Milwaukee and Chicago said they were responding to a call about a domestic dispute when they encountered Blake on Sunday. They did not say whether Blake was armed or why police opened fire, they released no details on the dispute, and they did not immediately disclose the race of the three officers at the scene.
The man who said he made the cellphone video, 22-year-old Raysean White, said he saw Blake scuffling with three officers and heard them yell, “Drop the knife! Drop the knife!” before the gunfire erupted. He said he didn’t see a knife in Blake’s hands.
The governor said he has seen no information to suggest Blake had a knife or other weapon, but that the case is still being investigated by the state Justice Department.
The officers were placed on administrative leave, standard practice in a shooting by police. Authorities released no details about the officers and did not immediately respond to requests for their service records.
Evers was quick to condemn the bloodshed, saying that while not all details were known, “what we know for certain is that he is not the first Black man or person to have been shot or injured or mercilessly killed at the hands of individuals in law enforcement in our state or our country.”
Democratic presidential nominee Joe Biden said the officers “must be held accountable.”
“This morning, the nation wakes up yet again with grief and outrage that yet another Black American is a victim of excessive force,” he said, just over two months before Election Day in a country already roiled by the recent deaths of George Floyd in Minneapolis, Rayshard Brooks in Atlanta and Breonna Taylor in Louisville, Kentucky. “Those shots pierce the soul of our nation.”
Republicans and the police union accused the politicians of rushing to judgment, reflecting the deep partisan divide in Wisconsin, a key presidential battleground state. Wisconsin GOP members also decried the violent protests, echoing the law-and-order theme that President Donald Trump has been using in his reelection campaign.
“As always, the video currently circulating does not capture all the intricacies of a highly dynamic incident,” Pete Deates, president of the Kenosha police union, said in a statement. He called the governor’s statement “wholly irresponsible.”
The shooting happened around 5 p.m. Sunday and was captured from across the street on the video posted online. Kenosha police do not have body cameras but do have body microphones.
In the footage, Blake walks from the sidewalk around the front of his SUV to his driver-side door as officers follow him with their guns pointed and shout at him. As Blake opens the door and leans into the SUV, an officer grabs his shirt from behind and opens fire while Blake has his back turned. Seven shots can be heard, though it isn’t clear how many struck Blake or how many officers fired.
White, who said he made the video, said that before the gunfire, he looked out his window and saw six or seven women shouting at each other on the sidewalk. A few moments later, Blake drove up in his SUV and told his son, who was standing nearby, to get in the vehicle, according to White. White said Blake did not say anything to the women.
White said he left the window for a few minutes, and when he came back, saw three officers wrestling with Blake. One punched Blake in the ribs, and another used a stun gun on him, White said. He said Blake got free and started walking away as officers yelled about a knife.
Civil rights attorney Ben Crump, representing Blake’s family, said Blake was “simply trying to do the right thing by intervening in a domestic incident.”
Police did not immediately confirm either man’s account.
Blake’s partner, Laquisha Booker, told NBC’s Milwaukee affiliate, WTMJ-TV, that the couple’s three children were in the back seat of the SUV when police shot him.
“That man just literally grabbed him by his shirt and looked the other way and was just shooting him. With the kids in the back screaming. Screaming,” Booker said.
Blake’s grandfather, Jacob Blake Sr., was a prominent minister and civil rights leader in the Chicago area who helped organize a march and spoke in support of a comprehensive housing law in Evanston, Illinois, days after the 1968 slaying of the Rev. Martin Luther King Jr.
Rachel Noerdlinger, publicist for the National Action Network, told The Associated Press that the Rev. Al Sharpton spoke Monday to Blake’s father, who called the civil rights leader for his support. Blake’s father will speak at Sharpton’s March on Washington commemoration on Friday, Noerdlinger said.
Karissa Lewis, national field director of Movement for Black Lives, a coalition of more than 150 Black-led organizations that make up the broader Black Lives Matter movement, said the shooting was yet another example of why activists have called for defunding police departments.
“There’s no amount of training or reform that can teach a police officer that it’s wrong to shoot a Black man in the back seven times while his children watch,” Lewis said in a statement first shared with the AP.
Online court records indicate Kenosha County prosecutors charged Blake on July 6 with sexual assault, trespassing and disorderly conduct in connection with domestic abuse. An arrest warrant was issued the following day. The records contain no further details and do not list an attorney for Blake.
It was unclear whether that case had anything to do with the shooting.
Crump, who has also represented the Floyd and Taylor families, said Blake’s family has asked that demonstrations in response to his shooting remain peaceful.
“They don’t believe violence to be the solution,” he said.
For more than 100 years, Kenosha was an auto manufacturing center, but it has now largely been transformed into a bedroom community for Milwaukee and Chicago. The city is about 67% white, 11.5% Black and 17.6% Hispanic, according to 2019 Census data. Both the mayor and police chief are white. About 17% of the population lives in poverty.


fortune--2020-08-25--Can the Dow’s Big Tech makeover finally push the blue chip index above 30,000?

This is the web version of the Bull Sheet, Fortune’s no-BS daily newsletter on the markets. Sign up to receive it in your inbox here.
Good morning. Stocks and futures are again climbing. There’s finally some good news on the U.S.-China trade front, a huge sigh of relief for investors. And the Dow got a big tech-friendly makeover late yesterday as the bluechip continues its torrid August surge, up nearly 8% this month.
Here’s what’s moving markets.
Markets update
Asia
The major Asia indexes are mixed, with Japan’s Nikkei leading the way, up 1.35% .
are mixed, with Japan’s leading the way, up . Don’t write off the Phase 1 trade deal just yet. Top U.S. and Chinese officials pronounced they’re still committed to the trade pact following a phone call yesterday, the first dialogue between the two trading powers since May. Investors cheered the news.
just yet. Top U.S. and Chinese officials pronounced they’re still committed to the trade pact following a phone call yesterday, the first dialogue between the two trading powers since May. Investors cheered the news. TikTok parent ByteDance is suing the Trump Administration, hoping to block a pending ban on the social media network. In the filing, TikTok claims that nearly one-third of Americans use the platform. (Maybe it’s time for Bull Sheet to join up, and see what all the fuss is about.)
Europe
The European bourses were in the green again this morning, with France and Milan leading the way, up 1.1% in early trade. Both Italy and France reported a slight improvement in COVID cases in the past 24 hours. Still, Germany doesn’t want its citizens going to Paris or the French Riviera any time soon.
were in the green again this morning, with leading the way, up in early trade. Both Italy and France reported a slight improvement in COVID cases in the past 24 hours. Still, doesn’t want its citizens going to Paris or the French Riviera any time soon. Germany revised upwards its Q2 GDP this morning. At a q-o-q decline of 9.7% it’s still a bad number, but an improvement over the initial reading. Stocks were up on the news.
this morning. At a q-o-q decline of it’s still a bad number, but an improvement over the initial reading. Stocks were up on the news. Slowly but surely, France is clawing back delinquent tax payments from major tech companies. Yesterday, Facebook confirmed it was paying €106 million ($125.5 million) to settle its 2018 tax dispute with French tax authorities.
U.S.
The U.S. futures are climbing this morning, pointing to further record-setting gains for the Nasdaq and S&P 500. The Dow too closed above 28,000. (We may need to revive that Dow 30K wager I last mentioned back in January.)
are climbing this morning, pointing to further record-setting gains for the Nasdaq and S&P 500. The Dow too closed above (We may need to revive that Dow 30K wager I last mentioned back in January.) After the Dow’s stellar close yesterday, S&P Dow Jones Indices announced a shakeup of the bluechip index . In are Salesforce, Amgen, and Honeywell International. Out are ExxonMobil, Pfizer, and aerospace company Raytheon Technologies.
. In are Salesforce, Amgen, and Honeywell International. Out are ExxonMobil, Pfizer, and aerospace company Raytheon Technologies. GOP delegates formally nominated Donald Trump on Monday for a second term. In his speech to follow, the president pointed to the recent stock market bull run as one of his principal economic achievements.
Elsewhere
Gold is up slightly, but it continues to trade in a range below $1,950/ounce .
is up slightly, but it continues to trade in a range below . The dollar is off slightly.
is off slightly. Crude is flat, with Brent trading above $45/barrel.
***
The e-word
It’s official. “The economy is on the ballot,” Vice President Mike Pence declared yesterday as the Republicans laid out their messaging for the run up to Election Day.
In American politics, the economy is always on the ballot. But these are odd times. Campaign experts might be justified in telling the candidate to gloss over the economy-talk with the country in recession and unemployment skyrocketing. (There are real concerns that this economic destruction and the job losses we’re seeing are of the permanent variety).
A growing number of economists fear things could quickly deteriorate further if Washington continues to dither on a second coronavirus bailout package. As Mark Zandi, chief economist at Moody’s Analytics, recently told Fortune, Washington has some unfinished business to attend to.
“We fell into a deep dark hole early on, we have dug ourselves halfway out roughly, and that’s where we’ll stay until we’re on the other side of this pandemic,” Zandi says.
“The risk,” he adds “is we slide back into the hole if we don’t get continued, additional support from policymakers.”
Zandi is tapping into a bigger concern. The further you get from Wall Street, the deeper the dismay about the state of the economy. Americans’ satisfaction with the way things are going hit a nine-year low, Gallup recently reported.
Amazingly, in February, Americans were feeling incredibly bullish. The level of optimism hit a 15-year high then. The pandemic has laid waste to that outlook.
A lot can happen on the campaign trail, of course—even the virtual campaign trail. If 2020 has taught us anything, it’s that things can change dramatically, in the blink of an eye.
Usually, campaign pros talk of the “October surprise” that can swing an election. But this year, an October surprise will likely be too late for a lot of voters.
Zandi says the U.S. economy needs a September accord more than an October surprise.
“By the second, third week of September, if Congress hasn’t gotten [a stimulus package] together,” Zandi says, “I suspect very strongly we’re going to get a negative September job number.”
Mark your calendars.
***
Have a nice day, everyone. I’ll see you here tomorrow.
Bernhard Warner
@BernhardWarner
Bernhard.Warner@Fortune.com
As always, you can write to bullsheet@fortune.com or reply to this email with suggestions and feedback.
Today's reads
An Apple a day. Apple shares yesterday closed at $503, yet another record. Here's why analysts, including some big Wall Street names, think there's still plenty of momentum in this trade to keep soaring.
That other PPE. No, we're not talking about personal protective equipment. Fortune's Jonathan Vanian breaks down tech company's profit-per-employee, or PPE, a key measure to value the health and stability of Big Tech firms. Facebook tops the list. Uber brings up the rear. The names in the middle might surprise you.
Some of these stories require a subscription to access. There is a discount offer for our loyal readers if you use this link to sign up. Thank you for supporting our journalism.
Market candy
Quote of the day
"This provides every opportunity of hyping a candidate and making it appear that one vaccine is better than another vaccine, when actually we don’t have the data to reach those conclusions."
That's Wayne Koff, the chief executive of the Human Vaccines Project, a nonprofit working to speed the development of vaccines for numerous contagious diseases. Koff is part of a growing community of scientists baffled at Wall Street's penchant for crowning winners in the COVID vaccine race. It's far too early, they tell Fortune's Jeremy Kahn. Here's why. Sorry Moderna and Novavax bulls.


fortune--2020-08-25--The U.S.-China trade deal is moving ahead—in spite of everything

The U.S. and China are finally talking.
On Tuesday, trade negotiators from the U.S. and China spoke over the phone to review progress on phase I of the trade deal, according to government officials in both countries. The disclosures eased concerns that the worsening state of U.S.-China relations would interfere with the agreed-upon truce.
Last week, U.S. President Donald Trump said he delayed the talks, which were scheduled for Aug. 15, over his broader frustrations with China and publicly questioned whether the two sides would continue to engage in trade negotiations at all.
“We’ll see what happens,” Trump said last week in response to a question on whether the U.S. would pull out of the trade deal.
The pact, signed in January, aimed to bring to an end the U.S.-China trade war that began in 2018. In so-called phase I of the deal, China agreed to purchase record levels of American products in 2020 and 2021 in exchange for the U.S. cutting trade war tariffs. But halfway through 2020, the pace of China’s purchases is behind where it should be, which fueled speculation that the agreement was at risk of falling apart.
Despite the shortcoming, both sides seemed determined on Tuesday to assure the public—and the markets—that phase 1 is on track.
“Both sides see progress and are committed to taking the steps necessary to ensure the success of the agreement,” the Office of the United States Trade Representative said in a statement.
The USTR’s brief statement also confirmed what the parties discussed: China’s purchase commitments related to the deal, steps the Chinese government is taking to protect American intellectual property in China, and how to create a freer business environment for American multinationals in China.
Likewise, China’s commerce ministry said the two sides held a “constructive dialogue” and agreed to “create conditions” to implement the trade deal.
The Tuesday talks marked a rare moment of cooperation between the two powers, whose deteriorating relations over the pandemic, Hong Kong, and human rights, at times, have appeared to put the trade pact at risk.
“I don’t want to deal with them right now,” Trump said last week when the talks with China were delayed. “What China did to the world [with COVID-19] was unthinkable,” he said.
What’s more, China’s progress toward its phase 1 pledges appeared to be off-track.
The phase I trade deal called on China to ramp up purchases of American goods by a combined $200 billion in 2020 and 2021 compared to pre-trade war levels in 2017. Through the first half of 2020, however, China was far behind on the commitments, according to the Peterson Institute for International Economics’ trade deal tracker.
PIIE said that through June, China had imported $40.2 billion of American goods, less than half of what it would need to meet its requirements. China’s purchase commitments have lagged across industries, from agricultural products to manufactured goods.
China is furthest behind on its commitment to increase American energy imports. Through June, China had only imported 5% of the $25.3 billion worth of energy products it agreed to buy from the U.S. in 2020.
There are some signs now that China is attempting to make up the deficit.
U.S. oil exporters say they are readying to send a record level of crude exports to China in September, and U.S. agricultural officials say that agricultural exports to China have been on the rise in the last few weeks.
Prior to the talks on Tuesday, Chinese trade deal negotiators had reportedly vowed to bring up another contentious issue: Trump’s recent decision to ban Chinese apps TikTok and WeChat in the U.S. Neither side said whether the apps were discussed on Tuesday. On Monday, Chinese tech giant Bytedance, which owns TikTok, announced that it was suing the U.S. government over the ban.
Even if they were narrowly focused, Tuesday’s talks represented one of the first friendly encounters between the U.S. and China in months and, shortly after the news broke, markets worldwide signaled relief.
“I think both sides recognize that [the trade deal] is really the glue that is holding the relationship together,” Greg Gilligan, chairman of the American Chamber of Commerce in Beijing, recently told Bloomberg. “There’s not an awful lot of other channels of communication that are working well.”


fortune--2020-08-25--Top CEOs are more confident about growth now than they were before the pandemic

‘ There ’ s going to be a selloff in the stock market ’ if Congress doesn ’ t pass @ @

This is the web version of CEO Daily. To get it delivered to your inbox, sign up here.
Good morning.
Here’s your bit of data for the day: the ratio of U.S. debt to GDP is on track to reach a whopping 136% by the end of this quarter. That’s a result of the massive federal spending response to the pandemic, and, for comparison purposes, is well beyond the 119% reached after the Second World War.
That extraordinary spending surge is likely one factor behind the stock market’s rise. And it may also be giving a boost to business confidence. KPMG gave CEO Daily an advance peek at a survey of 100 large-company U.S. CEOs coming out later today, which had some surprising results. Three stood out for me:
—60% of the CEOs said they are “more confident” in the growth trajectories of their companies over the next three years than they were at the beginning of the year.
—43% said they were “more confident” in the growth of the U.S. economy over the next three years than they were at the beginning of the year.
—And 37% said they were “more confident” in the growth of the global economy over the next three years.
You read that correctly: those CEOs have more confidence today than they did before the pandemic. How can that be? I asked KPMG U.S. CEO Paul Knopp that question yesterday. He noted first off that the CEOs surveyed were mostly the heads of large companies. The survey doesn’t cover the thousands of restaurants, small retail establishments, and others whose businesses have been permanently crippled by the crisis. But he also said it reflects the fact that many companies have seen their digital transformations “accelerated by months and in some cases years,” and thus are “more optimistic about their digital innovation.”
“There is no doubt that there has been tremendous economic dislocation,” Knopp said. “But many companies had earnings momentum going into the crisis” and many feel they “are building a more resilient business, and digitally transforming the business.”
More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
TOP NEWS
Tick tock
As the White House's deadline creeps closer, some big investors in TikTok parent ByteDance (specifically, General Atlantic and Sequoia Capital) reportedly want to see the video app's U.S. operations sold to Oracle rather than Microsoft. That's because they want a piece of the action, and Microsoft has not yet invited other U.S. investors to join its bid. Wall Street Journal
German GDP
The German economy contracted by 9.7% in Q2—a record shrinkage much worse than anything during the financial crisis a decade ago. Public sector consumption grew 1.5%, though, due to coronavirus rescue programs. But otherwise, as VP Bank economist Thomas Gitzel put it, "everything was in free fall." Reuters
India vs Huawei
India is reportedly phasing out Huawei equipment (and that from other Chinese firms) in its telecoms networks, without any formal ban. A telecoms industry executive told the FT: "It's open now that the government is not going to allow Chinese equipment. There is now clarity…It's really game over." Financial Times
Huawei chips
U.S. efforts to starve Huawei of chips could end up having a major impact on European telecoms networks, many of which have long employed Huawei equipment. By some estimates, Huawei has ongoing contracts in every EU country except for Slovakia. Politico
AROUND THE WATER COOLER
Profits per employee
Financial tech firm Tipalti crunched numbers from the Fortune 500 list to figure out how much profit tech companies are making per employee. The results put Facebook, Apple, Alphabet and Microsoft at the top. Facebook's profit per employee is $411,308 and Apple's $403,328. Uber, meanwhile, is losing a whopping $316,208 per employee. Fortune
Mask up
A coronavirus-carrying woman visited a Starbucks in South Korea this month and infected 27 customers, but none of the outlet's four mask-wearing employees. Now the incident is being closely studied. Infectious diseases expert Ma Sang Hyuk: "Masks may not provide 100% protection, but there's nothing out there that's as effective." Fortune
Fauci caution
A coronavirus vaccine should only be used when it has been proven safe and effective, the U.S.'s top virus expert has warned. Anthony Fauci said rushing the release of a candidate vaccine, as President Trump is reportedly considering doing, could harm the development of other vaccines. Reuters
Vaccine hype
Wall Street analysts are not great at interpreting the early results coming from coronavirus vaccine trials—unsurprisingly, because in many cases even immunologists can't yet reach conclusions based on those results. John Mascola, head of vaccine research at the National Institute of Allergies and Infectious Diseases: "There’s really no substitute for a Phase III trial." Fortune
This edition of CEO Daily was edited by David Meyer.


fortune--2020-08-25--A woman spread COVID to 27 customers at a Starbucks. Its mask-wearing employees escaped infection

After a woman with the coronavirus visited a Starbucks cafe north of Seoul this month, more than two dozen patrons tested positive days later. But the four face mask-wearing employees escaped infection.
The Aug. 8 outbreak in the South Korean city of Paju is another example of how rapidly the SARS-CoV-2 virus can spread in confined, indoor spaces — as well as ways to minimize transmission. With health authorities around the world still debating the evidence around face masks, the 27-person cluster linked to the air-conditioned coffee outlet adds more support for their mandatory use to help limit the spread of the COVID-19-causing virus.
“This speaks volumes about the role masks can play,” said Ma Sang Hyuk, a pediatric infectious diseases physician at Changwon Fatima Hospital in South Korea. “Masks may not provide 100% protection, but there’s nothing out there that’s as effective.”
Guidance on face masks is being issued from Australia to Venezuela to help stem the pandemic, which has infected more than 23 million people and killed at least 810,000 worldwide. Face coverings will become mandatory in New Zealand for residents using public transport and inside ride-sharing vehicles, Prime Minister Jacinda Ardern said Monday. Last week, the World Health Organization issued advice on their use in children.
But resistance to mask-wearing remains in some countries like the U.S., where some people object to being compelled to wear masks when entering shops or restaurants. Misinformation over their effectiveness and safety has also spread.
Officials assume that most patrons didn’t consistently wear masks as they were drinking and eating while in the Starbucks Corp. outlet in South Korea, according to Gang Young-do, a spokesperson for the Paju government. A ceiling-mounted air-conditioning was helping to cool the second-floor outlet, he said.
“The virus may spread where people can’t wear masks while eating or drinking tea, as witnessed at the Starbucks in Paju,” Jung Eun-kyeong, head of the Korea Centers for Disease Control & Prevention, told reporters in Seoul on Sunday.
The Starbucks case is one of “the most important opportunities to study risk factors among a more or less controlled cohort of people,” said Arnold Bosman, director at Transmissible BV, a Netherlands-based developer of training materials for outbreak control. “This Starbucks event will be a very valuable training exercise for future generations of epidemiologists.”
The Starbucks infections later led to about three dozen more cases outside the coffee shop as of Aug. 24. They add to the more than 3,000 this month that have prompted the South Korean government to consider imposing the highest level of physical distancing rules — a blow to an economy that’s managed to avert a steep recession so far.
The Seoul metropolitan area has emerged as a virus hot spot, and local government authorities made it mandatory this week for all citizens to wear masks both indoors and outdoors.


fortune--2020-08-27--Elon Musk’s brain company plans a big reveal on Friday. Here’s what we already know

We need a COVID vaccine .
We also need to figure out how to get it to people

Elon Musk has made plenty of claims about Neuralink, his brain-machine interface company. On Twitter and on podcasts, the billionaire has touted abilities that sound nothing short of miraculous: easing depression, helping with obsessive compulsive disorder and treating traumatic brain injuries.
Now, Neuralink, whose work has largely been shrouded in secrecy, is set to give a public “progress update” on Friday.
In the run-up to the big reveal, Musk has allowed some glimpses at the company’s technology. An early look came a year ago, when the Neuralink team showed off tiny electrodes on thin, flexible probes they said would be able to penetrate brain tissue with minimal damage, and ultimately help restore brain function to people with traumatic brain injuries. The team has already been placing them in rats and primates.
Will the devices actually be able to achieve the breakthroughs Musk says they can? Here’s a rundown of what we know so far about Musk’s startup—the most recent claims, the technology, and what neuroscientists say is actually possible.
Claim: Neuralink will soon be able to implant its technology in humans
On May 7, Musk appeared on the popular podcast, the Joe Rogan Experience, and made a distinctive claim about Neuralink: The startup would “be able to implant a neural link in less than a year in a person, I think.”
The prediction is not actually as groundbreaking as it might sound. Musk was describing a procedure that happens fairly routinely to treat conditions such as epilepsy and Parkinson’s, despite potentially fatal risks such as brain hemorrhages.
Justin Sanchez, who helped fund research done by Neuralink scientists when he ran the biological technologies office at the Defense Advanced Research Projects Agency, estimates that about 200,000 people globally have some sort of neurotechnology implanted in their brain. In fact, the technology is so well developed at this point that the Battelle Memorial Institute, where Sanchez is a fellow, has developed a neurotechnology-based non-implanted device aimed at nothing more grandiose than helping people improve their golf swings.
The other important element of Musk’s statement was that Neuralink is on track for human trials by next year. To test so quickly in humans, the company would need to get an exemption from the normal multi-year regulatory process from the Food and Drug Administration. That may be possible—other brain implants have received exemptions. But Neuralink’s device could face additional challenges.
Currently, the company uses flexible polymers, which are unlikely to last a decade in the human body—the minimum timeframe the FDA likes to see in medical devices that can’t easily be removed. “If you want to test whether something can last 10 years, you really have to wait 10 years,” says Matt Angle, chief executive of Paradromics Inc., an Austin, Texas-based brain-machine interface company.
A report in health news site Stat News this week detailed internal tensions at Neuralink, citing former employees who said the company culture could be chaotic and that it quickly cycled through scientific talent. According to two anonymous former employees, it had explored possibly by passing the U.S. regulatory process by pursuing human trials in China or Russia.
Claim: Neuralink devices will be able to treat addiction and depression
On July 10, Musk took to Twitter with another notable statement. A Twitter user asked Musk if Neuralink could be used to retrain the part of the brain that causes addiction and depression. Musk replied, “For sure. This is both great & terrifying.”
Neuroscientists agree that placing electrodes in the brain could help mitigate those conditions. In fact, researchers beyond Neuralink are working on it now, including Alik Widge, a psychiatrist and biomedical engineer at the University of Minnesota. The treatment involves applying electrodes to a spot in the brain called the internal capsule, and works by stimulating connections to the prefrontal cortex to improve cognitive functions such as perception and judgment. About 200 patients worldwide have tried the technique for depression, Widge said.
In several countries opioid addicts have had electrodes implanted into the areas of the brain that control addiction. That includes the U.S., where a West Virginia man underwent the procedure late last year at WVU Rockefeller Neuroscience Institute. He has abstained from opioids since, a spokeswoman said. A second opioid patient underwent the same surgery earlier this month.
While there are hurdles to wide adoption, there is no reason Neuralink couldn’t push into these areas in the future. In a 2018 review of studies of deep brain stimulation and its effects on depression, scientists said the results “showed promise” but the technique remained experimental. “The psychiatrists I talk with say that they want to see much stronger efficacy data,” Widge said.
Claim: The startup will be able to mitigate conditions like obsessive compulsive disorder
On July 18, a Twitter user asked if Neuralink could help patients with obsessive-compulsive disorder and if it could stimulate the release of oxytocin, serotonin and other chemicals. Musk replied simply, “Yes.”
Programs around the country already do this, so it’s plausible that Neuralink could one day achieve the same, experts said. However, scientists’ grasp on exactly how the technology works is still evolving. “We just have the understanding of bits and pieces,” said Rachel Davis, director of OCD and neuromodulation programs at the University of Colorado Anschutz Medical Campus, which is working on the technology.
Many scientists see big potential here, mainly because existing drugs often fall short when it comes to OCD and related conditions. “The next big wave for these stimulation technologies is going to be mood,” said Dave Rosa, CEO of NeuroOne Medical Technologies Corp.
Claim: Neuralink could “solve” brain injuries, and treat conditions like autism and ALS
On July 18, responding to Musk’s call for job applicants who wanted to help “solve” brain and spinal injuries, a Twitter user asked if Neuralink could also help disabled people living with injuries, autism and amyotrophic lateral sclerosis, or ALS. Musk replied it had that potential.
Deep brain stimulation, or treatment via electrodes implanted into the brain, is already used for traumatic brain injuries. Many patients have already undergone the procedure with promising results. Encouraging signs are also emerging that such technologies could help address autism. Implanting electrodes in the brains of autistic people has helped improve symptoms in many cases.
Treating ALS, however, may be more difficult. Vikash Gilja, a former Neuralink employee who now teaches at the University of California, San Diego and runs a translational neural engineering research lab there, says that would be a tough disease to combat with brain-machine interfaces, because it affects such broad areas of the brain. “We’re more likely to see pharmaceutical treatments for that,” Gilja said.
Claim: The company will be able to stream music directly into people’s brains
On July 19, a Twitter user asked if someone with a Neuralink implant would be able to stream music “directly from our chips,” calling it a “great feature.” Again, Musk replied with a simple “Yes.”
While it sounds far-fetched, neuroscientists say this feature wouldn’t differ markedly from existing technology. “That’s very technically feasible,” says Angle of Paradromics. “The auditory pathway is very well mapped.”
Some in the scientific community have watched the company’s promises warily, fearing that they might prompt afflicted people to delay necessary procedures. “One issue that has come up time and time again is the ethics around creating false hope” around unknown timelines, said Gilja, the UCSD professor and former Neuralink employee. “Creating hope in a patient population can be a good thing, but it can be a negative if a patient is trying to determine whether to get treated.” They may believe a better solution lies in the near future, when in fact it could be years out.
Musk doesn’t claim that Neuralink can do everything. Over the years, he has ignored questions ranging from the creepy (such as whether it will facilitate head transplants) to the quotidian (such as whether it will help with balance). “What will Neuralink do for the culinary arts?” asked one tweeter. Musk’s answer: silence.


fortune--2020-08-27--Why CEOs must take action on democracy and election integrity—and how they can do it

Let’s say you’re a CEO and you care about the health of our democracy.
And well you should: Participatory government is the bedrock on which our organizations have been built. It’s the source of the freedoms we enjoy. And it remains, in Abraham Lincoln’s words, our “last best hope” for advancing the ideals—equality, fairness, and opportunity for all—of a good and just society.
To that end, you know that it’s imperative that our upcoming federal election on Nov. 3 be free, fair, and accessible for all.
But if you’re like most top executives, you haven’t done anything about it. Perhaps this seems out of your lane as a business leader. Maybe you’re concerned that investors, employees, and customers may hold different views and push back, causing challenges for your organization.
We understand. We’re CEOs, and we’ve grappled with these same issues.
We’ve come to the conclusion, though, that business leaders have an important role to play—and should lean in. We have influence that we can use to advance our democratic ideals in this election and beyond.
We’re also military veterans. Each of us has served because of our conviction in America’s democratic ideals, and some of our brothers and sisters gave their lives in service of those ideals. We believe that it’s every American’s responsibility to do what they can to affirm, safeguard, and advance the health of our democracy.
But how can CEOs take a stand and be on the right side of election integrity and participatory democracy, while not running too far afoul of key stakeholders and breaching responsibilities to their organizations?
Here are four things that CEOs can do.
Support safe and secure elections
If the business community is silent while elected officials do not, in good faith, work to ensure a free and fair election, then those same officials will interpret that silence as a green light from business. Every CEO should issue a statement demanding election integrity, with the following nonpartisan parameters: Every eligible voter must be allowed to safely and comfortably vote, and every single vote must be counted in a transparent and effective way.
CEOs need not call out individuals or political parties or take potshots at leaders on either side of the aisle. Election integrity is not liberal or conservative: It’s the foundational building block of the democracy we all share. CEOs can anchor their statements in the values they believe in and the basic democratic principles with which the vast majority of Americans agree. Here’s how we—alongside other veteran leaders—recently spoke up on this issue. CEOs should make these statements public-facing and should send them to their elected representatives so that their position is clear.
Don’t fund democratic malfeasance
While all CEOs should consider the practice of corporate political contributions and its role in corroding the integrity of our democracy, CEOs should own the fact that any corporate contribution to elected officials who neglect to do their part to ensure election integrity is an investment in the degradation of our democracy—and should desist.
Support employees
CEOs can support employees by encouraging them to vote, by encouraging them to make a plan early (start now!), and by providing basic resources to aid them in developing those plans. (For useful resources, consider Civic Alliance, a nonpartisan effort, or this cross-partisan one, Fix the System.) CEOs should also support their workers in following through on those plans.
To that end, several companies are setting aside Election Day as a paid holiday to ensure that their organization safeguards rather than impedes employees’ ability to vote. At companies that can’t offer Election Day as a holiday, or where many or most employees vote by mail, CEOs might consider taking this idea a step further and offering employees a Democracy Day: a day for each employee to engage in democratic citizenship in a way and at a time of each employee’s choosing. For more on how to support your employees, you can consult the nonpartisan group Time to Vote.
Finally, CEOs might encourage able employees to consider volunteering as nonpartisan election officers at polling stations, which are currently tracking to be understaffed.
Invest in democracy
To advance a more functional and durable democracy, CEOs should consider contributions to organizations that work to: 1) advance voter access and counter our nation’s shameful history of voter suppression; 2) foster civic education to generate a broader appreciation for the common democratic rights and virtues that bind us as a nation; or 3) support civilian national service, which brings Americans of different backgrounds together in common cause and can help to weave our nation’s frayed social fabric together.
By grounding leadership on this subject in principle and an affirmation of fundamental democratic rights, CEOs can ensure that they are leading on this issue, while continuing to be good stewards of their organizations. By speaking up and taking action, CEOs can let elected officials know that the business community will not stand by as democratic rights are violated. During a time of distrust in institutions, CEOs can let the American public know that we acknowledge our civic duty and will do our part.
Since our nation’s founding, so many courageous Americans have risked so much on buses, bridges, and battlefields so that we might enjoy our democratic freedoms, and so that we might continue the work of making our union more perfect. Now, we have the opportunity to do our part.
Greg Behrman is the founder and CEO of NationSwell. Mary Beth Bruggeman is president of The Mission Continues. Nate Fick is general manager (security) of Elastic and the former CEO of Endgame. Wes Moore is CEO of the Robin Hood Foundation. Jake Wood is the cofounder and CEO of Team Rubicon.


fortune--2020-08-27--3 reasons why Walmart is chasing TikTok

3 reasons why Walmart is chasing TikTok

Walmart shocked nearly everyone on Wednesday night when it said it had joined forces with Microsoft to try to buy social media sensation TikTok.
After all, what would the world’s biggest retailer want with a service known for lip-synch videos and dancing?
“I was kind of surprised,” said Brian Yarbrough, analyst at investment firm Edward Jones. “I never thought Walmart would be one of the bidders. But when you sit back and think about it, it does seem to make sense.”
That’s debatable, but what’s clear is that the social media app is under pressure to sell after President Donald Trump, citing national security concerns, threatened to shutter the app in the U.S. if its Chinese owner, ByteDance, failed to sell its U.S. operations by Sept. 15.
Amid the growing pressure, TikTok CEO Kevin Mayer said on Wednesday that he would resign after only three months on the job. In his email to employees, Mayer said TikTok “expected to reach a resolution very soon” to its buyout odyssey. Dan Ives, analyst at Wedbush Securities, said he expects the price will be $35 billion to $40 billion.
Here are three reasons why Walmart would want to buy TikTok.
Bolster its digital chops
Walmart has been trying to increase its digital footprint for several years, but its strategy of scooping up online businesses has been muddled.
In 2018, Walmart paid $16 billion for a majority stake in Indian online retailer Flipkart. Previously, in 2016, Walmart bought online retailer Jet.com for $3.3 billion in an effort to gain ground on its fast-growing rival Amazon (it decided to close the site earlier this year). Several years earlier, in 2010, Walmart paid $100 million for streaming entertainment provider Vudu. But more recently, Walmart had second thoughts and, last month, sold that business to Fandango.
“Their digital strategy outside of Walmart.com has been all over the map,” Yarbrough said.
Buying TikTok would immediately help Walmart become more of a major digital service, analysts at investment banking firm Bard wrote on Thursday. Walmart’s “transformation under CEO Doug McMillon—from a stodgy retailer to a more digital consumer platform—has been key to the stock’s gains in recent years,” the analyst note said. “Today’s news simply furthers that narrative.”
Boost ads and online sales
TikTok recently said more than 100 million Americans use TikTok monthly. That’s 100 million more people who would be exposed to Walmart’s products and those of third-party sellers with which it works.
Walmart’s online business, which generated $24.5 billion last year, accounted for about 5% of its overall sales. Joe Feldman, analyst at investment banking firm Telsey Advisory Group, said Walmart’s online revenue is expected to increase to $35 billion this year.
TikTok’s owner is already pushing for more e-commerce on TikTok and Douyin, the Chinese version of TikTok. Walmart could continue that effort in addition to marketing its products on the service.
With the help of tech giant Microsoft, Walmart could also become a major force in online ad sales by selling ad inventory on TikTok. Walmart already sells ads on Walmart.com.
“When you think about digital ads, Facebook and Google dominate it,” Yarbrough said. “That’s a very high-margin business, much higher than retail and e-commerce.”
Better understand young shoppers
It’s unclear how much buying power TikTokers, many of whom are teenagers, have. But regardless, the data they would provide Walmart about their online habits may be invaluable.
Feldman said TikTok has repeatedly proved one thing: It’s able to get its users to continuously use its app. That’s because the service, like most social media apps, slices and dices user data to better understand what users want.
Walmart may be able to use TikTok’s strength in this area to understand how to keep shoppers on its app. And if it’s able to capture the attention of young people, it could transform them into lifelong shoppers.
“Say they get TikTok and get a better understanding of what 13-year-olds like. They can then put the right products in their stores and make sure Mom sees it,” he said. “They’re really scratching the surface on data mining.”
Walmart could also use data from TikTok to send users personalized emails and more accurately present online users with products they may be interested in. Using that strategy, it could ultimately catch the attention of young influencers on TikTok, who could then promote the products to their millions of followers.