fortune--2020-05-22--Reopening hair salons, spas, and other beauty businesses probably won’t be as difficult as you’d ass

Reopening hair salons, spas, and other beauty businesses probably won’t be as difficult as you’d assume

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Ora, a new acupuncture spa in New York City, had only been open for a week in March before the outbreak of COVID-19 prompted an economic shutdown.
“We had our opening event and were seeing a great number of appointments being scheduled,” says Ora founder Kim Ross. “However, when social distancing measures were put in place, we, of course, adhered to them and had to quickly close and make arrangements for clients virtually.”
Now that some regions and countries are beginning to lift their lockdowns, questions about how to maintain and regulate social distancing remain. Much like restaurateurs and bar directors, wellness and beauty business owners are asking government officials for clearer guidance on how to reopen salons properly. But given how slow federal agencies have been to provide coherent guidance, many salon managers are proactively planning, discussing, and collaborating on how to safely prepare for reopening.
In contrast to restaurants and bars, reopening beauty and wellness businesses could go a lot smoother and a lot faster. Despite the obvious requirement of aestheticians needing to be physically close to their clients, salons might be better optimized for social distancing. Stylists can move chairs apart more freely, customers are seated and treated individually, not crowded around a communal table or bar. And seeing a hairdresser in a face mask isn’t as off-putting as seeing one on a server. (The latter example has some fine-dining establishments understandably concerned about ruining the ambiance).
Ora offers a modern twist on the traditional acupuncture clinic, with a Rockwell Group–designed space (the same firm behind the Equinox Hotel) and a tea and tonic bar in the waiting room upon entry. Phoebe Cheong Photography
Still, while the unintended spread of infection is not new to the world of beauty salons and medical spas, the presence of COVID-19 has raised the bar for cleanliness to an unprecedented level. This is especially relevant to hairdressers, nail technicians, aestheticians, and massage therapists who do not have the luxury of distancing themselves from their clients or working behind plexiglass.
“If beauty professionals are to return to their jobs and work in an environment that is safe for staff and clients alike, significant changes will need to take place, representing a shift to a new norm or 2.0 version of the industry from which we may never go back,” says Jeff Alford, president of the CBON Group, a distributor of salon and spa industry products across North America. “This transformative change will come with a need for significant investment, retraining, and repurposing of salons and spas for a new life in the age of coronavirus and future outbreaks.”
Alford stresses it will be critical to disinfect all client touch points, including workstations, treatment furniture, counters, waiting areas, and bathrooms. He suggests this activity should take place between each appointment and be allowed the requisite contact time, which can be anywhere from three to 10 minutes. However, he warns that not all disinfectants are the same, and salons and spa owners should undertake a full investigation of the options; some are accompanied by harsh side effects through prolonged exposure like eye and skin irritation or respiratory issues.
“The new salon ‘infection prevention practitioner’ will need to become very familiar with precautionary label language, correct usage, compatibility issues to ensure germs, bacteria, and viruses are being appropriately removed from their facilities,” Alford explains.
At the Rita Hazan salon, potential new protective measures include taking temperatures of both clients and staff prior to walking in, social distancing between chairs, cutting appointment occupancy in half, and requiring payment and tips be made virtually, versus being handed to the staff by card or cash. Courtesy of Rita Hazan Salon
Ora had a small skeleton staff to begin with as it had just opened, and Ross says she took a lot of measures to keep the team involved for as long as possible despite the circumstances: “I think all small-business owners can agree that no one could have predicted that the shutdown would last as long as it has.”
The good news for Ora, according to its founder, is that acupuncture, as a practice, is based on sterility in terms of how the treatment is performed. Ora acupuncturists are highly-trained, Ross underscores, and part of that training is an intense focus on providing the most sanitized tools and experience possible, which includes constant handwashing and no skin-to-skin contact.
Moving toward reopening, Ross stresses remaining “hyper-focused” on providing that same extreme level of cleanliness and personalized care that accommodates those clients harboring higher levels of anxiety and strain after living through a global crisis, with some updates to accommodate a post-COVID world.
Booking appointments during the first wave of reopenings will be staggered to ensure that no groups congregate in the waiting area, and clients will be welcomed to situate themselves in their treatment rooms as they arrive should they wish to avoid the public areas entirely. Acupuncturists will be provided with personal protective equipment (PPE)—including masks, gloves, eyewear, booties for shoes, and specialty in-space-only uniforms that will be kept in the workplace and not worn out on the street. The entire space will be sanitized thoroughly, and the tea and tonic bar will be open to patrons only, encouraging beverages to be taken “to-go” to maintain social distancing protocols. Ora will also be expanding its health care coverage and sick leave policies.
All clients will be asked to wear masks, and masks will be provided if needed. Ora will also provide gloves to customers if they wish to shop retail offerings in the space, and temperatures will be taken and checked upon entry. Ora plans to launch a proprietary app soon, which will allow for contactless checkout and for all digital forms to be filled out ahead of time to make sure nothing is passed between two people at any point.
Heyday says it will become “exponentially more communicative” about updated policies and practices, sharing information about disinfectant products and protective equipment, such as face shields and face masks used by the brand’s skin therapists. Courtesy of Heyday
Face masks before facial masks
Prior to COVID-19 and the temporary closure of its 11 locations, Heyday was thriving. With numerous shop openings and various brand collaborations planned, the mini chain of skin-care spas had anticipated its strongest year yet as a business.
Once it became clear that all nonessential business were going to need to close indefinitely, making physical arrangements was the easy part, from sanitizing the shops before closure as quickly as possible, and later, rounding up remaining PPE for local medical donations when those supplies were in short supply. “The most thoughtful and planned work came around communication, both internally and externally, to try to answer as many questions as possible that we knew were running through people’s minds,” says Michael Pollak, cofounder and chief experience officer of Heyday. “We always put ourselves in the shoes of our audience, but the anxieties were heightened around that period.”
Heyday is still finalizing how it plans to reopen. Among the proposed methods being worked out include issuing health questionnaires to discern any symptoms or exposure to those with symptoms (for both team members and for customers prior to appointments); only accepting appointments and no walk-in traffic for retail or services; implementing a text-message service between the front desk and clients for arrival notifications; and simple but effective changes to the physical space, such as touch-less hand sanitizers, acrylic separators between the front desk and clientele, and foot-pedal door openers to limit surface touching.
“We are still working through this, but we will continue to lean into our goal of making skin care accessible,” Pollak says. “Through the pause, we’ve had the opportunity to make some upgrades to our services and delivery of them, and look forward to delivering high-quality treatments at an affordable level for our clients.”
“As a person-to-person service business, we have always maintained the highest of standards when it comes to cleanliness and hygiene within our shops,” says Michael Pollak, cofounder and chief experience officer of Heyday. Courtesy of Heyday
Rita Hazan, founder of the Rita Hazan salon on Fifth Avenue in Manhattan, says her salon was always steady with clients, and it was very busy (if not almost overbooked) right up to the shutdown with customers preparing for the holidays and travel plans surrounding Passover, Easter, and spring break.
The management team decided to close down the salon on March 15, a week earlier than what was mandated by the State of New York. Hazan says she personally felt it was important to keep her staff and clients safe. Thus, the team started to cancel appointments, offering customers custom color kits—which included their unique color formulas, gloves, bottles for color, bowls, and professional application brushes—alongside directions and a tutorial made for them. The team ended up deep-cleaning the entire salon before it closed, for what was assumed would only be two weeks.
“It is always a priority to have our salon remain immaculate and clean,” Hazan says. “But now we will be even more cautious and will ensure the salon is deep-cleaned and sanitized before we reopen each day and in between each appointment.”
To help gather input from all possible parties—staff, clients, and even other salon owners—Hazan posted to her personal Instagram feed to get candid insights on the policies that should be put in place to make revisiting the salon comfortable. “The insight that was gathered was totally aligned with what we had been planning for,” she says, noting suggestions included leaving front doors open to avoid touching extra surfaces, payments made over the phone or virtually (and absolutely no cash), partitions between each station, and, of course, PPE consisting of face shields for technicians as well as disposable robes and capes for customers.
“The salon business is one of the most personal businesses of one-on-one interaction, so we have to be extremely careful when reopening for both our staff and clients,” Hazan says.
However, as much as business owners might want to reassure customers that experiences will be just as close to normal (and just as valuable) as they were pre-pandemic, customers will need to adjust their expectations. Multiple salon owners said they will be closing off their waiting areas altogether, asking patrons to wait outside before appointments, which could be problematic in inclement weather. At Rita Hazan, clients will be asked to come in with the least amount of items during their appointment, including refraining from bringing large shopping bags and personal items, such as purses or jackets. But these measures, too, could prove to be difficult if customers are trying to fit in appointments between meetings during a workday—say, while carrying a large briefcase or laptop bag—or into the winter months when wearing a large coat is unavoidable.
Some amenities will also be changed—if not discontinued altogether. If clients are coming in for a haircut at Rita Hazan, they will be asked to come in with their hair already clean and wet, ready to be cut, to ensure less contact. Staff will be sanitizing each station in between appointments, but if clients feel more comfortable bringing in their own tools and products, the staff will accommodate that request. And complimentary beverages—a previously available perk of the salon—will be offered in disposable cups, if the service is continued at all.
Ahead of reopening, Alchemy 43 founder Nicci Levy says some of the top requests she has received from clients have included tips and tricks to maintain their regimens at home; to be added to a priority waiting list for appointments after reopening; and simply, to “reopen ASAP.” Courtesy of Alchemy 43
“My business has been open for 15 years, and my clients know how important cleanliness in my salon was, even before this pandemic,” Hazan says. “Now it’s my time to go far beyond and keep everyone safe upon returning to this ‘new normal.’”
On the rebound
Prior to closing its doors in March, Alchemy 43, an aesthetics bar with multiple locations across Los Angeles and New York, specializing in cosmetic micro-treatments such as Botox and Juvéderm, was thriving with increased revenue both month over month and year over year.
And also like many other service-oriented businesses, Alchemy 43 had to furlough most of its employees, which founder and CEO Nicci Levy admits was hard, but, she adds, the business was fortunate enough to keep a few staff needed for the shutdown period. The company maintained health care coverage for furloughed staff and will continue to do so through reopening.
“As a CEO and founder, I had to make quick and tough decisions and, at the same time, create solutions that would essentially keep the company moving forward during these uncertain times,” says Levy. “I believed it was very important to pivot quickly and not lose connection with our team, which is why I personally kept in touch and have continued to provide regular updates to them during the forward process of modified reopenings.”
Leaning on local guidelines and mandates under the instruction of New York– and California-based medical directors, Alchemy 43 will be implementing new procedures that the company says will abide by government regulations on top of existing medical standards already in place. The company is developing what Levy describes as a “structured environment” of social distancing measures, organized by stickers on the floor denoting proper distances between clients.
A hairdresser takes the temperature of a client in Molfetta, Italy, on May 18, the date of reopening for beauty salons, hairdressers, and barbers, with due protocols and safety measures to be respected. Davide Pischettola/NurPhoto via Getty Images
Needless to say, virtually everyone in the industry is suffering—at least financially—from the pandemic. Hairdressers in other countries, from New Zealand to Italy, starting to reopen saw a rush on appointments immediately. But if salons and spas adhere to strict social distancing policies, they are not going to be able to accommodate as many clients at one time as they could before the pandemic. With business down for several weeks and counting, and possibly a slow restart ahead, customers may be concerned about businesses attempting to recoup losses through price hikes.
At this stage, Alchemy 43 says it has no plans to increase pricing. “From day one, I have been committed to ensuring that Alchemy 43 delivers a competitive, fair pricing model that is both simple for the client and lends itself to the best treatment outcomes,” Levy says. She remains optimistic that the salon will be able to bring back most, if not all, employees when it launches a modified reopen to meet client demand, and that pent-up demand will help the medical spa bounce back to a road toward growth throughout the remainder of the year and into 2021.
“We will move forward with ways to make everyone in the situation the most comfortable, from private rooms to PPE to less salon volume,” says Rita Hazan. “We know that clients are very excited to get back in the chair as soon as possible.” Courtesy of Rita Hazan Salon
“I, personally, do not believe this is the time to raise costs at the salon,” Hazan says. “Everyone is suffering in their own ways, and we want to remain loyal and compassionate to our existing and new clients. I do not believe that raising service costs will help to make up for what was lost, and believe that if we can move forward and restart we will get further.” Hazan says the salon will even offer price adjustments to its long-standing clients until they get back on their feet, whether their current hardships be the result of illness, pay cuts, or unemployment.
As a small business that is brand-new, Ross says Ora is still in the process of exploring different price points. She adds Ora will also be offering free treatments for hospital workers, to serve as a thank-you for their efforts on the front line during this pandemic.
“If COVID-19 has taught us anything, it’s that we’re all vulnerable in different ways physically and emotionally,” Ross says. “Many of our clients have requested help around building proactive measures they can implement at home, to carry with them as things begin to return to normal.”
Pollak says Heyday’s most loyal clients are very eager to visit again: “We know this from the outpouring of inbounds that we’ve received to the tune of, ‘I can’t wait to get a facial—it’s going to be one of the first things I do.’ Our community knows that when the time is right to reopen, they trust us full-heartedly to take the necessary precautions to ensure their safety in our shops.”


fortune--2020-05-22--Facebook reveals its new normal

Facebook reveals its new normal

Social distance , party of one : Photos showing how the coronavirus is changing how we dine out

This is the web version of Data Sheet, Fortune’s daily newsletter on the top tech news. To get it delivered daily to your in-box, sign up here.
Uncertainty is the new byword. Target CEO Brian Cornell put it well following the report of his company’s better-than-expected revenues and worse-than-expected profits. “We are still trying to understand what’s going to happen with children going back to school, what’s happening with colleges and universities and how guests will celebrate holidays,” he said, according to The Wall Street Journal. “There is just so much uncertainty.”
Mark Zuckerberg clarified things a bit Thursday by declaring that within a decade, half his company’s employees will be working remotely. Zuckerberg’s comments were just vague enough to give Facebook wiggle room in the execution and just specific enough to dispel any doubt that workplaces everywhere really will be changing when we finally emerge from the pandemic.
It has become cliché to observe the world won’t be the same. (Remember the hopes of a “v-shaped” recovery?) We’ve assumed commercial real estate would be reshaped, that consumption patterns would change, that cities wouldn’t look the same.
Now, with Facebook’s news, we can begin to understand how this epic event will have lasting effects. Zuckerberg said newly hired senior engineers will have the option of joining remotely. Then other employees who have positive performance reviews can request permission to work from outside the office. Some who work from home from less expensive locales may have their pay adjusted downward, as well.
Zuckerberg said a few different ways that Facebook will move in a measured manner and also that some employees will still need to come into the office. (Hardware engineers, for example.) For the rest of this year, Facebook’s offices will operate at 25% or less of their current capacity to maintain social distancing.
Offices aren’t going away. In-person collaboration will still count. So will hubs near cities with cultural and academic institutions.
But the old normal won’t be the new normal.
***
We spend a lot of time scrutinizing the role of CEOs, and rightly so, but there are many other key players in tech. Aaron delved into the incredible career of chip designer Jim Keller, whose work is inside everything from iPhones to Xboxes to Teslas.
Have a restful weekend. We will see you back here on Tuesday.
Adam Lashinsky
@adamlashinsky
adam.lashinsky@fortune.com
This edition of Data Sheet was curated by Aaron Pressman.
NEWSWORTHY
Pink slip profusion. The job cutting in tech has moved from startups to long-established players. Hewlett Packard Enterprise CEO Antonio Neri said Thursday that the company is looking to save $1 billion this year through layoffs, salary reductions, and other measures. IBM is also quietly cutting several thousand workers.
Waves my wand. Speaking of job cutting startups, augmented reality startup Magic Leap cut half the jobs in the company last month. Now comes news it is raising $350 million of fresh backing. CEO Rony Abovitz says the money will keep the next-gen Magic Leap 2 system on track.
Mo money, mo problems. The little world of celebrity podcasting and videos is growing up fast. After Spotify had signed up Joe Rogan's super-popular podcast for exclusive distribution, Apple is now seeking to hire someone to oversee podcast development tied in part to its video service, Apple TV+. And in news I found a little like Charlie Bucket discovering Willy Wonka was a mean old man, John Krasinski sold the rights to his Some Good News YouTube show to ViacomCBS's Comedy Central.
Huzzah. The money just keeps pouring in for Indian wireless titan Reliance Jio. After collecting large sums from Facebook and private equity firms General Atlantic, Silver Lake, and Vista Equity Partners, Reliance is getting another $1.5 billion from the pioneer of the private equity industry, KKR.
This is our life now. Microsoft held its annual Build conference for developers this week (all virtually, of course). There were a ton of announcements, including a new Airtable competitor called Lists and Pinterest integration in the Edge browser.
All I do is win, win, win. On Wall Street, graphics chipmaker Nvidia said sales rose 39% to $3.1 billion, largely due to an 80% jump in its data center segment. Nvidia's stock, already up a blistering 49% in 2020, was about unchanged in pre-market trading on Friday.
FOOD FOR THOUGHT
AT&T, IBM, Xerox and many other longstanding tech giants used to have one thing in common: corporate research labs that could look into far-off technologies. Bell Labs invented the transistor and Xerox PARC gave us the mouse and windowed desktop software. Retired developer David Rosenthal lived through that era and blogs about a new study of what has been lost since the closing of the labs. Sometimes the developments led to whole new companies.
PARC had both spin-offs, in which Xerox had equity, and startups that built on their ideas and hired their alumni but in which they did not. Xerox didn't do spin-offs well...But Cisco is among the examples of how spin-offs can be done well, acting as an internal VC to incentivize a team by giving them equity in a startup. If it was successful, Cisco would later acquire it. Sun Microsystems is an example of exceptional fertility in external startups. Nvidia was started by a group of frustrated Sun engineers. It is currently worth almost 30 times what Oracle paid to acquire Sun. It is but one entry in a long list of such startups whose aggregate value dwarfs that of Sun at its peak.
FOR YOUR WEEKEND READING PLEASURE
A few long reads I came across this week:
The YouTuber Turning Black Men’s Hair Care into Video Gold (Level)
William Humphrey isn’t just entertaining his hundreds of thousands of subscribers — he’s showing that hair care can be self-care.
Can an artificial intelligence learn to beat the stock market? (Fast Company)
Jeff Glickman spent decades building an AI to rival the best minds on Wall Street. Is it possible that he's cracked the code?
How HBO took on the streaming wars (Financial Times)
Creating a rival to Netflix is more urgent than ever for WarnerMedia. Will the HBO Max moonshot succeed?
When SimCity got serious: the story of Maxis Business Simulations and SimRefinery (The Obscuritory)
SimCity wasn’t meant to be taken seriously. But that didn’t stop companies from believing Maxis could design realistic simulations. Will Wright didn’t believe that was even possible. “Many people come to us and say, ‘You should do the professional version,'” he continued. “That really scares me because I know how pathetic the simulations are, really, compared to reality.”
IN CASE YOU MISSED IT
How Best Buy’s new concierge service is making in-store shopping safer By Phil Wahba
Facebook Workplace just hit a big milestone By Jonathan Vanian
Shareholders dunked on CEO pay at CVS and Intel. Stock performance may be next By Aaron Pressman
Why Spotify’s Joe Rogan deal could change the podcast business forever By Aric Jenkins
What to do if your employer stops matching your 401(k) contributions By Anne Sraders
(Some of these stories require a subscription to access. There is a 50% discount for our loyal readers if you use this link to sign up. Thank you for supporting our journalism.)
BEFORE YOU GO
When I was a kid, one of the great big fun movies was The Cannonball Run starring Burt Reynolds about a secret, illegal car race across the United States from New York to L.A. Turns out, it's a real thing. And with so much less traffic on the roads, drivers have broken the record for the fastest ever time. Seven times. Apparently, a YouTube documentary is coming real soon. Have a great weekend and don't drive too fast.
Aaron Pressman
@ampressman
aaron.pressman@fortune.com


fortune--2020-05-22--China’s latest encroachment could risk Hong Kong’s special trade status with U.S.

On Thursday, one day before the National People’s Congress (NPC) gathering of China’s political elite, Beijing said it would bypass Hong Kong’s legislature and introduce national security laws that would ban sedition, secession, and subversion of China’s central government—the clearest sign yet of Beijing’s intent to dampen political dissent and further exert its influence in semiautonomous Hong Kong.
U.S. politicians responded swiftly, launching bipartisan measures that oppose Beijing’s proposal and signaling that political tensions between the U.S. and China—already strained by the coronavirus pandemic and the trade dispute—may get even worse.
“A further crackdown from Beijing will only intensify the Senate’s interest in reexamining the U.S.-China relationship,” Senate Majority Leader Mitch McConnell (R-Ky.) said on Thursday after the announcement.
That reexamination may come sooner rather than later. Hong Kong enjoys a special trade status with the U.S. that treats it differently from China. A review of that status is overdue and could be an opportunity for Washington to rebuke Beijing for its recent move.
Under review
The annual review of Hong Kong’s autonomy will be the first since President Donald Trump signed the Hong Kong Human Rights and Democracy Act (HKHRDA) into law on Nov. 27, 2019.
On May 6 of this year, U.S. Secretary of State Mike Pompeo said he was postponing the 2020 review until after the NPC had met so the U.S. could account for any decisions Beijing made about Hong Kong during the gathering.
On Friday, Pompeo called China’s proposed law “a death knell” for the autonomy of Hong Kong. “The United States strongly urges Beijing to reconsider its disastrous proposal,” Pompeo said in a statement.
Chinese delegates await the opening of the National People’s Congress at the Great Hall of the People on May 22, 2020, in Beijing. The central government introduced a national security law for Hong Kong that is seen as curbing the city’s democracy and risking its special trade status with the U.S. Kevin Frayer/Getty Images
The 1992 U.S.–Hong Kong Policy Act, drafted in preparation for the 1997 handover of the region from Britain to China, laid out the possibility that diminished autonomy in Hong Kong could lead to a revocation of its trade status. The HKHRDA added an annual review process to the existing stipulation. It also permits the U.S. to place sanctions on anyone it sees as contributing to the erosion of Hong Kong’s autonomy and bar them from entering the United States.
If the review finds that Hong Kong is not sufficiently autonomous from China, the U.S. can revoke Hong Kong’s special trade status. The revocation would hit bilateral trade—Hong Kong would be subject to U.S. tariffs, sanctions, and export restrictions on China—but Hong Kong and the U.S. only account for a small percentage of the other’s exports.
Reputational damage
The biggest injury would be to Hong Kong’s standing as a global financial hub. When the HKHRDA passed the Senate in November, the American Chamber of Commerce in Hong Kong released a statement warning that the measure could ultimately jeopardize American business in Hong Kong and “damage Hong Kong’s role as an international business center.”
Stocks in Hong Kong plunged on Friday after Beijing announced the plan, displaying investors’ widespread fear of the increased risk from political instability in Hong Kong and the worsening U.S.-China relationship.
“The implementation of the new security law will weaken the confidence of the foreign investors in Hong Kong,” said Yifan Zhang, an associate professor of economics at the Chinese University of Hong Kong.
The Heritage Foundation, a conservative think tank, has rated Hong Kong the world’s freest economy every year since 1990. It had downgraded the city to the No. 2 spot this year, even before Beijing proposed the new law.
“Hong Kong’s traditionally open and market-driven economy has become increasingly integrated with the mainland through trade, tourism, and financial links. Risks to Hong Kong’s economic freedom have grown correspondingly,” the foundation wrote of Hong Kong for its 2020 ranking.
“No matter how tense U.S.-China relations become, it would be a mistake for the U.S. to withdraw Hong Kong’s special trade status,” said Li Chen, an assistant professor of Chinese studies at the Chinese University of Hong Kong.
“Hong Kong has unique advantages in bridging China’s huge and rapidly growing markets with the rest of the global economy,” Li said. “As far as the Chinese markets remain open and attractive, I think the majority of global companies will not be pushed away from Hong Kong by the unilateral changes of the U.S. trade policies.”
‘Wait and see’
American and other foreign companies in Hong Kong will likely take a “wait and see” attitude toward developments in Hong Kong, said Willy Wo-Lap Lam, an adjunct professor at the Center for Chinese Studies at the Chinese University of Hong Kong.
Lam said that the U.S. may threaten to revoke Hong Kong’s special status but will “think very carefully” about whether to actually do so, since such a move would harm U.S. businesses. Still, Lam said, revocation remains “a possibility.”
U.S. lawmakers have proposed other means of rebuffing Beijing’s new encroachment on Hong Kong.
U.S. Sens. Pat Toomey (R-Pa.) and Chris Van Hollen (D-Md.) said on Thursday they will introduce a bill in which the U.S. could sanction Chinese officials and entities that enforce the new national security laws in Hong Kong. The bill seems to build on last year’s HKHRDA, which enables the U.S. to sanction individuals involved in human rights violations in Hong Kong. The new measure goes further—it would also penalize any banks that do business with entities that enforce the new laws.
For Toomey and Hollen’s legislation to become law, it will need congressional approval and President Donald Trump’s signature.
There is a prevailing, bipartisan anti-China attitude in Washington at the moment, amid a global blame game over the coronavirus pandemic and long-simmering trade tensions. But that’s still no guarantee Congress and the White House have the political appetite to take action that could ultimately compromise American business interests.
For now, Lam anticipates “massive demonstrations in the coming days” in Hong Kong, and the passage and implementation of Beijing’s national security law within the next few months.
This story has been updated to reflect Secretary of State Mike Pompeo’s statement on Friday.


fortune--2020-05-22--How CEO Corie Barry kept Best Buy afloat during the pandemic

Good morning, Broadsheet readers! Sen. Amy Klobuchar is on Joe Biden’s shortlist, an attorney breaks a second Supreme Court record, and Best Buy CEO Corie Barry talks about leading through the pandemic. Have a glorious weekend. The Broadsheet will be off for Memorial Day in the U.S. on Monday—we’ll see you here on Tuesday.
– Best Buy boss. For our Fortune 500 issue, our colleague Jen Wieczner talked to Corie Barry, CEO of electronics retail giant Best Buy (No. 74 on the list). This is Barry’s first full year on the job—and what a time to start!
She talked Jen about her decision to close all of Best Buy’s 1,000 U.S. stores on March 22, transitioning to delivery and curbside pickup—despite the fact that, as an essential service, the locations could have remained open. Barry said:
“It was becoming more and more evident that our employees were very concerned for their own safety. And this was met by this really high demand window, where customers really needed what we sold. We put all that in a blender. We moved to the curbside model in literally a matter of 48 hours. And we stopped going into people’s homes to install and do repairs. We just could not look our employees, our customers in the eye and say that that was a safe experience.”
Certainly not an easy call—though there were even more difficult moments to come:
“The single hardest decision was furloughing 51,000 employees. That is just not something that you would ever contemplate or write the manual for,” said Barry. “When we moved to the curbside model on March 22, we said we were going to continue to pay employees whether or not they were necessary in the new model, because obviously this requires just a much more skeleton crew of employees. We did that for four weeks. That’s [because] it would bridge people to when the federal stimulus program kicked in, and in many cases, that program actually would compensate them more highly than we might.”
Beginning this month, Best Buy started trying to create a new normal, reopening some stores using a concierge model, where shoppers make an appointment, then come into the store for a masked and socially-distanced shopping experience with the help of an associate.
The company reported Q1 results yesterday, and it seems that Barry’s leadership is paying off for the company’s bottom line. As Fortune’s Phil Wabha reports, the retailer’s online sales—which include curbside pickup—are up 155%. Best Buy managed to hold onto about 81% of its sales volume during the last six weeks of the quarter, something one Wall Street analyst called “amazing.” (For comparison, sales at U.S. electronics stores overall fell 61% in April).
While I doubt Barry would have picked this as her ideal first year on the job, it’s clear she’s stepped up to the challenge. As she told Jen: “Never has our purpose been more real.”
Read the full Q+A here.
Kristen Bellstrom
kristen.bellstrom@fortune.com
@kayelbee
Today’s Broadsheet was curated by Emma Hinchliffe.
ALSO IN THE HEADLINES
- VP report. Joe Biden has asked Sen. Amy Klobuchar to undergo vetting to be his running mate, CBS News reports. That doesn't mean that Klobuchar is definitely the pick, but is confirmed to be on the shortlist. New Hampshire Sen. Maggie Hassan has also agreed to be vetted, New Hampshire station WMUR reported, while her colleague in the state, Sen. Jeanne Shaheen, reportedly declined.
- Supreme record. Lisa Blatt has argued 40 cases before the Supreme Court—more than any woman in history. The Williams & Connolly partner now holds another distinction: arguing the first case the Supreme Court heard virtually. She represented Booking Holdings in a trademark case over the name Booking.com. Wall Street Journal
- The right expertise. The World Bank has a new chief economist: Carmen Reinhart, a Harvard professor whose area of study is "international financial crises and financial meltdowns." Reinhart replaces Penny Goldberg, who left the post in March. Plus, from another global institution: IMF managing director Kristalina Georgieva argues in a piece for the Financial Times that banks should halt dividends and buybacks to build capital during the economic crisis.
MOVERS AND SHAKERS: Macy's controller and enterprise risk officer Felicia Williams will become interim chief financial officer, replacing CFO Paula Price.
IN CASE YOU MISSED IT
- Yes, and. Former Stitch Fix COO Julie Borstein yesterday launched women's shopping platform The Yes. The startup, with $30 million in funding behind it, delayed its launch from March, but is now moving ahead. Borstein says the company wants to get going to help the 150 brands that will sell through its platform, which are "feeling the impact of the retail stores closing." TechCrunch
- All Ears. Abigail Disney, the heiress and philanthropist who has spoken out about executive pay at her family's company and other progressive issues, is launching a new podcast. The show seems poised to break Disney further into politics, with guests including Cecile Richards and Sen. Elizabeth Warren. The Daily Beast
- Insightful interview. Rowena Chiu was an assistant to Harvey Weinstein in the 1990s and says that he attempted to rape her in 1998 (he denies that allegation, although he has been convicted on other counts of sexual assault). Chiu, who left the workforce, shared her story in 2019, more recently than other Weinstein accusers. In this wide-ranging interview, Chiu discusses the fear she felt signing an ironclad non-disclosure agreement when she was 24, why she initially chose to remain anonymous when the floodgates opened against Weinstein, and her life now. Variety
- To the Full House. The highest-profile parents in the "Varsity Blues" college admissions case, Full House actress Lori Loughlin and husband Mossimo Giannulli, agreed to a plea deal after fighting the charges for months. Loughlin is set to agree to serve two months in prison. Fortune
ON MY RADAR
How Betsey Johnson built a fashion empire and lost her name The New Yorker
The inescapable pressure of being a woman on Zoom Vox
Bethenny Frankel's dark journey to find medical masks New York Times
PARTING WORDS
"We specifically used the term survivor’s guilt. ... Now that these are the circumstances, how do we [operate] in the most responsible, impactful way?"
-Kaylin Marcotte, of new puzzle company Jiggy, on what it's like to launch and run a successful business amid a pandemic


fortune--2020-05-22--Europe pushes for a green recovery as the Trump Administration weakens environmental protections

The dangerous added-effects of air pollution during the pandemic have emerged as the latest partisan flashpoint in Washington. Research shows emissions may heighten the risk of complications and death from Covid-19.
Despite these dangers, and the 94,000 Americans already dead from the virus on his watch, President Donald Trump has continued to weaken environmental rules at the behest of the fossil fuel industry. Over the past few months the Environmental Protection Agency has intensified its three-year campaign to cut protections—for both the environment and public health.
Trump’s EPA is finalizing rules that ease fuel-efficiency standards for automobiles while attacking rules aimed at reducing mercury pollution at power plants. Last month, the agency opted not to strengthen air-quality requirements governing soot, and now it’s seeking to give retailers more time to sell outdated wood heaters that emit more smoke—and potentially lethal air pollution.
But it’s not just the threat posed by air pollution that has left the Trump administration nonplussed. Also this month, EPA Administrator Andrew Wheeler refused to seek limits on a chemical that causes brain damage in fetuses and babies.
With much of the world housebound thanks to the coronavirus, global carbon dioxide emissions are 17% lower compared with the same time last year. To an optimist, the numbers show it’s possible to reduce emissions. To a pessimist, the fact that it took such a catastrophic event to cut emissions—even to 2006 levels—shows the massive task that lies ahead.
Nevertheless, the European Union is poised to announce the world’s greenest recovery package next week, as it seeks to curb pollution and save its economy from the pandemic. European Commission President Ursula von der Leyen is set to transform her Green Deal strategy (which seeks net zero emissions by 2050) into a rescue plan that drives private investment and creates jobs across the continent.
Selected proposals include spending up to 80 billion euros ($87.6 bilion) to boost electric vehicle sales and double investment in charging networks: an option to exempt EVs from the value-added tax; spending 91 billion euros a year to seal up drafty buildings, including plans to offer homebuyers green mortgages; and an annual 10 billion euro boost to renewable energy and hydrogen infrastructure.
The increased funding for renewables is likely welcome news. New power from wind and solar is set to fall this year for the first time in two decades, as new installations are delayed by factory closures, social distancing and developers’ financial concerns tied to the ongoing crisis.
The EU is also seeking to reduce the environmental impact of its food system. Its “Farm to Fork” strategy maps out ways for the region to halve the use of pesticides and antibiotics, boost organic farming, promote plant-based proteins and make every link of the system more sustainable. A separate plan on biodiversity lays out steps to restore ecosystems and cut pollution.
Meanwhile in the U.S., the outlook is much darker on almost every front. Huge meat companies—already under fire as major perpetrators of global warming—are facing blowback as the coronavirus sickens and kills plant workers. Asset managers with $2.3 trillion in assets want meatpackers to adopt recommendations they say will keep workers safe and mitigate reputational and financial risks.
Covid-19 and a weakened food supply chain aren’t the only threats looming on America’s horizon this summer. A warming atmosphere and warming seas are conspiring to wreak devastation during hurricane season.
Tropical Storm Arthur became the first named storm of the year last weekend. Though it turned east into the Atlantic, forecasters worry that it’s just the first domino to fall in a season that has the potential to match the worst ever. Scientists fear conditions are similar to 2005, when a record 28 storms clawed across the ocean, including Hurricane Katrina, which devastated New Orleans, killing 1,800 people. The waters of the Atlantic this year are exceptionally warm, ideal conditions for storms to form, feed and grow.


fortune--2020-05-22--Why Shopify is betting small business can get in on the coronavirus e-commerce boom

Recent business headlines have been dominated by impressive e-commerce growth for the likes of Walmart, Target, Best Buy, and Costco during the COVID-19 pandemic.
But the retail giants aren’t the only ones seeing a digital boom: Shopify chief executive Tobi Lütke says his company’s clients have experienced a surge in e-commerce orders from customers living within 15 miles of their stores, suggesting many local businesses are getting in on the online action.
In particular, Lütke says, some small clients like grocery stores and farmers—not constituents anyone typically associates with e-commerce prowess—have gone online during this crisis. He says Shopify’s latest slate of products have given them the digital firepower to sell food and either deliver it or have customers drive up to a curb to retrieve it, a capability they didn’t have before.
“There just wasn’t any supply online,” Lütke tells Fortune, wearing his trademark newsboy cap and hoodie during an exclusive interview via Google Meet. “All these kinds of things have been unknotted now.” In the six weeks between the start of lockdowns and April 24, the number of new stores using Shopify’s e-commerce platform rose 62% compared with the six prior weeks.
Unknotting e-commerce problems for companies, small and less small, by providing them with state-of-the-art tech to handle orders, logistics, and financial management challenges, has turned Shopify from a quiet tech company based in Ottawa into a major challenger of Amazon in the e-commerce wars.
In this case, Shopify had to “delete” its plans at the start of the COVID-19 crisis, as Lütke puts it, shifting its focus to products customers need quickly and accepting a bit less polish in order to get those services out the door so clients could jump on the digital surge. That was the case notably for its tech-facilitating curbside pickup.
So bullish is Wall Street on Shopify’s prospects to win much more business as more small companies go online and larger consumer brands look to sell more directly to customers, that shares have risen 150% since March 16, when lockdowns began in North America.
Shopify’s small-business roots
That has given Shopify a market cap of $95 billion—and, as of two weeks ago, made it the most valuable company in Canada. Not bad for a player with $1.7 billion in sales in the past year. Even before COVID-19, Shopify’s growth was red hot: In the first quarter of 2020, the value of items sold via the sites it supports rose 46% to $17.4 billion.
The German-born Lütke founded Shopify 16 years ago, in part because a snowboard store he founded was dealing with all sorts of problems going online, from clunky payment interfaces to an inability to find reliable technology to receive and manage orders. Those challenges ultimately led to the creation of Shopify. And Lütke says that that small-store perspective guides Shopify as it expands its services and software products over time.
“We work backwards from what makes it difficult to start these businesses,” he says. “It’s hard to run a small business and be responsible for payroll, for staff, et cetera, even at the best of times.”
It’s clear the company is onto something, especially as it lines up more small grocers. “These trends show the power of Shopify’s cloud-based software, which is far more advanced compared to legacy on-premise software products,” Bloomberg Intelligence analysts wrote in early May, noting that the company has a big opportunity in the food space.
Lütke recalled how it took him three months to get a payment gateway, which is a merchant service to help a business process credit card payments, for his snowboard shop. In that spirit, Shopify this week announced plans to launch a suite of financial products called Shopify Balance. The package will include tools that enable vendors to monitor cash flow, pay bills, and track expenses, and a bank card that enables entrepreneurs to access money more quickly and to avoid using their own personal credit cards.
Last year, Shopify launched Shopify Fulfillment Network, which uses machine learning to help with timely deliveries and to lower shipping costs as part of its effort to offer more logistics services to companies that don’t have the wherewithal to compete with Amazon, Walmart, or Target.
“It’s incredibly hard to have a logistics network that spans the globe,” says Lütke. “It’s far out of the reach of smaller businesses.”
Shopify is also one of a number of companies working with Facebook to help the social networking behemoth offer online storefronts under a new initiative called Facebook Shops. Rather than see Facebook and its apps as threat, Lütke takes a pragmatic view. “Facebook and Instagram are the communications channels of choice for many entrepreneurs,” he says.
Increasingly, major consumer brands are looking to sell directly to customers and reduce their reliance on retailers. PepsiCo, for one, launched two e-commerce sites last week aimed at helping it manage demand during this pandemic. While entrepreneurs are Shopify’s sweet spot, big businesses such as Unilever have long been a major part of its customer base, using its Shopify Plus service. Shopify last month added Heinz and Lindt chocolate as Shopify Plus clients.
Lütke says that until this crisis, consumer brands often tended to see e-commerce as something for big conglomerates to experiment with, rather than a business priority. But that is changing.
“These experiments are suddenly vital,” he says, adding jokingly, “COVID is leading the digital transformation of Fortune 500 companies more than CIOs are.”
What Canadian curse?
Earlier this month, Shopify leapfrogged the Royal Bank of Canada to become the largest Canadian company by market cap. But every previous company to have surpassed RBC by that metric went on to flame out spectacularly, notably tech companies Nortel and Blackberry. That has prompted the chattering classes up North to wonder whether Shopify can beat the “Canadian curse,” including some who point to Shopify’s net losses. To be fair, a lack of profit has not impeded the ascendance of e-commerce stars like Chewy or Wayfair or, until recently, Amazon.
The mere mention of the term elicits some eye-rolling from Lütke. “Honestly, this ‘Canadian curse’ is the most Canadian thing I’ve ever heard of,” he says, an allusion to Canadians’ occasional incredulity that one of their own can be so successful. At the same time, he says, he likes it when Shopify is underestimated and flies under the radar.
Another way COVID-19 is giving Shopify an opportunity to reinvent itself: On Thursday, the company announced its Digital by Default initiative that will see it keep all of its worldwide offices closed until at least year-end and, ultimately, redesign how it uses office space. But from now on, Lütke says, the vast majority of Shopify employees will work from home and collaborate remotely. “Talent is absolutely everywhere, and Shopify is proof of that,” he says. “One thing we’re not going to get back to, at least in the tech industry, is office-centricity.”
Another way he has looked to free up employees has been to challenge the glorification of overwork in the tech world’s culture. A few months ago, in a Twitter thread, he questioned the value of the endless work hours glorified by many other tech CEOs and the Silicon Valley venture capitalists who egg them on.
I'm home at 5:30pm every evening. I don't travel on the weekend. I play video games alone, with my friends, and increasingly with my kids. My job is incredible, but its also just a job. Family and personal health rank higher in my priority list. — Tobi Lutke 🌳🌲🛒🕹 (@tobi) December 26, 2019
“That is bad advice—people just cannot work like this,” he says. “If I’m working on creative things, then there are five good hours in the day, max.” And if Shopify is to stay on its trajectory, it will need all the creative things it can come up with.
More must-read stories from Fortune:
—Real unemployment rate soars past 24.9%—and the U.S. has now lost 33.5 million jobs
—Inside China’s reopening: 7 personal stories of life after lockdown
—Sheryl Sandberg: The pandemic is creating a “double double shift” for women
—Trump’s demand that China pay coronavirus reparations evokes an ugly history
—Now is the time to invest in preschool education. Here’s why
—PODCAST: How Marc Benioff is helping out during the coronavirus pandemic
—WATCH: Why the banks were ready for the financial impact of the coronavirus
Subscribe to How to Reopen, Fortune’s weekly newsletter on what it takes to reboot business in the midst of a pandemic


fortune--2020-05-23--9 escapist reads that will make you feel like you’re traveling even though you can’t

For some of us, summer vacation might be a summer staycation this year. But rest assured: Summer reading has not been canceled. If you can’t go to the beach, these books could bring the beach (read) to you.
The Vacationers by Emma Straub
A large family getaway, an anniversary party, and a postgraduation celebration congregate at a Mediterranean seaside summer vacation home on the picturesque Spanish island of Mallorca. Naturally, not everyone is going to get along, but the relationships and rivalries never become overwhelming under the deft and droll pen of New York Times bestselling author and bookstore owner Emma Straub. (Bonus read: Straub’s latest book, All Adults Here, was published this month.)
The Alchemist by Paulo Coelho
In The Alchemist—part epic travel journey, part mystic quest—the illustrious Brazilian author Paulo Coelho spins the tale of a young Andalusian shepherd who, after a recurring dream, makes the trip across North Africa to the Egyptian pyramids. By the book’s end, you’ll realize Coelho’s epic (albeit short in page-length) novel is more philosophical than plot-driven, inspiring the reader to search within (rather than elsewhere) to realize one’s destiny.
The Lost Vintage by Ann Mah
A must-read for Francophiles, oenophiles, historical fiction lovers, or anyone who longs to traipse through a vineyard in the late afternoon. Ann Mah’s charming novel revolves around a family-owned vineyard in Beaune, in the heart of France’s Burgundy region, flipping between two timelines—the Nazi occupation and present-day—with a mystery spanning generations that needs to be solved before time runs out.
Beautiful Ruins by Jess Walter
This novel is like walking into a dreamy Instagram photo of Cinque Terre—specifically during the era of La Dolce Vita (released in 1960), as the plot loosely centers on the filming of the Hollywood epic (but troubled production) of Cleopatra, released in 1963. Readers are transported between Golden Era Los Angeles, Rome, and a tiny, sunny (and fictional) village along Italy’s rugged coastline on the Ligurian Sea, with a mixture of fictional and real-life characters against the backdrop of one of the most expensive and chaotic movie productions in cinematic history.
The Historian by Elizabeth Kostova
Let’s get this out of the way: Yes, there are vampires in this book. But this might be, quite possibly, the most realistic take on the bloodthirsty supernatural beings. Readers can look forward to being transported across time (primarily the 1950s through 1970s) and place (from American Ivy League campuses to Istanbul to southern France to sneaking behind the Iron Curtain during the Cold War). History, fantasy, romance—there’s so much in this book, and yet it never feels overwhelming. It’s a thrilling rush from start to finish, and you’ll want to go back to the beginning all over again when you’re done.
The Wangs vs. the World by Jade Chang
With so many flights grounded, canceled, and even potentially crowded, this could be the summer of the road trip for anyone still making an attempt at travel. Bringing readers all the way back to the last financial crisis, Jade Chang’s hilarious spin on the contemporary family road trip— from their lavish mansion in the posh Bel-Air neighborhood of Los Angeles to upstate New York through the American South—will have you looking into renting a car for a jaunt of your own. Just pick your companions wisely.
American Spy by Lauren Wilkinson
Given the title, you know that this is going to be a spy novel. We won’t give much more of the plot away—except that you can expect to follow the main character as she gets caught in a CIA-spun web from 1980s Harlem to the rugged Caribbean island of Martinique to West Africa—all while working undercover to gather intelligence on the Marxist leader of Burkina Faso. (If you need any more convincing, this novel was also on President Obama’s summer reading list for 2019.)
The Tea Girl of Hummingbird Lane by Lisa See
There are so many books to choose from in Lisa See’s canon of historical fiction, all of which beautifully showcase Asian women’s stories not often depicted in U.S. television or film. Among one of her best works is The Tea Girl of Hummingbird Lane, centered on a young woman from an ethnic-minority community, whose skill in the study and farming of Pu’er tea takes her on an upward trajectory (with a few bumps in the road) from a remote mountain village in the southwestern Yunnan province to some of China’s largest, most industrialized cities.
Next Year in Havana by Chanel Cleeton
The book takes off with a protagonist who is a magazine writer working on a travel story, so you know some lush locale descriptions are in store for the reader. Jumping from present-day Miami to pre-revolution Havana, this is the ideal summer read for anyone looking for a mixture of family drama, romance, politics, money, and historical fiction weaved together—with a sequel already available.


fortune--2020-05-23--The coronavirus cycling boom has turned this Dutch bike brand into a global hit

About a month ago, Taco Carlier noticed something unusual. A tool to measure the daily performance of the Dutch bicycle company he had founded was suddenly registering wild spikes—pre-orders, web searches, newsletter registrations, press requests and advertising clicks were all going through the roof.
”We didn’t know what we were seeing, at first we thought the dashboard was broken,” said Carlier, the chief executive officer of VanMoof BV. “But the data turned out to be correct.”
In the weeks since, business has turned to explosive growth. Consumers from Canada to Israel to Australia are clamoring to get their hands on VanMoof bicycles, with their distinct frame architecture and fat tires that retail for 1,998 euros ($2,200).
VanMoof pulled in 12.5 million euros in fresh funds from venture capital firm Balderton Capital and teamed up with Taiwan-based manufacturer Sinbon Electronics to scale up production to as much as 10,000 units a month, more than triple its previous output. Now growth predictions that Carlier thought would play out over a decade look like they could happen in as little as four months, he said.
With a distinctive frame architecture and fat tires, VanMoof bicycles retail for 1,998 euros ($2,200). Photo courtesy of VanMoof.
As businesses buckle under the strain of a global lockdown, VanMoof’s success highlights the changing behavior brought by the coronavirus. Cycling, while already a national obsession in the Netherlands, is experiencing a renaissance around the globe as people shun public transport in favor of zipping around town on bikes, preferably with an electric support motor.
Governments in Europe have rushed to close roads and instead opened up cycle paths as alternative for packed buses and commuter trains where the coronavirus could easily spread. Milan, for instance, will introduce a five-mile cycle lane to cut car use after the lockdown, while the U.K. pledged to invest 2 billion pounds to promote cycling. Berlin has erected giant billboards urging the public to switch to bikes for short commutes.
Roosmarijn de Kok is seen riding a VanMoof bicycle in SoHo on April 08, 2019 in New York City. Wire photography: Gotham—GC Images Gotham—GC Images/Getty Images
The result for VanMoof is that it plans to more than double last year’s revenue to above 80 million euros in 2020, and Carlier said he’s already looking for another investor to help fund the rush to his bikes.
“It’s is one big mad house,” said Carlier, who created the company with his brother Ties in 2009, who is now based in Taiwan. “We can’t even answer all requests.”
Because VanMoof keeps control over its supply chain, it can respond quickly to demand swings, Carlier said. The inflow of fresh funds will help ramp up production quickly, cutting back on a waiting list that now stretches out four to five weeks, he said.
“We want to get that back to 10 days as soon as possible,” Carlier said.


fortune--2020-05-23--Coronavirus pandemic claims another victim: Robocalls

9 escapist reads that will make you feel like you ’ re traveling even though you can ’ t

Have you been missing something amid the lockdowns and stay-at-home orders? No, not human contact. Not even toilet paper.
Robocalls.
Industry experts say robocalls are way down — scam calls as well as nagging from your credit-card company to pay your bill. The coronavirus pandemic has inflicted millions of job losses, and scammers have not been immune.
YouMail, which offers a robocall-blocking service, says 2.9 billion robocalls were placed in April in the U.S., down from 4.1 billion in March and 4.8 billion in February. That’s a daily average of 97 million calls in April, down from 132 million in March and 166 million in April.
The main reason: many global call centers have closed or are operating with fewer workers, said YouMail CEO Alex Quilici. While it may be odd to think of scams being run out of call centers rather than a dark, creepy basement or a garage, that’s often the case, particularly in countries such as India and the Philippines, experts said.
After a lockdown order went into effect in India in late March, “we saw the volume of calls basically half the next day,” Quilici said.
That means scammers will probably be back in force once the call centers come back online. Stepped-up enforcement from industry groups and the U.S. government could nibble around the edges of those call volumes when the scammers are back, however. In recent months, federal agencies have focused on going after the small telecom providers that were allowing calls from COVID-19 scammers, citing the urgency of the pandemic.
And free blocking tools that were already in place on many people’s phones help consumers dodge unwanted calls, so it’s not clear how many have noticed the lower numbers of scam and telemarketing calls in the past couple months.
“What we do hear from consumers is call blocking tools are effective in reducing a significant number of robocalls but some unwanted calls are going to slip through,” said Maureen Mahoney, a policy analyst with Consumer Reports.
Complaints about unwanted calls to the Federal Trade Commission have been steadily trending down since late 2018, and dropped by more than half in March from the year before, to 240,000. The Federal Communications Commission gets many fewer complaints overall but says those also fell 50% in March, to 10,000, and 60% in April, to 7,500.
None of which is to say that nuisance calls and phone scams and texts have disappeared.
“While reports of robocalls are way down overall, we’re now hearing about callers invoking the COVID-19 pandemic to pretend to be from the government, or making illegal medical or health care pitches,” an FTC blog post declared in mid-April.
And Mahoney predicts that calls will pick up again, and it won’t just be scammers back in action. With so many people out of work and behind on their bills, debt collectors will be relentlessly badgering them to pay soon enough, she said.


fortune--2020-05-23--Work from home, get a $1,000 bonus. The tech industry’s new perk

Steve Jobs, perhaps the most revered of tech visionaries, disliked the idea of working from home.
The Apple cofounder preferred to maximize in-person collisions between colleagues. He believed rubbing elbows cast sparks of creativity, and he obsessed over architectural minutiae in the headquarters of Pixar Animation Studios to encourage that “serendipitous” friction—including, famously, the layout of toilets.
How the times change. Today, the scions of Silicon Valley are flushing the faith of their forefathers down the loo. Prompted by shelter-in-place measures designed to thwart the coronavirus pandemic, some of the tech industry’s most recognizable companies—from Facebook to Twitter—are reconsidering their office policies.
Forced to let their employees work from home, businesses are beginning to adopt that as the new norm. Some companies are even encouraging their employees to remain remote, sweetening the deal with $1,000 bonuses.
Companies have good reason to do so. Having fewer employees in the office means less need for real estate, less overhead cost. The trend could translate to reduced wages for employees who seek to live in cheaper areas, such as outside major metropolises like San Francisco and New York City.
Here are some of the companies doling out money to help people set up home offices.
Twitter
Twitter kicked off the trend. In mid-May, CEO Jack Dorsey said many employees could shift to working from home permanently, accelerating plans already in place for the company to become more “distributed.” The micro-blogger site is providing teleworkers an allowance of up to $1,000 to buy home-office supplies.
Facebook
Like Twitter, Facebook is offering employees a $1,000 cash bonus to work from home. The company expects half of its employees to be working remotely by the decade’s end. But there might be a catch: CEO Mark Zuckerberg said on a virtual chat this week that employees who choose to live in cheaper neighborhoods may receive reduced pay.
Box
The digital storage service is dipping into its cashbox to help employees shift to telework. In a recent blog post, Box’s CEO, Aaron Levie, said the company would hand employees who work from home a stipend of an unspecified amount. Kait Conetta, a Box spokesperson, clarified in an email to Fortune that this will consist of $300 on top of another $300 stipend offered earlier this year, yielding a total of $600. “We will be evaluating increasing this as we hear more from Boxers on what they need to remain productive,” she said.
Shopify
E-commerce hotshot Shopify is another tech company providing work-from-homers moolah to stay home. The company is giving a $1,000 stipend to ease the transition for teleworkers and helping them to set up home offices.
Coinbase
The cryptocurrency giant has currency up for grabs for employees who favor a virtual setup. Brian Armstrong, the company’s CEO, declared in May that Coinbase “will be a remote-first company.” Elliott Suthers, a Coinbase spokesperson, told Fortune that Coinbase offered a $500 stipend when the lockdown started.
Companies encouraging work from home with payouts is an apostasy of the Steve Jobs way. But it’s a welcome measure for the homebound. By the way, if you work from home, you can also possibly get a tax write-off for your home office.


fortune--2020-05-23--Texas court holds first U.S. jury trial via videoconferencing

The potential jurors popped onto the screen one by one. They confirmed their names and told the judge how they were connecting to the court: on laptops, tablets and iPhones.
There were some wireless issues and camera problems, but eventually 26 Texans in separate boxes raised their hands for the judge and together swore the juror’s oath, beginning the experiment of conducting a civil jury trial entirely over Zoom.
The coronavirus pandemic has crippled courts nationwide, putting many cases on indefinite hold and leaving judges trying to manage some hearings via videoconferencing. The delays have kept some defendants in jail longer, exposing them to possible outbreaks. And the virus even upended how the Supreme Court operates, with the justices hearing oral arguments by phone for the first time in the court’s history.
The test jury-trial-by-video that was held in suburban Dallas this week could reveal a possible path forward in which jurors are kept safely distanced while cases are allowed to proceed until the coronavirus threat has receded enough to resume some semblance of normal life.
It also raises complex questions about security, a person’s right to a fair trial and whether virtual deliberation might prevent 12 people from forming the bonds needed to hash out justice.
“No one is saying tomorrow we’re going to start trying serious felonies over Zoom,” said District Judge Emily Miskel, who coordinated technology for the trial. “But I think there are many civil trials where parties might agree that this is a good way to resolve it given the uncertainty of when you’re ever going to get an in-person civil jury trial.”
The Collin County court held the so-called summary trial — a one-day civil proceeding with a non-binding verdict — on Monday as an experiment in restarting parts of the justice system that ground to a halt because of the coronavirus. It was over a disputed insurance claim that was originally set to be heard in-person in March. According to the National Center for State Courts, which has tracked court functions during the pandemic, it’s the first remote jury trial ever in the United States.
Those involved seemed pleased with the process.
Jury selection was streamed live on YouTube, but most of the rest was private because summary trials are confidential civil proceedings meant to give the parties the option of settling before an actual trial.
During jury selection, lawyers for both sides asked people on the call to raise their hands in response to questions about potential bias. When a hand popped onto the screen, the lawyers would ask follow-ups or note the juror’s number.
Matthew Pearson, a San Antonio lawyer for the plaintiff, said the comfort of their homes seemed to make the jurors more responsive to questions. They were attentive as he presented evidence by sharing his computer screen over Zoom, Pearson said, and his firm saved money because it didn’t have to fly an expert witness in from Minneapolis.
“Overall, it was a better experience than I was expecting,” he said.
Deliberation proved a little more tricky.
The jurors were broken into two groups of six and put in separate virtual rooms where they could talk privately and look at evidence in Dropbox folders. They ultimately returned two verdicts meant to give the parties more information to assess whether to go to trial.
At one point, things were delayed a few minutes when a juror who’d stepped away to make a phone call during a break couldn’t hear the judge calling him back to his computer. The same type of thing happens in the courthouse, Keith Dean, the retired judge who presided over the trial, told the others.
Miskel, the other judge, joined the deliberation “rooms” a couple times to help jurors access evidence, which she said would normally cause attorneys to “freak out.” Normally, jurors send notes asking the judge for help and a member of the staff goes into the jury room with pieces of evidence.
But lawyers worry that virtual deliberation cuts out the casual interaction among jurors that some see as essential to building group trust. And defense attorneys are especially skeptical of e-court for criminal cases, where they already struggle to speak privately with their clients during routine hearings held remotely.
“It would just be too difficult, too many constitutional hurdles to clear for a defendant to be brought to a virtual trial,” said Randy Gioia of Massachusetts’ public defender agency. “There is no substitute for an in-person, face-to-face three dimensional hearing with a judge.”
Security is a concern too. As tens of millions of people have turned to video conferencing to stay connected during the pandemic, hackers have derailed many calls with threats, bigoted comments and pornographic images.
If more courts turn to video trials, ensuring people with poor or no wireless could serve as jurors would also be a challenge. Rare cases that require juries to be sequestered might have to take place in-person.
Even when cases do return to the courthouse, the virus may have changed things. Cross examinations will be different if attorneys and witnesses are wearing masks. And Miskel suggested courts might blend in-person and online — doing trials over video but bringing jurors into to court to deliberate.
Dean reminded jurors at the start of the proceedings that the online setting made their duties no less important.
“The courthouse came to you,” he said.


fortune--2020-05-23--What will the post-pandemic workplace look like? Europe offers a creepy glimpse

A “Romware Covid Radius bracelet” beeps every time a Tata Steel Ltd. worker in the U.K. or a docker at Belgium’s Antwerp port is within virus-catching distance of someone. At Bouygues SA construction sites and in Sanofi and Schneider Electric SE offices in France employees enter after thermal cameras check their temperatures. Invisible lasers will manage crowds at shopping malls and transport hubs in Spain and France, and some firms will use infection-tracing lanyard devices.
As Europeans head back to work, they’re entering a world very different from the one they left. Workplaces from banks and offices to e-commerce warehouses, factories, sports clubs and airports are trying out or installing fever-testing thermal cameras, mask-detection systems and tracking software to prevent a resurgence of the coronavirus that has claimed more than 167,000 lives in the region.
The virus has opened the doors to surveillance and monitoring technologies that many fear are here to stay. While such systems have been creeping into people’s lives across the globe — particularly in Asia, with China’s facial-recognition points system and South Korea’s invasive infection-tracking software — the trend runs up against Europe’s much-vaunted privacy culture. Europeans trading in privacy for safety now may find the longer-term consequences unacceptable.
“The use of mass surveillance infrastructures can lead to a normalization of these highly intrusive tools, and the hasty introduction of apps, devices and cameras will, in the long term, lead to a dissolution of trust between employers and employees,” said Ella Jakubowska, a researcher at internet rights association Edri.
Businesses are walking a fine line between keeping people safe and protecting their privacy. The absence of clear guidance from European regulators is forcing companies — who could also be on the hook if they don’t sufficiently protect workers — to make “extremely difficult decisions,” according to Daniel Cooper, a partner at law firm Covington and Burling, who advises clients on tech regulation.
“The exposure of companies collecting that information goes up because it’s sensitive,” Cooper said. “They also have to balance the privacy rights of the people whose data they’re collecting and get that balance right and not break the law.”
About 23% of companies surveyed globally are considering workplace tracking or contact tracing to transition back to on-site work, according to a study published this month by tax and consulting firm PricewaterhouseCoopers, which is testing its own contact tracing tool in its Shanghai office.
“As lockdown is lifted, the turn to contact tracing may add a whole new layer of data being accumulated about where we go and what we do,” Andrew Pakes, research director at U.K. Trade union Prospect, wrote in a blog post Tuesday, adding that “the worry in many quarters is that we could be sleepwalking into further surveillance without safeguards in place.”
Providers of such monitoring technologies tout them as a safe way to get people back to work and revive economies crushed by lockdowns. While many acknowledge the systems aren’t foolproof, they say infection risk can be capped.
“Our bracelets are tools to keep workers safe and to increase performance,” said John Baekelmans, the chief executive officer of Rombit, the Belgian company whose bracelets will add a tracing feature in June to allow Antwerp port doctors to keep track of a possible spread in the virus.
Rombit sees the bracelets outlasting the virus as companies use them to track employees’ health and performance. The company says it will supply such devices to 300 companies in the coming weeks.
Like Rombit, Krakow, Poland-based Estimote Inc. is selling social-distancing devices to factories, research centers and hospitals, which also let them trace contacts made by any infected staffer.
The devices, attached to lanyards, buzz when workers have spent too much time near a colleague. Employees developing symptoms or testing positive can press a button on the gadget to notify the company, allowing it to trace all the people they’ve been in contact with.
“It’s in our DNA to come close” to other people, said Estimote CEO Jakub Krzych, adding that the devices alert users to those habits, keeping the spread of the virus in check.
Herta Security in Barcelona is developing both mask-detection technology and facial recognition for touch-less access in workplaces, including for a global retail company that’s considering using it in its offices in Europe and Latin America, according to Laura Blanc Pedregal, Herta’s Chief Marketing Officer.
Shopping malls and major transport hubs in Spain, France, Israel and the U.S. will be using Paris-based Outsight’s laser technology to ensure social distancing, its president and co-founder Raul Bravo said. Aeroports de Paris, which manages the French capital’s airports, is testing Outsight lasers to monitor passenger flows.
Fever-checking thermal cameras are also starting to become ubiquitous. In Madrid, University Camilo Jose Cela is setting up a Chinese camera system that simultaneously measures students’ temperatures and checks if they’re wearing masks. Airports including London’s Heathrow and Paris’s Charles de Gaulle are testing thermal cameras.
“We sell more cameras every week,” said Guenther Mull, CEO of German biometrics company Dermalog Identification Systems GmbH, which offers mask detection as an add-on to its software. “The demand is currently very high.”
Privacy advocates are alarmed. Thermal cameras could be seen as an invasion of privacy, said Rob van Eijk, managing director for Europe at the Future of Privacy Forum, a nonprofit think tank.
“It would pressure individuals with relatively higher body temperatures to disclose or divulge, likely against their will, their personal health information that might be unrelated to Covid-19 or other respiratory viral infections,” he said.
In Europe, where breaching data protection laws can result in a fine of as much as 4% of annual global revenue, companies typically wouldn’t link temperature readings to names or store the information. Still, fever readings wouldn’t be difficult to trace back to an individual, said Covington and Burling’s Cooper.
For now, the checks are being taken in stride. Consider the employees of Bayer 04 Leverkusen, the German soccer club, which invested in five Dermalog thermal cameras. When the Bundesliga became the first major soccer league to resume playing last weekend, the club was ready. It had been scanning its players when they came in for training.
In late April, while much of Germany was sheltering in place, professional soccer player Leon Bailey stood at the entrance of the club’s training facilities to have his temperature taken. The camera zeroed in on his forehead to read a temperature of 37 degrees Celsius. No fever. He passed through the arena’s gates and joined his teammates for practice.
“They see it’s for their own safety,” said Dr. Karl-Heinrich Dittmar, Bayer Leverkusen’s medical director, in an interview. “Nobody wants to become ill.”


fortune--2020-05-24--The Danish restaurant that’s won over the world’s food critics is finally reopening—with $18 burgers

What will the post-pandemic workplace look like ?
Europe offers a creepy glimpse

Noma, four times winner of the title of World’s Best Restaurant, reopened this week in Copenhagen—as a wine bar with burgers.
You normally have to book a table months in advance at Noma, whereas the new incarnation is no reservations. The prices are accessible, too. A burger starts at 125 Danish kroner ($18.40) to take away, which might sound a lot outside Denmark but is in line with local costs and compares with 2,650 kroner for the usual menu of about 18 courses. (The burger is 150 kroner at the table.)
Fans of René Redzepi’s creative gastronomy need not fret. The wine bar is a pop-up in the gardens of Noma restaurant, which is scheduled to open in 1-½ to 2 months after the coronavirus shudown. Redzepi says his aim is to help kick-start social life in Copenhagen.
“Our dream for this is to get people active, to start coming out again,” Redzepi says in a telephone interview. “That’s the main purpose. We wanted to come up with something to show everybody is welcome, which is why we decided on the mighty burger to open. The response has been incredible.”
Don’t expect a gourmet burger with truffles and caviar.
“It’s got to be a burger as we know it, so we are doing a cheeseburger,” he says. “But what we have in our toolbox is that we have the best ingredients, the best quality of meat. The potato buns are going to be made fresh every morning, and the meat will be ground three times a day from grass-fed beef, and we’re hand-chopping organic onions. Small things like that make a big difference.” Vegetarian and vegan options will also be available.
The new space seats 65 and will be open from Thursdays through Sundays, 1 p.m. to 9 p.m. Beers will be 50 kroner and wine from 95 kroner a glass and 425 kroner a bottle. Isn’t Redzepi concerned there will be long queues? A similar experiment in Mexico found walk-in queues from 4 a.m. for seatings 14 hours later, he says.
“No, we hope for them,” he says and laughs. “But you have to realize that Copenhagen is not London. We are a city that is 10 times smaller than London and we have zero tourists. The town is so quiet. I’ve never seen it this quiet.”
The formal restaurant will reopen with about half the number of guests, Redzepi says, with a single seating instead of two.
Noma opened its outdoor wine bar on May 21. No reservations were needed. Courtesy of Ditte Isager
“A lot of the people from the first service would stay on the premises, in the garden or the lounge,” he says. “Anyway, I wouldn’t honestly expect to fill two seatings. Where would the guests come from?
“Our government has given us a fighting chance to get through this (coronavirus). People don’t have to wear masks and the restrictions are not crippling. We have to have two square meters per guest and there has to be a meter between tables. Those are the bigger ones, plus strict sanitation rules you need to follow but we were doing that anyway.
“I don’t know how things will change. We are one of the best restaurants in the world and we are opening up with burgers, and ice-creams for kids. How much more different can it be? We are doing the most casual thing of all the good restaurants. Later on, we will have a few more wine-bar type snacks, oysters crudités, vegetables. This is a new experiment where the door is open to everyone and it feels quite exciting.”
He says he is trying to work out if it will be possible to have a casual, walk-in dining space at Noma alongside the restaurant.
“I still feel like cooking and taking the best of the seasons and putting it on the plate, but maybe Noma can be more than that as well.
“If we can find a way to fuse the Noma that was with Noma of the Covid-19 era, it is exciting.
“The restaurant trade is going to be incredibly hard hit over the next year. Most restaurants in Europe kept afloat by government aid and that makes a giant difference. But once everything opens up, people are going to be worried to go out and there are no tourists in town. Margins are already thin. It is going to be very bad. There is going to be a lot of unemployment in our trade. Everyone is going to have to think very differently for sure.”


fortune--2020-05-24--Remote work may exacerbate diversity and inclusion problems for companies

These Wall Street analysts want to know what you are grilling during Memorial Day weekend

As more companies shift to remote work following the coronavirus pandemic, management may have to work harder to ensure that all employees are included and have equal opportunity. It’s a problem most companies grapple with even in a normal in-person office environment, but the issue can quickly intensify with distance.
“If you are a member of a group that’s marginalized or underrepresented, it’s already hard to be visible,” said Evelyn Carter, director at diversity and inclusion consulting firm Paradigm. “It’s especially exacerbated right now.”
Carter joined Paradigm CEO Joelle Emerson and Laszlo Bock, a former Google human resources executive who currently runs the HR software company Humu, for a virtual panel earlier this week. The three discussed how the new working environment may affect diversity, equity, and inclusion efforts and offered suggestions for companies to even the playing field, along with advice for marginalized employees, who may have to take extra steps to stay visible while working from home.
The panel comes as many companies, both big and small, have shifted to more remote work, helping employees stay safe during the outbreak. The pandemic is also expected to fundamentally change how companies view remote work in the future. Tech giants including Facebook, Twitter, and Square already have rolled out plans to allow some of their employees to work from home permanently.
But having an isolated workforce also creates a set of new challenges including developing and maintaining a company culture, building relationships, and making sure all employees are equally heard. Carter said distance reinforces people’s tendency to favor people who are similar to them. It also eliminates the opportunity for spontaneous conversations between different people who may be nearby or passing through.
A remote workforce ideally creates a new opportunity for companies to intentionally spread opportunities across the board. But Paradigm’s leaders said they’re not seeing many businesses take advantage of that. “We could be leveraging this moment in time to close those gaps,” Emerson said. “But instead, most people are taking shortcuts and exacerbating it.”
The panel offered some suggestions: Managers should be cognizant of who’s getting assignments and aim to even the distribution. They also should think about being more flexible with schedules, as many people are parents or caregivers who now have additional responsibilities during the workday, Carter added.
Employers also need to be aware that not all employees have the same resources at home, Carter said. Some may struggle with stable Wi-Fi connections or have less access to high-quality screens or software, tools that may be essential to doing their jobs from home.
But above all, employers need to have empathy and understanding during a time that may be especially difficult for marginalized groups, the panelists agreed. Anti-Asian racism is running rampant following the outbreak, and the virus is taking an especially big toll on black and Latino communities.
“Think about ways to be intentional, and evaluate the impact of it,” Carter said.
Meanwhile, marginalized employees can also use this opportunity to make sure they’re on the company’s radar, regardless of what their employers do. That means being proactive like regularly checking in, asking for feedback, and raising questions.
“What I worry about is a lot of times during economic downturns or times of challenge, people from marginalized groups get left behind,” Emerson said. “I don’t think this is the time to sit out.”


fortune--2020-05-24--These Wall Street analysts want to know what you are grilling during Memorial Day weekend

This major Canadian cannabis company is finally getting a foothold in the U.S .

Firing up the grill this weekend?
Bank of America’s team of food and beverage analysts are eager to peer into your grill, your fridge, and your cooler to see how consumer habits amid the coronavirus pandemic may be affecting the massive food and beverage stocks the analysts cover.
The group is launching the BofA summer BBQ tracker and plans to update its survey with new information for Father’s Day, July Fourth, and Labor Day.
The group’s research on Memorial Day found that only 40% of respondents plan to grill this weekend, versus 56% in a typical year. And 70% of gatherings will include fewer than 10 people. That translates to “roughly 25% to 30% indicating lower food/beverage purchases for their events,” the analysts wrote. Their information was gathered from May 14 to May 16 and included 1,000 respondents.
The analysts highlighted two particular consumption concerns: proteins and condiments. “We highlight potential slowing in data for neutral-rated TSN (Tyson Foods) and underperform-rated HRL (Hormel) and MKC (McCormick & Co.), which have otherwise displayed strong growth. While buy-rated CAG (Conagra) and KHC (Kraft Heinz) also have exposure (hot dogs/condiments), we expect the more diversified product portfolios to offset any grilling-related weakness,” they wrote.
As for beverages? Given fewer gatherings and smaller invite lists, the analysts expect “tough comparisons” for both soft drink and alcoholic beverage companies, including PepsiCo, Coca-Cola, Keurig Dr Pepper, Constellation Brands, and Molson Coors.
One relative area of strength? Home improvement chains have experienced a bump as the analysts reported 20% of respondents had bought a new grill within the past two months.
The analysts also noted that Memorial Day weekend marks the start of “hot dog–eating season” with 818 hot dogs consumed every second from Memorial Day to Labor Day.


fortune--2020-05-24--This major Canadian cannabis company is finally getting a foothold in the U.S.

Aurora Cannabis is staking a claim stateside.
The Canadian cannabis heavy hitter announced an all-stock acquisition of U.S. CBD company Reliva last week, which marks Aurora’s first big foray into the enticing U.S. market. But it comes at a time when industrywide bearishness has led many stocks to dramatically sell off—including Aurora, which has shed nearly 90% of its market cap in the past year.
The pros of the deal are obvious: “It’s immediate access into the world’s largest cannabinoid market,” and “delivers a key aspect of our reset plan,” Aurora executive chairman and interim CEO Michael Singer told CNBC Wednesday. The company’s stock popped over 30% on Thursday.
Back in September, Fortune reported Aurora was still looking for a strategic entry into the lucrative U.S. market, as many of its competitors like Canopy Growth had secured partnerships with titans like Constellation Brands. While this deal lets Aurora tap into the growing CBD market in the U.S., it still lacks a strategic investor to help it weather industrywide cash burn problems.
In fact, according to Morningstar’s Kristoffer Inton, “the deal doesn’t change what Aurora needs to and continues to focus on, which is dealing with this whole market cash burn,” he tells Fortune. Still, he believes “it’s a good asset to add to the company because U.S. CBD is a growing market.” (In fact, Brightfield Group, a research firm, estimates U.S. retail CBD sales could soar to as much as $24 billion in 2025.)
Aurora paid $40 million in stock for Reliva, which is one of the top sellers of hemp-derived CBD-infused drinks, creams, gummies, and more in the U.S. at over 20,000 retail locations and online. The deal closed in late May.
Cowen analyst Vivien Azer describes the “logical” deal as Aurora’s “long-awaited” entry into the U.S. at the heels of competitors like Tilray and Canopy. On the upside, the company says the Reliva deal will be “immediately accretive to Aurora on an adjusted Ebitda basis,” and analysts like Inton note the fact that Reliva is already positive adjusted Ebitda “is a good thing considering Aurora’s Canadian [business] isn’t positive Ebitda yet.” Plus, Reliva has no debt, and the deal structure allows Aurora to protect its own cash (yet Inton suggests Reliva is likely “still free cash flow negative,” and some analysts question how profitable the company is on a standard accounting basis).
Azer likes the deal for a couple of key reasons: “By acquiring a CBD company, [Aurora] has the ability to start building its infrastructure out to capitalize on the potential for 1) a more benign FDA environment on CBD and 2) THC legislation that makes it federally permissible to operate domestically,” she wrote in a note Thursday. (CBD is the nonpsychoactive component of marijuana, while THC is the component that gets you high.)
However, for Morningstar’s Inton, “I would point out to people that think this [Reliva deal] turns into a launching pad for eventual U.S. THC that it’s not necessarily the case,” he says. Reliva’s big distribution is in convenience stores, like Circle K, and Inton suggests, “I really, really doubt that even in the next 10 to 20 years, you’ll be able to find THC at a gas station. It’s always going to be controlled via dispensary,” he says. “Going into the U.S. CBD is not the same as going into U.S. THC.”
Yet it’s the U.S. THC market that many analysts suggest will be a more lucrative, bigger opportunity for cannabis companies. CBD, meanwhile, is growing fast in the U.S, but “it’s also supercompetitive,” says Inton. Plus, those like MKM Partners’ Bill Kirk have concerns about declining CBD prices in the U.S. amid questions about and restrictions on edible CBD from the FDA: “U.S. CBD has been under a lot of commoditized pressure,” Kirk recently told CNBC.
And while analysts believe Reliva looks like a good asset for Aurora, those like Inton and Kirk point out that shares of Aurora are getting highly diluted (the company paid for the acquisition in all stock and has had to raise equity to cover expenses). At the stock’s current battered levels, “it was another equity issuance at a low price,” Inton points out. In fact, Jefferies downgraded the stock on Friday, with analyst Owen Bennett noting that “the CBD space is experiencing significant headwinds currently,” and “further dilution at a questionable multiple…has been a criticism of the past.”
Problems on the home front
Meanwhile, although the deal provides Aurora a much-desired footprint in the U.S., the company still faces a multitude of problems on the home front in Canada.
“The bigger focus and concern should still be to right-size the Canadian operations,” Inton says, referring to how Canadian companies have struggled to find the right product mix and have been weighed down by cash-burning expenses tied to the growth they expected that has proved lackluster. “During the rest of the year…what everyone is still going to be looking for is how much progress Aurora is making in terms of shrinking that cash burn.”
Indeed, the sector en masse has been pummeled, as investors sold out of cannabis stocks late last year in what many industry experts called a “bubble that burst.” A slew of missed earnings, regulatory troubles, and lackluster sales in Canada have left many cannabis companies like Aurora struggling to achieve the promising growth they once touted.
Yet it seems investors are slightly more optimistic about Aurora now, as the stock popped over 100% since the company reported better than expected earnings for its third fiscal quarter on May 14—an “encouraging sign, for a change,” Cantor Fitzgerald’s Pablo Zuanic said in a note. The company said it’s now shooting for a positive adjusted Ebitda in the first quarter of 2021, and for Cowen’s Azer, the deal gives Aurora “additional cushion to meet its targets.”
While Aurora’s stock has seen a bit of a recovery in recent weeks, up over 80% in the past month, it’s still miles off its 2019 highs.
A new deal may bring promising growth in the U.S. CBD market, but Morningstar’s Inton maintains that stemming cash burn is “the No. 1 priority for Aurora.”
Update: This article has been updated to reflect that the Aurora Cannabis-Reliva deal closed.
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