fortune--2020-07-13--5 questions about Coinbase’s rumored IPO

A news report last week claimed that Coinbase, the country’s most prominent cryptocurrency company, is exploring an initial public offering. The report said the company is talking to bankers and lawyers and could go public late this year or sometime in 2021.
This is not exactly a bombshell. Every prominent Silicon Valley startup, including names like Robinhood and Stripe, have plans for an IPO at some point. In the case of Coinbase, though, any eventual IPO will be more intriguing than most, given how it has become the effective standard-bearer for Bitcoin and the still-emerging cryptocurrency industry.
Regardless of when Coinbase formally announces its IPO, here are are five questions potential investors and the finance industry should be asking.
Will Coinbase’s IPO involve a blockchain?
Blockchain, which creates a tamperproof ledger across multiple computers, is one of the most important new technologies of this century. It is what makes Bitcoin such a disruptive currency, and it underpins every other major cryptocurrency project.
Blockchain can also track and record ownership by means of digital tokens—the perfect tool, in other words, for issuing shares in a new company.
Coinbase cofounder Fred Ehrsam recently said the company is “spiritually” built to go public via some sort of token offering, and many of its employees would doubtless be dismayed if it pursues a garden variety Wall Street IPO. But any blockchain offering (even a hybrid one) would depend on the blessing of the SEC. That could be a tall order given the agency’s long-standing skepticism toward cryptocurrency.
Will Coinbase do a direct listing?
Alex Wilhelm, a longtime Silicon Valley watcher at TechCrunch, described Coinbase as “archetypal” for a direct listing. This process involves existing shareholders of a startup selling their shares to the public, as opposed to the company working with Wall Street underwriters to issue new blocks of shares.
Wilhelm points out that, like other recent firms to pursue a direct listing (notably Slack and Spotify), Coinbase has a similar profile in that it has a high valuation and ample cash reserves. A direct listing would also be more palatable to cryptocurrency fans, many of whom abhor Wall Street and the traditional IPO process in which the well-connected get first bite at a company’s stock.
What will Coinbase’s ticker symbol be?
The obvious choice would be COIN, which would invoke the startup’s name while also nodding at Bitcoin. A more cryptic choice could allude to blockchain tech or Bitcoin’s pseudonymous founder, Satoshi Nakamoto.
Will an IPO produce the ‘Coinbase effect’ for the broader crypto markets?
The term “Coinbase effect” describes the price boost many cryptocurrencies have enjoyed as a result of being listed on Coinbase. The effect likely occurs because Coinbase is the primary gateway to crypto for many buyers.
Given Coinbase’s status as the de facto leader of the crypto industry, a successful IPO could create a coattail effect that boosts the price of Bitcoin, Ethereum, and other cryptocurrency. Conversely, if Coinbase flubs its IPO, crypto prices could tank.
Will Coinbase try to time the crypto market?
As veteran crypto journalist Laura Shin recently noted, Coinbase may take into account the state of the broader cryptocurrency market in deciding when to go public.
Bitcoin and other cryptocurrencies are notoriously volatile and, despite a formidable rally in the late spring, prices and trading activities have been in a slump. An ongoing bear market in crypto prices could prove a drag on Coinbase’s initial stock price, and lead the company to put off an IPO till more favorable conditions arise.
More coverage on the intersection of race and business from Fortune:


fortune--2020-07-13--Why shares of Tesla, Workhorse, and other electric-vehicle makers are skyrocketing again

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The stock prices of companies in the electric-vehicle sector continued to zoom down the highway on Monday, while fueled by a bevy of positive developments.
Leading the pack as usual was Tesla, as Elon Musk’s company confirmed that it will announce new battery technology on Sept. 22. Analysts expect the breakthrough will enable Tesla’s cars, already the top-selling electric vehicles in the world, to travel farther on a single charge while bringing down the cost of manufacturing.
Tesla shares shot up 13% in midmorning trading on Monday to $1,746.69, an all-time high, giving the company a stock market valuation of $324 billion. Tesla’s shares have gained 87% over the past month.
Workhorse stock gains
The other big gainer on Monday was electric-van maker Workhorse Group. The company said it received a positive executive order for its C-Series electric delivery trucks from the California Air Resources Board, a step toward gaining acceptance in the state’s zero-emission subsidy program. Workhorse says it’s the only “medium duty” electric-vehicle maker to have acceptances from both the California board and the federal Environmental Protection Agency.
As a result, Workhorse shares shot up 9% in midmorning trading on Monday to $16.58. The shares have gained 343% over the past month amid investor mania for all things having to do with electric vehicles.
Fisker going public
The positive news helped bolster other stocks in the sector, as well. Shares of Chinese EV maker Nio rose 6% to hit $15.89, an all-time high and representing a one-month gain of 159%. Chinese electric-scooter maker Niu also hit an all-time high at $23.62 on Monday. That was a 5% gain on the day and 102% over the past month. U.S. upstart electric-car maker Nikola, which went public in June by merging with a special purpose acquisition corporation, gained 4% to $56.40. That’s well off its all-time high of $79.73 from a few weeks ago, and the stock is actually down 11% over the past month.
Other previously hot EV stocks cooled off as well. Three-wheeled EV maker Arcimoto, which sold $10 million worth of new shares to investors last week, dropped 16% on Monday morning to $5.96. It is still up 92% over the past month. And Canadian startup ElectraMeccanica Vehicles lost 9%, sliding to $4. It is now up just 135% in the past month.
Elsewhere in the electric-vehicle sector came news of two private companies that want to go public, perhaps unsurprisingly given the current mania.
Following in the tire tracks of hot stock Nikola, Fisker said it would merge with an already public special purpose acquisition corporation called Spartan Energy Acquisition, which is backed by private equity firm Apollo Global Management. Fisker, which has been through several pivots and some struggles, is the electric car company started by BMW and Aston Martin designer Henrik Fisker.
Though the deal is not expected to close until the fourth quarter, shares of Spartan Energy shot up 16% in midmorning trading to $19.34.
The other EV company planning to go public is Chinese startup Li Auto, which began selling its Li One plug-in hybrid in December. The company saw total sales of $40 million last year, which jumped to $120 million in the first quarter of 2020. It is not yet profitable, reporting a net loss of $344 million for 2019 and $11 million for the first quarter. The company did not offer a planned price range for its shares, suggesting an IPO is at least a few months away.


fortune--2020-07-13--How bad will Q2 earnings be?

How bad will Q2 earnings be?

This is the quarter we’ve been waiting for.
Since the country plunged into lockdown in March, analysts have long projected the data in the second fiscal quarter of the year would be the most grisly—and we’re about to find out just how bad things actually were.
“The second quarter of 2020 is expected to be the nadir for this earnings recession within the current economic contraction,” CFRA’s Sam Stovall wrote in a Monday note.
But according to Goldman Sachs, the estimates for how bad earnings will be in the second quarter aren’t sober enough: The firm is projecting earnings will plunge 60% year over year, versus the Street consensus of around 44%, analysts at the firm wrote on Friday.
Despite that, analysts at Goldman are actually raising their full-year 2020 S&P 500 earnings estimate from $110 in earnings per share (EPS) to $115 EPS. What’s more, the firm is projecting a far more optimistic outlook in 2021 and 2022—and anticipates that’s what many executives will focus on in earnings calls.
“Given the recent resurgence of COVID-19 cases in the U.S., we expect management commentary will prove more important to gauging the forward path of earnings than actual 2Q results,” the analysts wrote.
The firm estimates earnings will recover 48% (reaching $170) next year. Plus, something new: Goldman also introduced a 2022 EPS estimate, at $188 EPS (both above the Street’s consensus).
The main driver for the firm’s better-than-consensus estimates? Goldman’s economists’ estimates for GDP growth this year and next are above consensus, the firm writes. Indeed, economists at the firm wrote on Sunday, “Our baseline economic forecast is consistent with a ‘partial V’ [recovery] with more than half of the output decline reversing by September, but pre-corona GDP levels not achieved until mid-2021.” Elsewhere on Wall Street, some economists are saying we’re actually seeing the start of a reverse square root recovery.
Meanwhile, the market also seems a bit more optimistic, with the S&P 500 having risen over 2% in the past two weeks. “I think it’s safe to say, with the market bouncing back like this, it is expecting solid earnings or better-than-expected earnings,” LPL Financial’s Ryan Detrick recently told Fortune.
That’s what Goldman Sachs is seeing, too. “We—and many investors—expect the coronavirus-induced collapse in profits will be concentrated in 2020,” analysts wrote.
Still, those like Charles Schwab’s chief investment strategist Liz Ann Sonders have long been wary of investors looking into 2021 and 2022 for earnings growth: “Even on 2021 earnings, to the extent you believe them, I don’t think anyone can have conviction in earnings in this environment,” she recently told Fortune. And with valuations for stocks so high, “we’re set up for some risks here,” she told Fortune back in June.
One thing to keep an eye on: big-bank earnings. JPMorgan Chase, First Republic Bank, Wells Fargo, and Citibank are all reporting on Tuesday, and Goldman projects bank earnings will decline by 69% in the second quarter.
Unsurprisingly, tech is supposed to outperform the pack.


fortune--2020-07-13--AMC theaters line up deal to reduce debt by up to $630 million

AMC Entertainment Holdings Inc. said it has formal approval from a group of noteholders and the Silver Lake private equity fund for its previously announced deal to cut debt and raise cash.
The deal will help AMC stay in business while it tries to ride out the coronavirus pandemic, which forced it to temporarily close its theaters. The company would get $300 million in fresh funds, and debt would be reduced by about $460 million to $630 million, AMC said in a statement, elaborating on a deal disclosed last week.
The theater chain also has a deal to restructure $600 million of convertible notes issued in 2018 to Silver Lake, which has agreed buy an additional $100 million of new first lien notes at a discount. The plan has support from investors who hold 73% of the principal of existing notes.
Shares of AMC rose 16 cents to $4.76 at 9:37 a.m. in New York. Its bonds and loans were little changed in early morning prices compiled by Trace and Bloomberg data.
AMC had been trying for weeks to hash out an accord with stakeholders as it looks to raise cash, manage its more than $5 billion debt burden and avoid a potential bankruptcy. Companies in the entertainment and leisure industries are among those hardest hit by state and federal guidelines to stay at home.


fortune--2020-07-13--Ellevest will allow female investors to back companies that support racial justice

Investing in racial justice is an increasingly popular goal for socially responsible investors—and, they admit, an impossible one to fully realize.
The sweeping protests against systemic racism have trickled down into the wealthy, white, and male-dominated circles of wealth managers, especially those already committed to sustainable investing. Last month, the Racial Justice Investing Coalition, a group representing socially responsible investors, pledged to work to dismantle systemic racism—and acknowledged that “the investor community has contributed to and benefited from racist systems and the entrenchment of white supremacy.”
In reality, those looking for an actively anti-racist portfolio may be disappointed. Instead, such efforts typically involve redirecting investor dollars away from companies that are engaged in specific, measurable activities that contribute to social injustice, money managers say. But even that seemingly modest goal is complicated: When considering the broad scope of a company’s operations, how can socially conscious investors fully measure the impact of racism, let alone avoid it?
“When racism is systemic, you can’t get to perfect. And if you wait for perfection, you’ll invest in nothing,” says Sallie Krawcheck, cofounder and CEO of women-focused financial startup Ellevest.
But “money is power, and the way to help things change in a capitalist society is through shifting capital,” she says. “We can’t actively advance women if we’re not advancing Black, brown, and Indigenous women as well.”
Her financial company on Monday is broadening its “intentional impact” portfolios for its wealth-management customers, who have at least $250,000 to invest and who want their money to support gender equality and racial justice. When deciding whether to invest its clients’ money in a particular company, Ellevest will now consider 13 factors, including the company’s workplace diversity, working conditions, ethical and environmental track record, and its involvement in firearm sales or the private prison industry.
It is not yet explicitly considering whether companies do business with police departments. A company spokesperson says that Ellevest is screening out companies that “manufacture riot control weapons, which ties directly to the militarization of police, as well as data that is looking at the militarization of the border,” but “given limitations of scalable and granular data across public equity companies, we are not able at this time to exclude all companies based on their police involvement.”
Companies that don’t measure up on all the current benchmarks—for example, those that report more than 5% of revenue from firearm sales, or that authoritative critics of the private prison industry recommend for divestment—will be kicked out of consideration for Ellevest clients. The remaining portfolios, which will be administered by asset manager Ethic, will invest in a pool of about 300 companies.
Top leadership is important, but—for good and for bad, in a world in which only 36 Fortune 500 CEOs are female and only five are Black—not a guarantee of passing Ellevest’s screening tests, Krawcheck says: “Okay, great, you’re a female CEO. But do you have day-care services and gender pay equality? What are your diversity inclusion management practices? Are you involved in the manufacture of land mines or tobacco, or in predatory lending?”
Ellevest is not the first or the only investment adviser to “screen out” companies based on their track records on some of the issues that relate to racial justice. For example, San Francisco investment adviser Robasciotti & Philipson, has been doing so for years, and now has published its list of companies it excludes from investment portfolios and the sources it uses to make those decisions.
“We never thought there was a reason to share that,” Rachel Robasciotti, the firm’s founder and CEO, told the New York Times earlier this month. “But now we are saying, ‘Here are the companies we don’t invest in and why.’”


fortune--2020-07-13--Analyst predicts COVID-19 vaccine could generate $5 billion in sales

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Moderna Inc.’s experimental vaccine for Covid-19 could generate sales of more than $5 billion a year, Jefferies analyst Michael Yee said, initiating the stock at a buy.
The shares jumped as much as 5.6% in Monday trading after the bullish review. A more than 230% surge for the stock since the start of the year has split Wall Street as to “what will happen or if the vaccine will even work,” and investors are “hugely divided on valuation,” Yee wrote in his note to clients.
“We believe the Street will be surprised to the upside if the Covid-19 vaccine works, gets approved by early 2021, and there are multi-billion dollars of purchase orders from USA and around the world,” he said.
With a 30,000 person late-stage study set to kick off sometime this month, Moderna’s shot leads the pack in the race to get a vaccine to the world at large as the pandemic continues to spread.
Yee predicts mRNA-1273, as the inoculation is known, will get “at least” an emergency use authorization by early next year. There are more than 20 candidates in human testing, while at least another 130 vaccines are in even earlier stages of development, according to the World Health Organization.
The analyst assigned the biotechnology company a $90 price target, which is largely in-line with the $88 average price target of analysts tracked by Bloomberg. The Cambridge, Massachusetts-based company has 12 other buys and a single hold rating, while no analyst followed by Bloomberg currently rates it a sell.


fortune--2020-07-13--New York & Co. parent company files for bankruptcy and closes hundreds of stores

The retail bloodbath of 2020 continued on Monday as RTW Retailwinds, the parent company of New York & Co., said it had filed for Chapter 11 bankruptcy protection and may close all of its stores.
RTW joins a growing roster of already struggling retail chains pushed over the edge by prolonged COVID-19-related store closures this spring; other casualties include J.C. Penney, Neiman Marcus, GNC, Lucky Brand, and last week, Brooks Brothers.
“The combined effects of a challenging retail environment coupled with the impact of the coronavirus (COVID-19) pandemic have caused significant financial distress on our business, and we expect it to continue to do so in the future,” RTW CEO and finance chief Sheamus Toal said in a statement. The company operates a total of 387 stores, under the New York & Co., Fashion to Figure, and Happy x Nature names. RTW will begin liquidation sales shortly.
At its peak in the 1990s, New York & Co. was a fixture in malls and had partnerships with celebrities like Eva Mendes and Kate Hudson. But more recently it has fallen out of favor with shoppers and struggled to keep up in the e-commerce wars. In March, the company said it was time to become a “digitally dominant” brand, a realization that came as countless rivals, from established players like Gap to newer ones like Everlane, already had big presences online.
The company said it is considering selling its e-commerce operations and related intellectual property in bankruptcy proceedings.
RTW’s bankruptcy was expected after it failed to pay vendors and withheld April and May rent to its landlords, earning a slew of default notices. It also defaulted on a June 30 loan. The company had said in early June there was “a substantial doubt” about its ability to continue operating its business as a going concern, calling a bankruptcy filing “probable.”
Like many retailers now seeking bankruptcy protection, RTW’s troubles started well before the pandemic. Having entered 2020 with challenged finances and little connection with its customer base, it was in no position to withstand the hit to liquidity from the massive sales declines it experienced when stores shuttered this spring.


fortune--2020-07-13--Robinhood raises another $320 million at an $8.6 billion valuation

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Investors are adding hundreds of millions more to Robinhood’s coffers as the pandemic ushers in new customers.
On Monday, the stock-trading app announced that it had raised yet another $320 million from new and existing investors, bumping its valuation up to $8.6 billion. New investors include TSG Consumer Partners and IVP.
The fresh funding comes via subsequent closings of a $280 million Series F round led by Sequoia Capital which valued the firm at $8.3 billion in May. At the time, co-CEO Vlad Tenev noted that Robinhood experienced a surge as new investors flocked to the platform amid the market’s coronavirus-induced ups and downs: Robinhood added 3 million funded accounts between the start of the year and early May, he said.
While Robinhood’s team declined to comment on the most recent raise, two months later, the app’s name is perhaps more visible than ever as the pandemic has enabled strange moves in the public markets thanks to retail investors that were once seen as marginal and unlikely to shift the market.
For instance: Shares of Hertz, the car-rental company, soared in June after it filed for Chapter 11 protection in June, a move that many attributed to nonprofessional players willing to take more iffy trades, including those on Robinhood. It was hardly a move a typical investment advisor would have condoned, but some investors appeared to make quite a bit off the bet.
Now Robinhood is confronting a core issue as it grows: What level of freedom does it give to its pool of inexperienced traders and what guardrails does it put in place? The platform grew explosively in part by pitching “investing for everyone”—yet not everyone understands the stock market and its complexities.
A 20-year-old Robinhood trader by the name of Alex Kearns committed suicide in June, citing massive trading debts and a negative trading balance of over $730,000 wracked up through options trading on the platform. While the suicide ultimately appeared to be the result of a terrible misunderstanding over the amount of Kearns’ actual debt, Robinhood’s Tenev and Co-CEO Baiju Bhatt wrote in light of the death that they were “considering additional criteria and education for customers” seeking certain kinds of more complex options trading, and planned to add additional educational content for customers.
“It is not lost upon us that our company and our service have become synonymous with retail investing in America, and that this has led to millions of new investors making their first investments through Robinhood,” the duo wrote in June. “We recognize this profound responsibility, and we don’t take it lightly.”
Lucinda Shen
Twitter: @shenlucinda
Email: lucinda.shen@fortune.com
VENTURES DEALS
- UiPath, a New York-based robotics automation company, raised $225 million in Series E funding. Alkeon Capital Management led the round and was joined by investors including Accel, Coatue, Dragoneer, IVP, Madrona Venture Group, Sequoia Capital, Tencent, Tiger Global, Wellington, and funds and accounts advised by T. Rowe Price Associates.
- Harbour BioMed, a Shanghai-based biopharmaceutical company seeking to find a cure for Covid-19, raised $102.8 million in Series C financing. Hudson Bay Capital led the round. Read more.
- Meishubao, a Chinese online painting platform, raised $40 million in extended Series C funding. Tencent led the round. Read more.
- Lanistar, a London-based banking alternative, raised £15 million ($18.9 million) from Milaya Capital.
- Paige, a New York-based computational pathology company, raised $15 million from Goldman Sachs Merchant Banking Division.
- Beekeeper, an Oakland, Calif.-based communication and operations platform for frontline workers, raised $10 million in extended Series B funding. Energize Ventures led the round and was joined by investors including HighSage Ventures, SwissCanto, Thayer, Swisscom, Investiere, Alpana Ventures, and Swiss Post.
- CompanyCam, a Lincoln, Ne.-based app maker for residential contractors, raised $6 million in Series A funding. Blueprint Equity led the round.
- Verikai, a San Francisco-based Insurtech company, raised $6 million in Series A funding. ManchesterStory led the round.
- Honey Mama's, a Portland, Ore.-based maker of a honey-cocoa bar, raised $4.5 million from Amberstone Ventures.
PRIVATE EQUITY
- An affiliate of H.I.G. Europe acquired a controlling stake in Project Informatica S.r.l., an Italian information technology company. Financial terms weren't disclosed.
- BV Investment Partners invested in Becklar, an Ogden, Ut.-based company that owns emergency response companies Freeus and AvantGuard. Financial terms weren't disclosed.
OTHERS
- Qualcomm invested $97 million in Reliance Jio Platforms, the top Indian telecom operator. Qualcomm’s now owns 0.15% stake in the company.
- Chatham Asset Management plans to acquire McClatchy Co., a Sacramento-based bankrupt news publisher. Read more.
- Ares Management acquired SSG Capital Management, an Asian peer.
- Analog Devices, Inc. (Nasdaq: ADI) agreed to acquire Maxim Integrated Products, (Nasdaq: MXIM)a Norwood, Mass-based chipmaker, in a $21 billion all-stock transaction that values the combined enterprise at over $68 billion.
IPOs
- Marqeta, the U.S. payment card issuing start-up, is preparing for an IPO, Reuters reports citing sources. Read more.
- Trax, a Singapore-based retail tech firm, is considering a U.S. IPO, per DealStreetAsia. Warburg Pincus, Boyu Capital, Investec, and GIC back the firm. Read more.
- Rackspace Technology, an San Antonio, Texas-based cloud hosting services provider, filed to raise $100 million in an IPO. It posted revenue of $2.4 billion in 2019 and a loss of $102.3 million. Apollo Management and Searchlight Capital back the firm. It plans to list on the Nasdaq as “RXT.” Read more.
- IBEX, a Hamilton, Bermuda-based outsourced customer support services provider, filed to raise $100 million. It posted revenue of $368.4 million and income of $11 million in the year ending June 2019. The Resource Group backs the firm. It plans to list on the Nasdaq as “IBEX.” Read more.
- Oak Street Health, a Chicago-based provider of primary care for Medicare patients in the Midwest, filed for a $100 million IPO. It posted revenue of $540 million in 2019 and a loss of $137.2 million. General Atlantic, Newlight, and Humana back the firm. It plans to list on the NYSE as “OSH.” Read more.
- Li Auto, a Beijing, China-based maker of electric SUVs, filed for an $100 million IPO. It posted revenue of $40.2 million in 2019 and a loss of $463.1 million. It plans to list on the Nasdaq as “LI.” Read more.
EXITS
- MicroFocus acquired Atarlabs, a Turkish information security company. Atarlabs previously raised € 2.5 million in seed funding from Diffusion Capital Partners. Financial terms weren't disclosed.
F+FS
- Blackstone closed its new life sciences fund at $4.6 billion.
PEOPLE
- Bessemer Venture Partners, a venture capital firm, promoted Trevor Neff to Vice President.


fortune--2020-07-13--Vanishing antibodies could doom the race to develop a one-and-done coronavirus vaccine, study shows

In a potentially huge blow to the global pursuit of developing an effective COVID-19 cure, researchers in London say that antibodies in patients who have become infected by the virus may decline, or even disappear, within months, suggesting immunity from an eventual vaccine could fade as well over time.
The study, which has yet to be peer-reviewed, was conducted by a group of researchers at King’s College London on 96 patients and healthcare workers in London hospitals who had previously tested positive for the virus.
Nonetheless, a group of established researchers polled by the U.K.’s Science Media Centre described the research as robust, forming an early indication that COVID-19 has the potential to be a recurring, seasonal virus—much like the common flu bug—likely complicating efforts to completely eradicate the virus.
“Similar short-lived responses are seen against other human coronaviruses that predominantly cause only mild illness, meaning that we can be re-infected as time goes by and outbreaks can adopt seasonality,” said Stephen Griffin, an associate professor in the School of Medicine at the University of Leeds. “With the more serious, sometimes fatal, outcomes of SARS-COV2, this is troubling indeed.”
The study found that antibodies in the patients swiftly declined in the weeks and months after symptoms first appeared. The antibodies were most significant in patients who had a more severe response to the virus.
Only 17% of the 60% of patients who had had a particularly strong antibody response when they were fighting the virus still had those those antibodies at the same levels three months later. In some cases, the antibodies disappeared entirely, the researchers found.
The study, if backed up by further evidence, would further undermine the concept of “herd immunity”—or the idea that when enough of the population becomes immune to a virus through exposure, even society’s most vulnerable are protected—as effective, while putting to bed the idea of “immunity passports” for the previously infected. It also raises the prospect that any effective vaccine will require more than one shot, but may instead need to be regularly administered to remain effective.
“Antibody testing for COVID 19 has been seen by many as a psychological balm against the concerns of a possible infection,” said James Gill, an honorary clinical lecturer at Warwick Medical School. However, this study undermined the idea that for those with antibodies, life could go back to normal, he said.
“Even those with a positive antibody test, especially those who cannot account for where they may have been exposed, should continue to use caution, social distancing and appropriate mask use.”
However, several experts noted that hopes to build immunity to the virus are not entirely reliant on antibodies, but also on other immune responses, which may potentially help fight the virus during future infections, if not protect from it completely.
“Even if you’re left with no detectable circulating antibodies, that doesn’t necessarily mean you have no protective immunity because you likely have memory immune cells (B and T cells) that can rapidly kick into action to start up a new immune response if you re-encounter the virus. So you might well get a milder infection,” said Mala Maini, a professor of viral immunology and a consultant physician at UCL.
“We know from SARS infection (SARS-CoV-1) that T cells persisted many years longer than antibodies,” she said.
Now, researchers need to determine whether that will also be the case after a patient contracts COVID-19.


fortune--2020-07-13--We don’t need Silicon Valley’s billionaire vigilantes

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Those who doubt the relevance of government have plenty of fodder of late. The federal government, uniquely positioned to fight a pandemic, has whiffed, egged on by a president who thought a plague wasn’t good for ratings. At the local level, too, the citizenry is stepping in with well-meaning solutions that nevertheless are the job of government.
In San Francisco, for example, local groups provide showers for homeless people and crossing guards for children. A law school had to sue the city to remove tent camps from the troubled Tenderloin—but has done little to shut down the neighborhood’s open-air drug market.
And in an effort to stop smash-and-grab burglaries, one local tech entrepreneur is paying for cameras to spy on thieves. I wrote about E-Loan and Ripple founder Chris Larsen’s efforts in my February feature story on San Francisco. He received star treatment over the weekend in The New York Times from the ever-observant reporter Nellie Bowles.
Larsen is a compelling character in a morality saga for our times. He claims to be privacy-friendly: Facial recognition is off limits, for example. As much as anything, he wants to use technology to deter criminals, to convince them they’ll be punished for robbing homeowners and tourists in a city with a bad record for prosecuting petty crime.
I know Larsen would like to work with the police, who gave him a frosty review in Bowles’s article. No doubt they are cool to him in part because he is trying to do their job.
And that’s my beef, too, with a wealthy citizen trying to do good, with corporations who say that because government has failed, business should step into the void, with a society that looks to philanthropists to solve problems their own elected representatives should be addressing.
Vigilantism, technological or otherwise, is no more the correct solution than phony swamp draining or hollow corporate proclamations. Muscular government—I’ve borrowed this phrase from Anand Giridharadas—that does the bidding of its citizens is.
Adam Lashinsky
@adamlashinsky
adam.lashinsky@fortune.com
This edition of Data Sheet was curated by Aaron Pressman.
NEWSWORTHY
Do as I say not as I do. On Wall Street, when someone makes an erroneous order, say, buying 10,000,000 shares of Tesla instead of 10,000, they call it a "fat finger trade." That's about the only explanation I can offer for Amazon's move on Friday to send all employees an email saying TikTok was banned from their work phones only to rescind the demand hours later, saying the email had been sent "in error." Meanwhile, both the Republican National Committee and its Democratic counterpart, the DNC, have told their staffers to avoid installing TikTok, as has banking giant Wells Fargo.
Get your motor running. Speaking of Wall Street, we've noted recently the rather insane run-up in the stock prices of electric vehicle makers and related companies. Apparently, the VC sector is just as excited. Tesla rival Rivian raised $2.5 billion from a load of the world's largest investors such as Fidelity, BlackRock, T. Rowe Price, and Amazon. Okay, maybe Amazon is not a top investor, but they've pledged to buy 100,000 electric delivery vans from Rivian (and that is not a typo). In the M&A department, chipmaker Analog Devices is buying automotive and data center rival Maxim Integrated Products for $21 billion. And over at the IPO desk, things are staying hot. Digital banking software developer nCino is about to go public at a valuation of about $2.6 billion, while datacenter host Rackspace and Chinese electric vehicle maker Li Auto filed for their debuts a little later on. How are EV stocks doing again?
The next billion. Big Tech is paying more attention to India lately, perhaps thanks to the success of mobile carrier Reliance Jio, which, oh, by the way, grabbed another $100 million of backing, this time from Qualcomm. But the bigger headline from the world's second-largest market is that Google pledged to invest $10 billion in India over the next few years in a mix of equity stakes, partnerships, and operational, infrastructure, and ecosystem projects, the company says. The point of the new Google for India Digitization Fund "is to ensure India not only benefits from the next wave of innovation, but leads it," Google and Alphabet CEO Sundar Pichai said.
Bug fix. Linus Torvalds, who still helps oversee the open source Linux operating system he created, approved suggestions to remove troubling terminology like "master/slave" from the software. Instead, developers will pick from a list of alternatives such as "primary/secondary" and "host/proxy."
No such thing as a fair fight. Facebook is considering banning political ads, just for the few days before the November election. The idea is to avoid the spread of false information just before voting starts. What does that say about Facebook's influence the whole rest of the year?
FOOD FOR THOUGHT
As we noted last month, Apple's shift away from Intel chips to ARM-based designs of its own could also impact the much larger market for Windows PCs. Although ARM-based Windows gear is a tiny, tiny fraction of that market right now, former Apple and Be exec Jean-Louis Gassée thinks Apple's move will also give Windows on ARM a big boost.
Specifically, what are Dell, HP, Asus, and others going to do if Apple offers materially better laptops and desktops and Microsoft continues to improve Windows on ARM Surface devices? In order to compete, PC manufacturers will have to follow suit, they’ll “go ARM” because, all defensive rhetoric aside, Apple and Microsoft will have made the x86 architecture feel like what it actually is: old.
This won’t happen overnight and there will be an interesting mess of x86 and ARM SoC machines fighting it out in the marketplace. Large organizations need continuity and would balk at the prospect of servicing two kinds of Windows machines and apps. As usual, they’ll downplay Apple’s advantage and curse Microsoft for causing trouble. But if the newer machines are actually better, rogue members within these organizations will sneak in new devices and software; they always do.
IN CASE YOU MISSED IT
Global IT spending forecast to fall 7% amid COVID-19 cuts By Jeremy Kahn
Drone industry flies higher as COVID-19 fuels demand for remote services By Aaron Pressman
TikTok is becoming inaccessible in more markets. Tech-savvy users are finding workarounds By Naomi Xu Elegant
The founder of wellness startup Muniq on prioritizing public health concerns over diet trends By Rachel King
Do you trust Big Tech with your personal health data? By Lance Lambert
The best things I’ve bought during quarantine so far By Rachel Schallom
What company leaders can learn from J.K. Rowling’s missteps on gender By Lisa Kenney
(Some of these stories require a subscription to access. Thank you for supporting our journalism.)
BEFORE YOU GO
Wall Street Journal tech columnist Joanna Stern says it's finally time to stop using the Chrome browser from Google and switch to Apple's Safari or Microsoft's Edge. "While Chrome has gobbled up 69% of the desktop-laptop browser market share...its competitors, all with single-digit percentages, have been laser-focused on kicking Chrome square in the blue dot," she notes. I'm on the fence. Better battery life doesn't matter during the pandemic lockdowns and I haven't experienced poor performance due to Chrome. What do you think? Hit us up on email or Twitter and let us know if you're ready to switch.
Aaron Pressman
@ampressman
aaron.pressman@fortune.com


fortune--2020-07-13--Drone industry flies higher as COVID-19 fuels demand for remote services

Online shoppers who want to order food and medical items from the local Walmart in Grand Forks, N.D., have a surprising new home delivery option. In addition to the usual in-store pickup or delivery by truck, a drone startup is offering to fly items straight to a customer’s backyard.
The airborne delivery network, run by Israeli drone startup Flytrex, is one of just a handful in the U.S. permitted to make crosstown commercial deliveries. The service kicked off in May after the company received approval from the Federal Aviation Administration, which regulates drones, a month earlier.
Lately, the FAA has been speeding up its approvals for services that may help during the COVID-19 pandemic. And home delivery that doesn’t require contact between a customer and a driver fits the bill.
“Because of COVID-19, the FAA has not lowered the bar on safety, but they’ve been working a lot faster,” says Yariv Bash, CEO of Flytrex, which is also delivering treats from Dairy Queen. “They’re really pushing things ahead a lot faster.”
Over the past few years, the commercial drone industry has been slowly expanding in the U.S. as the Federal Aviation Administration allows more flights. Most of those approvals have gone to services like deliveries, the inspection of buildings and structures, and moviemaking.
Since the pandemic started, some companies have talked about using drones to help fight the spread of the virus directly, like spraying disinfectants on outdoor stadiums or scanning crowds for infected people using thermal imaging. But those ideas have yet to gain much momentum.
“COVID of course caught everyone by surprise, but what we’ve seen is an acceleration of drone adoption trends,” says Jan Gasparic, director of strategic partnerships at leading drone maker DJI.
About 60,000 developers are working on drone applications with DJI, including pipeline inspection apps to 3D mapping. Applications related to critical infrastructure and first responders have been particularly hot during the pandemic. “That kind of stuff can’t go on pause,” Gasparic says. “That’s where drones have really come into their own.”
One DJI drone feature that is getting more use during the pandemic is the speaker that the company added to its popular Mavic 2 Enterprise edition drone. Police or other government authorities have flown drones over streets and beaches to monitor how well—or poorly—people are social distancing and then use the speaker on the $1,500 device to ask them to move apart.
The use of such drones, and far more sophisticated military surveillance drones, at Black Lives Matter protests, has been far more controversial, however, drawing protests from civil liberties groups.
But most of the boost in use of drones during the pandemic has been far more prosaic.
DroneDeploy, a drone software startup in San Francisco, has seen a huge increase in business during the pandemic. However, it’s been for the same kinds of general applications it was offering before.
For example, DroneDeploy has a program that analyzes drone footage of farmers’ fields and helps make recommendations about when to apply pesticides. The number of agriculture flights has tripled over the past three months. Similarly, the company is seeing 2.5 times as many flights using its energy app, which solar panel installers use to calculate where to place panels on customers’ roofs. Meanwhile, flights by companies involved in the construction industry are up 70%.
“Drones are kind of the perfect socially distant worker,” says DroneDeploy CEO Michael Winn. “They can collect data and share it with people who aren’t present.”
Similarly, Alphabet’s Wing drone delivery division has expanded its services into more industries. After the pandemic hit, orders through an existing drone-delivery partnership with Walgreens in Virginia jumped for medicine, toilet paper, and groceries. Last month, Wing expanded to deliver school and library books by drone.
The Flytrex service in North Dakota relies on drones the company has created that are capable of carrying packages weighing up to nearly seven pounds for up to 3.5 miles. Customers must order using a Flytrex app, through which about 200 Walmart items—from diapers and toothpaste to hamburger buns—are available. Flytrex packs the drone at the store and then flies it to a customer’s backyard, where the order is lowered by cable from a height of about 80 feet.
Fortune asked Walmart for comment and will update this story if the company responds.
CEO Bash declines to provide details about his company’s revenue. But he argues that his service is cheaper than delivering by car or truck on a per delivery basis. A drone operator can make up to 15 deliveries an hour versus about three per hour using a car, he says. Moreover, delivery drivers can be easily retrained to become drone operators. “We don’t need an ex-787 pilot,” Bash says. “After two days of training, a driver can become an operator.”
Startups that have tried to pitch their custom flying machines for more direct virus fighting tasks have had a more difficult time taking off. In Westport, Conn., police worked with dronemaker Draganfly to spot infected people who failed to quarantine, by using computer vision and other sensors on drones to detect symptoms of COVID-19 like coughing and fevers.
But as soon as the plan was made public in April, residents and civil rights groups objected. “Any new surveillance measure that isn’t being advocated for by public health professionals and restricted solely for public health use should be promptly rejected,” David McGuire, executive director of the ACLU of Connecticut, said in a statement at the time.
The police promptly dropped the program, and Draganfly has pivoted to building ground-based sensors for detecting infected people for use on movie sets and other business locations. The company may try a similar drone surveillance program in the future, a spokesman tells Fortune.
Additionally, drone startup EagleHawk, based in Syracuse, N.Y., has been testing a new feature on its drones that enables the machines to fly over outdoor or indoor stadiums and spray disinfecting substances to kill COVID-19. Though large-scale drone spraying projects to combat the virus have been used in parts of China and India, EagleHawk has yet to announce any U.S. customers for its offering.


fortune--2020-07-13--Parents say they need schools to reopen. Teachers aren’t so sure

Good morning, Broadsheet readers! Singapore’s election sets a new record for women, Shannon Watts reflects on the connection between the movements against gun violence and police brutality, and teachers—and parents—worry about schools’ reopening plans. Have a productive Monday.
– No good solutions. As August and September inch closer with every passing day, there seems to be one topic on every parent’s mind: how will schools operate in the fall?
From the colleges and universities racing to help their international students stay enrolled amid Trump administration restrictions to the pre-K classrooms preparing to instruct kids too young to keep masks on, every level of the American educational system must navigate a different challenge.
The biggest challenge of all? The one facing our teachers. The 3.5 million teachers in the United States—76% of whom are women—are scared and confused about the year ahead. Feeling pressure from their bosses, lawmakers, pediatricians, and parents, many teachers want to do all they can to help students and their families in the fall—but aren’t willing to sacrifice their own families’ safety.
In this New York Times story, teachers say that their districts have not developed coherent enough COVID-19 safety plans to allow their return. In Los Angeles, the teachers’ union is demanding full-time remote learning when the 2020-2021 school year begins. “I want to serve the students, but it’s hard to say you’re going to sacrifice all of the teachers, paraprofessionals, cafeteria workers, and bus drivers,” added Hannah Wysong, an Arizona teacher.
Of course, parents, after months working without childcare, are eager for schools to reopen; many teachers are parents of young children themselves, with their own concerns about their children’s education. The American Academy of Pediatrics released a statement advocating for the reopening of schools in the fall, citing “evidence of the negative impacts on children because of school closures in the spring of 2020.” It’s hard to watch schools—a bedrock of our society—remain fully closed while bars and restaurants across the country welcome patrons.
Another NYT piece, this one by columnist Michelle Goldberg, makes an even starker argument. “As those who can afford it hire private teachers and tutors,” she writes, “we are rapidly heading toward a system of neo-governesses in which basic schooling becomes a luxury good unattainable for many people outside the 1%.”
There are no good answers. So, Broadsheet readers, we want to hear from you: if you’re a working parent of a school-age child, what is their school’s plan—and your plan—for this fall? How are you feeling about it? And for the teachers reading—we’d especially love your perspective. Please email me at emma.hinchliffe@fortune.com. We may use your response in a future Broadsheet.
Emma Hinchliffe
emma.hinchliffe@fortune.com
@_emmahinchliffe
ALSO IN THE HEADLINES
- Demanding action. The movement against gun violence is at the center of every crisis facing the United States right now, from how to safely reopen schools to the fight for racial justice. Moms Demand Action founder Shannon Watts reflects on how "police violence is gun violence" and how the past few months have changed her battle for gun safety. Fortune
- Singapore sets a record. In Singapore's election on Friday, a record 40 women competed for seats in Parliament. The next Parliament will likely fall just short of the longtime goal of 30% female representation. Raeesah Khan, 26, of the Workers' Party is a feminist activist elected this weekend. Nikkei Asian Review
- Rental economy. In this interview, Rent the Runway CEO Jennifer Hyman explains her decision to cut costs—and employees—as much as she possibly could early in the pandemic, choosing the tougher Option A over the wait-and-see Option B. Rent the Runway will expand its offering to buy secondhand clothes via the site as rental subscriptions continue to slowly recover. Wall Street Journal
MOVERS AND SHAKERS: Hanna Rosin joins New York Magazine as editorial director for audio. Marketing agency Fingerpaint promoted Jenny McKenna to head of operations.
IN CASE YOU MISSED IT
- Holding back progress. Betsy Hodges was the mayor of Minneapolis—the city where the death of George Floyd sparked nationwide protests over racism and police brutality—from 2014 until 2018. In this piece, she argues that white liberals have held back reform, opting for pilot programs and volunteer opportunities over true racial and economic justice. New York Times
- Getting it wrong on gender. Lisa Kenney is the co-founder and CEO of the organization Reimagine Gender. In this piece, Kenney explains just how J.K. Rowling went so wrong with her public commentary on transgender women—and the lessons her missteps offer corporate leaders. For example: Don't change a policy or a product to appear more gender inclusive without actually taking the time to understand the 'why' first. Fortune
- Discrimination has consequences. A new study found that women who suffer or perceive workplace discrimination while pregnant are more likely to have babies that are born prematurely and with low birth weights—and to suffer stress and postpartum depression themselves. Bloomberg
ON MY RADAR
Black women helped build house music. Their credit is often left off records Zora
Former USA Gymnastics coach arrested on multiple counts of lewdness with a minor NBC News
Trump vs. the women who lead Michigan: A battle with 2020 implications New York Times
PARTING WORDS
"I am not going to be erased."
-Singer Anita White, or Lady A, on her fight with the band Lady Antebellum, who recently renamed themselves the same thing


fortune--2020-07-13--This bank refuses to pay out lavish banker bonuses, and it’s doing just fine

A Swedish bank may be about to change perceptions of how bonuses affect performance.
Dennis Campbell, a Harvard Business School professor, has been studying how companies design compensation strategies. His work led him to the biggest bank in Sweden, Svenska Handelsbanken AB, which he says uses a model that raises serious questions about how well bonuses drive results.
Handelsbanken caught Campbell’s attention about five years ago. Since then, he’s written two case studies on the Stockholm-based lender, and his conclusions challenge the conventional wisdom.
Campbell says staff at Handelsbanken were highly motivated despite the absence of bonuses for all but a tiny group. What struck him was 1) how flat Handelsbanken’s corporate hierarchy is, and 2) how important branch managers are.
“Handelsbanken just stood out as a really interesting example because they have really unusual levels of empowerment,” Campbell said in an interview via Zoom. What’s more, he says the Swedish bank has “had these really unusual performance outcomes that normally don’t go along with that level of decentralization.”
The Bonus Debate
Banker bonuses have become an increasingly thorny subject since the global financial meltdown of 2008. More recently, governments and regulators have put pressure on the industry to show restraint on pay and instead use surplus cash for loans to businesses hit by the Covid-19 crisis. Many banks have complained that such restrictions make it hard to attract the right talent. But the link between bonuses and performance is hard to prove.
Campbell says Handelsbanken stood out in part because of its ability to keep impairments low. He attributes that in no small measure to a broad network of branches at which local staff know their clients better than most in the industry. (Coincidentally, Handelsbanken has placed less emphasis on automating a lot of client-facing services than some of its peers.)
“We would normally think that the level of decentralization that they have … would lead to things like higher loan losses, would lead to less efficiencies in their cost structure,” Campbell said. “Yet here’s this bank that has operated this way since the 1970s and has had higher returns on equity than its peers, not just on average over those years but literally every single year, going back that far, and has also had a fraction of the loan losses of their competitors in any given year, including in years where there were major economic crises.”
About 1% of Handelsbanken’s employees, mostly in investment banking, receive some form of variable pay, according to Jörgen Olander, head of compensation and benefits. But it’s offered “with great caution” and not to employees who can have a “material impact” on the bank’s risk profile, he said. In the first quarter, Handelsbanken booked smaller impairments than any other major Nordic bank.
Profit Sharing
Campbell says his study showed that, despite not having “any skin in the game” in terms of personal enrichment, branch managers at Handelsbanken appeared to “really care deeply” about the cost-to-income ratio.
Handelsbanken does offer a profit-sharing plan — the Oktogonen Foundation, which also holds a 10% stake in the company — but employees have to wait till they turn 60 to see any of that money. That reduces the risk that they’ll chase short-term gains without considering long-term outcomes, Campbell said.
The main takeaway, according to Campbell, is that Handelsbanken has managed to create “a very strong culture organization,” which, if done properly, is a more potent way to generate long-term profits than a bonus program.
“People are naturally motivated,” he said. “That’s very different than the assumption that many leaders make.”


fortune--2020-07-13--Why slashing product prices is usually a terrible idea

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Warren Buffett is an aggressive pricer. He mostly leaves the managers of Berkshire Hathaway’s portfolio companies alone, but when it comes to setting prices at companies including See’s Candies and the Buffalo News, he has often liked to be involved.
“The manager has just one business,” he once explained to Fortune. “His equation tells him that if he prices a little too low, it’s not that serious. But if he prices too high, he sees himself screwing up the only thing in his life.” Such excessive risk aversion leaves money on the table, Buffett figures, so he often pushes for higher prices. More often than not, he’s right.
Even in a historic downturn, Buffett’s instinct is worth keeping in mind. Many managers underestimate the power of pricing, and the unanimous advice from pricing experts in this troubled economy is to price with courage and creativity. In businesses where demand has plunged, slashing prices may be a terrible idea—and it may not be necessary at all.
In a few special cases—think hand sanitizer—the pandemic has turbocharged demand. Yet even here, managers need courage. It’s the courage to abstain from multiplying prices by five or 10 or 20, or whatever the market will bear. The winners will be those who think long-term, difficult as that is in a crisis.
For the vast majority of businesses—those facing strapped customers and shrunken demand—the No. 1 imperative is to avoid cutting prices if at all possible, what experts in the field call “maintaining price integrity.” In the B2B world, “you get a lot of pressure back from your customers to reduce price, which can manifest itself as hesitancy to move forward with the purchase,” says Ron Kermisch, a Bain consultant who leads the firm’s global pricing practice. “Companies too quickly move to price as the lever, without really understanding what’s driving the customer hesitancy.”
Creative managers can find many ways to allay customers’ concerns while maintaining price: for example, by extending payment terms, or by offering a shorter-term contract if the customer is worried about uncertainty, or by offering additional services such as help with integrating new software.
Even when financial concessions are unavoidable, maintaining the established price is crucial. In B2C commerce, several Four Seasons hotels are offering a third or fourth night free, the same strategy they followed in the last downturn; the customer gets more, but the room rate on the bill remains the same. Ritz-Carlton is offering some guests a daily “resort credit” of $100 to be applied toward meals, spa treatments, or other services, reducing the customer’s total cost without cutting the room rate.
But wait: Is anyone really fooled? If customers are being given more for a stated price, isn’t it obvious that the price has been cut? In fact, there is a difference, and it’s important. In pricing theory there’s something called the reference price, which is the lowest price customers ever paid for a product or service. They tend to remember it and compare all future prices against it. One-time add-ons to a product or service may be hard to remember or hard to value, but the reference price is clear. Reduce it, and customers will wonder why they should ever pay more.
That’s just the beginning of the damage that price cuts can do. They rarely pay for themselves. If you cut prices 20%, you have to sell 25% more units just to maintain revenue. In a severe downturn, how likely is that? And if a competitor matches your price cut, the pain will be much worse. The economics of every business are different, but McKinsey research has found that in a typical S&P 1500 company, a 5% price cut would have to spark a 19% volume increase just to pay for itself, and that hardly ever happens. Even if holding prices steady reduces sales and profits, price cuts may reduce them even more.
The long-term effects can be more harmful. Price cuts, even temporary ones, train customers to behave badly, always waiting for the next sale. Perhaps worse, they destroy brand equity.
The problem is especially acute in the luxury goods business, where a breathtaking price is a product feature and a key element of the brand identity. Conventional wisdom held that the industry had learned its lesson in the financial crisis of 2008–09, when some luxury items were offered for 70% off at Saks Fifth Avenue and other temples of upscale consumption. But it’s happening again. Valentino dresses are being discounted 50% at Valentino’s own website, for example, and 70% elsewhere; at Matchesfashion.com, a beaded Valentino gown has been reduced from $30,000 to a mere $9,000. Customers who paid full price may resolve never to make that mistake again. The same general phenomenon plays out in most product and service categories.
Having vowed to avoid price cuts no matter what, you may nonetheless find that in this downturn, which has been so traumatic for so many, you sometimes have no choice. Yet even then, you can mitigate the damage by asking for something in return. For example, recent Bain research finds that 81% of chief information officers who asked software vendors for payment relief received it—and 80% of those who received relief gave something back. Some agreed to extend their contract or to expand the scope of their contract in the future; others agreed to renew early. “Customers are willing to do that,” says Kermisch. “You need to show empathy as a provider, but they understand you’re running a business.”
And if you sell one of those white-hot pandemic products that are still in short supply? The advice is simple: Don’t gouge. Even if the market will bear it, your reputation might not. Attorneys general from Washington State to Washington D.C. have sued retailers or hit them with cease-and-desist orders for selling Clorox, hand sanitizer, and related products at exorbitant prices. Don’t let that happen to you. Forgo the quick profits and think long-term.
Pricing is an undervalued discipline. No one in the C-suite has “price” in their title. Research by the Simon Kucher & Partners consulting firm finds that “only 12% [of companies] believe they can boost profits by adjusting prices.” Pricing is worth far more attention than most managers give it—especially now, when you need every advantage you can get.


fortune--2020-07-14--Exclusive: Gwyneth Paltrow invests in an accessible therapy startup

Sauvignon Blanc has become the go-to wine for Americans during the pandemic

A global pandemic isn’t typically the ideal backdrop for the launch of a company. But for founder Ariela Safira and therapy startup Real, the COVID-19 crisis has made the need for new and different mental-health solutions all the more apparent. And it seems that investors—and a certain famous wellness guru—feel the same way: Real announced on Tuesday that it has closed a $6 million round of funding led by Forerunner Ventures and including Gwyneth Paltrow.
The business aims to change the way Americans access therapy. For about $30 a month, members will be able to participate in weekly group therapy meetings, events, and 12-step therapy sessions organized around themes like body image, miscarriage, or sexuality—rather than more standard categories like anxiety or depression. The startup had planned to launch with an in-person New York studio in April but quickly pivoted to a digital-first model. The service has not yet launched to the public, but Safira says it will begin accepting members this summer.
“People are really open and vocal about their mental-health needs right now because we don’t feel different or singled out—we know it’s a shared experience,” says Safira, who studied clinical psychology at Columbia University and worked at the U.K. National Health Service’s Mersey Care Foundation Trust, a well-known mental-health treatment center, before founding Real.
Kirsten Green, the partner at Forerunner Ventures known for successful investments in consumer companies like Glossier and Dollar Shave Club, led Real’s seed round on behalf of her firm. Other investors include Female Founders Fund, BBG Ventures, Great Oaks Venture Capital, and Bonobos founder Andy Dunn. Safira says she connected with Paltrow through Lightspeed Ventures partner Nicole Quinn, who is known for brokering celebrity venture deals; Lightspeed invests in later-stage businesses and did not participate in this round. Paltrow’s investment is a personal one, not connected to her business, Goop. Real raised $2.5 million last year and added $3.5 million over the past few months for its $6 million seed funding total.
“Reimagining various aspects of health care has been on our minds for some time,” says Green of Forerunner’s investment in Real. “What have consumers come to expect in other areas of services and products—and how can we translate that to health care? We mapped over the areas we felt were most underserved, and that led us to mental-health care.”
Real, which will launch with a focus on women and nonbinary patients but intends to expand to other demographics, still plans to provide in-person sessions when possible. In its free beta program, geared toward specific crises like the coronavirus pandemic, the startup offered one-on-one online appointments with its licensed therapists but found that group offerings were more popular among its 1,500 nonpaying users.
Safira’s hope is that Real’s patients go from viewing mental health as something to be treated during a crisis to an ongoing component of their well-being.


fortune--2020-07-14--Media critic Margaret Sullivan outlines the mounting crisis for local journalism

In a year that has already included an impeachment hearing, a global pandemic, an economic crisis worse than any other in modern history, and a U.S. presidential election still on the horizon, there is no shortage of news.
But there is a shortage of resources to report on these events, especially at a local level, according to Margaret Sullivan, media columnist at the Washington Post and the former public editor of the New York Times.
In her new book, Ghosting the News: Local Journalism and the Crisis of American Democracy (Columbia Global Reports), Sullivan aims to amplify the long-running alarm that local news media—entities core to local and national democracy—are in more trouble than ever. The greatest risk, she writes, is that local newspapers especially are on the verge of disappearing forever, which could have severe ramifications during a time when fact-based reporting is under siege.
Sullivan recently answered a few questions for Fortune about the state of local news during the COVID-19 pandemic and economic crisis.
Margaret Sullivan Michael Benabib
Fortune: The economic crisis brought about by the COVID-19 pandemic has wreaked havoc on the already beleaguered news industry, with many businesses pulling advertising dollars, resulting in slashed budgets and thousands of layoffs. But nowhere has been more decimated than local news. Given the severity of this public health crisis, coupled with the fact that local newspapers had already been in decline for years, can local media ever make a comeback? And how will this shape local communities? Where will they look for news now?
Sullivan: We have to separate “local news” from “local newspapers.” It’s very unlikely that local newspapers in their traditional printed form will make a comeback. The underlying business model—based on plentiful print advertising and bygone reading habits—simply has changed too much. But certainly there is plenty of hope for local news in other forms. We’re seeing hundreds of new digital sites cropping up all around the country, many of them nonprofits.
The highly successful prototype for these is the Texas Tribune in Austin, which now is joining forces in an exciting new venture with the well-respected investigative journalism organization, ProPublica. The relatively new organization Report for America, based loosely on the Peace Corps, is growing. Public radio stations are stepping up. Local TV stations are doing more enterprise and investigative work. And newspapers, even in their diminished form, are still doing very important journalism. I see the answer as a patchwork, not just one solution.
With millions of workers—including journalists—working from home, there is the argument that people can theoretically live wherever they want (or wherever they can afford) while still getting a job for a major corporation based in New York City or Washington, D.C. However, while it can be convenient, there are a number of reasons why working from home might not be a sustainable option for journalists beyond the pandemic, from building a base of sources to really knowing a community or environment. Could we expect a shift in the workforce like this, and how might that affect the way the news is shaped and delivered?
For the news media writ large, this could be a positive development. It’s a problem that too many journalists live in New York City, Washington, D.C., and in the large cities of California. So if remote work allows more journalists to live in other regions of the country while reporting for the big national outlets, that’s good.
But for local journalism, of course, reporters need to live in the region where the coverage takes place. So, once again, this is a case of the national media organizations and the local ones having very different sets of circumstances.
On that same note, if people are leaving major (and expensive) cities like New York, Los Angeles, and San Francisco, among elsewhere, out of either health or financial concerns, could we see a shift in talent heading toward local media in smaller markets?
That’s possible. But the problem in these localities isn’t really one of sufficient talent. It’s one of opportunity, and frankly, who is going to give you a paycheck to do your journalistic digging? Will there be significant growth of local news organizations that could employ individuals who want to report from Cleveland or Cheyenne? I’d love to see that, of course, but again the difficult problem of the underlying business model arises. And there is no easy solution there.
“Ghosting the News: Local Journalism and the Crisis of American Democracy” Courtesy of Columbia Global Reports
All of this sounds very doom and gloom for local news (and for some places, that really is the case), but many readers understand the value of local news reporting, often recognizing that value through purchasing digital subscriptions and other products. Is there a particular local news outlet (magazine, newspaper, digital only, etc.) with a business model that is getting it right and that could serve as a model for others?
You’re absolutely right, and the troubling paradox is that while people trust local media, in general, more than they do national media, they don’t always open their wallets to support those local outlets. In fact, some Pew Research that I write about in my book was startling to a lot of journalists: We media people know all too well that many local news sources are deeply troubled, financially, but most Americans do not know. And most Americans aren’t accustomed to paying for local news. So that’s a real problem to be overcome.
And some of this falls at our own doorstep: For many years, newspaper management put their journalism on the web for free. Now, we expect news consumers to switch gears and happily pay for it. There are success stories in the midst of this—both the New York Times and the Washington Post have been able to procure enough digital subscriptions to make that revenue a sustaining force as advertising dollars have dwindled. But this is much harder to do on the local level. However, the Boston Globe and the Los Angeles Times, among others, are showing big jumps in digital subscriptions. And that is a hopeful sign not only for them but for others to emulate.
Ahead of your new book’s release this week, there was some criticism that it didn’t cover industry trends concerning objectivity (and how much it really matters anymore or not) and how national politics have permeated into local news. Now, of course, you can’t cover everything—there are simply too many debatable issues in journalism to cover in one book—but how would you respond to that criticism now that it’s been addressed?
Whenever I talk to news consumers, across the country, I hear a refrain: “Just give me the facts. I don’t want any interpretation from you.” And that desire is understandable. However, every time we decide to write a story or choose a photograph or narrow down who to interview, we are making choices.
So I would reframe the objectivity question as a fairness question: How can we best make our journalism accurate and fair—to the people we cover, to the people affected, and to the citizens who depend on us for information? Almost all institutions—schools, law enforcement, corporations—are less trusted now than decades ago. It’s not just the news media. But there is more trust in local news organizations than in the national media. That makes it all the more crucial that our society find ways to sustain and reinvent these local-news sources that are under siege.


fortune--2020-07-14--Google in talks to invest $4 billion in India’s high-flying Jio Platforms

Google is in advanced talks to buy a stake in Reliance Industries Ltd.’s digital arm Jio Platforms Ltd., according to people familiar with the matter.
The U.S. technology company has been discussing an investment of about $4 billion, the people said, asking not to be identified because the information is private. An announcement could come as soon as the next few weeks, according to the people.
Details of the potential deal could change, and negotiations could still be delayed or fall apart, the people said. Representatives for Google and Reliance didn’t immediately respond to requests for comment.
Google would join Facebook Inc. and a slew of private equity firms piling into billionaire Mukesh Ambani’s technology venture, which has already attracted more than $15 billion of investments in just a few months. An arm of Qualcomm Inc. was the latest in Jio’s growing list of high-profile investors, who also include Silver Lake Partners and Mubadala Investment Co.
Shares of Reliance Industries pared losses in Mumbai on the Bloomberg News report. The stock slipped about 1% as of 2:42 p.m. local time, outperforming a 1.8% decline in S&P BSE Sensex index. Reliance shares have more than doubled since a low in March to a record on investments into Jio.
On Monday, Google said it plans to spend $10 billion over the next five to seven years to help accelerate the adoption of digital technologies in India. The amount could be put into partnerships and equity investments among others.
Sundar Pichai, who was born in the country and is now chief executive officer of parent Alphabet Inc., said the outbreak of the coronavirus has made clear the importance of technology for conducting business and for connecting with friends and family.
Google, founded in 1998 in Silicon Valley, entered India six years later with offices in Bangalore and Hyderabad. The India business has since grown into one of the company’s most important. The country now has more than 500 million internet users, second only to China, with growth that has drawn all the American technology giants.
In the last decade, Google has successfully launched several products in India, including a Google internet Saathi service to bring women in rural areas online and its popular Google Pay service.


fortune--2020-07-14--Why China is sanctioning Lockheed Martin

China’s foreign ministry on Tuesday said it would place sanctions on U.S. defense contractor Lockheed Martin Corp for the company’s involvement in a U.S. government deal to supply arms to Taiwan, a self-governing island that the government in Beijing considers a province of China.
The U.S. approved a potential $620 million upgrade package for surface-to-air missiles for Taiwan last week. Lockheed Martin is the main contractor for those missiles.
The U.S. does not have official diplomatic ties with Taiwan, but it’s obliged to provide the island with military support under the 1979 Taiwan Relations Act and has done so for decades. Beijing sees such arms transactions as a violation of Chinese sovereignty and condemns them as foreign interference. Washington has declined Taiwan’s arms requests in the past so as not to anger Beijing.
Chinese foreign ministry spokesperson Zhao Lijian, who announced the Lockheed Martin sanctions, said the U.S. should suspend its military support of Taiwan “so that it doesn’t do further harm to bilateral relations and damage peace and stability in the Taiwan Strait.”
“China firmly opposes U.S. arms sales to Taiwan…We will impose sanctions on the main contractor of this arms sale Lockheed Martin,” Zhao said on Tuesday.
Zhao did not specify what the sanctions would entail. The U.S. has an arms embargo on China that prevents U.S. companies from selling military equipment to China; the embargo doesn’t apply to Taiwan.
“Foreign Military Sales are government-to-government transactions and we work closely with the U.S. government on any military sales to international customers. Discussions about sales to foreign governments are best addressed by the U.S. government[,]” Lockheed Martin said in an emailed statement to Fortune.
Taiwan’s defense ministry said the surface-to-air missile upgrade will be the Trump administration’s seventh arms sale to Taiwan. It expects the transaction to take effect in the next month.
Beijing has vowed to sanction U.S. weapons makers in the past over in Taiwan arms sales, but stopped short of making good on the threats.
In August 2019, when the Trump administration was preparing an $8 billion deal to sell Lockheed Martin-made F-16V fighter jets to Taiwan, China’s foreign ministry said China would place sanctions on “the American companies that participate in this arms sale to Taiwan.” Beijing issued a similar threat in July 2019 regarding a $2.2 billion sale of tanks and missiles from the U.S. to Taiwan.
In both cases, the threatened sanctions did not occur. If they had, they were not expected to have a significant effect on Lockheed Martin and other companies involved in the deals since the U.S.’s China arms embargo already limits the kind of sales U.S. defense contractors can conduct in China.
Almost three-quarters of Lockheed Martin sales occur in the U.S., and the U.S. government is its biggest customer, accounting for 71% of the firm’s net sales in 2019. Sales to Asia Pacific countries make up 10% of Lockheed Martin’s business.
The new sanctions are the latest blow to U.S.-China relations this week.
On Monday, China’s foreign ministry said it was placing sanctions on four U.S. officials in response to U.S. sanctions on four Chinese officials for their role in alleged human rights abuses in the Xinjiang region of western China. And Secretary of State Mike Pompeo said on Monday that Beijing’s claims to disputed areas of the South China Sea were illegal, a marked shift from the U.S.’s previous stance of having no position on contesting claims in the area.


fortune--2020-07-14--A second wave of coronavirus this autumn could be deadlier than the first, U.K. researchers warn

Google in talks to invest $ 4 billion in India ’ s high-flying Jio Platforms

A potential new wave of coronavirus infections this winter poses a serious risk to the U.K. and could lead to as many as 120,000 hospital deaths from September to June, according to a report.
A second wave of Covid-19 could be more serious than the first as the National Health Service deals with a backlog of patients needing assessment and treatment and a potential outbreak of annual seasonal flu, researchers from from the country’s Academy of Medical Sciences said in the report.
The U.K. has already faced one of Europe’s worst outbreaks of SARS-CoV-2, with Prime Minister Boris Johnson falling seriously ill at one point. The country is one of many striving to ease restrictions on social contact while trying to revive failing economies and businesses.
Hospitals in the U.K. face an increased burden in winter when other respiratory diseases and common conditions such as heart disease tend to worsen. Covid-19 is also more likely to spread in cold weather as people spend more time indoors where the virus thrives, according to the report.
Flu Shots
Scientists and academics who wrote the report called for expansion of programs to test, track and trace those who have been exposed and are infected. Control measures and adequate stocks of personal protective equipment also need to be assured for hospitals and nursing homes, they said.
Flu vaccinations will also be important to prevent hospitals from becoming overwhelmed, the report said. Seasonal flu is regularly responsible in part for the NHS’s “winter crisis” when some hospitals fill up with sick patients.
The average number of people that one infected person transmits the coronavirus to, often called the reproduction rate or R-naught, could rise to 1.7 beginning in September, according to the report. That would lead to a peak of hospital admissions and deaths in January and February which could be worse than the first wave.
The current reproduction rate in the U.K. is about 0.7-0.9, which means the epidemic is diminishing overall. Ministers have previously warned the U.K. could go back into lockdown if the R rate rises above one.
The report is not a prediction but a “reasonable worst-case scenario,” and calls for intense preparation, the authors said.


fortune--2020-07-14--Bill McDermott on why modern business leadership requires a softer touch

Bill McDermott has put decades into business leadership, first at Xerox, then as CEO of SAP, and now as the chief executive at ServiceNow, an industry-spanning software company. On the July 14 episode of Leadership Next, the Fortune podcast about the changing role of CEO, McDermott and hosts Alan Murray and Ellen McGirt discuss the state of business today.
After spending 17 years at Xerox and 17 years at SAP, McDermott decided it was time for a change, both in his life and at SAP.
“I think 10 years is about the right amount of time to be CEO,” he said. “And I felt strongly that it was in my best interest as well as SAP’s to bring on a new generation at SAP and then give me a new experience, a new frontier to conquer.”
In his time at the three companies, he’s encountered plenty of leadership styles and approaches to business, and McDermott said over the decades a lot has changed. At the beginning of his career, management was focused more on managing daily tasks and processes.
These days, he said, corporate leadership requires a softer touch and the ability to release workers’ entrepreneurial spirit. A focus on purpose and an inspiring workplace culture take precedence now.
“The pendulum has really swung more toward leaders being absolutely in service to the employees and finding new ways to innovate, to find the best in them,” McDermott said.
Around the 12-minute mark, McDermott details how ServiceNow is looking at bringing its employees back to work. He said he believes that there has been a paradigm shift in the way people work, with a third of workers choosing to return to the office when possible, a third working “from anywhere,” and a third working from home permanently.
The coronavirus pandemic, he said, has the business community realizing it was doing “a lot of silly things.” Having people travel to be in one physical location for training or conferences doesn’t make much sense from a health and wellness standpoint now, but it also costs a lot and comes with a lot of distractions, he said.
On top of COVID-19, business at large is reckoning with long-held racist traditions and systems in a new way. When asked for advice for his peers in approaching this topic at their own companies, McDermott said, “When you look at the facts, the facts tell you that not enough has been done. We’re only as sick as our secrets, so put your cards on the table.”
To learn more about McDermott’s approach to supporting his Black employees, the future of work, and more, listen to the episode and subscribe to Leadership Next below.


fortune--2020-07-14--Wall Street: forget Q2 results, and instead pay attention to this

This is the web version of the Bull Sheet, Fortune’s no-BS daily newsletter on the markets. Sign up to receive it in your inbox here.
Good morning. Asia and Europe are awash in red as investors fret over U.S.-China geopolitical tensions, plus a new wave of shutdowns and coronavirus spikes from Hong Kong to California.
Let’s check in on the action.
Markets update
Asia
The major Asia indexes are all lower in afternoon trade with the Shanghai Composite Index off 1.5% , leading the way down.
are all lower in afternoon trade with the Composite Index off , leading the way down. Dark geopolitical clouds continue to gather… The Trump Administration has not completely ruled out ending Hong Kong’s dollar peg as it looks for a way to punish mainland China for the new national security law.
Administration has not completely ruled out ending as it looks for a way to punish mainland China for the new national security law. Meanwhile, China has slapped sanctions on Lockheed Martin over its latest arms deal with Taiwan .
on Lockheed Martin over its latest . One bright spot, however… China is easing travel restrictions for the gambling hotspot Macau, a move that’s lifting casino stocks.
Europe
The European bourses reversed yesterday’s gains, nosing down at the open. The benchmark Stoxx Europe 600 was off 1.2% .
reversed yesterday’s gains, nosing down at the open. The benchmark was off . EU leaders need to agree to a recovery plan, and it has to be “massive,” says Germany’s Angela Merkel , as she tries to rally the fractious bunch behind a €750 billion coronavirus bailout plan.
, as she tries to rally the fractious bunch behind a coronavirus bailout plan. Britain’s economy may be coming out of lockdown, but it’s barely growing, the latest GDP data shows.
U.S.
The major averages were cruising to a Monday rally when California announced a major rollback of re-openings yesterday afternoon. Just about everything bombed after that, with the S&P 500 finishing down nearly 1% . Spoiler alert: California won’t be the last major economy to order a new wave of shut-downs.
were cruising to a Monday rally when California announced a major rollback of re-openings yesterday afternoon. Just about everything bombed after that, with the S&P 500 finishing down nearly . Spoiler alert: California won’t be the last major economy to order a new wave of shut-downs. When Hollywood inevitably puts the story of this bull market on the big screen, a prominent character will be the Robinhood day trader blithely running up the price of Tesla shares. Tesla at one point was up 16% yesterday. In one four-hour stretch, 40,000 Robinhood traders had topped up their accounts with Tesla shares.
blithely running up the price of Tesla shares. Tesla at one point was up yesterday. In one four-hour stretch, had topped up their accounts with Tesla shares. Another character will be the Amazon bull. Get a load of this data point: so far in July, Amazon has padded its market cap by $210 billion, a sum that surpasses the entire market cap of 95% of the S&P 500. We are [looks at calendar] just halfway through the month. Happy Bastille Day, btw.
Elsewhere
Gold is down.
is down. The dollar is flat.
is flat. Crude is down again. On Monday, OPEC released annual production data that showed the cartel was hurting well before COVID.
***
Earnings, schm-earnings
Today is the biggest day on the earnings calendar so far with banking giants JPMorgan Chase and Wells Fargo, plus Delta Air Lines, due to report Q2.
For most of the S&P 500, it’s going to be a brutal quarter. The Street consensus is earnings will fall 44% year-on-year. As my colleague Anne Sraders points out, Goldman Sachs thinks the nadir is closer to -60%. The numbers will be so bad that, Goldman advises, investors should probably all but ignore them and just tune into management’s comments.
“Given the recent resurgence of COVID-19 cases in the U.S., we expect management commentary will prove more important to gauging the forward path of earnings than actual 2Q results,” the analysts wrote in a recent investor note.
Earnings-wise, this quarter will be an across-the-board dud. According to Refinitiv, tech and utilities earnings growth will be merely bad (not awful). They project EPS on utilities to dip 4.8% and IT to drop 8%. Yes, that counts as the best of the bunch.
For the ugly, you need look no further than energy. Refinitiv analysts are putting a negative-154.9% handle on the energy sector.
Let’s get to this week’s calendar. 128 companies have scheduled earnings calls, with big names from each sector set to report. I’ve listed the big ones here:
But that’s not to say there’s no room for surprises. Beats could still happen, particularly if, say, trading revenues lift the bottom line of the banks, or if pharma or health care experienced a turnaround towards the end of Q2.
Stay tuned.
***
Have a nice day, everyone. I’ll see you here tomorrow.
Bernhard Warner
@BernhardWarner
Bernhard.Warner@Fortune.com
A note from my Fortune colleagues on a timely new initiative:
Many companies are speaking out against racial injustices right now. But how do they fare in their own workplaces? Black employees in the corporate world, we want to hear from you: Please submit your anonymous thoughts and anecdotes here. https://bit.ly/WorkingWhileBlack
As always, you can write to bullsheet@fortune.com or reply to this email with suggestions and feedback.
Today's reads
Wee profits at WeWork? Marcelo Claure, the SoftBank executive tasked with turning around the the beleaguered shared office-space provider, told the Financial Times the company is on track to meet its goals of positive cash flow and profits by 2021.
Leaving Elon Musk in his dust. The chairman of Reliance Industries Ltd., Mukesh Ambani, is on a tear. The net worth of India's richest man has soared past Sergey Brin, Larry Page and Elon Musk in recent days to claim the No. 6 spot on the world's wealthiest list.
Some of these stories require a subscription to access. There is a discount offer for our loyal readers if you use this link to sign up. Thank you for supporting our journalism.
Market candy
The pricing paradox
The economics of pricing is a tricky field. Set the price tag too high and you could leave sales on the table. Worse, discount too much and you destroy brand value. Fortune's Geoff Colvin examines a conundrum all managers have to deal with in the age of COVID: the perils of cutting prices.


fortune--2020-07-14--ServiceNow’s Bill McDermott says the rules of leadership have changed

This is the web version of CEO Daily. To get it delivered to your inbox, sign up here.
Good morning.
There’s a new episode of our podcast Leadership Next out this morning, in which Ellen McGirt and I talk with Bill McDermott, CEO of ServiceNow, former CEO of SAP, and an inspiring example of the new style of leadership.
I first met McDermott ten years ago, backstage at Radio City Music Hall, where he was preparing to go onstage to give a talk on leadership and I was preparing to interview the legendary leader Jack Welch. For the podcast, I reminded McDermott of that meeting, and asked him about the change in leadership that’s occurred in the 20 years since Welch stepped down as CEO of General Electric. His response was worth capturing:
“Jack was an incredible force of nature. He figured you had to be number one or two in any business, and he held people highly accountable. And if you didn’t perform, you didn’t last long. That was a leadership style that proved to be highly successful for him.
“I do think the rules have changed so much. There is a bigger war for talent now than there ever has been. I believe you have to create cultures that have an enormous focus on purpose. And you have to create environments where people feel inspired to come to work. So the pendulum has really swung more toward a leader being absolutely in service to the employees and absolutely finding new ways to inspire them, new ways to innovate, new ways to bring out the best in them. And the accountability is in unleashing the entrepreneurial spirit versus managing hard line. There’s a soft touch that you need today that’s pretty unique.”
That, in a neat nutshell, is why we launched Leadership Next–to tell the story of how leadership has changed. There’s much more in this interview worth listening to, including how a working-class kid and deli manager from Queens managed to end up running a giant tech company in Germany.
And separately, thanks to those of you who inquired about my health. I got test results back yesterday, and I’m happy to report, courtesy of LabCorp, that 10 days ago I was COVID free. Still not sure how the whole test & trace thing is supposed to work with delays running that long. But I did learn something from this piece by former Fortune investigative reporter and editor Wyndham Robertson, who trained to be a contact tracer in North Carolina.
More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
TOP NEWS
SoftBank's ARM
SoftBank is reportedly looking to offload ARM Holdings, the British chip designer, either through an IPO or a full- or partial sale. ARM is one of the most important companies in the tech world, as its designs power pretty much every smartphone out there—and soon, if reports are to be believed, Apple's laptops too. Wall Street Journal
WeWork hopes
WeWork chairman Marcelo Claure says the company—written off by many not so long ago—will be profitable by next year. Claure claims there is strong demand for WeWork office spaces now that large companies are telling their employees they can work from wherever they're located. Cost-cutting has also helped. Fortune
SiriusXM and Stitcher
Satellite and online radio giant SiriusXM is shelling out $325 million to buy Stitcher, the podcast and Internet radio service. The move should help Sirius in an increasingly competitive podcast landscape, with rivals that include the likes of Apple and Spotify. Sirius's podcast network includes shows from celebrities such as Conan O'Brien and Rob Lowe. Fortune
Ma stake
Alibaba co-founder Jack Ma cashed out more than $8 billion worth of his shares in the company over the past year, leaving him with a stake of 4.8% rather than 6.2%. Ma retired as executive chair in September, and these days focuses on philanthropy. Executive vice chairman Joseph Tsai also offloaded shares worth more than $3 billion over the same period. Reuters
AROUND THE WATER COOLER
Q2 earnings
How bad will Q2 earnings be? Analysts say it will be the worst quarter of the current economic contraction, but some—including Goldman Sachs—argue that the estimates out there are too rosy. The bank is however very optimistic about 2021 and 2022. Fortune
U.K. recovery
The U.K. economy did not recover as much as hoped for in May. Economists thought they might see a 5.5% rebound but got just 1.8%. So, yet another reminder that the coronavirus recovery will be no quick affair. CNBC
COVID-19 immunity
A British study suggests that COVID-19 antibodies could last only a few months. The study has not yet been peer-reviewed, but if the findings are confirmed, then it could mean a potential vaccine would only have short-lived effects—and that "herd immunity" is a pipe-dream. Fortune
EU tax
The European Commission is looking at ways to get low-tax EU member states to change their ways, in order to make it harder for multinationals to exploit advantageous corporate tax schemes. This would be an unprecedented move requiring the approval of most—but not all—member states. Financial Times
This edition of CEO Daily was edited by David Meyer.


fortune--2020-07-14--Patek Philippe revamps a trifecta of grand complications

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In the world of high-end watchmaking, dozens of companies make incredible watches for under $100,000. But when it comes to making the finest and most complicated wristwatches—tourbillons, split-second chronographs, perpetual calendars, minute repeaters, and any combination thereof—few brands can compete with Patek Philippe.
For 2020, Patek is updating three of its most beloved “grand” complications:
Ref. 5303R Minute Repeater
Courtesy of Patek Philippe
We first saw the Ref. 5303 minute repeater tourbillon at Patek’s Grand Exhibition in Singapore in 2019, where a limited run of 12 watches inspired by the flag of Singapore was released. Now a slightly modified version of the 5303, produced in a 42mm rose-gold case, has made its way into Patek Philippe’s catalog.
The watch’s minute repeater function chimes out the hour, quarter-hour, and minutes on gongs that are visible from the semi-skeletonized dial. In an idiosyncratic twist, the tourbillon—a complicated time-regulating mechanism that most brands love to show off through the dial—is kept hidden.
As with every minute repeater produced by the Geneva maison, each piece is reviewed by company president Thierry Stern to make sure it sounds exactly right.
Movement: Caliber R TO 27 PS manual-wound
Case material: 18K rose gold with 18k white-gold inlays
Case diameter: 42mm
Height: 12.13mm
Width between lugs: 20mm
Price: The piece is priced upon application, which, if you have to ask…
Ref. 5370P-011 Split-Seconds Chronograph with Blue Grand Feu Enamel Dial
Patek Philippe, 5370P-011 Courtesy of Patek Philippe
The Ref. 5370P, a split-seconds chronograph cased in platinum, has been one of Patek Philippe’s most fan-beloved watches since it was released at the Baselworld watch fair in 2015. (At the time, Hodinkee’s Ben Clymer called it “the best watch Patek Philippe has produced in years.”)
Where a regular chronograph allows the wearer to time one event at the start and stop of a pusher, the split-second chronograph allows one to measure intermediate events such as lap times. This is done by using two chronograph hands that “split” when the pusher is pressed at the end of a lap. One more press of the pusher and the second chronograph hand “catches up” with the other (hence the French name for the complication rattrapante, from the verb rattraper meaning to catch up). It’s one of the most fun watch complications to use, and it’s also one of the most technically difficult (ergo, expensive) to produce.
For 2020, the 5370P receives a dial made from glossy blue grand feu enamel—another feature requiring great technical skill—and keeps the reference’s distinctive Breguet numerals. (On a side note: Is 2020 the year of the blue watch?)
Movement: Caliber CHR 29-535 PS manual wound
Case material: 950 platinum
Case diameter: 41mm
Height: 13.56mm
Width between lugs: 22mm
Dial: Blue grand feu enamel on gold
Price: $263,093
Ref. 5270J Perpetual Calendar Chronograph in Yellow Gold
Detail of the front, and view of the back of the Patek Philippe 5270J. Courtesy of Patek Philippe
Patek Philippe describes the 5270, introduced in 2011, as the heir to its iconic mid-century Ref. 1518—an example of which just sold for $3.57 million—and by changing up its case material to yellow gold, the similarity is made even more apparent.
The perpetual calendar chronograph is the quintessential Patek Philippe grand complication—allowing you to time both a hard-boiled egg with the chronograph and keep the correct date and moon phase, including leap years, for the next 80 years.
Yellow gold has fallen a tad out of fashion as a precious metal choice for watch cases in recent years, but the execution here brings the watch some nostalgic vintage charm.
Movement: Caliber CH 29-535 PS Q
Case material: 18K yellow gold
Case diameter: 41mm
Height: 12.4mm
Width between lugs: 21mm
Price: $168,970