fortune--2020-11-18--Marissa Mayer launches her first startup

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Three years after resigning as Yahoo’s CEO, Marissa Mayer has finally gone public with her new challenge.
On Wednesday, Sunshine launched with its first app focusing on organizing and automating the smart phone address book using A.I. Co-founded by Mayer and a veteran from her tenure at Google and Yahoo, Enrique Muñoz Torres, the app’s focus had been previously reported by The Information.
Dubbed Sunshine Contacts, the app seeks to cull double entries while updating old phone numbers and emails in the address book by pulling, with user permission, contact information from sources such as Apple contacts, LinkedIn, and email. If a friend leaves a job, for instance, and no longer has a corporate line, Sunshine would, theoretically, automatically detect the change. The offering is currently available to iPhone owners by invitation only (Coincidentally, while I interviewed Mayer, her mother texted to inform her that she’d been left off of Sunshine’s invite list). While currently free, Sunshine plans to add a paid tier of service sometime in the future.
The idea may sound simple—and that’s by design.
“If you look at the grand challenges artificial intelligence is tackling right now, there are a lot of intelligent algorithms that can be deployed simply and a straightforward way,” Mayer says. “In many cases, [existing tech companies] are working on grander challenges, on problems and solutions that will come to market five years from now, or 10 years from now.”
The idea, the duo say, came while they were still both at Yahoo. But as Verizon acquired the declining web portal, they realized it wasn’t the right time and that Yahoo itself “was going in a different direction.”
So six months after leaving Yahoo, Mayer and Muñoz Torres took the idea and started Sunshine, previously known as Lumi Labs.
The ultimate goal is to create an ecosystem of apps that allow for what Mayer describes as “smart, small-scale sharing.” With the contacts app acting as a base for understanding people’s networks and who they interact with, the duo envision more intuitive ways of organizing events, for example. Perhaps one day, an app could automatically suggest who should be invited to a birthday party and then find the best time to host the gathering—to avoid someone being left out. There are other ideas, too: Using image recognition to pick out the best photos at, say, a soccer practice, and using location-sharing and contact data to suggest parents that should receive that information.
Though all of those ambitions require a robust network created from the contacts app.
“All of that is predicated on us… understanding who our users might want to do such activities with,” says Muñoz Torres. “If we get it right and start understanding how people relate to each other, then we can start building utility on top of it.”
As many have noted by now, smart Rolodexes aren’t a necessarily new idea. Also, their success depends on whether the irritations of our disorganized contact books are serious enough to make people seek a fix. Until now, consumers seemed fine with manually entering their information.
One departure was Bump, a smartphone app that let users exchange contact information automatically by bumping their devices together. The app was shuttered in 2014 after being acquired by Google.
Having raised $20 million in seed funding from investors including Felicis Ventures, Unusual Ventures, Win Ventures, and Mayer herself, Sunshine is certainly in its early stages. The company has 20 employees, including some long-term interns.
Mayer had been among the most high-profile U.S. executives, both as at Google and later at Yahoo. But her final years at the latter were marked by tumult as her attempts to turn Yahoo around flailed while its marquee acquisitions like Tumblr soured. Would Mayer one day consider working at another tech giant, in another executive position?
“I hope we end up at a large company,” says Mayer when asked. “We hope it is Sunshine.”


fortune--2020-11-18--Apple to pay $113 million to settle claims over iPhone ‘batterygate’

Here are the most bullish trades for 2021—and , no , Bitcoin does not top the list

Apple will pay $113 million to settle allegations by more than three dozen U.S. regulators that the company misled consumers about iPhone battery power and software updates that slowed the performance of the devices.
The settlement was reached with 33 states and the District of Columbia, according to statements Wednesday from several attorneys general. Regulators alleged Apple equipped iPhones with batteries that tended to lose power and shut down, and then tried to manage the issue through updates that “throttled” the devices’ performance in order to prevent them from turning off.
“Apple withheld information about their batteries that slowed down iPhone performance, all while passing it off as an update,” said California Attorney General Xavier Becerra, whose state will receive $24.6 million from the settlement. “This type of behavior hurts the pockets of consumers and limits their ability to make informed purchases. Today’s settlement ensures consumers will have access to the information they need to make a well-informed decision when purchasing and using Apple products.”
A company spokeswoman, Michele Wyman, declined to comment.
According to the settlement, Apple didn’t admit any wrongdoing. In early 2018, Apple confirmed it had been intentionally throttling the speeds of some older phones to avoid battery-related problems and offered cheap battery upgrades to extend the life of many handsets after customers complained. The issue prompted inquiries from federal regulators and lawsuits from state attorneys general and district attorneys.
Under terms of the agreement, Apple will provide information about how it manages power performance on a “prominent and accessible” website, notify all affected consumers when an update will affect their phone and inform users on the device about whether they should update the battery.
Apple customers have asked a California federal court to give final approval to a class settlement calling for the company to pay between $310 million and $500 million to resolve allegations it hindered the battery performance of older iPhones. Judge Edward J. Davila tentatively approved the deal in May.


fortune--2020-11-18--Black winemakers are climbing up the vine

The U.S. has over 8,700 wineries, but less than 1% are Black-owned or have Black winemakers. Two sisters, Andréa and Robin McBride, started the McBride Sisters Wine Collection with the goal to transform the industry.
Following the killing of George Floyd, nationwide protests sparked conversations about the impacts of racism and ways to better support Black communities—including their businesses. In July, Black business owners across industries shared their work during the social media campaign Blackout Tuesday, and the McBride sisters were determined to raise awareness of Black vintners.
They made and shared a list of 86 vintners on Instagram with a reminder to their followers: The power was in their hands.
“Repost this to your social handles and tag the retailer where you buy your wine and ask them to bring in your favorite black-owned wine brand,” they instructed in the post. “Walk into your favorite store (wearing a mask of course!) and tell them about a black-owned wine brand that you would like to try and would support with a purchase.”
The post went viral as celebrities such as Dwyane Wade and Gabrielle Union shared it on their pages.
“I actually got emails from retailers thinking that I had, like, armies of salespeople out across the country,” Andréa McBride says, laughing. “They were getting emails from their store managers saying, ‘We keep on getting people walking in here.’”
Before May, the McBride Sisters could be found in 84 stores in the country. Today, they say the brand can be found in 2,697.
Now more Black winemakers are getting attention too.
Lindsey Williams of Davidson Wine Company has been in business only a little over a year, but after July she began receiving inquiries from national retailers, she says, and restaurants in California and New York.
Lindsey Williams owns and operates Davidson Wine Company. Courtesy of Davidson Wine Company
“I remember getting tagged in several things during this new normal, and next thing you know, one of the big-box stores is following me on social media,” says Chrishon Lampley, who founded Love Cork Screw. “And that turned into a wildfire of other big-box stores actually now responding to my emails, so customers have huge power.”
“There’s this perception that African-Americans aren’t serious about wine and we don’t have the capability to learn about wine,” Lampley says. “And that’s just wrong.”
Customers are flooding the Instagram account Black Girls in Trader Joe’s with comments as they hunt for Black-owned wines at their favorite grocery stores. (“Did you find it? Go check out this one.”) This community of Black foodies celebrates each other’s finds and bands together to help those in unfortunate zip codes. (“Mine doesn’t have can someone ship me a bottle.”) And they demand their stores add wines to their inventory. (“The Union Square Trader Joe’s wine store needs to get on this by the time I return to work.”)
McBride says that before Black Girls in Trader Joe’s posted about their bottles, their products could only be found in some Trader Joe’s locations. Weeks later? They were in Trader Joe’s nationally.
“I think that’s a really good example of how they advocated for us and were loud enough—we can be economic activists. We have spending power,” McBride says.
Williams says visitors travel from up to four hours away to come to Davidson Wine Company in Davidson, N.C. “I think that’s a testament to how much people want to go somewhere where they can enjoy wine—or try wine for the first time—and really look at somebody and see themselves,” she says.
Keeping the momentum going for Black-owned wines is easy, says Greg Markell Lawrence, cofounder of Markell-Bani Fine Wines. If you’re a consumer, he says, subscribe to your favorite wine club and imbibe. And for people of color who are really passionate about wine, the industry needs you.
“The only way true elevation and change will take place is if more Black entrepreneurs get into other aspects of the wine industry,” Markell Lawrence suggests. “If we do that, we will not have to go to other people to make, distribute, package, and sell our wines. We can do it ourselves without having to rely on others.”
But Black wine lovers say they lack access.
“There are no how-to guides on how to start in the wine industry,” says Donae Burston, the founder of La Fete du Rosé. “Given the amount of money it takes to buy a vineyard and to produce wine, opportunities would historically be only afforded to those with money or social status and pedigree.”
The McBride sisters started a fund to help Black women entrepreneurs grow their business. In 2019, the SHE CAN Professional Development Fund reported contributing $40,000 to helping women attend wine industry conferences and pursue educational opportunities in wine. This year, the fund aims to help small-business owners overcome lack of access to credit or venture capital by awarding them $10,000.
To provide people of color a fun space to learn about wine, the sisters also created a virtual wine school. Through Facebook modules, their course teaches the nine varieties of wine and their traits with the help of major pop icons. Beyoncé? Definitely sparkling Champagne. Rihanna? She feels more like a Sauvignon Blanc.
“People have been making wine for 8,000 years, and for the last 200 years, it’s been dominated by really one group of people,” McBride says. “There’s an opportunity here to bring a fresh perspective to energize the experience.”


fortune--2020-11-18--Robinhood asks banks to pitch for potential 2021 IPO

Robinhood Markets, the trading platform that’s proved popular with novice investors, has asked banks to pitch for roles in an initial public offering, according to people with knowledge of the matter.
The company is aiming to go public as soon as the first quarter of 2021, said the people, who asked not to be identified because the information is private.
The company’s plans could change and it might decide not to pursue an IPO, the people said.
A representative for Robinhood declined to comment.
Robinhood raised an additional $460 million in a series G funding round, lifting its valuation to $11.7 billion, the company said in September. Robinhood’s investors include Sequoia, DST Global, Ribbit Capital, Andreessen Horowitz, Index Ventures. and D1 Capital Partners.
An IPO would follow a huge boom in volume on the platform, with stay-at-home orders during the coronavirus pandemic driving up retail trading. Robinhood has also tapped into a new demographic — millennial and Gen-Z traders. Robinhood has 13 million accounts on its platform, which allows for trading in options, gold and cryptocurrencies as well as equities and funds.
Larry Tabb, head of market structure research for Bloomberg Intelligence, said in a note that Robinhood’s targeting of millennials and its business model will increasingly draw the attention of other brokers.
“Yet competing versus Robinhood will be difficult,” Tabb said.
Founded by two Stanford University graduates, Robinhood declares on its website that it is “on a mission to democratize finance for all.” The company has experienced some growing pains.
In the first half of this year, U.S. consumer protection agencies received more than 400 complaints about Robinhood — roughly four times more than competitors such as the brokerage units of Charles Schwab Corp. and Fidelity Investments. The grievances, obtained via a public records request to the Federal Trade Commission, depict novice investors in over their heads, struggling to understand why they’ve lost money on stock options or had shares liquidated to pay off margin loans.
Almost 2,000 accounts on its platform were compromised in a hacking spree last month. Access to more than 10,000 email login credentials allegedly tied to Robinhood accounts were available for sale on the dark web in October, according to a Bloomberg review of dark web marketplaces.
Robinhood said at the time there were no signs its systems were breached and that it employs several security measures, while encouraging customers to enable two-factor authentication.(Updates with details of account security concerns in 11th paragraph)
–With assistance from Katie Roof.


fortune--2020-11-18--Meet the financially troubled startup helped power Trump’s campaign

President Donald Trump’s 2020 reelection campaign was powered by a cellphone app that allowed staff to monitor the movements of his millions of supporters, and offered intimate access to their social networks.
While the campaign may be winding down, the data strategy is very much alive, and the digital details the app collected can be put to multiple other uses — to fundraise for the president’s future political ventures, stoke Trump’s base, or even build an audience for a new media empire.
The app lets Trump’s team communicate directly with the 2.8 million people who downloaded it — more than any other app in a U.S. presidential campaign — and if they gave permission, with their entire contact list as well.
Once installed, it can track their behavior on the app and in the physical world, push out headlines, sync with mass texting operations, sell MAGA merchandise, fundraise and log attendance at the president’s rallies, according to the app’s privacy policy and user interface.
Yet the enterprise software company that built a tool to propel Trump’s mass movement is in financial distress and has been sustained at key points by the administration and the president’s campaign, according to interviews with former employees, financial filings and court documents.
Austin-based Phunware, whose stock is trading for pennies, recently agreed to pay Uber $4.5 million as part of a settlement over claims of fraudulent advertising and earlier this year risked being delisted from the Nasdaq. In April, the company got a $2.9 million loan under the Coronavirus Aid, Relief and Economic Security Act as it was building the Trump campaign app.
Campaign watchdogs and former employees alike marvel at how a struggling startup known more for building apps for hospitals and a Manhattan-based astrologer became a juggernaut in Trump’s reelection bid, facilitating an ongoing data and fundraising effort that threw the company a financial lifeline.
Even after major media outlets called the election for his Democratic opponent Joe Biden, the app kept pushing out content supporting Trump’s bid.
“We all know why Joe Biden is rushing to falsely pose as the winner, and why his media allies are trying so hard to help him: they don’t want the truth to be exposed,” read a statement attributed to Trump posted earlier this month. “I will not rest until the American People have the honest vote count they deserve.”
On Tuesday, the app pushed out fresh content defending the campaign’s vote-counting litigation in Georgia.
Last week, the app posted a fundraising appeal asking for donations to Trump’s newly formed Election Defense Fund, which will send most of the money raised to a new political action committee Trump formed called Save America. That PAC has few spending restrictions and could pay for lavish personal expenses or give money to other candidates.
While activity on the app has slowed recently, the enriched data it gathered on the president’s supporters — which can include everything from their contacts to their IP address to their location data — can serve many purposes going forward, said Adav Noti, a former Federal Election Commission attorney who works for the nonpartisan Campaign Legal Center.
Congress and the FEC have not set rules governing how campaigns can use people’s personal data and or limits on the number of entities to whom the campaign can sell its list, he added.
“I’m assuming that what he is going to do is transfer the assets of the campaign,” Noti said. “You can definitely buy the data and the campaign can sell it to you, the trickier question is how much do you have to pay for it.”
Phunware declined to respond to questions about the app, the company’s financial status, its internal culture and its relationship to the campaign.
“Phunware has absolutely no role in the constitutional processes tied to US elections at any level … and also has no role in the content created or used by our customers specific to our mobile software or enterprise cloud platform for mobile,” CEO Alan Knitowski said in an email.
A senior Trump campaign official declined to answer questions about possible future uses for the rich supporter data the campaign collected via digital platforms, including the Phunware app.
“The data is owned by the campaign and limited whatever hit their servers,” said the official who spoke on condition of anonymity to discuss campaign specifics.
As Phunware has hit challenging financial times in recent years, it has shed employees, clients and investors, 10 of whom agreed to speak with The Associated Press, some on condition of anonymity because they signed non-disclosure agreements or feared retaliation.
Phunware sued its client Uber in 2017, accusing the ride-sharing company of failing to pay its invoices, according to court records.
But after Uber filed suit against Phunware, alleging the software company committed fraud by among other things, allowing ads for the ride-sharing app to show up on porn sites, former employees said the startup looked for new ways to diversify its revenue stream.
Into the picture stepped Karl Rove, former advisor and Republican strategist for President George W. Bush.
Long before reaching the White House, Rove made his name in Texas politics as a specialist in direct mail, a form of political advertising he once said was effective because it was largely “immune from press coverage,” or near invisible to the public.
In an interview with the AP, Rove said a lobbyist who was friendly with his wife introduced him to Phunware executives, who told him the company had built apps for sports teams and Fortune 100 companies that integrated geofencing technology, which can track people’s movements through their cellphones.
Ex-Phunware employees and the lobbyist’s staff gave Rove a presentation, showing off how the company could use cellphone data to send out customized political ads that also were hard to trace.
“His mind was blown. He was like ‘this is extremely powerful data,’” a former employee recalled.
Rove said he brokered a relationship for Phunware with Trump’s 2016 campaign digital director Brad Parscale.
“I thought it had lots of implications for politics so in a subsequent conversation I mentioned it to Brad Parscale,” Rove said. “He said ‘interesting’ and that was it, he never told me he had hired them.”
Knitowski said in an email that he built the relationship with the Trump campaign.
“Phunware met the Trump Campaign through me directly after a 1:1 introduction from a Silicon Valley CEO who requested our consideration and participation in an RFP that also had Salesforce as a finalist,” Knitowski said.
Stung by the Cambridge Analytica controversy — the company was accused of using data improperly obtained from Facebook to predict voter behavior in the 2016 election — and perceived bias from social media platforms, Parscale wanted to bypass Big Tech and reorient the reelection campaign to connect directly with supporters.
After Trump’s 2016 victory, Parscale worked with consultants and an ex-Cambridge Analytica data scientist to build out a data storehouse that could better microtarget audiences with specialized ads, former collaborators said.
Phunware, meanwhile, started marketing its tools to campaigns, saying it could reach likely voters through geofencing, by drawing virtual boundaries around areas of interest “such as event appearances, polling centers, sporting events – even an opponent’s campaign rally,” a blog post said.
Two former employees said Knitowski told engineers to embed invisible tracking software to follow users’ behavior inside each app they built to boost Phunware’s offerings to campaigns.
“We were told they needed to be in every app to collect information for whatever we did, and the political vertical was one of those reasons,” an ex-employee said. “It would still go in even if the customer said they didn’t want it.”
Knitowski declined to comment on the allegation. A former manager said he worked to keep the software out of apps whose clients didn’t want it.
At monthly meetings, Knitowski would brief staff on the startup’s prospects for getting bought by another company or attracting angel investors, another former manager recalled.
The Republican National Committee, in turn, had hired a private company to build a centralized hub for voter data for right-leaning campaigns called Data Trust, and Parscale joined its board. All the while, his team kept amassing mobile phone numbers, and offering Trump supporters MAGA swag in exchange for their digits.
“This is how Donald Trump stays president for four more years,” Parscale said, holding up his iPhone on stage at a 2018 rally supporting Texas Sen. Ted Cruz’s reelection. “Now this phone is how we connect with you. It’s how we turn you into the army of Trump.”
By early 2019, after Phunware had gone public, former colleagues said Knitowski started talking about his efforts to court the Trump campaign. In April, 15 percent of the staff was laid off due to “organizational restructuring and cost reductions,” according to a Securities and Exchange Commission filing.
In July of that year, Knitowski rang the bell at the Nasdaq. But by then revenue was dropping and major clients were threatening to leave.
New York-based astrologer Susan Miller, whose glittery horoscope app had been one of Phunware’s most successful, said she would ask for features to be updated, and no one would call back.
“Have you ever talked to someone at a party who is always looking at the door and not at you because they want to talk to someone else more? It felt like that,” Miller said. “They just treated me like an old shoe.”
An investor said Knitowski stopped returning his calls, too.
“The guy seems very shady. He is all your best friend when he’s looking to raise money and once you have questions he is nowhere to be seen,” said Scott Walker, who said he lost more than $200,000 after Phunware’s stock tanked.
In August, there was something new to announce: work with American Made Media Consultants, “otherwise known as the ‘Trump-Pence 2020’ and ‘Keep America Great’ Campaign,” Knitowski said in an earnings call.
According to a document filed with Federal Communications Commission two months later, the company’s directors included campaign operations director Sean Dollman and campaign counsel Alex Cannon.
Phunware would later reveal more details about its work on the Trump app, which would include location-based tools and other features to help the campaign crowdsource new users. Plus, there would be a gamified loyalty system, where supporters could accumulate points to spend on signed MAGA hats or pose for a picture with Trump.
By September 2019, 18 percent of the remaining staff was laid off after client Fox Networks Group left, taking a large percentage of Phunware’s sales with them, according to filings.
Managers asked engineers in Phunware’s Newport Beach office if they wanted to work on the Trump app, and some engineers who were opposed resigned, a former employee said.
Then in April, as coronavirus cases surged and stay-at-home orders shut down business, Phunware received a $2.9 million loan from the U.S. Small Business Administration’s Paycheck Protection Program, a relief fund that Congress created to help small businesses keep workers employed through the pandemic.
Phunware COO Randall Crowder denied political favoritism helped Phunware get the loan.
“We got no help from the Trump campaign — boy I wish we could have, what a great way to have friends in high places — but that didn’t have any implication on what we did,” Crowder said in a recorded interview.
Phunware declined to return the money after the administration demanded that public companies that received more than $2 million give it back.
The next month, Nasdaq notified the company it could be delisted over its finances. To stay listed, companies must meet a set of standards to reassure investors that since the initial public offering, they remain a credible company.
SEC records revealed that by July, American Made Media Consultants accounted for one-third of Phunware’s sales, paying Phunware more than $1.6 million in the first half of the year. The Campaign Legal Center filed an FEC complaint alleging that the Trump campaign and a major PAC supporting it had shielded their spending on Phunware and other subcontractors through American Made Media Consultants.
As the pandemic kept many supporters at home, Trump’s campaign used the app to acquire new users remotely, and Parscale touted how the app was retooled to support virtual events. According to online data provider Apptopia, nearly 860,000 people downloaded the Trump app in July, the same month Biden’s campaign abandoned its first app, Team Joe, and asked followers to download an entirely new app, Vote Joe (only 11,075 did).
By mid-November, 2.8 million people had downloaded the Trump app, which Apptopia CEO Eliran Sapir estimated could give the campaign hundreds of millions of phone numbers, enabling it to reach people whose numbers were stored in their friends’ contact lists but never consented to being contacted. A Carnegie Mellon University researcher, however, estimated the total would be closer to 27 million due to duplicate phone numbers.
By then, the app had already laid the groundwork for a coordinated final months, allowing campaign officials to model supporters’ behavior under quarantine and incentivize them to appear at rallies.
“Why is that app so valuable? Because people like sharing messages with their friends from the campaign and getting news and updates,” said Republican consultant Eric Wilson. “But it’s not just an extractive resource. It’s also generating contacts and mindshare on behalf of the campaign.”
Phunware’s financial troubles hadn’t abated, however.
In a Thursday SEC filing, Phunware suddenly stopped disclosing its top customers by name. But by matching the accounting figures to past filings, AP derived that American Made Media Consultants is Phunware’s single biggest customer, and paid Phunware $2.4 million over the first 9 months of this year, accounting for nearly one-third of Phunware’s revenue. Two former employees concurred. The app developer also disclosed sizable debt and expressed “substantial doubt about its ability to continue as a going concern.”
On an earnings call with analysts last week, the company never mentioned its work for the Trump campaign, instead focusing on its future growth potential. Despite the company’s uncertainties, some analysts say it has a positive long-term outlook due to the growth in mobile usage.
Last month, its stock rose slightly after the company announced it had finished two contracts for Honeywell. Honeywell fired back on Twitter, saying it had asked Phunware to retract its release, and that the industrial conglomerate “does not have an ongoing relationship with Phunware and does not plan to work with Phunware in the future.”
A second company, Hewlett Packard Enterprise, told AP Phunware had publicized a partnership between the companies where none existed. Knitowski declined to comment on either instance.
“We never had a relationship with Phunware, we don’t have any formalized partnership with them,” said spokesman Adam Bauer. “We didn’t authorize them to issue that press release and we asked them to take it down.”


fortune--2020-11-18--Why Biden must rely on innovation to rejuvenate the economy

Made in America. It seems those three words will define President-elect Joe Biden’s approach to rejuvenating an American economy that continues to be pummeled by the ongoing coronavirus pandemic.
But looking closer at his platform, it seems Biden’s actual approach to economic recovery in the face of the coronavirus will be defined by three other terms: invest, provide, and support.
Biden has made clear through policy proposals that the U.S. needs to kick-start its struggling economy through a heavy focus on one of America’s true strengths: innovation.
His plan shows a strong desire to invest in research and development activities in order to increase demand for domestic goods and services while creating high-quality jobs.
He has also laid out proposals to provide incentives such as tax credits for businesses that are innovating, and he outlined a path to support an economically viable environment for U.S. businesses to keep their operations here and combat offshoring.
Markets have rallied in response to reported positive results for the Pfizer/BioNTech and Moderna vaccines, but that isn’t indicative of truly sustainable economic progress. Biden’s plan for lasting economic recovery leverages the power of innovation in the U.S. in an attempt to boost our industrial and technological capacities.
It’s clear that Biden recognizes the role that American small and midsize businesses, particularly in the manufacturing sector, will play in an economic rebound effort that he compares to our country’s resilience during World War II.
Tackling COVID-19 will be job No. 1 in the Biden administration, but these growth tactics are sure to play a role in combating the pandemic’s negative economic impact.
First, Biden’s proposals call for a $400 billion investment in federal purchases for products made by American workers. Biden hopes to both spur demand and increase job growth for small businesses through this investment, which will likely mirror the 2009 Recovery Act in many ways, and which will include the purchase of billions of dollars’ worth of clean vehicles and products, materials such as steel and cement, and other equipment.
The investment would also include a commitment to purchase advanced tech—a sign of his administration’s confidence in a digital revolution centered on artificial intelligence (A.I.), machine learning, and telecom.
Further, Biden has supported direct federal funding for research and development activities in the form of a $300 billion investment in his first term that would be directed toward the advancement of critical “new industries and technologies” such as 5G and A.I.
And, although the details of the proposal are not fully disclosed, Biden’s team has also thrown support behind the creation of a “credit facility” that will inject capital into small and midsize manufacturing firms in order for them to modernize and become more competitive.
These sorts of support measures are aimed at ensuring new products emerge from the U.S. and that America remains a mecca of innovation where the next Apple, IBM, Microsoft, or SpaceX can flourish.
Although addressing the Tax Cuts and Jobs Act in the form of a Biden tax reform plan likely won’t be on the table for some time, the administration very likely will work to implement tax tools for American businesses to leverage in order to bolster economic viability.
Specifically, his team has claimed it will “put a special focus on the backbone of American manufacturing—the thousands of small and medium-sized manufacturers throughout the country.”
In order to encourage business growth and innovation, a Biden administration would push for a 10% tax credit for companies that invest in “revitalizing closed or nearly closed facilities, retooling or expanding facilities, and bringing production or service jobs back to the U.S.”
Alongside the tax credit, Biden has also pitched a 10% surtax for companies that offshore manufacturing operations that would seemingly increase the corporate tax rate to 30.8%. That’s a sure sign that for him, innovation in the homeland is priority No. 1.
Biden has signaled, however, that these types of incentives wouldn’t just be available to one specific industry. This is indicative of the President-elect’s belief that innovation efforts for all American small and midsize businesses will be central to relief efforts.
Confronting an adversarial China has already been listed as a top priority for the Biden administration. This will be a necessary task if the U.S. wants to increase innovation efforts and maintain a stable role in the global supply chain.
However, this approach will need to not only concentrate on pushing back against China, which boasts cheap labor and infrastructure development for businesses tempted by offshoring, but also ensure that the U.S. can create an equally appealing environment for innovators.
Biden’s approach to tax incentives and penalties seems to be a strong first step toward creating that environment, but more will need to be done. His team has proposed invigorating public-private partnerships, and even investing $50 billion in workforce development programs, a necessity when access to technical labor has been a consistent problem in the U.S.
Creating a support system for innovation will also involve ensuring that our workforce can keep pace with what will hopefully be a hare-paced development of new technologies. President-elect Biden seems to understand that.
As stated on his published platform, “As President, Biden will ensure that employers receiving federal funds give all affected employees advance notice of technology changes and automation in the workplace, put their employees at the front of the line for new jobs, and offer paid skills training so that employees can succeed in new jobs.”
For Democrats excited by the notion of a Biden presidency, the truth is that control of the Senate is a concern. In order for any of these proposals to become a reality, Biden will likely have to keep his word and leverage his past strengths as a master in bipartisanship.
To start, Biden should look toward existing incentives that already benefit from bipartisan support. The Research and Development Tax Credit has historically been a boon for American small and medium-size businesses, and has been recognized by members of both parties as a viable tool for spurring economic recovery.
In fact, several pieces of bipartisan legislation, including Sen. Chris Coons’ (D-Del.) Forward Act, advocate for strengthening the credit. A recent column from House Minority Leader Kevin McCarthy (R-Calif.) and Rep. Kevin Brady (R-Texas) even signaled support for doubling the credit to foster greater innovation.
President Obama received criticism in the wake of the 2008 crash for not doing enough to generate a robust recovery, even though his efforts were enough to mitigate the crisis. Biden should work to avoid any chance of similar critiques by focusing heavily on creating tools for sustainable economic growth.
Regardless of the approach to reinvigorating the U.S. economy, innovation is sure to play a central role.
Joe Crowley is a senior policy adviser at Squire Patton Boggs in Washington and serves on alliantgroup’s Strategic Advisory Board. He was first elected to Congress in 1998 to represent portions of Queens and the Bronx in New York. While in Congress, Crowley served as chair of the House Democratic Caucus and a member of the House Committee on Ways and Means.


fortune--2020-11-18--Apple to cut app store fees in half for most developers

Apple is cutting by half the fees charged to most developers who sell software and services on the App Store, marking the biggest change to the store’s revenue structure since the iPhone maker launched the service in 2008. That wasn’t enough for some developers.
The company is lowering the App Store fee to 15% from 30% for developers who produce as much as $1 million in annual revenue from their apps and those who are new to the store. The change will go into effect Jan. 1 as part of an App Store Small Business Program, Apple said Wednesday in a statement. The new structure will apply to the “vast majority” of developers who charge for apps and in-app purchases on Apple’s devices, the company said. It won’t affect major apps, such as those from Netflix. and Spotify Technology.
The Cupertino, Calif.-based technology giant said it’s making the change to help small developers financially and to provide a way for them to invest in their businesses amid the economic struggles caused by the Covid-19 pandemic.
Apple has faced ongoing scrutiny from government regulators and criticism from developers about the percentage of revenue it takes for App Store purchases. Alphabet’s Google also charges similar fees to developers on its Android app store.
Income from app developers has been key to Apple’s growing services business, which reached almost $54 billion in revenue in fiscal 2020. The App Store is one of several products and offerings that make up the services unit, but is the biggest revenue driver, according to Toni Sacconaghi, an analyst at Sanford C Bernstein. He estimates the App Store alone will bring in $18.7 billion in 2021, about a third of Apple’s total services revenue next year.
Shannon Cross, an analyst at Cross Research, estimated the fee changes will reduce Apple’s revenue by about $600 million in 2021, or just 3% of her firm’s projection for App Store sales. Gene Munster of Loup Ventures estimated a larger hit of about $1.6 billion, or 0.5% of Apple’s total annual revenue.
Small developers make up the majority of App Store sellers. Sensor Tower, a firm that tracks App Store data, said 98% of App Store developers generate under $1 million in annual gross spending by consumers. The firm estimated that just 5% of Apple’s App Store revenue in 2019 came from developers who took in less than $1 million during the year.
The changes failed to appease one of the more vocal small developers who relies on Apple’s ecosystem. “If you’re a developer making $1m, Apple is STILL asking to be paid $150,000, just to process payments on the monopoly computing platform in the US. That’s obscene!” Basecamp Chief Technology Officer David Heinemeier Hansson wrote on Twitter.
In June, Apple blocked an update to Basecamp’s Hey email app after the developer refused to implement a way to sign up in the app, which would have given Apple up to 30% of its revenue from the App Store. After the developer complained publicly, Apple said the app could stay as long as it followed other app-review guidelines.
The EU is probing Apple for forcing software developers to use its in-app payment system, which effectively imposes fees on many services using the App Store to reach consumers. While officials have said they aren’t targeting the amount that Apple charges, the focus on the payment system could also compel Apple to offer alternative payments providers to developers. The EU said its investigation is ongoing and declined to comment further.
Spotify, which competes with the Apple Music streaming service and has complained about the App Store’s fees and rules, called Wednesday’s changes “window dressing” that should be ignored by antitrust regulators.
“This latest move further demonstrates that their App Store policies are arbitrary and capricious,” a Spotify spokesman said. “While we find their fees to be excessive and discriminatory, Apple’s tying of its own payment system to the App Store and the communications restrictions it uses to punish developers who choose not to use it, put apps like Spotify at a significant disadvantage to their own competing service.”
Fortnite-maker Epic Games, which is engaged in lawsuits with Apple over its App Store fees and rules, said that “by giving special 15% terms to select robber barons like Amazon, and now also to small indies, Apple is hoping to remove enough critics that they can get away with their blockade on competition and 30% tax on most in-app purchases.”
Apple has said there are 1.8 million apps in the App Store across all of the company’s platforms and more than 28 million registered developers. The company said earlier this year the store has generated $155 billion for developers since it started.
Since the beginning of the App Store, Apple generally has charged developers a 30% slice of revenue generated by their apps. In 2016, Apple lowered to 15% the cut it takes from subscriptions purchased through the apps for more than a year. Earlier this year, Apple also loosened restrictions on some cloud-gaming apps and email services, charging a fee to fewer developers.
Chief Executive Officer Tim Cook testified about the company’s App Store practices at a July hearing before U.S. lawmakers. In advance of Cook’s appearance, Apple published a study that claimed its 30% cut is normal for the industry or lower than some app stores.
Apple’s standard 30% fee will remain for developers that generate more than $1 million in a calendar year.
“We’re launching this program to help small business owners write the next chapter of creativity and prosperity on the App Store, and to build the kind of quality apps our customers love,” Cook said in a statement. “The App Store has been an engine of economic growth like none other, creating millions of new jobs and a pathway to entrepreneurship accessible to anyone with a great idea.”
The company said that if a developer made $1 million or less in 2020, the fee will drop to 15% in 2021 until they reach the $1 million mark. If a developer doesn’t reach $1 million in revenue in 2021, they will retain that discount in 2022. If a developer tops $1 million in revenue in a calendar year, they won’t be eligible again for the 15% split until their revenue falls to less than $1 million for a full calendar year.
The change will take place across App Stores on the iPhone, iPad, Mac, Apple TV and Apple Watch. The company has said that 85% of apps found on the App Store are free and aren’t part of the revenue fee system.
Some major apps, such as those offered by Netflix and Spotify, don’t let subscribers sign up through the App Store, avoiding the 30% charge. Apple’s new fee program reductions won’t lure those subscriptions back because the popular apps generate far more than $1 million annually.
Apple is betting that the fee change will result in developers creating more apps and sticking with the App Store, which will create enough new revenue to offset any potential financial negatives from the fee reductions.
U.S. Justice Department lawyers have probed the rules that govern Apple’s App Store, and at least one developer was asked about the 30% fee.


fortune--2020-11-18--‘Challenger banks’ are on track for a record year even as business model remains uncertain

Big investors are backing online banks more than ever, betting that these upstarts’ low overhead and nimble technology stacks will let them keep grabbing customers from traditional financial institutions. This year, these so-called challenger banks have already raised a total of $4.6 billion across 101 deals—and are on pace to break the record $5.3 billion they pulled in during 2019.
These figures, set out in a new report by CB Insights, reflect in part a series of massive bets on the likes of Chime, which recently raised a $485 million Series F round that valued the online bank at $14.5 billion. The popularity of challenger banks among venture and private equity firms is reflected in this chart:
CB Insights notes that many challenger banks have been able to thrive thanks to a 2011 law known as the Durbin amendment, which lets banks with less than $10 billion in assets charge merchants up to 1.5% on debit card swipes—which is more than seven times what giants like Bank of America can charge.
But while revenue from card swipes has helped online banks gain a foothold in the larger banking market, the banks themselves could face challenges in the coming year. While these banks have added millions of customers—Chime had 10 million, and smaller rival Current had 1 million as of September, according to CB Insights—they also face a wave of competition.
In the U.S., the market is already crowded as Chime counts rivals like Varo, MoneyLion, Dave, HMBradley, and others, including just-launched Jiko, which puts user deposits into U.S. Treasury bills. Meanwhile, the U.S. challenger banks face new pressure from cross-Atlantic rivals like Revolut and Monzo, as well as competition from giants like Venmo and Square, which are expanding their bank offerings.
While CB Insights notes the online banks are benefiting from tailwinds in the form of increased online commerce and a bounce back in debit card spending, it’s an open question if there are enough debit swipes to go around. Some of the upstarts are trying a subscription model—asking users to pay a modest fee for investment or overdraft services—but it’s unclear how consumers will embrace this.
Meanwhile, traditional banks are fighting back by jazzing up their apps and online offerings even as they enjoy record levels of customer deposits in the COVID era. According to Federal Reserve stats, the total amount of deposits at U.S. consumer banks swelled to $15.9 trillion from $13.2 trillion at the start of the year—even as the banks have been slashing savings rates. These giant cash reserves are a boon for the big banks’ core lending business, which is something the challenger banks largely don’t have.
Mark Goldberg, a partner at Index Ventures who specializes in fintech, says that the current environment means some challenger banks will struggle or see themselves get acquired. He added success will be especially tough for the newer entrants and for those that are relying on social media ads to sign up new customers—a popular tactic for some challenger banks.
Goldberg also predicts the future will belong to early leaders like Chime and Robinhood, which are winning the race for new customers and are in a strong position to cross-sell new products to them. He adds that upstart banks in the strongest position also include those that have targeted a niche, citing Greenlight, which recently raised $215 million for its “debit card for kids” offering.
In the longer term, the success of banks—new and old—will depend on their ability to retain customers and extract more value from them over the course of a lifetime, says CB Insights.
More must-read finance coverage from Fortune:


fortune--2020-11-18--Electric vehicle stocks recover, but the road may not end well

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Last time we checked in with the electric vehicle sector at Data Sheet—about two years, sorry, two months, no, checks web archive, two weeks ago— things were not good.
The crowd of revenue-free startups planning to produce EVs down the road, like Fisker, Hyliion, and Lordstown, were plunging amid a growing aversion to risky stocks and concern that consumers might not be ready to go electric. Even market leader Tesla, which produces more than 1,500 electric cars a day, lost one-eighth its value, or about $50 billion.
But a couple of things have changed in November. For one, former vice president Joe Biden won the election. A component of Biden’s economic plan is to boost the green energy sector by building a huge network of charging and refueling stations for renewable energy vehicles, converting half a million buses to emission-free technology, and subsidizing consumers who want to swap a gas-powered car for an EV. Also, the mysterious committee that oversees the S&P 500 stock index finally decided to add Tesla, meaning all of the mutual fund managers running S&P 500 index funds will have to buy billions of dollars worth of the stock.
The Biden win and S&P 500 decision fueled a turnaround not just for market leader Tesla, up 14% in November, but also smaller players like three-wheeled EV maker Arcimoto, with a 47% jump this month, electric van maker Workhorse Group, up 40%, and Chinese electric SUV maker Nio, up 52%. Star car designer Henrik Fisker got a boost too. His eponymously named second-try electric car startup doesn’t have a product on the market yet, but it rose 62% this month. Electric bus maker Arrival hit the market on Wednesday via a merger with a SPAC. Expect it to shoot up for a bit too.
While the president certainly has some influence over the future of electric vehicles, some related stocks got a boost from another guy who has some influence over the stock market. Former hedge fund manager and CNBC host Jim Cramer has long been touting companies that focus on the hydrogen fuel cell-powered vehicle segment. These vehicles replace a gasoline engine with one that runs on hydrogen, which can easily be created with wind power and produces no emissions beyond water. Cramer was hammering the theme again last week, even criticizing Tesla for ignoring hydrogen. FuelCell Energy saw its stock price double since the start of the month, Plug Power is up 64%, and Bloom Energy has gained 52%
All of these stocks may get another slight boost today, after U.K. Prime Minister Boris Johnson unveiled his green energy package that includes banning gas-powered vehicles in 2030.
But this sort of coordinated movement in the EV sector is one of the classic signs of an investment bubble. As is the flood of investor cash and high valuations given to companies that don’t have any sales yet. It’s gotten to the point where Elon Musk is worth more than Mark Zuckerberg, making him the third-richest person in the world.
For now, everyone’s a winner. But as with most bubbles, it’s unlikely to last for the majority of these speculative stocks caught in the updraft.
Aaron Pressman
@ampressman
aaron.pressman@fortune.com
NEWSWORTHY
Go ask Bezos when he's ten feet tall. Speaking of big stock moves, the big pharmacy chains tumbled on Tuesday after Amazon rolled out its expanded prescription drug sales effort. It took two years after buying online pharmacy PillPack, but now Amazon is bringing its full weight to bear on cracking the market, including discounts and free delivery for Prime members.
Fanfare for the common app. In a move showing good faith with software developers, Apple on Wednesday announced it would cut its take in half, to just 15%, on sales of apps that generate less than $1 million. Apps from new developers would also get the 15% treatment. Neither condition applies to apps from Epic Games, so don't expect that lawsuit to end just yet. Nor would the change likely satisfy regulators probing the app store's policies for antitrust violations. But among those brand new developers? Marissa Mayer's new startup's new app, Sunshine Contacts. It's an effort to clean up the contact mess across our phones and other devices.
Smoke but no fire. There wasn't much news, although there were surely a few viral clips generated by Tuesday's Senate Judiciary Committee hearing. Facebook CEO Mark Zuckerberg and Twitter CEO Jack Dorsey defended their companies' actions around the election, while Republicans complained of bias and Democrats asked for stronger oversight. “All taken together, we went really quite far to distribute reliable and accurate information,” Zuckerberg said. Maybe some of the more troublesome tweets can be converted to the site's new fleets, an Instagram Stories-like feature that lets users post photos and short videos that disappear after a day.
The quickening. The movie industry is just beginning to adjust to the permanent changes wrought by the pandemic. On Tuesday, Universal Pictures became the first major studio to face the new reality, striking a deal to bring most of its films to streaming services as few as 17 days after opening in theaters. Movies making $50 million will stay exclusively in theaters for 31 days.
Exceeds expectations. The reviews are out for the three computers Apple introduced last week running its homegrown M1 processor. And the reviews are good. Harry McCracken says the new MacBook Air works just like the last one (powered by an Intel CPU) but is "much faster (and) more power-efficient." Jason Snell finds a $699 Mac Mini outperforming his $5,000 iMac Pro. And YouTube's Marques Brownlee says he used the new 13" MacBook Pro for a week without needing to plug it in.
FOOD FOR THOUGHT
Remote learning wasn't created from the pandemic. Sal Khan founded the Khan Academy to help kids learn online back in 2008. He talked to The Verge about how the massive increase in online learning needs to change how teachers teach in person.
When people get together, the teacher should act as more of an adviser. How do you unblock kids, or how do you be the conductor so that you can get kids to help each other? So the school has always been about students’ agency and the students being at the center of their learning, and that the adults are there to always help and unblock.
And that might seem like a small thing, but it’s actually a huge thing. It’s much harder and it takes a lot more sophistication than if you’re just going through the same lectures year after year. That’s always been the core principles of the school. And there’s other principles; everyone a student, everyone a teacher, learning should not be bound by time or space.
IN CASE YOU MISSED IT
Everything to know about Airbnb’s IPO By Lucinda Shen
How to succeed in the subscriptions business By Robert Hackett
How AI is changing the legal profession By Jeff John Roberts
Zurich added 6 words to job listings and saw women’s share of applications—and hires—jump By Claire Zillman and Emma Hinchliffe
For pollsters, it’s back to the drawing board after yet another miss in the 2020 election By Rey Mashayekhi
Introducing Measure Up, our partnership with Refinitiv to measure racial diversity By Rachel Schallom
(Some of these stories require a subscription to access. Thank you for supporting our journalism.)
BEFORE YOU GO
They did introduce the line with the disclaimer, "Never thought we'd print this," but still...
On the cover of the December issue of Cosmopolitan, alongside the interview of movie star Emma Roberts, is this insane statement about 2020: "Dating lessons from pandemics past. The 14th century called and it wants its sex spree back." Sadly, the story is not online yet.


fortune--2020-11-18--EV startup Arrival goes public at $5.4 billion valuation in SPAC deal

Arrival, a startup developing electric trucks and buses, announced today that it will go public via a trendy process known as a SPAC, a special purpose acquisition company. The deal values the startup, which has a deal in place to produce electric vans for UPS, at $5.4 billion dollars.
Lead investors in the deal, executed via a merger with a dedicated entity called CIIG Merger Corp. (CIIC), include Fidelity Management & Research, Wellington Management, and funds managed by BlackRock. Prior investments have come from Hyundai-Kia. The newly combined company will trade on the Nasdaq exchange under the ticker ARVL. Arrival says the deal will leave it with about $660 million in cash to fund growth.
Arrival, founded in January 2015, is focused on producing electric vans and buses for commercial and municipal buyers. Its banner deal is with UPS, which has ordered 10,000 electric delivery vans, which will go into production in 2022. UPS has an option to purchase an additional 10,000 vans, and, along with other contracts, Arrival says it has deals in place worth as much as $1.2 billion.
Unlike flashy consumer EV makers such as Tesla or Fisker, Arrival is primarily focused on producing low-cost vehicles. It says its vans and buses will be “competitive in price with fossil fuel alternatives and substantially lower than comparable EVs.”
Mike Ableson, head of Arrival’s automotive operations and formerly vice president at General Motors, told Fortune that’s possible largely because of Arrival’s approach to manufacturing. The company plans to produce its vehicles in what it calls “micro-factories,” using lightweight robotics and automation to stand up production facilities that fit into existing warehouses or similar spaces, reducing capital expenditures.
Ableson says the factory format is possible because electric vehicles are simpler to assemble than traditional internal-combustion vehicles, making automation easier. Another key innovation is Arrival’s unique color-infused composite body paneling, which eliminates the need for a traditional, large-footprint paint system.
According to Ableson, Arrival has also developed battery modules and other electrical components in house, which should improve profit margins compared with buying those from suppliers. Like some other EV startups, Arrival uses a modular “skateboard” format that allows various bodies to be designed for use with the same undercarriage and drivetrain.
In addition to cost reductions, Ableson says the micro-factory approach makes Arrival more agile. “We don’t have to forecast demand three or four years in the future…We can roll out factories as we see demand develop,” including in response to specific contracts.
The first of Arrival’s micro-factories is a van production facility coming to the U.K. in 2021. Arrival’s first U.S. micro-factory will be in South Carolina, and Ableson says bus prototypes should be on the road in the U.S. this year.


fortune--2020-11-18--Investors are betting that the next Warby Parker will spring from Amazon

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Where Amazon walks, a graveyard follows. The phenomenon was clear yesterday, when investors spooked by its pharmacy offering drove shares of traditional drugstores down.
But now, venture capitalists are considering the company’s platform fertile ground to grow new consumer-facing brands.
On Wednesday, venture capitalists such as General Catalyst, Khosla Ventures, and Arbor Ventures injected $175 million in Series A funding into Heyday, a company that acquires and incubates companies that sell products on Amazon. That’s right: $175 million for a company that just came out of stealth and hired its first employee in August—though it did not disclose the division between debt vs. equity.
The bet is that consumers want to shop in a centralized marketplace, a space currently dominated by Amazon—and that sizable businesses can spring from the e-commerce giant. Heyday CEO and co-founder Sebastian Rymarz points to Anker Innovations, a Chinese company selling eponymous portable batteries that’s now valued at $11.8 billion in trading in Shenzhen after getting its start almost entirely on Amazon.
“Warby Parker and Dollar Shave Club dominate in direct to consumer,” Rymarz says. “We don’t think that it’s going to be those brands that are going to win in marketplaces. [Marketplace] brands need a whole new stack…to be able to rank well on digital shelves and to optimize listings.”
Heyday’s investors aren’t the only ones running with this thesis. Thrasio, another acquirer of companies that list products on Amazon, recently raised $260 million in Series C funding led by Advent International and says it is a profitable unicorn. And there’s Perch and Heroes in Europe—each of which have millions to buy up consumer brands listing on marketplaces.
Heyday both launches and acquires brands that list on marketplaces. On the acquisition side, the company plans to buy only profitable businesses with $2 million to $20 million in revenue that it believes can be ten times larger, investing between $3 million to $20 million in a company. With more data on marketplaces and consumers, Ramyrz and his cohorts believe they can help brands better target customers and organize their supply chains.
While I colloquially say such firms are betting that a big consumer-facing brand like Warby Parker could spring from Amazon, there are also key differences. Many direct-to-consumer brands appear to have control over their operations. By relying on a marketplace, companies like Heyday and Thrasio face the issue of platform risks. It’s what famously made life difficult for gamemaker Zynga, which early on made much of its games based on Facebook’s network. It’s also an issue the media business knows well, as more news is delivered via Google or Facebook.
It’s well-known on Amazon too. The marketplace giant has been accused of using data from independent sellers on its website to launch competing products. And what’s to say that Amazon won’t suddenly change its listing algorithm, upending companies on its platform altogether? Rymarz acknowledges those risks, though he believes Amazon has still allowed, and has a key stake in, allowing the overall marketplace to proliferate.
The ultimate prize here, though, is whether such brands can use Amazon as a launching pad to attract consumers all on their own merit and through their own channels.
Heyday has not yet reached unicorn status, though it plans to reach $200 million in annualized revenue by the end of 2021 and $1 billion by the end of 2023.
I HATE YOU, I LOVE YOU, I HATE THAT I LOVE YOU: Adam Neumann may be suing SoftBank—and there’s no shortage of ugliness there—but the Japanese giant’s CEO Masayoshi Son says he still loves the WeWork co-founder and believes Neumann will be successful in the long term. Son believes Neumann has made mistakes and that he himself is to some extent responsible for those errors, Son said at the New York Times DealBook conference. Son added: “I still love him. I still respect him…I’m a big believer that someday he will be very successful.”
Again, this all comes as Neumann is aggressively suing the Japanese giant over its scrapped plans to acquire $3 billion of WeWork stock, including from Neumann himself, and as SoftBank has reported billions of losses on that particular investment. You can watch the full interview here.
Lucinda Shen
Twitter: @shenlucinda
Email: lucinda.shen@fortune.com
This story has been updated to clarify that Heyday did not disclose the mix between equity in debt in the round.
VENTURE DEALS
- Relativity Space, a Long Beach, Calif.-based maker of 3D printed rockets, is raising a $500 million D round led by Tiger Global, valuing it at $2.3 billion, per CNBC. Read more.
- PingCAP, a San Mateo, Calif.-based open-source software developer, raised $270 million in Series D funding. GGV Capital, Access Technology Ventures, Anatole Investment, Jeneration Capital and 5Y Capital led the round. Read more.
- Klaviyo, a Boston-based email marketing platform going up against Mailchimp, raised $200 million in Series C funding. Accel led the round and was joined by investors including Summit Partners.
- Gojek, the Southeast Asian ride-hailing giant, raised $150 million from Telkomsel. Read more.
- Cato Networks, a Tel Aviv-based network for sharing resources, raised $130 million in Series E funding valuing it at $1 billion. Lightspeed Venture Partners led the round and was joined by investors including Coatue, Greylock, Aspect Ventures/Acrew Capital, and Singtel Innov8.
- Kandou, a Switzerland-based semiconductor company, raised $92.3 million in Series C funding. Investors include Bessemer Venture Partners, Climb Ventures, and Swiss Select Opportunities.
- Elevation Oncology, a New York-based biopharmaceutical company focused on cancers, raised $65 million in Series B funding. venBio Partners and Cormorant Asset Management led the round.
- Medable, a Palo Alto, Calif.-based telemedicine trial platform, has raised about $64 million of a planned $94 million in funding. Read more.
- K Health, a New York-based digital primary startup, raised $42 million in Series D funding. Valor Equity Partners led the round and was joined by investors including Marcy Venture Partners, Atreides Management, PICO Venture Partners, 14W, and Max Ventures.
- EdgeQ, a Santa Clara, Calif.-based 5G chip company, raised $51 million in total funding. Investors include Threshold Ventures, Fusion Fund, and Yahoo! co-founder Jerry Yang.
- Yubo, a Paris-based social platform, raised $47.5 million in Series C funding. Investors included Idinvest, Iris Capital, Alven, Sweet Capital, and Gaia Capital Partners.
- Fireblocks, a New York-based digital asset custodian, raised $30 million in Series B funding. Paradigm led the round and was joined by investors including Cyberstarts, Tenaya Capital, Swisscom, Galaxy Digital, Digital Currency Group, and Cedar Hill Capital.
- OakNorth, a U.K.-based lender to small and medium-sized businesses backed by SoftBank, sold $30 million in secondary shares to Sumitomo Mitsui Banking Corporation.
- ControlUp, a San Jose, Calif.-based way to monitor, troubleshoot, and remediate desktops, raised $27 million in Series C funding. JVP and K1 Investment Management led the round.
- Headway, a New York-based way to search for therapists, raised $26 million in Series A funding. Thrive and GV led the round and were joined by Accel , GFC and IA Ventures. Read more.
- Mati, a San Francisco-based API user verification process, raised $13.5 million in Series A funding. Tribe Capital led the round, joined by Spero Ventures, Amaranthine, Operator Partners, Aglae Ventures, and Comma VC.
- OXIO, a New York-based cloud-based mobile carrier, raised $12 million in Series A funding. monashees and Atlantico Capital led the round and were joined by FinTech Collective and Multicoin Capital.
- Upfront Healthcare, a Chicago-based communication and patient engagement platform, raised $11.5 million in Series B funding. Baird Capital and LRVHealth co-led the round and were joined by Echo Health Ventures, Nashville Capital Network and Hyde Park Venture Partners.
- Seldon, a London-based company seeking to scale machine learning models, raised £7.1 million in Series A funding. AlbionVC and Cambridge Innovation Capital led the round.
- Northstar, a Los Angeles-based provider of financial wellness benefits for employees, raised $7.3 million in Series A funding. M13 led the round and was joined by investors including Foundation Capital and Workday Ventures.
- Ubiq Security, a San Diego, Calif.-based cybersecurity startup, raised $6.4 million in a seed funding. Okapi Venture Capital led the round and was joined by investors including TenOneTen Ventures, Cove Fund, DLA Piper Venture, Volta Global, and Alexandria Venture Investments.
- WattBuy, a New York-based online electricity marketplace, raised $3.3 million in Series A funding. Evergy Ventures led the round and was joined by investors including Updater, Avesta Fund, Yoav Lurie, John Sherman, and Bill Gatreaux.
- Maude, a Brooklyn, N.Y.-based sexual wellness company, raised $3.7 million in seed funding. CASSIUS led the round and was joined by investors including True, Outbound Ventures, Vice Ventures, and Patina Brands.
- Nozzle.ai, an ecommerce and advertising platform for Amazon, raised $2.6 million (£2 million) in funding. Investors include Parkwalk Advisors, The Angel CoFund, and UCL Technology Fund.
- Cooper, an Amsterdam professional network, raised $2 million in seed funding. Comcast Ventures led the round and was joined by investors including LocalGlobe, 468 Capital, and Combine.
- KisanHub, a U.K.-based supply chain management platform, raised £1.12 million in seed funding.
Low Carbon Innovation Fund 2 led the round and was joined by investors including Future Fund.
PRIVATE EQUITY
- Sverica Capital Management invested in DeFY Security, a Pennsylvania-based provider of cybersecurity solutions. Financial terms weren't disclosed.
- SyBridge Technologies, backed by Crestview Partners, acquired X-Cell Tool and Mold, a Fairview, Penn.-based medical tooling industry and supplements company. Financial terms weren't disclosed.
- Belcan, backed by AE Industrial Partners, acquired Avista, a Platteville, Wisconsin-based provider of software engineering services to those in the aerospace, defense, industrial and medical industries. Financial terms weren't disclosed.
EXITS
- Nexi will acquire Nets, a Danish payments company, for €7.8 billion ($9.3 billion) from Hellman & Friedman.
- Clearlake Capital Group agreed to acquire The Wellness Pet Food Holdings Company, a pet foods brand, from Berwind Corporation. Financial terms weren't disclosed.
- KKR agreed to acquire Argenta, a New Zealand-based animal health-focused pharma services platform, from the Tomlinson Group, who will retain a stake. Financial terms weren't disclosed.
- Gridiron Capital acquired GSM Outdoors, an Irving, Texas-based retailer of supplies for hunters and outdoors activities, from Sentinel Capital Partners. Financial terms weren't disclosed.
OTHER
- Mars agreed to acquire Kind North America, a U.S.-based maker of energy bars. Financial terms weren't disclosed. Read more.
- The Deutsche Boerse plans to acquire a 80% stake in Institutional Shareholder Services , a Rockville, Md.-based ESG data provider, for about $1.8 billion.
- Talkspace, a New York-based online therapy app, is weighing a potential sale that could value it at $1 billion, per Bloomberg. Firms including Revolution and Norwest back the firm. Read more.
- Autodesk (Nasdaq: ADSK) acquired Spacemaker, a Norwegian maker of building evaluation software, for $240 million.
- Eldridge will acquire The Killers’ music publishing catalog from studio albums released prior to 2020. Financial terms weren't disclosed.
- Wunderkind, formerly BounceX, plans to acquire SmarterHQ, an Indianapolis-based provider of a marketing platform. SmarterHQ was backed by investors including Battery Ventures.
IPO
- Robinhood Markets, the stock trading fintech, is considering an IPO for the first quarter of 2021, per Bloomberg. Read more.
- Ozon Holdings, a Russian e-commerce platform, filed to raise up to $825 million in an IPO. Backers include Sistema, Baring Vostok Private Equity, and Index Ventures. Read more.
SPAC
- Arrival, a maker of electric vans and buses, is in talks to combine with CIIG Merger Corp., a SPAC, per Bloomberg. Backed by investors including BlackRock, Arrival could be valued at $5 billion to $6 billion following a transaction. Read more.
F+FS
- Council Capital, a healthcare-focused private equity firm, raised $200 million for its fourth fund.
- Union Square Ventures is raising between $100 million to $200 million for its first climate-tech focused venture fund, per the WSJ. Read more.
PEOPLE
- OpenView Venture Partners added Sanjiv Kalevar as an investor.


fortune--2020-11-18--Target trounced rivals like Walmart in the third quarter

On Wednesday, Target reported another set of blistering quarterly financial results that show how well its merchandise and e-commerce strategies are working, enabling the discount chain to outdo its peers, notably longtime rivals such as Walmart and Kohl’s.
Comparable sales at Target rose 20.7% in the quarter ended Oct. 31, stemming from the popularity of its newer home furnishings, its Good & Gather food brand, and the Cat & Jack kids’ clothing line. That was nearly twice the 11.6% growth analysts had been expecting, according to Consensus Metrix, sending shares up 2.5% in premarket trading. Digital sales rose 155% thanks to its investments in same-day delivery and curbside pickup options that are popular with shoppers during the pandemic.
“It’s clear that Target is not only gaining new customers but also retaining them, which will be critical as we move into 2021,” Chuck Grom, an analyst with Gordon Haskett, wrote in a note.
Walmart also reported strong numbers earlier this week, with e-commerce rising 78% and overall comparable sales rising 6.4%. Because groceries represent half of Walmart’s sales and are typically something people still buy in store much more than other categories, an astronomical lift is harder for Walmart to pull off.
Both chains, with their massive product assortments, have benefited from shoppers consolidating trips to reduce time in stores during the pandemic, meaning they’ve taken market share from weaker rivals.
But one crucial area where Target handily bested Walmart and most other retailers, was its ability to get people into stores, a feat all the more remarkable during a pandemic. Comparable sales at Target’s physical stores were up 9.9%.
And shopper visits rose 4.5%, the benefit of a $7 billion program in the past three years to remodel and beautify its stores, improve categories that drive customer traffic like beauty products, and better focus its smaller but important food offering. In contrast, at Walmart, store comparable sales were up a modest 0.7%, while the number of transactions was way down.
Target has invested heavily in the visual presentation of its products, making shopping enticing, all the more crucial given how much it relies on impulse purchases.
“Being able to draw people in for fun is one of the hallmarks of retail success, especially during a pandemic,” said Neil Saunders, managing director of GlobalData.
A big draw has been Target’s fortuitous investment pre-pandemic on new home products, just in time for a spending boom on home improvement that has lifted other retailers like Home Depot and Lowe’s, as well.
“Home continues to be a focal point,” Target CEO Brian Cornell told reporters on a media call. “With all that time at home, guests are cooking more and replacing home decor.” Cornell said home goods sales rose by a mid-20s percentage last quarter.
Other categories where Target is taking market share from rivals: electronics, up more than 50%; clothing sales, up 10% (hurting rivals like Kohl’s, which reported a 14% drop in third-quarter sales); and beauty products.
Target’s net earnings rose in the quarter to $1.01 billion, from $714 million a year earlier. Total revenue surged 21.3% to $22.63 billion, easily beating estimates for $20.93 billion.
Cornell expects Target’s momentum to continue as the peak holiday shopping season gets going next week with Black Friday, especially in categories like toys and electronics.
“Many have started to shop earlier, and we do expect [shopping] to be spread out during the holiday season. But they are looking to celebrate,” he said. “We expect a lot of gift-giving.”


fortune--2020-11-18--How to succeed in the subscriptions business

When Tien Tzuo joined Salesforce in 1999 as the then startup’s 11th employee, he witnessed “the dawn of SaaS,” or software as a service. Offering on-demand software to customers on a subscription basis was founder Marc Benioff’s grand business innovation—and his golden ticket to unfathomable riches.
Instead of just selling a one-off software product, as Oracle, Benioff’s former workplace, did at the time, Salesforce would create a more intimate relationship with customers. “Our big realization was we actually can see how our customers are using our product, and we can understand that, and we can actually deliver more to them,” said Tzuo, now CEO and cofounder of Zuora, a subscriptions management firm. Tzuo spoke told an audience of business executives at a virtual event hosted jointly by the Fortune CEO Initiative and Fortune Global Forum on Tuesday.
In other words, Salesforce would hook subscribers, collect data on people’s habits and desires, and then continually update the product. The speed of the feedback loop and the emphasis on experimentation are what separated Salesforce’s approach from the calcified subscription business models of yore—from print magazines to insurance companies.
By now, the virtues of subscription-based businesses are well known. They provide recurring revenue, resiliency in the face of crises (like the coronavirus pandemic), and they inspire loyalty with ever-improving products. When done properly, subscription-based businesses create a flywheel effect that can propel growth.
“With every physical product now connected to the Internet—washing machines, cars, everything—every engineer, every designer, every single product is going to go through that same experience” of iterating based on instant feedback, Tzuo said.
Look no further than today’s biggest tech titans for proof. Salesforce is a juggernaut. Amazon is riding high on Amazon Prime memberships. Apple is minting money with its fast-growing software and services unit. There is no shortage of startups shipping personalized boxes of goods—razors, clothes, meals, you name it—to consumers. Even many media companies are pivoting, broadly, back to subscriptions after failing to compete with Google and Facebook in digital advertising.
The trick is to keep people coming back for more. “The real quest for us is, how do you turn this episodic engagement into an ongoing engagement, and something even like turning it into a lifelong engagement,” said Shravan Goli, chief product officer and head of consumer revenue at Coursera, the online learning company, who spoke alongside Tzuo at the Fortune event.
Bob Lord, a senior VP at IBM, provided an example of product iteration in action. “Starbucks started this way back. All of a sudden you’re a rewards member on your card. The next thing you know, they’re wishing me happy birthday, they’re sending me free drinks,” he said.
“You get direct feedback back from your consumer almost instantaneously. Because, if that free drink didn’t work, I’m not going to do it again. I’m going to find something else to do,” Lord continued.
Of course, the Starbucks loyalty program isn’t a true subscription service, but it incorporates many of the same principles. One could actually consider it a reverse subscription, since people receive rewards for their patronage.
Sarah Bond, corporate VP of gaming ecosystem at Microsoft, another speaker, offered some advice for businesses exploring subscription business models: Start with curation, then lean into personalization. When Microsoft released its Xbox Game Pass, a cloud-based gaming service, it focused on simplifying the experience for people in that order, she said.
“A lot of what we were solving for people was there’s thousands and thousands and thousands of games out there, which ones do I want to play?” Bond said. “That someone went and curated something for you and figured something out is really key to the value exchange.”
If there’s a shared trait that could be considered the key to a successful digital subscription business, it is this: Never sit still. “The most important thing is to get something out there and then go through this process of experiment and learning,” Tzuo said.


fortune--2020-11-18--Of course Dolly Parton helped fund the Moderna vaccine

This is the web version of The Broadsheet, a daily newsletter for and about the world’s most powerful women. Sign up to get it delivered free to your inbox.
Good morning, Broadsheet readers! Judy Shelton’s Fed nomination fails to advance, competitors bid for Simon & Schuster, and Dolly Parton does good. Have a good Wednesday.
– The greatest gift of all. Last year, the New York Times deemed Dolly Parton the one thing “we can all agree on.” Indeed, the 74-year-old country legend had found a new following among a younger audience thanks to a podcast and a Netflix special. Her appeal seemed to span generations and political ideologies.
And this week she cemented her feel-good, bipartisan credentials by adding a new line to her bio: pandemic hero.
The title is, of course, exaggerated, but it’s true that the singer-songwriter had a hand in funding the Moderna vaccine that’s proven to be 94.5% effective in late-stage trials. Parton said in April that she’d donated $1 million to Vanderbilt University in Nashville after learning from a friend that researchers there were working on a COVID-19 vaccine. The gift, named the Dolly Parton COVID-19 Research Fund, went toward early research by Dr. Mark Denison that helped produce the Moderna vaccine.
The U.S. government later invested $1 billion in the project as part of Operation Warp Speed, but Denison has said that Parton’s donation “helped us develop the test that we used to first show that the Moderna vaccine was giving people a good immune response that might protect them.”
Parton’s unexpected role in the development of a vaccine pleased Dolly fans to the point that there’s now a version of ‘Jolene’ reworked to feature ‘Vaccine’ bouncing around the Internet, thanks to linguist Gretchen McCulloch, author of Because Internet: Understanding the New Rules of Language, who tweeted out fitting lyrics. “Vaccine, vaccine, vaccine, vacciiiiiiiiiiiiiine I’m begging you, please go in my arm.”
Now McCulloch is suggesting another role for Parton: an ambassador for the vaccine, once it’s ready for distribution. Considering the current level of divisiveness, especially about the pandemic, if Parton doesn’t assume that task, whoever does is going to need Dolly Parton-level mass appeal.
Claire Zillman
claire.zillman@fortune.com
@clairezillman
Today’s Broadsheet was curated by Emma Hinchliffe.
ALSO IN THE HEADLINES
- Book business. Simon & Schuster, led by publisher Dana Canedy (No. 50 on Fortune's Most Powerful Women ranking) has a growing list of interested buyers. Rupert Murdoch's News Corp, which owns Harper Collins, is competing with German media group Bertelsmann, which owns Penguin Random House. Financial Times
- Down to the wire. Judy Shelton's controversial nomination to the Federal Reserve's board of governors failed to advance yesterday as two Republican Senators missed the vote because of COVID-19 quarantines. Her confirmation may be over since the Senate is not in session next week, and Sen.-elect Mark Kelly (D–Ariz.), who defeated Republican Sen. Martha McSally, could take office as soon as Nov. 30. Once he's seated, Republicans are unlikely to have the votes to advance her nomination. Wall Street Journal
- Retail storm. The latest edition of Fortune's podcast Leadership Next features Kohl's CEO Michelle Gass. The retail chief reflects on weathering the COVID storm in the industry. "We were making it up as we went," she says. Fortune
MOVERS AND SHAKERS: The Biden White House team continues to take shape with a few key appointments. Campaign manager Jen O'Malley Dillion will be deputy chief of staff; Dana Remus will be counsel to the President; Julissa Reynoso Pantaleon will be chief of staff to First Lady-elect Jill Biden; Julie Chavez Rodríguez will be director of the White House Office of Intergovernmental Affairs; and Julie Annie Tomasini will be director of Oval Office operations. The New York Times hired Freddie Mac's Jacqueline M. Welch as EVP and chief human resources officer. Former Hilton CMO Kellyn Smith Kelly is now chief marketing and growth officer at AT&T. LS&Co. hired Elizabeth A. Morrison as chief diversity, inclusion, and belonging officer. SRDS named Heather Petaccio president.
IN CASE YOU MISSED IT
- Unequal effects. The important story about how women and mothers are being hurt by the coronavirus crisis has a few new entries: this NYT piece about how closed schools turned to moms for their back-up plan and this story about the continued economic impact of a gendered recession.
- Safety in sports. Concussions aren't just an issue in football. In women's sports, head injuries are a growing—and hidden—concern as well. Women's lacrosse is the biggest offender; the sport doesn't require headgear for its players, while men's lacrosse does. MEL Magazine
- BFFs? A childhood friend of Ivanka Trump's writes about her longstanding relationship with the First Daughter—including some unflattering details. But why now? "I think it’s past time that one of the many critics from Ivanka’s childhood comes forward—if only to ensure that she really will never recover from the decision to tie her fate to her father’s," writes Lysandra Ohrstrom. Vanity Fair
ON MY RADAR
Kim Ng has been ready for years New York Times
The U.S. is too far behind the rest of the world when it comes to women in government Fortune
Women and leadership: Looking beyond the global health crisis New York Times
PARTING WORDS
"I hope people will give themselves permission to do whatever they want this year."
-Ina Garten on Thanksgiving


fortune--2020-11-19--China wants to make its own chips. 2 failures in 1 week show how hard that will be

One of the world ’ s strictest new lockdowns bans outdoor exercising and dog-walking

This is the web version of Eastworld, Fortune’s newsletter focused on business and technology in Asia. Subscribe here to get future editions in your inbox.
China’s push for self-reliance in semiconductors suffered two embarrassing reversals this week as one of the nation’s most high-profile chipmakers was taken over by municipal authorities in its home city of Wuhan, and a second chipmaker, affiliated with prestigious Tsinghua University in Beijing, defaulted on a corporate bond.
On Wednesday, the South China Morning Post, citing Chinese corporate registration records, reported that authorities in Wuhan’s Dongxihu district have seized control of Wuhan Hongxin Semiconductor Manufacturing Company (HSMC) following months of delays in the construction of a $20 billion semiconductor manufacturing plant that was to have been one of the most advanced in China.
Construction at the plant has been stalled since August; the facility appears not to have produced much of anything. The company’s chief executive has resigned and fled the country. The local government’s plans for the plant and sorting out the company’s debt obligations remain unclear.
News of HSMC’s travails came two days after a prominent Chinese credit rating agency declared that Tsinghua Unigroup, 51% owned by Tsinghua University-controlled Tsinghua Holdings, had defaulted on a privately-placed domestic bond worth $197 million. Unigroup owns one of China’s biggest mobile chip designers and controls Yangtze Memory Technologies Co. in Wuhan, which makes flash memories. Unigroup’s financial woes puzzled analysts because the company has enjoyed generous state-backing in years past; in 2015, Unigroup made headlines by attempting a $23 billion takeover of U.S. memory-chip maker Micron Technology.
Stumbles at HSMC and Unigroup highlight how difficult it will be for Beijing to realize its goal of achieve self-sufficiency in semiconductors by 2030.
China is the world’s largest consumer of semiconductors. It is expected to spend more than $300 billion on importing semiconductors this year—about $60 billion more than it spent last year on imports of crude oil. In 2019, China produced only 16% of the semiconductors it consumed domestically.
That dependence on foreign chipmakers has long been source of anxiety for China’s leaders. And it has become a national emergency over the past year as the Trump administration imposed a series of harsh measures designed to ban companies from both the U.S. and its trading parters from selling semiconductors or chip-making technology to China.
Beijing has lavished subsidies on home-grown chipmakers—mostly to no avail. In 2014, China announced a National Integrated Circuit Plan promising to spend $150 billion to expand local semiconductor manufacturing. Eliminating China’s dependence on foreign suppliers for key technologies like semiconductors is a central focus of China’s 14th Five-Year Plan drafted in Beijing last month.
And yet China’s leading chipmakers, by most estimates, remain five to ten years behind the most advanced fabrication facilities in Taiwan, South Korea, and the U.S. “Today, China has no leading-edge semiconductor manufacturing facility,” declare Justin Hodiak and Scott W. Harold of the RAND Corp., who note that China’s most modern foundry, at Semiconductor Manufacturing International Corporation (SMIC) in Shanghai, only began production for creating chips from the 14 nanometer technology node in late 2019—at least two generations, behind the leading edge foundries run by Taiwan Semiconductor Manufacturing Corp. (TSMC), Samsung, and Intel.
S&P Global Market Intelligence estimates Chinese semiconductor companies have raised the equivalent of nearly $38 billion so far this year through public offerings, private placements, and asset sales. The Wall Street Journal reports that more than 50,000 Chinese companies have registered their businesses as related to semiconductors this year, a record that is four times the total from five years ago.
But many of these would-be chipmakers have no experience with the industry and are piling in from unrelated sectors like real-estate, cement, and agriculture to qualify for the latest round of tax breaks and government subsidies. HSMC isn’t the first multi-billion dollar China-based chip-making venture to go belly up—there have been at least two more this year—and almost certainly won’t be the last.
It would be foolish to suggest that China’s drive to become self-sufficient in semiconductors can’t succeed, but the evidence to date suggests this isn’t an industry that plays to China’s economic strengths.
More Eastworld news below.
Clay Chandler
clay.chandler@fortune.com
This edition of Eastworld was curated and produced by Naomi Xu Elegant and Grady McGregor. Reach Naomi at naomi.elegant@fortune.com and Grady at grady.mcgregor@fortune.com.
Eastworld news
Back to the farm
The Chinese government is spearheading a mass migration policy from urban centers to the countryside—the opposite direction of China’s traditional rural-to-urban migration pattern. The government is sprucing up rural infrastructure and offering financial incentives to returnees to lure city-dwelling entrepreneurs and consumers to rural areas. Rural citizens make up a large portion of China’s poor, and the migration push is part of a wider nationwide anti-poverty campaign that aims to eradicate extreme poverty by the Chinese Communist Party’s centenary in 2021. Wall Street Journal
The China challenge
The U.S. State Department released a 70-page policy document on Tuesday strategizing a U.S. response to China’s global rise. Titled “The Elements of the China Challenge,” it details the Communist Party's ideological worldview and suggests ways the U.S. and American allies might counter China’s growth. The paper was compiled by the State Department’s Office of Policy Planning, whose founder, George Kennan, was the architect of the U.S.’s Cold War-era strategy to contain the Soviet Union. It lists ten “tasks” for the U.S. that include “cooperating with China when possible and constraining Beijing when appropriate” and “educating Americans about the China challenge.” Axios
Between the cracks
Much of the illegal fentanyl that circulates in the U.S. and contributes to the ongoing opioid public health crisis comes from China. The Chinese government banned the manufacturing and sale of fentanyl last year, but that hasn’t stopped an online network of fentanyl vendors and traffickers from springing up in China. More than 100 vendors across the country skirt the rules by marketing domestically-produced analogs of fentanyl or some of the chemicals used to make it that haven’t been outlawed yet. The vendors ship the chemicals in small packages—sometimes disguised with detergent labels—to U.S. and European customers and Mexican drug cartels. National Public Radio
Jack Ma vs. the Party
Jack Ma founded Alibaba in an apartment in Hangzhou in 1999. The billionaire entrepreneur has since built China’s largest e-commerce company and the dominant fintech giant Ant Group while straddling the line between a national champion and an upstart thorn in the government’s side. In early November, that fragile balance collapsed with Beijing’s shock decision to halt Ant Group’s $37 billion IPO two days before it was scheduled to debut. The combination of Ant’s encroachment on China’s traditional banking system and Jack Ma’s outspokenness doomed Ant’s November IPO, which Chinese President Xi Jinping himself reportedly called off. Nikkei Asian Review
Hong Kong's financial core
Around one in five Hong Kong residents applied for shares in Ant Group’s blockbuster IPO before its last-minute halt in early November. The surprise suspension, and an increasingly tense political atmosphere in Hong Kong, haven’t discouraged its eager investors or the city's stock exchange. Ant’s IPO would have been the world’s biggest, but Hong Kong’s exchange is still recording enough listings to surpass its $40 billion total last year. Hong Kong’s sizzling stock market is a jarring contrast to the region’s political developments, which include arrests of prominent pro-democracy activists, the sidelining of moderate voices like former politician Martin Lee, and the expulsion of pro-democracy lawmakers from the city’s legislature. Bloomberg
A list of grievances
The relationship between Australia and China is in free fall. This week, the Chinese embassy in Sydney issued a list of 14 grievances (leaked to Australian press) that China had with Australia, including complaints about alleged anti-China bias in Australian media, "siding with the U.S." in criticizing China over COVID-19, and banning Huawei from building its 5G network. The Australian government said the complaints are "unreasonable" and "misrepresent" its position. Meanwhile, the trade spat between the two countries means that Australia may lose its largest export market, pushing exporters in Australia to search for new buyers. SupChina
Coronavirus by country
Japan
In July, Japan launched a ‘Go To Travel’ scheme, which incentivized citizens to travel around the country during a relative lull in new COVID-19 cases to boost the country’s tourism industry. Now, critics blame the program for helping seed the country’s third wave of the virus, which is on track to be worse than outbreaks the country suffered in the spring and fall. On Wednesday, Japan recorded 2,191 new cases of COVID-19, roughly 400 cases more than the previous one-day high set last Saturday. Japan’s government has since put cities like Tokyo, Okinawa, and Osaka on "maximum alert" but has yet to enforce any lockdown measures or warn citizens against traveling as a three-day holiday weekend looms. Nikkei Asian Review
Markets and movers
Baidu -- On Monday, the Chinese search engine said it would buy social media platform JOYY Inc’s live-streaming video business for $3.6 billion. After the deal was announced, activist short-seller Muddy Waters released a report accusing JOYY of falsifying user data and inflating its revenues. JOYY denied the accusations to Bloomberg. Deal Street Asia
Huawei -- The Chinese telecoms giant announced this week that it is selling its smartphone brand Honor for a reported $15.2 billion to an investment consortium, which includes the government of Shenzhen, in a bid to shield the offshoot company from sanctions imposed by the U.S. government. Fortune
TSMC -- City officials in Phoenix, Arizona approved $200 million in financial incentives for Taiwan’s flagship chipmaker, the Taiwan Semiconductor Manufacturing Company, to build a planned $12 billion plant in the city. Bloomberg
Korean Air Lines -- South Korea's flagship carrier Korean Air Lines will spend $1.6 billion to become the top shareholder in debt-ridden Asiana Airlines, another South Korean carrier. The consolidation will make Korean Air the world's tenth-largest airline. Reuters
Final figure
$26 trillion
On Sunday, 15 countries in the Asia Pacific, representing $26 trillion in combined GDP, signed a trade deal, called the Regional Comprehensive Economic Partnership (RCEP), that created the world’s largest trade bloc. Analysts say the pact is a geopolitical victory for China and will help the country strengthen ties across the region after the U.S. withdrew from organizations like the World Trade Organization under President Donald Trump. In total, analysts expect the deal to contribute $200 billion in total to the global economy by 2030. Fortune