fortune--2020-06-10--SoftBank-backed Arm says it ousted its China CEO. Arm China says it hasn’t

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This is messy, even for SoftBank.
The ouster of a CEO is usually a behind-closed-doors affair, even if the writing’s on the wall as with WeWork’s Adam Neumann. But that’s not the case with SoftBank-backed semiconductor company Arm. The British company, which is SoftBank’s biggest bet, is very publicly clashing with its Chinese venture over whether the lead of operations there, Allen Wu, is out.
The key semiconductor player said on Wednesday that it had installed two interim co-CEOs to replace Wu as chairman and CEO after looking into a whistleblower complaint.
While that usually is the end of it, Arm China came back with an uh, nope—saying Wu was still in charge as Arm China is an independent entity legally domiciled in China.
Arm returned with more ammunition. In a statement alongside Hopu Investments (SoftBank’s partner in Arm China), Arm hinted at much more behind the story of removing Wu: “Evidence received from multiple sources found serious irregularities, including failing to disclose conflicts of interest and violations of the employee handbook.”
This all comes after Arm sold a 51% stake of Arm China to a consortium of investors including state-backed entities such as the Silk Road Fund in 2018. Arm itself meanwhile has struggled to live up to SoftBank founder Masayoshi Son’s dreams for the chip designer, which was acquired for $32 billion in 2016. Read more.
Oh right, SoftBank Vision Fund is also preparing to cut about 15% of its staff after reporting record losses in the last fiscal year, per Bloomberg.
Private equity, hospitals, and the coronavirus: Hospitals and physicians are in an especially tenuous position right now. The coronavirus has flattened revenues from lucrative elective surgeries as caretakers focus on Covid-19, leading to layoffs and pay cuts. Now the microscope is focused even more on private equity-backed healthcare companies.
In the latest round of criticism, four Democratic members of Congress are accusing Leonard Green & Partners of taking some $658 million in fees and dividends from its Los Angeles-based hospital chain, Prospect Medical holdings. The quartet say that Leonard Green & Partners extracted those payouts even as Prospect’s finances deteriorated, with operating income falling from $142 million to $17 million in 2018.
VENTURE DEALS
- NS8, a Las Vegas-based provider of fraud prevention tools within e-commerce marketplaces, raised $123 million in funding. Lightspeed Venture Partners led the round and was joined by investors including AXA Venture Partners. Read more.
- DNAnexus, a Mountain View, Calif.-based provider DNA data sets for collaboration on research projects, raised $100 million in Series G funding. Perceptive Advisors and Northpond Ventures co-led the round and was joined by investors including GV, Foresite Capital, TPG Capital, and First Round Capital. Read more.
- Cue Health, a San Diego-based healthcare technology company, raised $100 million in funding. Investors included Decheng Capital, Foresite Capital, Johnson & Johnson Innovation, and ACME Capital.
- Xiaolinggou, a electric car rental unit of Chinese automaker Geely, raised nearly 688 million ($97 million) in Series A funding. Investors included state-owned Ningbo Yincheng Group and an entity called Hangzhou Puzhao Technology. Read more.
- Autobahn Therapeutics, a San Diego, Calif.-based developer of regenerative medicines for CNS disorders, raised $76 million in Series B funding. Arch Venture Partners and Cowen Healthcare Investments led the round and were joined by investors including BVF Partners, Biogen, Bristol Myers Squibb, Pfizer Ventures, Invus, Section 32, Samsara BioCapital and Alexandria Venture Investments.
- jSonar, a Boston, Mass.-based security platform, raised $50 million in funding from Goldman Sachs.
- Lycia Therapeutics, a San Francisco, Calif.-based biotech tackling protein degradation, raised $50 million in funding. Versant Ventures was the investor.
- CereVasc, a Boston, Mass.-based company conducting noninvasive treatments for hydrocephalus, raised $43.9 million in a Series A funding. Perceptive Advisors and Aton Partners co-led the round.
- Domino Data Lab, a San Francisco, Calif.-based data science management platform, raised $43 million in funding. Highland Capital Partners led the round, and was joined by investors including Dell Technologies Capital, Sequoia Capital, and Coatue Management.
- M1 Finance, a Chicago-based money management platform, raised $33 million in Series B funding. Left Lane Capital led the round and was joined by investors including Jump Capital, and Clocktower Technology Ventures.
- Yugabyte, a Sunnyvale, Calif.-based SQL databases company, raised $30 million in Series B funding. 8VC led the round and was joined by investors including Wipro Ventures, Lightspeed Venture Partners, and Dell Technologies Capital.
- Squire Technologies, a New York-based barbershop management and point of sale software maker, raised $27 million in Series B funding. CRV led the round, and was joined by investors including Tiger Global, San Francisco 49ers organization, Charles Phillips (former CEO and Chairman of Infor), and existing investors Trinity Ventures, 645 Ventures, Comcast Ventures’ Catalyst Fund and Y Combinator.
- RapidSOS, a New York-based emergency response company, raised $21 million in funding. Transformation Capital led the round and was joined by investors including C5 Capital and Laerdal Million Lives Fund.
- Alpha Health, a South San Francisco-based automation company for healthcare, raised $20 million in Series A funding. Andreessen Horowitz led the round, and was joined by investors including Costanoa Ventures.
- Noodle Partners, which helps campuses build online programs, raised $16 million in Series B funding. ValueAct Spring Fund led the round and was joined by investors including Lumina Foundation.
- C2i Genomics, a New York-based company focused on the tumor pattern recognition approach for liquid biopsy, raised $12 million in Series A funding. Casdin Capital led the round and was joined by investors including NFX Capital, and The Mark Foundation for Cancer Research.
- Viaduct, a San Francisco-based machine learning startup for vehicles, raised $11 million in Series A funding. Innovation Endeavors led the round and was joined by investors including Exor Seeds and Box Group.
- Journera, a Chicago-based startup seeking to create seamless travel, raised $11.6 million in Series B funding. Andreessen Horowitz and B Capital led the round, and were joined by investors including Pritzker Group Venture Capital and The Boston Consulting Group.
- Boom.tv, a Menlo Park, Calif.-based esports platform, raised $10 million in Series A funding. Bitkraft Esports Venture led the round, and was joined by investors including Crest Capital, PTW, Everblue, ImaginationVC, MTG Media Group, WTI, and H. Barton Asset Management. Read more.
- EnsoData, a Madison, Wis.-based company analyzing health data from wearables and medical devices, raised $9 million in Series A funding. Venture Investors and Zetta Venture Partners led the round.
- MPOWER Financing, a Washington, D.C.-based fintech platform for educational loans to international and DACA students, raised $9 million in funding. Investors include Breega, Potencia Ventures, AI8, Cometa, Zephyr-Peacock, 1776, Fresco Capital, 1994 LLC, and Goal Structured Solutions.
- Pando, a San Francisco-based company focused on managing career risk, raised $8 million in Series A funding. Core Innovation Capital led the round, and was joined by investors including Pear VC, Avalon Ventures, Ulu Ventures, Nimble Ventures, Stanford StartX Fund, WTI and Slow VC.
- Flatfile, a drop-in spreadsheet importer, raised $7.6 million in Seed funding. Two Sigma Ventures led, and was joined by investors including Afore Capital, Designer Fund, and Gradient Ventures.
-Chargeback, a Salt Lake City,-based dispute management platform for merchants, raised $6.6 million in Series A1 funding. Fintop Capital and Next Frontier Capital led the round, and was joined by investors including Next Coast Ventures and Kickstart Fund.
- Axiom, a London-based DevOps platform, raised $4 million in seed funding. Crane Venture Partners led the round and was joined by investors including Fly VC, Mango Capital and LocalGlobe.
- Innovation Department, a New York-based platform that builds DTC brands, raised $3.7 million in funding from investors including M13 Ventures, Long Light Capital, Synergis Capital, and Ambridge Capital.
- Canopy, an Indianapolis-based revenue intelligence platform, raised $2 million in seed funding. High Alpha Capital and Elevate Ventures led the round, and was joined by investors including IU Ventures and Service Provider Capital.
- SimpleLab, a Berkeley, Calif.-based home water testing maker, raised an undisclosed round of funding from Craft Ventures, Spring Point Partners, and Mazarine Ventures.
- Genial Care, a Brazilian digital health company treating autism and other conditions, raised an undisclosed amount in seed funding. Canary led the round.
PRIVATE EQUITY
- Kayne Anderson Rudnick Investment Management and Whale Rock Capital Management invested in Duck Creek Technologies, a Boston-based software provider for insurers. Duck Creek raised $230 million ahead of a planned initial public offering.. Read more.
- Private equity firms are reportedly eying a buyout of Cloudera (NYSE: CLDR), a cloud company. Carl Icahn is Cloudera’s largest shareholder. Read more.
- ICONIQ Capital invested in QGenda, an Atlanta-based workforce management software to the healthcare industry. Francisco Partners will retain a majority stake. Financial terms weren't disclosed.
- North Castle Partners invested in Sparx Hockey, an Acton, Mass.-based sports brand. Financial terms weren't disclosed.
- Spectrum Equity invested in CINC Systems, a Duluth, Ga.-based cloud-based platform for community association management. Financial terms weren't disclosed.
- Trinity Hunt Partners invested in Juris Medicus, a San Antonio, Texas-based medical expert sourcing and case management company. Financial terms weren't disclosed.
OTHERS
- Data Robot acquired Boston Consulting Group’s SOURCE AI technology. Financial terms weren't disclosed.
- Sennder, a German freight technology firm, said it is merging with French peer Everoad. Read more.
BREAKUPS, HANGUPS, AND BANKRUPTCIES
- Hyundai Development Co is seeking new buyout terms for its acquisition of Asiana Airlines after the carrier’s debt load increased by $3.8 billion. Hyundai previously agreed to acquire the company for $2.1 billion. Read more.
IPOS
- Snowflake, a San Mateo-based cloud data platform, has filed confidentially for an IPO. Read more.
- Royalty Pharma, a New York-based company that buys royalty interests in biopharmaceuticals, plans to raise $2 billion in an offering of 70 million shares (14% insider sold) priced between $25 to $28 apiece. The company posted revenue of $1.8 billion in 2019 and income of $1.2 billion. It plans to list on the Nasdaq as “RPRX.” Read more.
- Dun & Bradstreet, a Short Hills, NJ.-based provider of data analytics services, filed on to raise $1 billion. The company posted revenue of $1.4 billion in 2019 and loss of $674 million. A consortium of investors including Bilcar, Thomas H. Lee Partners, Cannae Holdings, Black Knight, and CC Capital Partners took the company private in 2018. It plans to list on the NYSE as “DNB.” Read more.
F+FS
- Mason Wells closed Mason Wells Buyout Fund V with $725 million.
- Balbec Capital closed InSolve Global Credit Fund IV with approximately $1.2 billion.
- Whitehorse Liquidity Partners is seeking $3 billion for its fourth fund. Read more.
- Collab Capital is targeting $50 million to invest in Black entrepreneurs. Read more.
PEOPLE
- Valor Ventures added Gary Peat as a General Partner.
- EQT Ventures added Rania Belkahia as a partner leading investments in France.


fortune--2020-06-10--I’m a black tech CEO. Diversity shouldn’t be our end goal; ending the current corporate culture shou

I’m a black tech CEO. Diversity shouldn’t be our end goal; ending the current corporate culture should

The coronavirus has now killed more Americans than every war since the start of the Korean War—combined

Following the death of George Floyd, I felt like many other Americans did. Angry. Hurt. Confused. Heartbroken. As a black man who grew up in America, the emotions I feel in this moment are all too familiar to how past generations felt. As one of the few black tech CEOs in this country, I feel compelled to share my point of view.
Growing up, I wanted to earn my own success. But when I was deciding which college to attend, my mother explained that I must choose schools in states that were “more receptive to people like me.” At first I was confused. But I soon realized my mother’s guidance was driven by fear and concern for my safety.
The deaths of Ahmaud Arbery, Breonna Taylor, and now, George Floyd, have surfaced the fear that my mother (and the mothers of many black people) face every day in America. And no black person doesn’t experience this. Not the 44th President of the United States. Not an accomplished tech founder. Nobody.
This became clear to me as I encountered unconscious bias quickly upon entering the job market. I was ushered into a Wall Street diversity program. And it was awkward. My normal was being the exception. Everything about it made me feel like the “diversity kid.” Many of my fellow colleagues in the program felt that way too.
I made the personal choice to break out of the bubble and befriend my coworkers beyond the confines of the diversity program. I had to work to dissolve a label that was put on me before I even arrived. I was nowhere near alone in this endeavor.
Companies create diversity and inclusion (D&I) initiatives with the mindset that diversity needs to be bolted on to the existing company culture. Without meaning to, we’re saying that diverse talent is often expected to adapt, yet still be themselves, within a white company culture. Every diversity agenda will continue to miss the mark until business leaders create spaces where every individual can contribute to establishing a new culture.
To start, corporate diversity shouldn’t be a goal. It should be the outcome of a fundamental shift in the DNA of a company. We spend time setting diversity agendas and forming new D&I initiatives, but the problem with affirmative action is that the people coming in feel stigmatized immediately.
I experienced firsthand from my time on Wall Street that individuals who get access to jobs via this route are often labeled by their peers as underqualified. You see similar treatment in programs for women and LGBTQ people.
Executives need to take an honest look at their own corporation’s identity. It requires stripping away silos. In the process, business leaders should ask themselves how they can make systemic changes at the ground level that will hold everyone in the company accountable for working toward true diversity and equality.
As leaders, we need to reeducate our broader employee base. We can facilitate ongoing conversations about what equity means; ensure HR departments are well equipped to recognize microaggressions, racism, and unconscious bias; and create more opportunities for communication between departments, seniority levels, and peers. If we cultivate corporate cultures that place education and genuine conversations at the center, we can change our company blueprints. We can make space and normalize diversity.
After all, black people just want to be equal and normal. I want to be equal and normal. As a tech CEO, I want my employees to feel equal and normal. Anecdotally, but confidently, I can say that black people never want to be seen as a charity case or a diversity requirement. No one does.
We should be making these cultural shifts because it is the right thing to do, and we should always strive to do what is right. That said, it would be naive of me to not also acknowledge why corporate diversity makes business sense.
At Holler, I spend my workdays connecting with business partners around the world and creating content that services a diverse set of global demands. At its core, my company needs to be diverse in order to adapt and scale.
If we make diversity an agenda item or a program that runs in a silo, we are missing out on a huge competitive advantage. Diversity opens the door for innovation and new opportunities.
Moving in the direction of positive change requires business leaders to think about how to elevate diverse voices without intentionally or unintentionally containing them.
I am admittedly at the beginning stages of this process with my own company. I encourage the business community to join me in putting in the work necessary to convert conversations to action and fundamentally change the way people think about equity, diversity, and inclusion.
We must do more. I must do more.
Travis Montaque is founder and CEO of Holler.


fortune--2020-06-10--ZoomInfo’s IPO garnered high praise. It also left $576 million on the table

ZoomInfo’s public offering on June 4 won kudos as a bellwether for a stirring comeback in the beaten-down world of IPOs and a sign of the bull market in optimism that has ignited a historic rally in stocks. As usual, the business press measured the event’s success by the bounce in ZoomInfo’s price on the first day of trading, and by those standards, the IPO delivered big-time, bestowing a 62% gain. Business Day noted “the iconic first day pop.” The Wall Street Journal lauded “the strong debut.” Reuters wrote that ZoomInfo “struck a chord with investors,” and GeekWire cited “this blockbuster IPO.” ZoomInfo’s shares variously “soared,” “skyrocketed,” or just plain “rocketed,” depending on the headline of universally positive reviews that underscored the high spirits.
As a business, ZoomInfo won praise for good reason. Its cloud-based platform that generates leads for finding new customers is a big hit with its clients. The offering made billionaires of its visionary founders, Henry Schuck and Kirk Brown, and its $19-plus billion market cap as of June 9 attests to investors’ confidence in its prospects for achieving strong growth and profitability.
But measured by what an IPO should do—raise big money at the lowest possible cost to build the business and repay debt—the ZoomInfo debut, like so many other public offerings, rates as a flop. Not a single story this writer could find made the point, but the first-day leap shows that ZoomInfo allowed its underwriters to sell the shares to their institutional clients on the cheap, at far lower prices than those investors, and the general public, were willing to pay. The venture capitalists and founders that owned its shares as a private company raised $576 million less than if they’d sold at the market price established at the close of trading on June 4.
“The ZoomInfo case shows once again that the process of going public is extremely inefficient and expensive, and that it benefits hedge funds and underwriters at the expense of the pre-IPO shareholders,” says Jay Ritter, a finance professor at the University of Florida and the nation’s leading academic expert on the workings of IPOs.
It would seem hard to match the underpricing of ZoomInfo. But it just happened again. The latest and most extreme case of Wall Street lowballing is the public offering of Vroom. The underwriters sold 21.5 million shares in the used-car purveyor, mainly to money managers, at $22, raising $438 million after fees. During the maiden day of trading on June 9, Vroom zoomed 118%, closing at $47.90. Had Vroom managed to capture that full market price instead of the bargain that the banks secured for their big trading clients, it would have raised about $1 billion. The one-day gains that went to the funds instead of Vroom’s treasury: $562 million. It effectively cost Vroom $562 million to raise $438 million. That amounts to a charge of 118%, or $1.18 for every $1.00 it harvested in the IPO.
Bookending ZoomInfo’s offering during the first week in June were two other big IPOs, both generally hailed as successful because they followed the same pattern of hosting an opening-day surge. Warner Music’s underwriters presold its shares at $23; by the end of the first day of trading on June 3, the price stood at $30.12, a rise of 31%, meaning that Warner would have banked an additional $394 million at the market price. Shift4 Payments, seller of credit card terminals to retailers, launched the day after ZoomInfo on June 5. Its stock gained 46%, meaning that Shift4 sold at $159 million below what investors were bidding at the end of its opening day. All told, the three, back-to-back IPOs from the first week in June left a staggering $1.129 billion in forgone cash “on the table.” Add Vroom to the list, and the total reaches $1.7 billion.
The ZoomInfo offering was this year’s biggest tech IPO and ranks second to Warner Music in the amount raised. But because ZoomInfo’s stock was underpriced by twice as much, it sacrificed even more cash. ZoomInfo’s 17 underwriters, led by JPMorgan Chase and Morgan Stanley, presold 44.5 million shares, mainly to big money managers and hedge funds, at $21 a share, raising $887 million after $48 million in expenses. By the end of opening day June 4, those shares were worth $1.53 billion, so that ZoomInfo would have collected $1.463 billion after similar costs if the underwriters had sold the shares at what Wall Street was willing to pay. The difference of $576 million is what ZoomInfo left on the table, narrowly exceeding the gap for Vroom.
ZoomInfo’s big rise wasn’t an ephemeral spike. By the market close on June 9, its price had risen another 47% to 50.00, lifting its market cap to $19.5 billion. So the big investors who bought the shares at $21 a week ago are already sitting on 138% gains amounting to $1.37 billion.
It’s true that ZoomInfo sold under 12% of its total shares in the IPO. Hence, its market cap would be only 3% or so higher if it had collected that extra $576 million. That’s still a ton of money for a still relatively small, growing company (2019 sales: $335 million) that would benefit greatly from a big cushion of extra cash. In its offering statement filed on June 2, the company disclosed that after adding funds raised in the IPO, it will have $146 billion in cash on its balance sheet. Banking the $576 million it surrendered through underpricing could have raised its war chest fourfold. That half-a-billion-plus also represents 13 times its free cash flow over the past four quarters. The extra funds could have repaid almost 70% of its $833 million in long-term debt. (Through a spokesperson, ZoomInfo declined to comment for this story, citing restrictions imposed by the “quiet period” following the IPO.)
On his website, Ritter provides a list of approximately 300 companies that saw first-day run-ups in their shares over the past few decades, ranked by amounts left on the table. ZoomInfo is in 25th place, while Warner Music is 62nd. The practice of radically underpricing shares peaked, he says, during the dotcom bubble, and “isn’t nearly as extreme as in the past.” But the ZoomInfo, Warner, and Shift4 cases show that it’s still very much alive. The IPO game is extremely profitable for the underwriters and their clients, says Ritter. “The underwriters sell shares to hedge funds and mutual funds far below their market value so that they pop the first day. The clients reward the banks in ‘soft dollars,’ in the form of inflated commissions on trades that far exceed the cost of executing those trades.”
In exchange, he says, the young companies get special attention from sell-side analysts. The banks also contend that they’re selling to investors who will be loyal, long-term shareholders rather than flippers.
As Ritter points out, the promised analyst coverage doesn’t seem nearly worth the cost. And Wall Street allocates shares not to clients based on their devotion to the company but to those that pay the biggest commissions. The enduring mystery is how investment bankers manage, time and time again, to convince founders and venture capitalists to forgo the hundreds of millions, or even billions, when it’s so obvious that Wall Street is feasting at their expense.
It’s a cliche in IPO-land that the big pop generates great publicity for young companies making their debut on the public stage. Here’s a more sober view. It makes the leaders who agree to sell shares for far less than they’re worth look like they were taken for a ride.


fortune--2020-06-10--How to avoid burning out your black employees right now

Good morning, Broadsheet readers! Rep. Barbara Lee calls for a commission on racial healing, Kathy Sullivan sets a record in space and at the bottom of the sea, and we learn about how not to burn out black employees and colleagues. Have a healthy Wednesday.
– Black employee burnout. As we well know now, the George Floyd protests have prompted new conversations in American workplaces about race and racism, unearthing or simply reemphasizing employer shortcomings and prompting promises of change. Underrepresentation must be righted. Pay gaps must be closed. Blind spots must see the sun. These corporate epiphanies are commendable, however self-righteous and overdue.
What they are not is the sole responsibility of black employees. So writes Najoh Tita-Reid, senior executive of marketing reinvention at Logitech, for Fortune.
“Don’t get me wrong,” she writes. “Black Americans are glad that finally after 400 years, there is mass outrage at racial injustice. Many of us have been fighting for change our entire lives, and were taught by our parents that it was our job to uplift our race. And we are glad that nonblack people want to be part of the solution.”
But even in this moment intended to rightly recognize black employees there’s a risk of further weighing them down.
The burden of “dismantling systemic racism must not be placed solely on black employees by asking them to fully lead diversity and antiracism efforts,” she writes. “Black people did not create these problems, so please do not expect us to resolve them alone. After all, we are exhausted.”
Burning out black employees is a real risk right now. “[W]e are leading race relations task forces, peacefully protesting, and working to protect our families that are disproportionately dying from COVID-19 and police brutality,” she writes. And that’s on top of “[having] our jobs to do.”
In her piece for Fortune, Tita-Reid offers tips on avoiding “black burnout while proactively improving your company’s approach to race.” Tip No. 1? “Do not inundate your black colleagues with requests to help you understand and solve racial injustice as if it is their duty.”
You can read more of her thoughtful guidance here.
Claire Zillman
claire.zillman@fortune.com
@clairezillman
Today’s Broadsheet was curated by Emma Hinchliffe.
ALSO IN THE HEADLINES
- Congressional healing. Rep. Barbara Lee introduced legislation calling for the first United States Commission on Truth, Racial Healing, and Transformation. Inspired by a similar government effort in South Africa, the commission would examine slavery, racism, and discrimination throughout history—and their effects on current policy. Zora
- Highs and lows. In 1984, Kathy Sullivan became the first American woman to walk in space. Now. she's the first woman to descend to the deepest known point of the ocean—and the first person to do both. The astronaut/oceanographer emerged Sunday from a 35,810-foot dive to the Challenger Deep. New York Times
-Mixed-up ministry. Macarena Santelices was named Chile's women and gender minister last month. But her appointment prompted widespread outrage because she is a great-niece of former Chilean dictator Augusto Pinochet—and has said that the regime, under which female political prisoners were subject to sexual violence, had a "good side." Santelices, who in the past month oversaw several more controversial decisions (including appointing a former swimsuit competition judge to a position at the women's ministry!), resigned yesterday. Her replacement is Mónica Zalaquett, a politician known for her strong opposition to abortion. Guardian
- LEAP forward. Director Ava DuVernay created the new Law Enforcement Accountability Project, an initiative that will fund 25 artistic works telling stories about police officers who have killed black people. "The cop isn’t hidden behind a body cam or distorted by grainy surveillance video," DuVernay says of the video of officer Derek Chauvin pressing his knee into George Floyd's neck. "That led me to think, ‘how many of these police officers do we never see?’ ... Somehow, we, as American citizens, have agreed to not speak their names. I do not agree to that anymore." Washington Post
MOVERS AND SHAKERS: Harper's Bazaar named former Vanity Fair executive fashion director Samira Nasr editor-in-chief. Salesforce SVP of strategy and government relations Niki Christoff joins the board of MedMen. Horizon Group USA hired Mattel chief franchise management officer Janet Hsu as CEO. FuboTV hired Diana Horowitz, formerly of Telestream, as SVP, advertising sales. Rania Belkahia joins EQT Ventures as a deal partner.
IN CASE YOU MISSED IT
- Police stories. In an emotional interview, actor Niecy Nash talks about her son, who just last week was stopped by police officers who asked questions like, "how did you afford this car?" Nash plays a cop on the comedy Reno 911, and the cast donated $10,000 to George Floyd's funeral costs. The Hollywood Reporter
- Olympic challenge. The governor of Tokyo, Yuriko Koike, said she doubts whether the Olympic Games now scheduled for 2021 will be able to take place without an international deal on rules around travel and quarantine. She doesn't see the Olympics happening unless athletes and fans are allowed to visit freely. Financial Times
- Problems next door. Nextdoor, the neighborhood social network led by CEO Sarah Friar, has long had issues with racism on its platform. Nationwide protests are again bringing those problems to the fore. The Verge
- Powerful statements. Variety released its annual Power of Women issue yesterday, featuring Janelle Monáe, Cate Blanchett, Patti LuPone, and more women outside of entertainment. Monáe discusses the interracial queer relationship at the center of her series Homecoming, while Blanchett talks about the cause of protecting refugees from the coronavirus. Variety
ON MY RADAR
Quiz: Who do you think Joe Biden should choose for VP? Washington Post
The black women who paved the way for this moment The Atlantic
Daniel Radcliffe speaks out in support of trans women following J.K. Rowling’s tweets Fortune
Bonnie Pointer, founding member of the Pointer Sisters, dead at 69 NPR
PARTING WORDS
"I did a little dance."
-New Zealand Prime Minister Jacinda Ardern on learning the country had no active coronavirus cases


fortune--2020-06-10--Zara’s parent company to invest $3 billion in e-commerce—and expanding physical stores

Inditex SA plans to invest 2.7 billion euros ($3 billion) to boost e-commerce operations of chains like Zara and Bershka and expand store space to gain an edge on rivals as the pandemic snarls the clothing-retail industry.
The Spanish retailer aims to get more than a quarter of its sales from the web by 2022 after online growth helped mitigate a 44% drop in first-quarter sales. Inditex delayed a special bonus dividend after reporting its first quarterly loss since it went public two decades ago.
“We have total confidence in our business model and long-term perspectives,” Chairman Pablo Isla said on a call with analysts.
Two months after lockdowns forced almost 90% of Inditex’s stores to close, the company is already looking at how it can surpass rivals and gain market share in the post-lockdown world. Part of the effort includes devoting 1 billion euros to online investment and 1.7 billion euros in store expansion over three years.
The stock swung between gains and losses Wednesday morning in Madrid. The shares have lost about a fifth of their value this year.
Saving Grace
Internet shopping has been a saving grace for retailers. At Inditex, e-commerce rose 50% in the first quarter as about 6,000 of its more than 7,000 stores were shut at one point in April. The company got 14% of total revenue from online sources last year.
Inditex announced the plan to open 150 stores a year before signs of any rebound in brick-and-mortar stores overall. Total revenue fell 51% in May and 34% in the first days of June, excluding currency shifts.
The company, which also operates Massimo Dutti and Stradivarius, plans to expand its best-performing stores and absorb as many as 1,200 through next year. Inditex often operates stores of its various formats next door to each other. When such shops start underperforming, Inditex has sometimes merged them with the neighboring location.
Inditex took a charge of 308 million euros related to depreciation of underperforming stores, which swelled the first-quarter loss. The bulk of the lockdowns in key markets for the owner of the Zara brand, such as Spain and Italy, occurred in April. More than three-quarters of its stores are open now after confinement rules were eased. In markets that have fully reopened, sales fell 16% in the first few days of June.
Isla said he expects most key markets will have resumed business by the end of this month. All stores in Spain have reopened this week. Revenue over the past 10 days has been at the prior-year level in China, Japan and South Korea, Isla said.
Inditex’s flexible purchasing model is giving it an advantage over competitors. The company’s inventory level dropped 10% in the first quarter.


fortune--2020-06-10--How yarn stores are adapting to and preparing for social distancing

Just before New York City made it mandatory for nonessential businesses to shut down because of the coronavirus pandemic, Pearl Chin decided to temporarily close Knitty City, her Manhattan yarn shop of 15 years.
Chin had just come back from a vacation in Puerto Rico days before making the decision. While her business kept operating as usual, she noticed people “panic shopping” when she went out for groceries. Her concern grew for her staff, as well as her customers, which included a number of regular senior shoppers. Then her son Zac—who helps manage the store—said he felt it was time to close. They decided to shut down after Saturday, March 14, giving customers a chance to stock up on supplies.
“The moment that we made that decision, I’ll tell you, I stopped worrying because I felt that this was the best decision to make,” she says.
Chin’s store is among many in the fiber-arts world that closed, either right before or around the time government mandates about closures were issued. Some have weathered the storm by fleshing out their online stores and offering curbside pickup. But now they’re trying to figure out how to reopen safely, especially given that such businesses often serve as a place of community where like-minded people gather during classes and in knitting circles to work on projects and socialize.
From community spaces to online stores
Even though businesses in Georgia began to reopen in recent weeks, Athens-based Revival Yarns offered only curbside pickup at first. It’s slowly reopening its doors this week to appointment-only shopping, though the owners may close it again if the state sees a spike in coronavirus cases.
While the store has a wide range of customers, Revival Yarns co-owner Lindsay Woodson says many are in the 65-and-older age range, which made her and the store’s other owner, Cara Cannon, nervous about reopening too soon.
“I hate telling people I can’t help them with their projects one-on-one, and I feel terrible having to back away from a customer when they’re telling me about how their children are doing, and they’re coming close,” Woodson says. “It’s just not who we are. But it’s essential.”
Revival Yarns closed its physical store earlier than many businesses in the state, as Athens’s mayor called for closures before the governor did, Woodson says. From there, it was a “frantic dash” to update the website with the yarns available for sale. The first couple of weeks after closing were tricky because customers wanted to support the shop, Woodson says, but most of its inventory wasn’t listed yet. Some initial orders were taken over the phone and even via social media messages.
“We had a website, but we’d never sold any yarn online before,” she says. “The fiber world is very much a community thing. We’d always prided ourselves on being a community space and helping people and not being another online store.”
The store has been fulfilling online orders for a couple of months, while the owners also respond to messages across platforms “with photos and suggestions” to help customers.
Catherine Clark, owner of Brooklyn General Store—which sells yarn, fabrics, and related supplies—also refocused her attention to her website after closing on March 16, working by herself in the shop to fulfill online orders. The orders for fabric in particular, which “took off,” are what helped keep her in business, she says. Pivoting to making masks and selling mask-making kits has also played a big role.
“Maybe about a month into the closure, I decided we really needed to offer this, and it was a way for me to continue to pay [my employees],” she says, explaining that she had a couple of workers producing masks for sale, since they couldn’t fulfill their usual duties at the shop.
Brooklyn General Store, which sells yarn and fabric, pivoted to selling masks and mask-making kits for order because of the pandemic. Courtesy of Brooklyn General Store
Other yarn stores have followed a similar path. The Perfect Blend Yarn and Tea Shop, a yarn store that also sells tea products at its brick-and-mortar location in Saugerties, N.Y., now lists yarns, kits for knitting projects, and other supplies on its website.
Back in New York City, Chin, who sporadically tried to fulfill orders via email during the initial part of the shutdown, started ramping up those efforts in late May. Knitty City is now offering free curbside pickup a couple of times a week, local delivery within Manhattan’s Upper West Side for $5, as well as orders that can be shipped for $8. The website is also being updated with yarns, needles, tote bags, and more.
What will yarn stores look like while social distancing?
But store owners are also thinking about what they’ll do once they can let customers in. It’s still unclear how easily the coronavirus can be picked up from fabrics, but buying yarn is a tactile activity, so hand sanitizer will be on-site, and customers will have to wear masks, according to the shop owners who spoke to Fortune. (“A lot of people want to put it up to their face and inhale yarn, so that’s not going to be allowed,” Clark says.) A number of social distancing practices, such as limiting the number of people that can come in, will also be in effect.
Revival Yarns’ appointment-only strategy will allow only one customer in at a time, Woodson says. Customers will be encouraged to place any yarns they’re interested in on a table typically used for display pieces, instead of piling them up at the shop’s counter or carrying them all over the store.
It’s too early to be sure when they might let more customers inside; plus, Woodson and Cannon both have small children whose schedules may also determine next steps.
“I’m sure if school is back in session, if those types of gatherings are happening, then we probably would allow more than one person in the shop at a time,” Woodson says. “It’s just so hard to say. We may say we’re opening for more people, and then we might shut it back down if it feels unsafe.”
Revival Yarns, which is starting to offer appointment-only shopping, has a table set up for customers to keep the yarns they’ve selected to one side. Courtesy of Revival Yarns
Clark, whose store is fairly large at 1,800 square feet, is considering a safe counter pickup area for the future when New York City allows stores like hers to let shoppers inside. “I’m not sure quite yet how to do it, but I’m thinking kind of like an ice cream shop where you can taste a few items and then choose your flavor and then we will gather your items for you,” she says.
Perfect Blend’s owner Mary Ebel plans to buy a couple of chairs and benches to keep outside her store for anyone waiting to come in, while allowing a maximum of only four customers inside when it reopens. She’s not yet sure when she may start knitting classes again at her store, but when she does, only four attendees will be able to participate at a time—by reservation.
Chin, who also plans to limit the number of customers inside when she officially reopens the store, is considering keeping some tables outside her store featuring yarns for sale, while the door will stay open during the summer months.
“And I don’t know whether we’re going to go as far as no cash, only credit card,” she says. “I think we’re going to take our lead a lot from the small places that are already open—the food places and the small smoke shops—and seeing how they’re doing.”
Why an in-person community still matters
Meanwhile, many of the stores have found both formal and informal ways to keep classes and gatherings going. Chin says some of her regulars started doing Zoom meetings, including those involved in a weekly men’s knit night. Her store’s website is now offering customers a chance to connect with instructors for virtual help with projects.
“A couple of our instructors have gotten set up where they can have two cameras, so that they can have a camera pointing at their hands and also be speaking with a customer, so that they can kind of do help sessions, like little mini classes,” Woodson says. “People who have used it have been really happy. I think a lot of people are even hesitant to try it because knitting is hard if you can’t see someone’s hands very well.”
Ebel has also done Zoom gatherings and FaceTime calls with regulars, figuring out a socially distanced way to help fix customers’ projects when they get stuck on them.
“They’ll drive by. I let [the project] sit for the day before I open it,” she says. “I fix it, and I call them, and they come back and pick it up.”
Most of the shop owners imagine that this is how they’ll have to maintain their communities for the near future, even after their physical stores reopen, though it’s not ideal.
“We have people that come here three times a week, just to hang here, just to be together,” Ebel says. “You become friends, and you bond. It doesn’t matter the age; it doesn’t matter the gender—nothing else matters except they’re your knitting buddies.”
On top of that, events have become a key part of the knitting community—Vogue Knitting Live! is big in cities like New York and Seattle, while Rhinebeck is home to the annual Sheep and Wool Festival.
“That’s our big week for the year,” says Ebel of the festival, pointing out that Saugerties is near Rhinebeck. “Right now, my gut feeling is it’s not going to happen, but we’ll have to wait and see.”
“The retail sort of depends on all that other stuff to keep us alive,” Clark says.
Though the businesses Fortune spoke with have managed to get by over the past few months by adapting as needed, it hasn’t all been easy. Like other small businesses, some have also needed Paycheck Protection Program loans. In Revival Yarns’ case, Woodson says some of that money was applied toward paying staff to knit projects that can be displayed at the shop in the future.
Ebel, whose landlord did give her a “little break” on the rent, says she’s been “maintaining enough” to keep the business going, though she’s not bringing much extra in. Knitty City had a GoFundMe set up during the early part of the shutdown to benefit staff, though Chin—who says she can “borrow from myself”—has since decided that contributors will be able to receive full store credit.
Clark ultimately believes most yarn stores will be just fine as the pandemic prompts people to focus on more “home-centered” activities. Crafting, cooking, and gardening are among activities that have grown in popularity in recent months. “I feel like knitting is going to see a big increase, as well as sewing—home sewing and home knitting, and just general homemade things,” she says.
And while Chin is also concerned about changing business practices, the inability to hold events easily, and the likelihood that the international visitors that have been a big part of her shop’s customer base will no longer be able to visit for some time, she is ready to adjust as needed.
“We’re probably not going to buy as much yarn as we have in the past. I mean we’ve had problems in the past with cash flow, where we’ve overbought for a certain season, and we had to deal with it, so we’re not a stranger to having to work out cash flow for the business,” she says. “So, it might be slow, but we’ll work it out.”


fortune--2020-06-11--How one company manages supply chains for every single ‘essential’ industry

New research shows how face masks can stop second and third coronavirus waves

If there’s one company that connects the many businesses deemed essential during the coronavirus pandemic, it might be Flex. “Name an end market—we probably are in it,” says Revathi Advaithi, CEO of the $26 billion Global Fortune 500 company. “I can’t think of something that’s essential that we’re not involved in.”
The manufacturing and supply chain logistics company makes everything from health care equipment to products that support the global energy supply to infrastructure needed to keep the world’s communications systems functioning. Flex is one of the world’s top 15 manufacturers of medical devices, and this year it alone will produce more ventilators than the total 35,000 made by all global manufacturers in 2019.
As part of a series of conversations with female executives about how the coronavirus has affected their businesses, Fortune spoke with Advaithi, first over email and then by phone. She’s easier to pin down these days, now that she’s no longer spending 60% of her time traveling the globe visiting Flex’s factories everywhere from Southeast Asia to Europe.
The CEO spoke about changes to Flex’s worldwide operations and how to keep global supply chains running—avoiding the kind of breakdown we saw in the production of products like toilet paper. Advaithi’s two conversations with Fortune have been edited and condensed below.
Fortune: What’s your No. 1 concern related to the coronavirus and your business?
Revathi Advaithi: Of course, my No. 1 concern is the health and safety of our employees. It has to be. Flex has 160,000 employees, mostly factory workers, and locations in over 30 countries; in many of these areas there are outbreaks. It is a challenge because many people really do want to keep working, and many of our factories make essential products, but we have to provide a safe place for employees. We have put considerable resources into protocols to protect our employees including providing personal protective equipment, temperature screening, and physical distancing. To date, we have done over 7 million temperature screenings.
How has the coronavirus impacted your business in the short term?
Early on, we experienced disruptions to our China operations. Fortunately, we were well prepared, but we also learned quickly, and developed a robust playbook to manage the situation and replicated our plan around the world as the virus spread. We participate in diverse end markets from medical, automotive, consumer, tech, and industrial. As you would expect most markets are expected to be down except for medical and critical infrastructure in technology.
COVID-19 is driving significant demand increases in critical care products, such as oxygenators, patient monitors, testing equipment, and ICU-related necessities, all of which we manufacture and quickly responded by increasing production to help our customers meet demand. We are also in the process of manufacturing five different ventilator programs. Typically, medical programs take nine to 18 months to ramp. We ramped and started shipping ventilators in five weeks.
What does it take to manage supply chains of this level of complexity through this period?
It’s dependent on factories running in every part of the world. It’s dependent on planes flying. Obviously there’s been a tremendous amount of disruption over the past few months, but it was more significant in January and February. Most other markets, besides health care, are recovered and back on track. In health care, demand has been up for anything associated with critical patient care: not just ventilators, but beds, infusion systems. These supply chains are four or five levels deep, so you’re chasing hundreds of thousands of suppliers to make these end products. It’s a pretty complex animal.
How do you expect the crisis to impact your business in the long term?
We continue to see more discussions on regionalization of supply chains, which had started during the trade war. While this is easier in some markets, it is more complex in others. Supply chain resiliency is another major concern for many companies. Many are understanding that this is not easy to navigate, and we are helping our customers rethink their supply chain strategy.
What management lessons or principles are you drawing on as you face this unprecedented crisis? What, if any, road map are you following?
Having spent my whole career on the manufacturing floor, you always put people’s safety first, no exceptions. All decisions consider safety first.
It is easy for teams to get overwhelmed when faced with the level of challenges at a time like this, so I am a huge fan of simplicity and disciplined execution. You take the extra step to break down the problem or challenge into their simplest forms and take them on one at a time. I apply these principles to my decision-making, and we instill it in our culture. I am also very organized on getting the teams focused around the issues. My road map on leadership has always been about being empathetic but making decisions quickly. I continue to use that to guide me on an everyday basis.
What data are you monitoring to gauge the crisis short term? Long term?
We have been using credible sources like the CDC and the WHO, like most companies. We have epidemiologists under contract to help us scenario-plan and be as prepared as we can related to the virus. We have an internal data analytics system that compiles data from 88 different sources to give us visibility across a number of vectors.
Flex is in a unique position to see trends early because of where we sit in the value chain as well as the diverse markets we serve. We are manufacturing everything from a small consumer device to cloud infrastructure, from drug delivery systems to autonomous vehicle electronic modules. We operate directly and indirectly in almost every country in the world, so we see early data at the grass-roots level, through our contacts with thousands of purchasing managers and leaders. We combine that with the connectivity we have with a broad array of CEOs, banks, and government officials. We are using all this intelligence to help shape our customer and supplier behaviors in terms of demand so we can operate as a more efficient supply chain. We are also using scenario-planning for different demand situations, enabling us to respond to decreases or increases more quickly. All of this work is helping shape the future of manufacturing.
What’s the biggest way your professional life has changed amid this crisis?
Not being able to travel has been a huge adjustment. Before the pandemic, I was traveling about 60% of the time; now of course it’s down to zero. Think of a country, I probably have been there in the past year. Anywhere in Southeast Asia, India, China, all parts of Europe. I couldn’t even name the top five. I miss meeting with employees and customers at our sites around the world.
What’s the biggest way your personal life has changed amid this crisis?
I head to my office at 6 a.m. and am in my office until 6 p.m. most days. But I’m also spending more time with my family, which has been wonderful. With two teenage kids—my son, who is home from college, and my daughter who is in high school—at home, like most families we are learning how to best make it work.
The first few weeks there were a lot of interruptions—“Mom, what’s for lunch?” We had to set some rules: There are sandwiches for lunch, everyone make their own stuff. Like clockwork, one of my kids will walk in at 5 or 5:30 and ask what’s for dinner; they did that during an all-employee meeting.
What—if any—good do you think will come from this crisis?
I think we will see faster innovation and reduced time to market in some health care sectors. We have shown the world how fast we can ramp manufacturing when every minute counts. My hope is we apply that learning to rethink how we can accelerate innovation and production. My hope is that we continue the collaboration and strong relationships we have built through this crisis and stay more connected. As nation-states, hopefully we are learning to be better prepared for the next time we face a crisis like this.


fortune--2020-06-11--How COVID-19 has sparked innovation in health care

This is the web version of CEO Daily. To get it delivered to your inbox, sign up here.
Good morning.
COVID-19 has exposed multiple problems in the U.S. health care system–the lack of surge capacity, the fragility of the financial model, and the vagaries of the payment system, to name a few. But it also has sparked remarkable innovation. Fortune yesterday assembled some of the brightest minds in the field for a virtual conversation about how the health system will be changed by the crisis, as part of the run-up to our big event in July: Fortune Brainstorm Health. My takeaways:
1) Telemedicine is here to stay…but in some places more than others.
“Forty-five percent of our visits are telehealth visits. The horse is out of the barn. Everybody has to do it. That has changed dramatically. There is no going back.”
–Dr. Steven Corwin, CEO, NewYork-Presbyterian
“Telemedicine is enabling people to bring that health care much closer to them.”
–Dr. Vivian Lee, author of The Long Fix
“In New York, there was an 11X increase in telehealth.” But in some Southern and rural states “there were much smaller increases.”
–Dr. Arif Nathoo, CEO, Komodo Health
2) The pandemic will increase the demands for reform in the payment system.
“We really need to fundamentally change the model of health care,” providing reward for driving value, rather than fee for service. “That will naturally drive us to make the right investments in prevention.”
–Lee
“I think payment for value is going to become an irreversible trend, because the payment model is broken.”
–Corwin
3) Inequities in health care will have to be addressed.
“We have seen the inequities of the health care system play out. The question is can we build a more equitable future that is built on technology.”
–Nathoo
“COVID-19 and Black Lives Matter are inseparable in terms of what they mean in terms of [health] outcomes. We don’t have a choice as a country. [This] means much greater interest on health equity as a piece of social justice.”
–Corwin
And while we are on social justice, both Twitter and Square have decided to make “Juneteenth” (June 19) a company holiday. The day marks the end of slavery in the U.S. CEO Daily wants to know: Are there other companies that have made, or are considering making, June 19 a holiday?
More news below. And an odd health care tidbit that Fortune discovered yesterday: the dentistry business seems to be leading the move to reopen. More here.
Alan Murray
@alansmurray
alan.murray@fortune.com
Many companies are speaking out against racial injustices right now. But how do they fare in their own workplaces? Black employees in the corporate world, we want to hear from you: Please submit your anonymous thoughts and anecdotes here.
TOP NEWS
Cases up
COVID-19 rates are going up in nine states, including a bunch in the South plus Utah. The biggest increase is in Texas, one of the first states to lift pandemic restrictions—it reported 1,945 new cases on Tuesday, compared with 1,053 new cases a couple weeks earlier. Meanwhile, new research has found that widespread mask adoption allows for less strict lockdown measures and could prevent further waves of infection. Fortune
Stocks down
Stocks have fallen around the world following the Federal Reserve's cautious outlook on the U.S. economic recovery, and as investors take note of the rising case rates mentioned above. After the DJIA dropped 1% yesterday, the Nikkei 225 dropped 2.8%, the Hang Seng 2.3% and the Stoxx Europe 600 2.3%. At the time of writing, Dow futures suggest an opening fall of around 1.8%. Wall Street Journal
Lufthansa cuts
Lufthansa Group is instituting what seems to be the heaviest round of job cuts—so far—in the aviation industry's coronavirus nightmare. A massive 22,000 jobs will go, half of them in Germany, and Lufthansa will end up operating 100 fewer craft after the crisis. Meanwhile, the New Economic Forum warns that up to 70,000 jobs in the sector are at immediate risk. Yahoo Finance
Facial recognition
A couple days after IBM pulled out of the facial recognition game over racial-bias and surveillance fears, Amazon said it will block police use of its facial recognition systems for one year. The "A.I." in such systems misidentifies dark-skinned faces more often than it does light-skinned faces—however, Amazon has contested criticism of its Rekognition system on this basis. The company's moratorium on police use is more to do with giving Congress times to implement "appropriate rules" around deployment. Reuters
AROUND THE WATER COOLER
Unilever reorganization
Unilever-watchers may be forgiven for feelings of dizziness: the company has now decided to merge its Dutch entity into its British arm, rather than the other way round as it abortively planned to do a couple years ago. Under the new plan, shareholders in the consumer goods giant's Dutch entity will own 55% of the combined operation, while British shareholders get 45%. Unilever says it will be easier to make equity-based acquisitions or demergers now. Financial Times
HSBC in crossfire
HSBC, which raised eyebrows when it recently expressed support for the imposition of a Chinese national security law in Hong Kong, keeps getting caught up in geopolitics. It was subsequently reported that HSBC had warned British Prime Minister Boris Johnson of potential punishment for the bank if the U.K. government decided to ban Huawei from British 5G networks. Now U.S. Secretary of State Mike Pompeo has said the U.S. "stands with our allies and partners" against Beijing's "coercive bullying tactics." Fortune
Confederate flags
A couple days after driver Bubba Wallace urged NASCAR to ban Confederate flags from its events, the auto racing body agreed to do so. "The presence of the Confederate flag at NASCAR events runs contrary to our commitment to providing a welcoming and inclusive environment for all fans, our competitors and our industry," it said in a statement. NASCAR had previously asked fans not to bring the flags to its races, but Wallace called for more—yesterday he applauded the definitive ban, saying "Props to NASCAR and everybody involved." CNN
Bankruptcy trap
A lot of small business owners are set to declare bankruptcy, but many could face a devastating trap: in some states, the bankruptcy code could force them to give up their homes in order to settle their business debts. As Fortune's David Z. Morris explains: "Many small businesses are unincorporated sole proprietorships, meaning the businesses’ debts aren’t legally separate from the owners’ personal finances…Compounding that reality is the fact that many states have very low caps on the so-called homestead exemption allowed by their bankruptcy codes." Fortune
This edition of CEO Daily was edited by David Meyer.


fortune--2020-06-11--The Fed says it’s standing pat through 2022—but markets don’t love the tune

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, Bull Sheeters. This is Fortune finance reporter Rey Mashayekhi, filling in for Bernhard Warner for the rest of this week.
The Federal Reserve is maintaining interest rates at near zero for the time being—and plans to keep them there through 2022, it said Wednesday. You would think that would energize the markets, but as we’re about to see, the response has been tepid at best.
Markets update
Asia
Asia’s major indices all fell on Thursday. The Nikkei (-2.8%) and Hong Kong’s Hang Seng (-2.3%) saw the steepest drops, while on mainland China, the Shanghai Composite (-0.8%) and Shenzhen Component (-0.8%) notched downward. In South Korea, the KOSPI also fell (-0.9%).
all fell on Thursday. The (-2.8%) and Hong Kong’s (-2.3%) saw the steepest drops, while on mainland China, the (-0.8%) and (-0.8%) notched downward. In South Korea, the also fell (-0.9%). New inflation data out of China underwhelmed. The Producer Price Index in May fell 3.7% from the previous year, per China’s National Bureau of Statistics, while the Consumer Price Index rose 2.4%. Both metrics failed to meet analyst projections.
out of underwhelmed. The in May fell 3.7% from the previous year, per China’s National Bureau of Statistics, while the rose 2.4%. Both metrics failed to meet analyst projections. Despite worsening U.S.-China relations this year, China keeps buying American soybeans, as Bloomberg reports.
Europe
The European bourses all ended Wednesday down slightly, but early signs pointed to bigger losses on Thursday. London’s FTSE , Frankfurt’s DAX , the CAC 40 in Paris, and the pan-European STOXX 600 all started the day down more than 2%.
all ended Wednesday down slightly, but early signs pointed to bigger losses on Thursday. London’s , Frankfurt’s , the in Paris, and the pan-European all started the day down more than 2%. Uber ’s loss in its doomed Grubhub merger would appear to be Just Eat Takeaway ’s gain. The Netherlands-based online food ordering firm has swooped in and agreed a $7.3 billion acquisition of Grubhub, after the latter’s talks with Uber fell apart.
’s loss in its would appear to be ’s gain. The Netherlands-based online food ordering firm has swooped in and agreed a of Grubhub, after the latter’s talks with Uber fell apart. Inditex—the Spanish fast fashion giant that owns Zara, Massimo Dutti, and other retailers—reported its first-ever quarterly loss on Wednesday, and the numbers were brutal. Inditex registered a net loss of 409 million euros ($465 million) between February and April, and not even a 50% increase in online sales could prevent revenues from being nearly halved amid the coronavirus pandemic.
U.S.
The Dow (-1%) and S&P 500 (-0.5%) fell for a second straight day Wednesday, while the Nasdaq (+0.7%) enjoyed its new 10,000-point reality with further gains. Futures were down across the board Thursday morning.
(-1%) and (-0.5%) fell for a second straight day Wednesday, while the (+0.7%) enjoyed its new 10,000-point reality with further gains. across the board Thursday morning. As we touched on earlier, the Fed expects to keep interest rates at near-zero “until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.” That could be a while; it forecasts that the U.S. economy will shrink 6.5% in 2020 , before bouncing back with 5% growth in 2021 and 3.5% growth in 2022 . It also expects an unemployment rate of 9.3% by the end of this year.
expects to keep interest rates at near-zero “until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.” That could be a while; it forecasts that the , before bouncing back with and . It also expects an by the end of this year. The Fed also provided guidance on its quantitative easing measures , after gradually reducing its bond-buying program in recent weeks and months. The central bank says it will continue to purchase at least $80 billion in Treasurys and $40 billion in mortgage-backed securities per month.
also provided guidance on its , after gradually reducing its bond-buying program in recent weeks and months. The central bank says it will continue to purchase at least and per month. U.S. consumer prices continued to show signs of weakness, having fallen—albeit less significantly—for the third straight month in May, the Department of Labor said Wednesday.
Elsewhere
Gold rose on the Fed’s bearish outlook for the U.S. economy.
rose on the Fed’s bearish outlook for the U.S. economy. The dollar sank to a three-month low against the euro and the pound .
sank to a three-month low against the and the . Crude oil climbed, with Brent settling at more than $41/barrel Wednesday.
Overdue rental
The party appears to be over for retail investors who jumped on the Hertz bandwagon—driving the bankrupt rental car firm’s stock to more than $5 a share this week despite the long, painful financial road ahead for the company.
On Wednesday, Hertz disclosed that it had received a delisting notice from the New York Stock Exchange that would see the company’s stock relegated to over-the-counter trading platforms. While Hertz said it has appealed the delisting, news of the notice was enough to send shares down nearly 40% yesterday.
Hertz’s run-up bewildered many observers, as retail investors flocked to the stock—many of them making a pretty penny—even after legendary Wall Street heavyweight Carl Icahn threw in the towel on the company last month at 72 cents a share (losing nearly $2 billion in the process).
Online brokerage platforms have witnessed a surge in new users amid the coronavirus pandemic—with young, novice traders, in particular, seemingly drawn to the market as shutdowns have taken away sports (and sports betting) and other forms of entertainment. With the market continuing its extraordinary rebound and millions of Americans newly equipped with stimulus funds to spend, many have looked to get in on the action.
In turn, lower-priced and distressed stocks like Hertz and JCPenney have seen their trading volumes pop, as opportunistic investors have sought to turn a quick buck on cheap equities. Of course, equity investors are among last in line to get paid when a company files for bankruptcy, which makes those companies’ spiking share prices all the more bewildering.
But where the market offers opportunity, so does it risk. One can only hope that those who rode Hertz to its heady, $5.53-per-share highs were wise enough to dump the stock before it came crashing back down to reality.
***
That’s all from me, for now. Have a wonderful Thursday and see you tomorrow.
Rey Mashayekhi
@ReyM12
Rey.Mashayekhi@Fortune.com
A note from my Fortune colleagues on a timely new initiative:
Many companies are speaking out against racial injustices right now. But how do they fare in their own workplaces? Black employees in the corporate world, we want to hear from you: Please submit your anonymous thoughts and anecdotes here. https://bit.ly/WorkingWhileBlack
As always, you can write to bullsheet@fortune.com or reply to this email with suggestions and feedback.
Today's reads
From hot to flop. Legendary Fortune scribe Shawn Tully has taken a must-read dive into ZoomInfo’s initial public offering. What was heralded as a triumph for the beaten-down realm of tech IPOs was, in reality, an underpriced “flop” that left an incredible $576 million on the table for the company and its investors, Shawn reports.
Oil money. The collapse of oil prices may be one of the biggest market-related stories of the year, but not everyone is rueing the fall of crude. Goldman Sachs’s commodities desk generated more than $1 billion through the first five months of this year, Bloomberg reports, as its traders saw their big, bearish bets on oil’s slump reap enormous benefits.
More aid on the way? Treasury Secretary Steven Mnuchin believes the federal government needs to do more to help American businesses that have been devastated by the coronavirus pandemic. Fortune’s Anne Sraders examines what that may entail (more Paycheck Protection Program funds, perhaps?) and the potential obstacles in the way.
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
“We’re not thinking about raising rates. We’re not even thinking about thinking about raising rates.”
—Fed chairman Jerome Powell, giving his apt prognosis of the central bank’s monetary policy in the time of coronavirus.


fortune--2020-06-11--New research shows how face masks can stop second and third coronavirus waves

How one company manages supply chains for every single ‘ essential ’ industry

A study published Wednesday by scientists in the U.K. finds that widespread adoption of face masks, in addition to lockdowns, could prevent further waves of the coronavirus and allow for less strict lockdown measures.
The researchers, who hail from Cambridge University and Greenwich University, argue that lockdowns alone are not sufficient to prevent second and third waves of infection, but if “combined with 100% adoption of face mask use by the public,” infection rates can be flattened and subsequent waves can be prevented.
The researchers looked at four models to see how effective masks could be in lockdown scenarios: one where no one wears face masks, one where 25% of the population wears masks, one where 50% is masked, and one where everyone is masked. In each one, there are intermittent lockdown periods.
A woman wearing a protective face mask walks near Tower Bridge in London following the introduction of measures to bring England out of lockdown. Dominic Lipinski—PA Images/Getty Images
In the first scenario, in which no one wears masks, infections increase exponentially, slightly slowed by the first lockdown; a second wave starts when the first lockdown ends. In the second scenario, in which a quarter of people wear masks, the first three infection peaks are flatter, and “there are clear benefits to face mask wearers, compared with non-wearers,” with the former recording many fewer infections.
In the third, in which half the population wears masks, infections barely increase at first but then start to take off in the fourth lockdown period, and infection rates are lower among mask wearers.
“When 100% of the public wear face masks, disease spread is greatly diminished,” the researchers wrote in the study, which was published in the scientific journal Proceedings of the Royal Society A.
The research suggested that any kind of face mask—including homemade coverings and ill-fitting masks—”is likely to decrease viral exposure and infection risk of a population level,” and the more people wear masks, the better.
The researchers focused on the U.K., where government guidance on face masks has not been consistent, and they called for “the widespread adoption of face masks.” At the time of writing, the researchers noted, only Scotland had recommended public use of face masks; the rest of the U.K. had not made any recommendations.
Face masks will become compulsory in England on June 15, but only for people on public transport. Wales on Tuesday advised people to wear face coverings when on public transport or in crowded areas, but emphasized that wearing masks on public transit will not be compulsory. In the U.S., the debate over face masks has morphed into a culture war.
Meanwhile, many Asian nations saw mass adoption of masks early in the COVID-19 crisis, and the practice is credited with slowing the disease’s spread.
Researchers at the University of Hong Kong (HKU) wrote a separate paper assessing the influence of different public health measures on virus suppression in Hong Kong, which flattened its first wave and squashed a second. A preprint of the paper came out on Tuesday.
Hong Kong “stopped short of a society-wide lockdown,” the researchers wrote. This differs from the U.K., which has been on lockdown since March 23.
The HKU researchers “could not directly estimate the effectiveness of some important interventions, such as face mask wearing,” but said a combination of measures including face masks, contact tracing, and physical distancing helped to prevent subsequent waves of infection in Hong Kong.
“It is likely that the widespread use of face masks in the community has played a role in reducing transmission,” the HKU researchers wrote, noting that the largest infection clusters in Hong Kong occurred in bars and at a wedding dinner, “both locations in which face masks were not worn.”


fortune--2020-06-11--PayPal founder Max Levchin joins $13M Series A for consumer data tech firm Ethyca

For companies that collect consumer data—which can be anything from an email address to web browsing history—the stakes are increasingly high when it comes to managing it.
A raft of new consumer privacy rules are going into force in the U.S. and around the world, and can pose stiff financial and operational burdens on companies that must comply with them.
A startup called Ethyca, however, believes it has a solution: software that identifies sensitive data and automates the process of managing it. On Thursday, the New York–based firm announced it had raised a $13.5 million Series A round from PayPal cofounder Max Levchin and other investors.
Ethyca cofounder Cillian Kieran told Fortune that his clients include Slice Pizza, luggage maker Away, and several large tech companies. He said the service is superior to other systems because it requires firms to employ no manual decision-making process. Ethyca typically charges between $750 and $1,500 a month but also offers a free version for small companies, and more expensive tools for very large ones.
Following the introduction of Europe’s landmark privacy legislation, the General Data Protection Regulation (GDPR), numerous other countries, including Canada and Brazil, have introduced measures of their own. And in the U.S., California’s governor announced last week he intends to begin enforcing the state’s new privacy law, the California Consumer Privacy Act (CCPA), as soon as July.
Complying with these laws can force companies to expend considerable time and expense mapping their data and responding to customer requests, and can lead to fines if they fail to do so. Ethyca is seeking to provide a shortcut with its service, which it touts as a way to “scrap the spreadsheets” when it comes to the GDPR and CCPA.
The arrival of services like Ethyca, whose advisers include a top technology official from the Obama administration, may also mark a shift in the way many companies conceive of data in the first place. According to Kieran, a self-described computer science and physics dropout, the tech industry has a poor track record when it comes to privacy, in part because of an ethos that prizes speed over caution.
“We don’t do ethics very well in computer science,” he says. “But software has become a form of civil engineering, and imagine if an engineer wore a T-shirt that said ‘Move things and break things’ while fixing a bridge.”
Kieran suggests that this attitude is changing, however, as more firms embrace the idea of “privacy by design”—an ideal long espoused by consumer advocates, but often ignored by companies eager to profit from data.
Ethyca is not profitable at the moment, but Kieran says the 18-person company expects to be soon, and that it’s growing at 250% a month. Other investors in its Series A round include IA Ventures and tech entrepreneur Scott Belsky.
More must-read finance coverage from Fortune:


fortune--2020-06-11--China offers shots of experimental coronavirus vaccines to employees of state-run companies

China is offering employees of some large state-run companies the option of being inoculated with two coronavirus vaccines currently in development, showing how quickly the country is moving to test the viability of its homegrown shots.
Employees intending to travel overseas for work can volunteer to be administered vaccinations developed by China National Biotec Group Co. or CNBG, a subsidiary of Beijing-based Sinopharm Group Co., according to people familiar with the matter who asked not to be identified as the offer hasn’t been made public. The proposal was relayed to state-owned companies by the government body that oversees them, the people said.Play Video
CNBG is among the Chinese companies bidding to create a successful vaccine against the new coronavirus. There are currently five Chinese vaccine candidates in the human trial stage, competing with products being developed by global pharmaceutical companies such as AstraZeneca Plc and Moderna Inc. that can bring an end to the pandemic and allow countries to reopen more fully after economically-punishing lockdowns and travel curbs.
Beijing has mobilized its health authorities, drug regulators and research institutes to work around the clock with local companies to come up with the world’s first effective vaccine for Covid-19. If China is successful in the race, it would wield immense geopolitical clout. President Xi Jinping has promised to share any vaccine globally.
CNBG’s experimental shots have been tested on 2,000 people with no reported “obvious adverse effects,” Sinopharm Chairman Liu Jingzhen told local media last month. A CNBG spokeswoman said she was not aware of the vaccine offer and declined to comment further.
The State-owned Assets Supervision and Administration Commission, or SASAC, which oversees China’s government-run companies, didn’t immediately respond to a Bloomberg query.
Generate Data
If state-run company workers avail themselves of the vaccination, not only will they potentially be protected against the virus but their experience could help generate data on the shots’ efficacy in beating the pathogen that has sickened over 7.2 million people and killed more than 411,000 worldwide.
It isn’t yet known whether CNBG’s vaccines, which employ a dead strain of the novel coronavirus to elicit an immune response from the body, can prevent the infection.
The experimental vaccines are currently in Phase II trials and being evaluated for their safety on humans. Their ability to prevent infection of the virus will only be clear in Phase III trials — the final hurdle to clear for securing marketing approval — in which thousands of people take the shot to see how effective it is in an active outbreak environment.
With China’s cases dwindling to only a handful a day, the vaccines will need to be tested overseas where infections are still growing.
It’s uncertain how many employees of state-run firms have taken up the offer and whether they will be tracked for adverse reactions and their immune response. However, their exposure abroad may give an early view into the vaccines’ potential in places where the virus is not yet under control.
In addition to the ongoing clinical trial, Sinopharm’s Liu and hundreds of the company’s senior managers and employees have voluntarily taken the shots, according to Chinese news reports. CNBG is building factories that will enable the vaccine maker to churn out more than 200 million doses annually, it has said.


fortune--2020-06-11--‘Cautionary tale:’ Mike Pompeo says HSBC saga shows what happens when business supports Beijing

HSBC, the London-based bank with a large presence in Hong Kong, is becoming further ensnared in tensions between Beijing, the U.S., and the U.K.
On Tuesday, U.S. Secretary of State Mike Pompeo said the U.S. “stands with our allies and partners” against Beijing’s “coercive bullying tactics” toward HSBC. With his statement, Pompeo was referring to reports that HSBC executive Mark Tucker warned U.K. Prime Minister Boris Johnson that the Chinese government may punish HSBC if the U.K. decides to ban Huawei, the Chinese tech giant, from building the U.K.’s 5G networks.
“The [Chinese Communist Party’s] browbeating of HSBC, in particular, should serve as a cautionary tale” in relying on Beijing, Pompeo said.
Indeed, HSBC seems stuck between Beijing and a hard place. Governments and investors in Western countries see the bank as being far too cozy with the Chinese government. But in China, the bank is being seen as not supportive enough of Beijing’s interests abroad.
National security law scares investors
Last week, HSBC’s Asia head Peter Wong publicly declared support for Beijing’s new national security law in Hong Kong.
Beijing says that the law, which may to go into effect as early as August, will target only select individuals in Hong Kong who threaten China’s national security via subversion, secession, terrorism, or foreign interference.
“The legislation targets only a very small number of people whose behaviors gravely jeopardize national security,” said China’s foreign ministry spokesperson Hua Chunying at a press conference on Monday.
The U.S., U.K., and other governments have denounced the law, saying it risks undermining the city’s relative autonomy from Beijing and the “one country, two systems” legal framework that has defined the city’s relationship with the mainland since it was handed over from the U.K. to China in 1997. The details of the law have yet to be released, but it has already sparked fears that Hong Kong’s status as a global financial hub may be under threat, and some 30% of American businesses in Hong Kong are already preparing to scale down their operations in the city.
At her Monday press conference, Hua cited HSBC’s support of the law as a “voice of confidence” that Hong Kong’s business environment won’t be hurt by Beijing’s new policy.
“There is no need whatsoever for foreign investors and the law-abiding Hong Kong residents to worry,” she said.
However, at least one major HSBC investor is concerned.
On Tuesday, the U.K. asset management firm Aviva Investors, which is a top 20 shareholder in HSBC, expressed alarm over the bank’s support for the law.
“We are uneasy at the decisions of HSBC and Standard Chartered to publicly support the proposed new national security law in Hong Kong without knowing the details of the law or how it will operate in practice,” David Cumming, chief investment officer for equities at Aviva Investors, said in an emailed statement, according to the Nikkei Asian Review.
Yet, as those in the West grow wary of HSBC’s support of the central government’s new law, some in mainland China are questioning whether HSBC is devoted enough to Beijing.
The Chinese nationalist-tabloid the Global Times said on Tuesday that HSBC’s support of the law was “late,” and the bank held a “lingering ambiguous attitude” toward the new policy.
In his statement, Pompeo said China’s new alleged threats against HSBC, even after the company’s public support of the law, should serve as a warning for businesses and countries working with Beijing.
“[Wong’s] show of fealty seems to have earned HSBC little respect in Beijing, which continues to use the bank’s business in China as political leverage against London,” Pompeo said.
HSBC and Huawei
Beijing’s new alleged threats against HSBC over Huawei’s contract in the U.K. have also revived previous claims that the London bank colluded with foreign authorities against the Chinese tech giant.
In 2016, HSBC launched an investigation into its own business with Huawei over Washington’s concerns that the Chinese tech giant had covered up its dealings in Iran in violation of U.S. sanctions. HSBC presented its findings to the U.S. Department of Justice in 2017, which the U.S. government then used to bring criminal charges related to the sanctions violations against Huawei’s chief financial officer Meng Wanzhou.
Meng, who is also the daughter of Huawei CEO and founder Ren Zhengfei, was detained by Canadian authorities in December 2018 on extradition orders to the U.S. Shortly thereafter, U.S. authorities announced federal charges against Meng for facilitating Huawei’s business in Iran via an “unofficial affiliate” called Skycom. Huawei sold its stake in Skycom in 2007, but the U.S. alleges that Huawei maintained control of the organization and used it to sell millions of dollars of telecom equipment in Iran. Huawei denies the allegations.
Meng remains under house arrest in Vancouver while fighting the extradition. On May 27, Canadian courts denied Meng’s most recent appeal to dismiss the charges.
Meng’s case has become a sticking point between Huawei and HSBC.
In February, Huawei accused HSBC of cooperating with the American government’s efforts to “depict Huawei as the mastermind of HSBC’s [own] sanctions violations.” Huawei also said that HSBC misled U.S. authorities about Huawei’s ties to doing business with Iran. HSBC denied the allegations, and said the bank “factually responded to the DOJ’s requests for information.”
Nonetheless, HSBC’s role in the Meng Wanzhou affair, combined with its perceived wavering support for Beijing’s national security law in Hong Kong, will make the bank “far from safe” from government reprisals, according to Chinese state media.
For now, the U.S. is using the HSBC saga as additional firepower in its ongoing battle with China’s leadership regime. “Beijing’s aggressive behavior shows why countries should avoid economic overreliance on China and should guard their critical infrastructure from [Chinese Communist Party] influence,” Pompeo said.


fortune--2020-06-11--Why this analyst says the future of cars is electric—and Chinese

The coronavirus pandemic has upended the global car industry—but China remains a bright spot amid the disruption.
After shutting down from late January until early March during the early stages of the country’s battle with COVID-19, Chinese car manufacturing is now fully operational and there are signs that car buyers are returning to pre-pandemic purchasing levels.
China’s ability to reopen its economy quickly doesn’t just provide global automakers a chance to salvage profits in China; it may let Chinese automakers accelerate long-held ambitions to expand globally and become an electric vehicle manufacturing hub by 2025, says Michael Dunne, the chief executive officer at ZoZo Go, a San Diego-based consultancy that advises automakers, suppliers, and investors on strategy and operations in Asia.
Currently, China is the largest automobile manufacturer in the world, and in 2019 made 28% of all vehicles produced globally, according to the International Organization of Motor Vehicle Manufacturers. That output, however, serves China’s domestic market almost exclusively. China exported roughly 3% of the vehicles it produced in 2019. It lags behind Japan, Germany, and the U.S. in selling its cars globally. Last year, for example, China exported roughly one million cars abroad whereas Germany sold roughly 3.5 million overseas.
This week, Dunne told Fortune’s Clay Chandler why China’s global footprint in the automotive space is likely to expand as the world battles the pandemic in the coming years. He also discussed the challenges and opportunities Chinese manufacturers will face in expanding abroad amid heightened U.S.-China tensions, how China’s own auto market has rebounded during the country’s economic reopening, and why the future of Chinese vehicles is electric. The conversation below has been edited for length and clarity.
Fortune: Passenger car sales in China have increased for the past two months. Has China shaken off the shock of the coronavirus?
Michael Dunne: The comeback has been remarkable. If we go back to February, the entire industry and the market came to an absolute standstill. Factories weren’t building cars and no consumer was going to a dealership. Sales tanked 80%—80% in the world’s largest market. But you’ve really had a tremendous recovery after that standstill. In May, sales are up again, not by a lot.
What is the mindset of Chinese consumers right now?
Cautious, careful, circumspect. There’s a cloud of uncertainty that’s hanging over the Chinese economy. U.S.-China trade tensions, job losses in the economy, people are unsure, and they’re being quite careful about the way they spend.
How much is the pandemic disrupting auto production lines in China?
Production is not a problem in China. Workers are back, supply chains are more or less in order. China’s supply chains are largely here inside China; it’s not an issue of relying on a lot of parts coming from overseas.
The question mark remains where demand is going to be in these coming months. [China has] the capacity to make up to 40 million vehicles a year with demand at home at about 20 million. So, do the math, and there’s just enormous pressure for them to push out [to foreign markets]. And they will push out.
But [China] really has its eyes on Southeast Asia, Africa, and South America; those are markets where the consumer is more price sensitive. In terms of the United States and Europe, it’ll be another five years before we really see Chinese cars on American roads. It’s going to be a while.
The Chinese automaker Geely announced intentions to merge with Volvo in February. Can we expect to see more of that kind of cross-border investment in the auto industry from China?
That deal represents a strategic direction for Chinese automakers as they go overseas. It will be difficult for Chinese to build their own ‘transplants’ [or foreign-owned manufacturing facilities] in other markets, but the approach that Geely took with Volvo has been phenomenally successful.
Volvo has had record sales, record profits. They’re firing on all cylinders and the key there is that rather than [Geely] trying to build [its] own brand, which in many consumers’ minds might be tarnished to begin with, [Geely] instead just acquired another brand.
Acquisition is going to be a key tool for Chinese as they go abroad.
Do you expect political backlash against and restrictions placed on that Chinese investment?
No question about that, and especially here in the United States. In 2017, we [at ZoZo Go] were stunned to discover that over a hundred Chinese owned [auto] firms were operating in the United States. Most of them are parts makers, and came in through acquisition. But, wow, who would have guessed there are so many Chinese companies operating in the U.S.?
Since 2017, that needle has not moved. [Chinese auto companies] are holding their ground here, but fresh investment has gone to almost zero. That’s largely due to perceptions that the U.S. is no longer an easy and friendly place to step into.
What is China’s vision for electric vehicles?
China is saying [to global automakers], ‘If you want to play here, you must build electric vehicles.’ For global automakers this time, there’s really no workaround, there’s nowhere to run, they really have to comply.
China also has invested heavily in charging stations nationwide. So China has by far the largest network of electric car chargers of any country and Tesla, for example, has a huge network not only between cities but inside cities.
Look for China, come hell or high water, to be No. 1 in electric vehicles, remain No. 1 and be the export hub globally for electric vehicles. That’s a vision from Beijing.
This story is part of Eastworld Spotlight, a series of conversations on matters of business, tech, and finance with executives, experts, entrepreneurs, and investors in Asia. Subscribe to Fortune’s Eastworld newsletter to get them in your inbox.


fortune--2020-06-11--Read before you RT: Twitter will ask some users to actually click a link before retweeting an articl

Read before you RT: Twitter will ask some users to actually click a link before retweeting an article

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Twitter Inc. will prompt some users to click links to other websites before retweeting them, part of an effort to discourage the spread of misinformation and foster more thoughtful communication on its social network.
“Sharing an article can spark conversation, so you may want to read it before you Tweet it,” the company said in a tweet Wednesday. The prompt will only apply to Twitter users on the Android mobile operating system for now. The San Francisco-based company is experimenting with other ways to improve user interactions on the service—it’s also running a test where it will ask users to reconsider before they send vulgar tweets.
Twitter Chief Executive Officer Jack Dorsey promoted the feature with a tweet of his own. “Did you read the article you’re about to spread?” he posted along with the announcement.
Did you read the article you’re about to spread? https://t.co/bUsvprod5C — jack (@jack) June 10, 2020 At least one high-profile user likes the idea: Tesla Inc. and SpaceX CEO Elon Musk, whom Dorsey has said is his favorite tweeter. “Great point,” Musk tweeted Wednesday in response to Dorsey’s post. “Many articles are retweeted based on headlines that don’t match the content.”


fortune--2020-06-11--2020 Coachella and Stagecoach music festivals are canceled over coronavirus concerns

The Coachella and Stagecoach music festivals have been canceled this year due to coronavirus concerns.
Dr. Cameron Kaiser, Riverside County’s public health officer, signed an order Wednesday canceling the popular festivals outside Palm Springs. Health officials are concerned about a possible surge in coronavirus cases in the fall.
Coachella, a massive music and arts festival, and Stagecoach, a country music event, are typically held in April but were previously postponed until October.
Now, “given the projected circumstances and potential, I would not be comfortable moving forward,” Kaiser said.
Travis Scott, Calvin Harris and Frank Ocean were set to headline Coachella. The Stagecoach lineup included Lil Nas X, Carrie Underwood and Billy Ray Cyrus. Both festivals are held in Indio.


fortune--2020-06-11--Amazon bars police from using its facial recognition technology for a year

Amazon will bar police from using its facial recognition technology for a year amid the nationwide protests over racial injustice and law enforcement bias.
The company said on Wednesday that it would pause selling its nearly four-year-old Rekognition service, which could be used by law enforcement to identify potential criminal suspects.
Many civil rights activists and A.I. researchers worry that A.I.-powered technology like facial recognition software is prone to bias and that it is more inaccurate when used on people of color and on women. They’re also concerned that police, some of whom have a history of racial discrimination, will use the technology to target black and Latinx neighborhoods.
“We’ve advocated that governments should put in place stronger regulations to govern the ethical use of facial recognition technology, and in recent days, Congress appears ready to take on this challenge,” Amazon said in a statement. “We hope this one-year moratorium might give Congress enough time to implement appropriate rules, and we stand ready to help if requested.”
Amazon’s moratorium comes days after IBM said it would stop selling facial recognition technology for the foreseeable future. On Monday, IBM CEO Arvind Krishna sent a letter to Congress that called for police reform and also applauded members of the U.S. House for recently introducing legislation intended to curtail police misconduct.
A number of civil rights organizations and even some of Amazon’s investors have urged the e-commerce giant to stop selling facial recognition services to law enforcement. In 2018, The American Civil Liberties Union discovered that Amazon’s Rekognition technology matched 28 members of Congress to criminal mug shots, highlighting flaws in the service in accurately identifying people of color.
At the time, Amazon disputed the ACLU’s facial recognition tests, saying that the organization had used a setting that was too low, resulting in poor accuracy.
Nicole Ozer, the ACLU’s technology and civil liberties director, said in a statement about Amazon’s announcement, “It took two years for Amazon to get to this point, but we’re glad the company is finally recognizing the dangers face recognition poses to Black and Brown communities and civil rights more broadly.”
She continued: “This surveillance technology’s threat to our civil rights and civil liberties will not disappear in a year. Amazon must fully commit to a blanket moratorium on law enforcement use of face recognition until the dangers can be fully addressed, and it must press Congress and legislatures across the country to do the same.”
Meanwhile, Evan Greer, the deputy director of advocacy group Fight for the Future, said in a statement that Amazon’s retreat is “nothing more than a public relations stunt.
“They’ll spend the next year ‘improving’ the accuracy of their facial recognition algorithms, making it even more effective as an Orwellian surveillance tool,” Greer said. “Then they’ll unleash their army of lobbyists to push for industry-friendly ‘regulations’ that assuage public concern while allowing them to profit.”
Although it will bar police, Amazon said it would continue to make its facial recognition technology available to other groups. They include the anti–human trafficking organization Thorn, the International Centre for Missing & Exploited Children, and Marinus Analytics, which partners with law enforcement to rescue human trafficking victims.