fortune--2020-10-22--White House and Twitter deny hacker accessed Trump’s Twitter with password ‘maga2020!’

Victor Gevers, a Dutch security researcher, claims he commandeered President Trump’s Twitter account.
Gevers, a prolific online vulnerability hunter, said he accurately guessed Trump’s password after a handful of tries. He told Vrij Nederland, a Dutch magazine, that he gained entry after entering “maga2020!,” a reference to the Trump campaign’s Make America Great Again slogan.
Gevers said the account did not have two-factor authentication, a recommended measure for securing online accounts. If true, that means a hacker would need just the password—rather than, say, Trump’s phone—to gain control of the account.
Trump’s campaign team and the Department of Homeland Security’s Cybersecurity and Infrastructure Agency referred questions about the alleged incident to the White House.
When contacted for comment, Judd Deere, a deputy press secretary at the White House, strongly rejected the claim. “This is absolutely not true, but we don’t comment on security procedures around the President’s social media accounts,” Deere told Fortune.
A statement from Twitter makes Gevers’ claim seem even more dubious. “We’ve seen no evidence to corroborate this claim, including from the article published in the Netherlands today,” a spokesperson told Fortune. “We proactively implemented account security measures for a designated group of high-profile, election-related Twitter accounts in the United States, including federal branches of government.”
Last month, Gevers claimed to have hacked Trump’s Twitter account along with two associates in 2016. That boast, published in an earlier article by Vrij Nederland, alleged the since-changed password was “yourefired,” Trump’s catchphrase from his old reality TV show, The Apprentice.
Cybersecurity experts cautioned that the evidence to support Gevers’ claim was thin. That skepticism prompted Gevers to try hacking Trump’s account again, he said.
Fortune was unable to independently verify whether screenshots published by Vrij Nederland purporting to show Gevers’ access to Trump’s account were real or fabricated. Gevers did not reply to Fortune’s requests for comment.
Gevers is best known for having last year uncovered surveillance-related databases exposing information on millions of Uighurs, a persecuted ethnic minority in China. He pursues “white hat” research—finding and flagging security issues for companies to fix—through a Hague-based nonprofit organization he cofounded, called GDI Foundation.
When hackers hijacked a slew of high-profile Twitter accounts this summer, including those of Democratic presidential candidate Joe Biden, Tesla CEO Elon Musk, and Amazon CEO Jeff Bezos, Trump’s account remained notably untouched. Twitter said at the time that certain VIP accounts were equipped with extra protections.
“If ‘maga2020!’ is legit, using a password based on a term that you say on an almost daily basis in public is truly, hilariously dumb,” said Joy Howard, chief marketing officer at Dashlane, maker of a password management app. She advised that Trump “consider using random, unique passwords for every account.”
At a recent campaign rally in Arizona, Trump mocked a C-SPAN editor, Steve Scully, who was suspended after falsely claiming that his Twitter account had been hacked. Trump told the crowd, “Nobody gets hacked. To get hacked you need somebody with 197 IQ and he needs about 15% of your password.”
Trump’s businesses—and his Twitter account—were both breached in years past.


fortune--2020-10-22--Gap and Banana Republic are leaving malls in a big way

Stimulus update : Pelosi says a deal could be near , but a vote may not come until after the @

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Gap Inc’s namesake and Banana Republic brands are planning to close another 350 of their North American stores in the next three years in a move that largely exits them from the shopping malls where they have been fixtures for decades.
For Gap, the brand that started in 1969 but which has withered in recent years, closing 220 stores (about one-third of the fleet) by 2023 will mean that only 20% of its remaining stores will still be in malls. Banana Republic is closing some 130 stores. The move was announced by Gap Global president Mark Breitbard on an analyst webcast on Thursday.
“We’re shrinking North American specialty stores and getting out of mall-based locations,” he said on the webcast. “What we’re doing is restructuring the fleet, shifting and pushing more of the business to digital and growing (market) share in key categories.” Gap earlier this week said it planned to close most of the brand’s stores in Europe and move to a license model in that market.
“We’ve been overly reliant on low productivity, high rent stores,” he added. Gap Inc has been involved in a dispute with mall operator Simon Property Group over rent charged early in the pandemic when stores were closed for weeks. Breitbard continued: “We’ve used the past six months to address the real estate issues and accelerate our shift.”
The long decline of shopping malls in recent years, coupled with the shift online of Gap’s customers, has led the company to rethink its real estate. When the closures are complete, the two chains will derive 80% of revenue online and from stores outside malls.
In contrast, Gap Inc’s flourishing brands, Old Navy, which generates half of company sales, and Athleta, both announced plans for more stores. Still, Old Navy, which last year said it could open another 800 stores over time on top 1,200 existing locations, is slowing the pace because of pressures on the business from the COVID-19 pandemic.
Old Navy CEO Nancy Green said her brand, which has weathered the pandemic better than most with sales down only 5% last quarter, could grow from $8 billion in annual sales to $10 billion in short order by building up its activewear business and selling more plus size clothing.
As for the $1 billion Athleta brand, executives said it could double in three years and widely build on its 200-store fleet. By 2023, the two brands will generate about 70% of Gap Inc revenue, up from about 54% now.
Gap Inc CEO Sonia Syngal pointed to the company’s relatively strong finances despite the sales plunges earlier this year and told investors, “We will continuously streamline to be fast and flexible.”


fortune--2020-10-22--The perils of letting social media titans correct misinformation

With the election imminent, social media platforms find themselves once again in the awkward position of being the referee deciding whether to call a penalty kick in overtime.
Especially since this summer, social media platforms have also taken the unprecedented steps of flagging and even deleting false or misleading claims by politicians, including most recently a post by President Trump claiming that COVID-19 was “less lethal” than the flu.
Platforms are also taking aggressive action to remove inauthentic accounts and reduce the spread of misinformation that social media propagated in 2016. The recent case of whether and how to allow a New York Post story on their sites brings the complicated politics of content moderation into sharp relief.
Last week, the Post published a story allegedly revealing secret emails about a meeting between Vice President Joe Biden and an adviser to a Ukrainian energy company. Social media giants moved aggressively against the story—and in so doing became the story. Facebook limited distribution of the Post’s main story while Twitter blocked users from posting pictures of the emails, causing users who tried to share links to see a message saying that the photos were obtained through hacking and contained private information.
Within a day, CEO Jack Dorsey confessed that Twitter’s communication about the decision had been “not great”—blocking links without offering context was “unacceptable.”
The Post brouhaha exposes the potential perils of draconian action. One argument against such measures is normative: that deciding what can be shared and what is prohibited is tantamount to censorship. In this case, Twitter’s moderation response was more aggressive than its published policies, which made it harder to generate a patina of legitimacy in this particular instance. When it did reverse course, Dorsey explained—not entirely convincingly and thereby playing into the hands of critics—that the initial moderation choice was due to the Post story sharing personal information, rather than its unsubstantiated claims.
Another argument against is more tactical: Trying to correct misinformation can actually generate a backfire effect, further entrenching misperceptions among those predisposed to believe the false claim. Some research suggests when people are confronted with information that conflicts with their pre-existing views, they counterargue in their minds with such vigor that they end up with more extreme views than prior to the correction.
During the COVID-19 pandemic, platforms have experimented with different correction modalities with an eye toward correcting misinformation without generating a backfire effect. But perhaps these concerns are overblown. Research on the backfire effect is mixed, and some studies suggest it happens rarely.
But how should platforms act when political officials—even the President—are major spreaders of false claims? Will corrections work? Will they have no effect? Or worse, will they backfire?
To find out, we conducted a survey experiment within days of Twitter flagging a presidential tweet as false for the first time—Trump’s May 26 tweet alleging, without evidence, widespread mail balloting fraud. Some of our subjects saw only Trump’s original tweet. Others saw both the tweet and a correction—either a simple “nudge” urging voters to “get the facts about mail-in ballots,” a more robust correction, or an even stronger correction that provided more information rebutting Trump’s claim. Finally, subjects in the control group did not see either the President’s tweet or a correction.
When looking at all of our survey respondents, neither Trump’s tweet nor any of the corrections to it had much of an effect on public beliefs about whether mail fraud occurs, how much fraud there is in U.S. elections, or voting by mail.
However, the corrections had dramatically different effects on Democrats and Republicans. Providing the facts decreased concerns about fraud among Democrats, but increased them among Republicans—a classic backfire effect.
As the election draws closer, social media companies face increasing pressure to fact-check and push back against false or misleading claims posted by politicians on their platforms. But these efforts to combat misinformation may not only fail—they may unintentionally further fan the flames of partisan polarization.
Sarah Kreps and Douglas Kriner are political scientists at Cornell University.


fortune--2020-10-22--Joe Biden’s tax plan could take a bite out of some small businesses

If you’re a small-business owner, you’ll be thinking a lot harder about buying that new backhoe, opening a second catering kitchen, or hiring another landscaper if Joe Biden’s tax platform becomes law.
The former vice president and Democratic presidential nominee has been open on his plans to hike taxes on big business. But he has had little to say on what his policies would mean for America’s 30 million owners of restaurants, construction businesses, and the other proprietorships that have long generated most of America’s new jobs. He did briefly address the issue at the primary debate in Las Vegas on Feb. 20, when asked whether he’d champion higher rates that could kill jobs for Latinos and other minority workers. Biden reassured America’s hometown entrepreneurs, “No, taxes on small businesses will not go up.”
The centerpiece of the Biden tax platform, however, is a plan to substantially increase the share of income that the federal government collects from individuals and families earning over $400,000 a year, reversing tax cuts enacted under President Trump. Hence, Biden’s policies would mean a big tax hike for a wide swath of America’s small businesses. That’s because most of their owners aren’t corporations but what are called “pass-through” entities that file individual returns, and pay individual rates. Owners typically report their business income on the IRS Form 1040 that some 140 million American singles and couples use to file each year.
To be sure, folks making that kind of money could afford to pay more. But these are also America’s growers and risk-takers. A bigger slice for the Treasury leaves them less money for opening another hair salon or restaurant and undercuts their incentive to take chances, since once they reach a certain size, they’ll pocket a lot fewer cents in profit for every dollar they invest.
“Higher taxes will make owners agonize a lot more on whether to add a new product or service,” says Scott Swain, a CPA and partner at Cohen & Co., an accounting and consulting firm in Cleveland. “When you’re risking serious capital to expand your business, and you see that you’re keeping less of the extra income it would generate than before, you’ll invest less. A heavier burden on small businesses is big disincentive to taking risks.”
Adds Vernon Hill, chairman of Republic Bank, a Philadelphia lender that specializes in serving the region’s Main Street stalwarts, “The Biden proposed tax and regulatory plan would destroy the success of the Trump deregulation and lower tax plan that’s created a boom.”
Biden pledges to repeal Trump’s Tax Cut and Jobs Act, the most sweeping tax reform legislation for businesses in 30 years, and an especially huge boon to small business. The TCJA introduced four major provisions that lowered rates for sole proprietorships and partnerships to well below their levels in the Obama and previous administrations.
Sole proprietorships and partnerships determine business income by subtracting rent, salaries, and all other expenses from revenue. That number goes on their Form 1040. The TCJA’s first and biggest break is the new qualified business income (QBI) deduction that reduces the amount of business income that’s taxable by 20%. In other words, the QBI effectively exempts from federal taxes one-fifth of every dollar the company earned, whether profits are $100,000 or $20 million or more. Second, the TCJA lowered the top rate on personal income from 39.6% to 37%.
Third, it allowed businesses to write off 100% of their spending on plants, equipment, and other capital projects the year the money was spent, whereas the previous rules required spreading the deductions for that spending over several years. Fourth, the TCJA killed the “Pease” provision that phased out itemized deductions by 3% a year for every dollar earned over certain thresholds.
TCJA was a blueprint for encouraging entrepreneurs to expand and hire. It did this in two ways: first, by allowing them to keep a lot more of their current income; and second, ensuring that they’d pocket almost the same big proportion as their profits swelled. It’s not clear from the U.S. employment statistics that the TCJA boosted already-strong hiring by small companies. From March 2018 to June 2019, for example, 53% of the 2.145 million net new jobs were created by enterprises with between one and 250 workers. Small businesses generally swell their payrolls more than big companies in good times and shed more workers, more quickly, in recessions.
In these worst of times, those fragile enterprises are shrinking their workforces to survive. America needs a great reversal, a big push from small-business hiring to rebound from the COVID-19 crisis. The question now is whether big tax hikes promised by a new administration could throttle that engine.
The Biden proposal wouldn’t raise rates on pass-throughs with incomes of less than $400,000. But it has been branded by opponents as a growth and jobs killer because it imposes a much higher burden on anything over that amount than under the TCJA. So if the owner of a carpentry contractor or data processing outfit swell their income from $400,000 to $500,000 or $1 million, he or she would pay a much bigger share of the additional $100,000 or $600,000 to the Treasury than the TCJA exacts.
A three-pronged increase
Three major changes would lift the government’s levy. First, eliminating the QBI; second, raising the rate for the highest income bracket; and third, and least noticed, enormously increasing payroll taxes. To see how these shifts create the gap between what owners now pay on income over $400,000 and the hit under the Biden blueprint, let’s use a simple example.
Take a hypothetical owner whose enterprise will make exactly $400,000 in 2020. When that income is recorded on their tax return, they get the immediate QBI deduction of 20%, or $80,000. The owner gets another longstanding deduction for the payroll taxes they pay in their joint role as employer and employee—more on that shortly. In this case, that number is roughly $12,000 (around half of all payroll taxes). In addition, the filer has $50,000 in mortgage interest, charitable contributions, and other itemized deductions. So deductions total $142,000, leaving taxable income of $258,000. That pushes part of that income, for a single person, into the second-highest bracket of 35%. Total federal tax due is $65,000. Add $24,000 in payroll taxes, and the full tab comes to $89,000. That’s a rate of a little over 22% on income of $400,000.
Now let’s look at what happens if that owner grows mightily, pushing his business income up to $700,000. The difference between what he or she would pay on that extra $300,000 if Biden wins and gets his agenda enacted, versus the current Trump take, could hardly be starker.
Under today’s regime, the QBI would increase from $80,000 to $140,000. The deduction for payroll taxes would also rise a bit; Social Security and Medicare combined would wax from $24,000 to around $31,000; and itemized deductions would stay at $50,000. The owner would take a slight hit as part of their income advances into the top 37% tier. The total bill, income and payroll taxes combined, would rise from $89,000 to $175,000, lifting the average rate a bit from 22% to 25%. The biggest factor in keeping the levy relatively flat is the boost from the QBI.
What matters most is how much of the additional $300,000 the owner got to keep. According to those who see low taxes as a big motivator, what owners pocket “on the margin” is what stirs their animal spirits. The Biden platform would still provide the QBI deduction of 20% up to $400,000, then quickly phase out the $80,000 benefit as incomes rise above that threshold. It’s a good bet the QBI would go to zero on an income of $700,000. So the first big change is that the $140,000 break would vanish altogether. Biden would also restore the “Pease” phase-out for itemized deductions, shaving what our filer can subtract by half, from $50,000 to $24,000.
Here’s the haymaker. The owner also works for the company. So he or she has to cover their own Social Security and Medicare taxes. For the former, they’re obligated to pay both the employer and employee halves, totaling 12.4%, since they both own the company and work there. Today, the 2.9% Medicare levy applies to all income, but Social Security’s “owner” tax is imposed only on the first $137,700. Biden would leave that cap but impose the full 12.4% on all income over $400,000, leaving a “doughnut hole” in between.
That change would double total payroll taxes on $700,000 from Trump’s $31,000 to $63,000. The Biden plan would also push all of the additional $300,000 into the new 39.6% bracket that’s 2.6 points higher than today’s max, assuming the filer is a single person. (Under Trump, going from $400,000 to $700,000 merely pushed part of the owner’s income into the second-highest 35% tier.)
All told, the “Biden taxes” on $700,000 in pass-through income would total roughly $214,000, for an average rate of 31%, six points higher than under Trump’s TCJA. But the number to ponder is how much the owner gets to keep of the additional $300,000 that they invested their sweat and capital to reap. The Trump taxpayer paid a “marginal” rate of just 21% on that money, and kept $214,000 of the $300,000. The Biden filer would pay 41% on the increased income and would keep just $178,000, $36,000 less. (This calculus doesn’t include the impact of state tax laws: In New York and California, state taxes would raise the marginal rates by an additional 7% and 8% respectively.)
The Biden tax manifesto has garnered praise for targeting high earners who’ve gotten too sweet a deal under Trump. What’s lost is the small-business story—that’s where many of the jobs for carpenters and restaurant managers and nursing home workers come from. Hey, man, we’re talking the middle class here. It would be a mistake to take aim at the “rich,” and hit the working American instead.


fortune--2020-10-22--Tesla shares pop after a big earnings beat—but its jump to the S&P 500 is hardly a ‘sure thing’

Investors have seemingly breathed a sigh of relief after Tesla continued its profitability streak, as the Elon Musk–led company beat earnings estimates late Wednesday.
Tesla stock traded up 2.2% in early afternoon trading on Thursday as the company reported $8.8 billion in revenues for the third quarter, and, most notably, $331 million in profits—the company’s fifth straight quarter in the black.
Investors continue to zero in on Tesla’s profitability, ever-bullish Dan Ives of Wedbush Securities argues. “Overall, they checked a lot of boxes in terms of profitability—the 500,000 units [goal] for the year guidance and also giving investors comfort [around] the factory buildout between Berlin and Austin,” Ives tells Fortune.
Ives recently raised his price target for the stock to $500 per share, and raised his bull case to $800 (up from $700) on Thursday. So far this year, Tesla’s stock has shot up over 405%, and the company performed a 5-for-1 stock split in August.
Credits concern
One sticking point worrying some on the Street is the portion of revenues Tesla derives through the sale of emissions credits. Electric-vehicle makers can take in a tidy profit selling their emissions credits to rivals whose fleet consists mainly of gas-guzzling, carbon-spewing automobiles. As emissions controls have tightened in places like Europe and California, the credits sales have gone up, reaping high-margin revenue for the likes of Tesla.
In the third quarter, revenue from the sale of those credits hit $379 million. That was down from $428 in the prior quarter, but just enough to help the EV maker turn a profit this quarter. That “regulatory credits” line item is going to be a key area of focus for Tesla investors moving forward as that lucrative line of business is expected to shrink in the coming quarters.
To be sure, those credits will remain a key part of the business, but Ives believes with profitability from the core auto business beating Street estimates, “the baton starts to get handed [from the credits] to the core business from a profitability perspective over the next 12 to 18 months,” and he estimates the underlying profitability of the company could ramp up “toward the mid-20s on a gross margin over the next few years.”
Is S&P to be?
A big dampener on the stock in recent months has been its failure to win inclusion in the S&P 500—a move some analysts like Morningstar’s David Whiston argued was due to those concerns over its profitability record. But those worries might not last forever, JMP Securities’ Joseph Osha recently told Fortune; he believes “the concerns about profitability are going to evaporate, and the people who make these index decisions will do what they do.”
With a fifth straight quarter of profits on the EV maker’s books, Tesla could be positioned for inclusion imminently.
“Possible inclusion to the S&P 500 index remains a catalyst to the stock,” Morningstar’s Whiston wrote in a note Thursday, as he also raised his “fair value” estimate for Tesla to $319 per share from $195 (still about a 24% haircut from the stock’s current levels). “But we do not think it’s a sure thing due to credit sales and Tesla’s small profits for a company with its large market capitalization.”
As to where the stock goes from here, even bullish Ives believes it may trade flat to slightly higher in the coming months as investors await fourth-quarter delivery numbers. But he notes that “for a stock that’s up 400%-plus this year, there’s a lot of good news baked in.”


fortune--2020-10-22--Bitcoin surges to a 2020 high on PayPal’s embrace

Bitcoin broke the $13,000 mark on Wednesday, hitting its highest price since June 2019. The latest surge has come as part of a bull run driven in part by votes of confidence from some of the country’s biggest financial companies.
On Wednesday morning, PayPal announced it would let users buy a handful of cryptocurrencies, including Ethereum and Bitcoin, causing the price of the latter to rise close to $13,200. On Thursday morning, Bitcoin was trading closer to $12,800—still a high for the year.
The PayPal announcement came two weeks after payment giant Square announced it was adding $50 million worth of Bitcoin to its balance sheet as a long-term investment, and two months after another publicly traded company, MicroStrategy, made a $250 million Bitcoin purchase.
Although Bitcoin has long been regarded with wariness by traditional investors, it has also received an implicit blessing this year from august names like Harvard University and hedge fund billionaire John Tudor Jones. The upshot is the cryptocurrency’s best streak of price performance in over a year:
The current bull run for Bitcoin is also notable because it has seen the cryptocurrency float about the key psychological mark of $10,000 for a record 85 consecutive days. While Bitcoin eclipsed that mark several times in the past—most notably during the crypto bubble of late 2017, when the price brushed its all-time high of $20,000—it has typically fallen below $10,000 just a few days or weeks later.
Bitcoin is notoriously volatile (though considerably less so than during its early days), and it is often hard to identify single factors that explain price swings. While this week’s surge was almost certainly spurred in large part by the PayPal news, there may be other tailwinds driving the price up.
Those tailwinds include a boom in lesser-known cryptocurrencies this summer, which led some traders to cash out and plow their profits into Bitcoin. At the same time, longtime Bitcoin bulls claim that the cryptocurrency has become an alternative to gold among those looking for a safe-haven asset amid times of turmoil and loose monetary policy.
More must-read tech coverage from Fortune:


fortune--2020-10-22--Employers can’t ignore America’s childcare crisis any longer. How they can fix it

The lack of an affordable, reliable childcare system in the U.S. has long been a challenge for parents. The upheaval of the COVID-19 pandemic has turned it into an acute crisis. A recent Catalyst-CNBC survey of 1,000 working parents across the United States found widespread fear and job insecurity; more than half (57%) of working parents said they believe being a parent is a strike against them in the workplace.
Hybrid school schedules, remote learning, and abrupt closures have disrupted daily life for working parents, especially mothers, who are facing unprecedented mental health, physical health, and financial challenges, too. Data suggests some women are even dropping out of the workforce for the foreseeable future. If employers don’t address these issues, they risk continuing to lose valuable talent and bearing the often-higher cost of hiring and training new people.
Corporate leaders simply can’t afford to sit on the sidelines. Our survey indicates that more employers need to step up and provide meaningful support for their employees. And those that do have childcare and parental support programs must do a better job of communicating about these programs and making sure employees feel comfortable availing themselves of these benefits.
Here’s what we found:
More than a third of parents say they are not aware of plans their employers have in place for parents, or whether these plans exist at all in their company.
Nearly half (49%) of working mothers and 39% of working fathers say they are not aware of any employer-funded childcare benefits.
Four in 10 parents fear it would be a risk to their employment to take advantage of the offerings or benefits available to them through their workplace (42%), and over a third (39%) worry that their employment will be terminated if they ask for them.
Corporate leaders must adopt bold, tangible solutions for employees now. Companies that have long been leaders need to go even further. For example, Bank of America has extended backup childcare payments for parents of children as old as 12 until the end of 2020. It’s also providing daily childcare reimbursements (instead of only partially subsidizing them, or capping dependent care assistance accounts from an employee’s pretax dollars).
At Catalyst, we’ve expanded our existing sick leave, flextime, and flex leave policy options to support employees. We’re enabling employees to reduce their hours to three days per week (21 hours) with a reduced salary, but with no impact to benefits, time-off accruals, or annual bonuses. Employees can also request an unpaid leave or intermittent leave.
5 ways to lead on childcare
More employers need to proactively lead through this crisis and help organizations rethink how work gets done during the pandemic and beyond. Some recommendations include:
Adopting flextime. Consider flextime or flex leave for all, including employees without dependent children, with no career penalty. Flexibility is not just about the day-to-day or week-to-week juggle; it is flexibility across the lifetime of an employee—from childcare to eldercare, and everything in between.
Commitment from the top. Reinforce employee adoption of policies like flexible work with support and communication from the very highest levels of the organization’s leadership. Managers can both model these policies and adjust their team’s workloads to ensure employees can manage to their specific capacities.
Embracing innovation. Develop programs that support more innovative and flexible models of childcare. For example, this could include support for childcare workers who become part of a family’s social pod; at-work, supervised day care; or even innovative worker-share childcare programs for employees who live close to one another.
Rethinking your physical space. Conduct an audit of available office space options for on-site childcare. Work with your local community and educational nonprofits and childcare agencies—can this space be repurposed to safely scale up the amount of childcare available?
Building better home offices. Increase support for at-home technology: Negotiate with technology suppliers so employees can choose to better equip their part-time home offices if necessary. The tradeoff in the cost of commercial office space and reliable technology that aids productivity is worth it.
COVID-19 has laid bare deep inequities in our culture. Employers committed to diversity and retaining top talent must develop innovative solutions and policies to ensure that everyone can participate in the workplace. The future of work is here, and our challenge and opportunity is to create workplaces that work for everyone, even beyond the crisis of the moment.
Lorraine Hariton is the president and CEO of Catalyst.


fortune--2020-10-22--Justin Simien talks ‘Bad Hair,’ following his genre obsessions, and getting ‘free as hell’ in ’80s h

Justin Simien talks ‘Bad Hair,’ following his genre obsessions, and getting ‘free as hell’ in ’80s horror satire

Editor’s Note: The following piece is based on an interview that focused on the Sundance Film Festival cut of Bad Hair.
Asked to name a few films that inspired Bad Hair, his gloriously out-there romp through possessed weaves, late-’80s music-video culture, and systemic oppression streaming on Hulu this Friday, Justin Simien rattles off more than a dozen without blinking.
“Invasion of the Body Snatchers! The original Carrie, how it weaves together melodrama and camp. Really, everything Brian De Palma did in the ’80s, but especially Dressed to Kill, this movie that’s following a white straight man’s obsessions and is totally politically incorrect and fucked up in all these ways…”
His smile widening as he goes, the writer-director—interviewed by Fortune at the Sundance Film Festival earlier this year, shortly before selling Bad Hair to Hulu for upwards of $8 million—becomes particularly effusive when discussing one movie he considers a major influence. In his 1989-set horror-satire, Anna (Elle Lorraine), an aspiring assistant at Culture, the Black arm of an MTV-style network, gets a (literally) killer new do in hopes of climbing the corporate ladder. When it emerges that said do has a taste for blood, its horrified host becomes tangled in a conspiracy with roots in slave folklore and capitalist hierarchy. Suffice it to say, the film’s a smoothie, chunks of Get Out and Sorry to Bother You–style social horror blended against the camp comedy of Little Shop of Horrors and They Live’s anti-capitalist agenda.
But it was 1982’s Halloween III: Season of the Witch, a lesser-known sequel to John Carpenter’s classic slasher, that provided the most unlikely fuel for Bad Hair, Simien explains. “It’s the Halloween movie nobody likes, because Michael Myers isn’t really in it,” he notes. “But, man, I fucking love that movie.”
Considered a curio within its franchise, Season of the Witch ditched Myers—the masked killer best known for terrorizing Jamie Lee Curtis—to instead tell a stand-alone tale of mad scientists and ancient Celtic rituals, in which a deranged toymaker plotted to slaughter children using deadly Halloween masks and a rock stolen from Stonehenge.
“People are being constantly conditioned by these commercials to put the masks on,” explains Simien, 37. “And then they eat your brain out! And then you get to the ultimate baddie, who’s behind all of this, and they just fucking disappear! That is terrifying, to me. Because what it means is that the system is designed for me to never find out how it’s set up against me. Bad Hair is designed in that way, where you’re put through these experiences, and only when you get to the end of it, you realize you’ve been in a maze the whole time.”
From left: Yaani King Mondschein, Elle Lorraine, and Lena Waithe in “Bad Hair” by Justin Simien. Courtesy of Sundance Institute
Simien first came to Sundance in 2014 with his directorial debut, Dear White People, a tart and timely satire of race that followed the experiences of several Black students at an Ivy League college, and he left the festival a Special Jury Award winner. But he struggled to lock down another feature, despite succeeding in adapting Dear White People into a series for Netflix. Far from believing he’d made it as a filmmaker, Simien felt boxed in.
“In so many ways, I just felt controlled and bound by these cultural forces that I had no insight into or knowledge of who operated them,” he explains. “Who decided Black people could only make this kind of movie or look this kind of way? It wasn’t us. It’s been made to look and feel like it was our choice, but it wasn’t.”
Though Dear White People was a more straightforward comedy, albeit one iron-spiked with withering punch lines and sidelong jabs in the direction of a supposedly “post-racial” America, Simien shot it through with such brazen, cinephile touches—shots lifted directly from Bergman’s Persona and Kubrick’s The Shining; a scene in which a student unexpectedly declares his love for Robert Altman (“Motherfucker goes in!”)—that it felt cumulatively like something bigger.
As Simien’s campus-activist protagonists sparred over matters of identity politics as garish as blackface and insidious as misogynoir, his choices behind the camera—though in places indebted to more obvious influences like Spike Lee’s School Daze and Do the Right Thing—just as readily recalled films by Howard Hawks and Sidney Lumet. Such a cinema-literate approach added meta-textual wrinkles to Dear White People’s racial commentary. By framing his Black characters in compositions that evoked influential (and almost entirely white) imagery from the past half-century in cinema, even as those characters debated their lack of representation within that very canon, Simien pushed the movie from provocation into something more like reconstitution. (His Dear White People series for Netflix has been even bolder in this respect, staging its narrative Rashomon-style and nodding to Barry Lyndon in one scene, The Godfather in the next.)
Simien’s up to similar tricks in Bad Hair, restaging classic genre moments as something of a lingua franca to bridge his perspective with those of Hitchcock and Kubrick. Anna’s visit to a sinister salon, where the ominous Virgie (Laverne Cox) sews in her weave, is a snatch of body horror vivid enough to turn David Cronenberg’s stomach. A split-focus diopter is implemented, one of a few homages to De Palma’s Body Double. An axe shows up in the third act, but The Shining is referenced throughout, especially through Kris Bowers’ shrieking, dissonant score. Visual references to everything from Cat People to Psycho abound, with the film’s J-horror debt becoming more pronounced once women with possessed weaves go on the attack, their tresses thrashing around like Gorgon serpents.
But as steeped in Simien’s love of horror as Bad Hair is, it also feels uniquely his, never more than in a subplot that follows the Janet Jackson–esque rise of Sandra (Kelly Rowland), a pop star who frequents Virgie’s salon. Simien was so taken with the character as to write Sandra’s chintzy, oddly convincing pop songs himself. The writer-director chose to set Bad Hair in 1989 both because the weave had become popularized around that time and because, by the tail end of the ’80s, Black musical artists were breaking through to mainstream radio in a manner he found fascinating.
“New jack swing was a whole new musical genre that Black people were inventing, singing over hip-hop beats,” explains Simien. “Just by doing that, suddenly, the personality of the artist superseded their technical precision. It gave way to superstars like Janet Jackson. But what happened is that that exact kind of music just gets sung by white people in the later part of the decade, and just gets called pop music, as if Justin Timberlake, Britney Spears, and the Backstreet Boys invented it. But it’s the same music!”
The film’s Sandra subplot ultimately intersects with Anna’s journey at Culture—ominously rebranded as Cult by its ruthless new boss (Vanessa Williams)—but not before it weaves together even more disparate threads, including one about ancient witches. Bad Hair is ambitious in the extreme and messy by design. It even opens with a James Baldwin quote—“American history is longer, larger, more various, more beautiful, and more terrible than anything anyone has ever said about it”—before getting caught up in the freighted politics of Black women’s hair, all the while interrogating workplace sexism and cultural appropriation, before it becomes a goofy-gory horror freak-out.
Justin Simien, Elle Lorraine, Yaani King Mondschein, Ashley Blaine Featherson, Kelly Rowland, and James Van Der Beek of “Bad Hair” during the Sundance Film Festival on Jan. 24, 2020, in Park City, Utah. Vivien Killilea—Getty Images
As Simien expected, early reviews out of Sundance were split, with some writers praising the ambition of Bad Hair and others criticizing its length and sprawl. Personally, Simien couldn’t be happier the film’s been divisive.
“You don’t realize how the culture is not really ready for certain things until you do them,” he says. “Even with the success of films like Get Out and Us, people are not used to Black stories being told in this way, in this space.
“But as a gay Black man, if I’m just following my obsessions, I’m going to blend shit together that other people aren’t blending,” he adds. “We’re used to horror movies going through the filter of white men and their obsessions and fetishes. And I love them, by the way. Vertigo, to me, is just an exploration of Hitchcock’s fetishes; he was a kinky dude, but it’s such an amazing film. But it’s interesting what happens when people who are typically not allowed to set the tone are given access to genres like this.”
After the success of Dear White People, Simien knew he was interested in exploring further the political minefield of Black hair, and specifically in examining the pressures Black women face to relax and straighten their locks in order to be perceived more favorably in certain settings—especially by white folks in positions of power.
“When the people at the bottom of the capitalist totem pole are only given one or two choices, we go through life thinking, ‘I chose this life. I wanted this,’” he explains. “The truth is, I was only given two choices. I’ve been conditioned to want one of two things. If you’re in a society that says you have to get this weave or lose your job, that’s not really a choice.”
But Simien “didn’t want to make something overly moralistic,” he notes. “‘It’s good to get a weave! It’s bad to get a weave!’ I thought that’d be very boring—and, also, not my place to say.”
So instead, he turned to horror. First, Simien caught up on entries in the sparsely populated “hair horror” subgenre, including a South Korean film, The Wig, and J-horror entry Exte: Hair Extensions, both about women possessed by their new hair. There was no clear American equivalent for such films, which excited Simien—though he knew, as a gay Black man, he couldn’t tell the story by himself. Hunkering down with Black female creatives such as Lena Waithe (who’d later take a role in the film, as Anna’s wry coworker), Tiffany Johnson, and Dime Davis, Simien kept his ears open and a pen ready.
From left: LaFaye Baker, Vanessa Williams, and Yaani King Mondschein in a scene from “Bad Hair.” Tobin Yellan—Hulu
“The more we had those discussions, the more I realized it’s not so much the weave itself that’s the scary part of the movie,” says Simien. “That the weave is possessed could go either way. Sometimes, it can empower Anna, and sometimes it can strip power from Anna. What is scariest is that we can spend our whole lives in a society and never, ever get to experience who we are or who we might be, were it not for the ways the society puts us in these little classifications and forces us to duke it out to get from this box to that box.”
Horror movies have long been concerned with probing social issues, from racism and nuclear terror to consumer culture and conservatism. What’s been missing from the genre, Simien stresses, is a Black perspective on these same structural oppressions, despite how much more adversely communities of color are affected by them.
“If you walk into it knowing it’s a horror movie, you’re subconsciously more at ease to face your own fears,” he says. But with so few Black filmmakers working in horror, the dominant films of the genre have tended to reflect the fears and anxieties of white audiences—leaving everyone else out of frame.
“We’ve been taught to feel ashamed of our internal thoughts and fears,” says Simien. “I look to the jazz musicians and Harlem Renaissance poets a lot for inspiration. Because when jazz was being figured out in America or the Renaissance was happening, they were doing what Black filmmakers are doing right now: taking baby steps into the larger mainstream to have these conversations that were happening, in private, in darkened corners, in such a way that we didn’t realize others of us were feeling this same way.
“The shit we have to unpack about Black culture is really complicated,” he adds. “And social horror, at its core, it lets us put a lot of really complicated things on top of each other. Including Halloween III! Because, again, horror has really just been a bunch of white dudes being free as hell as filmmakers. Now, I want that.”
Bad Hair comes out on Hulu Oct. 23.


fortune--2020-10-22--Quibi is out. But other companies will still try to build in its place

This is the web version of Term Sheet, a daily newsletter on the biggest deals and dealmakers. Sign up to get it delivered free to your inbox.
Quibi, the heavily funded and heavily doubted short-form streaming service founded by former Disney executive Jeffrey Katzenberg, officially threw in the towel Wednesday‚ a mere six months after its launch.
In its brief life, the company struggled to attract and keep viewers with its roster of content, even with $1.75 billion in funding. The company has reportedly sought to sell itself, but failed to find a buyer.
“We feel that we’ve exhausted all our options,” Katzenberg and CEO Meg Whitman wrote a Medium post. “As a result we have reluctantly come to the difficult decision to wind down the business, return cash to our shareholders, and say goodbye to our colleagues with grace. We want you to know we did not give up on this idea without a fight.”
The company will still need that fighting spirit: It won’t be an easy wind down. Of the $1.75 billion, some $350 million will be returned to investors, according to the Wall Street Journal.
You’ve probably already encountered the deluge of takes on Quibi’s remarkably quick burnout. Some assign blame to billionaire hubris, some to an overly competitive streaming ecosystem, to a lack of clear strategy (why watch Quibi, when you can watch YouTube for free?), to lackluster content, to too much funding, to a lack of experimentation, and, of course, to the pandemic. The reality probably lies somewhere in between all of the above.
As the story developed Wednesday, I was surprised to see my inbox full of streaming and video CEOs being offered up for comment on Quibi’s downfall—CEOs that weren’t of the Netflixs, Amazons, YouTubes, or Twitches of the world. On one hand, that can be read as opportunistic: Startups in the space are hoping for recognition by riding on the Quibi news cycle. On the other, it’s optimistic: Founders are still seeing opportunity to build in a space that has been locked in by the aforementioned giants.
The pandemic has led to a boom in video streaming. But is that enough to shift consumers to a plethora of options? I’m not so sure about that.
STRIPE INVESTS IN A CARTA COMPETITOR: The payments darling and fintech investor led a $10 million investment in Pulley, a new competitor to equity management platform Carta. Pulley hopes to offer an alternative with better user experience to the now $3.1 billion company. The investment adds to the many fintech bets Stripe has made in recent months, and is notable for Stripe’s personal experience with cap table management software. The company is a customer of Morgan Stanley’s Shareworks. Read more.
Lucinda Shen
Twitter: @shenlucinda
Email: lucinda.shen@fortune.com
VENTURE DEALS
- Arctic Wolf, a Sunnyvale, Calif.-based cyber security company, raised $200 million in Series E funding valuing it at over $1 billion. Viking Global Investors led the round and was joined by investors including DTCP.
- Bind Benefits, a Minneapolis-based health insurance company, raised $105 million in Series B funding. Investors included Ascension Ventures.
- Faire, a San Francisco-based wholesaler, is in talks to raise over $100 million in Series E funding at a valuation of over $2 billion, per Bloomberg. Its investors have included Lightspeed Venture Partners, Founders Fund, Forerunner Ventures. Read more.
- Rokt, a New York-based e-commerce technology company, raised $80 million. TDM Growth Partners led the round and was joined by investors including Square Peg.
- Be Biopharma, a Cambridge, Mass.-based company developing B cells as medicines, raised $52 million in Series A funding. Atlas Venture and RA Capital Management led the round and was joined by investors including Alta Partners, Longwood Fund and Takeda Ventures.
- Azura Ophthalmics, a clinical-stage company developing innovative therapies for Meibomian gland dysfunction and related eye diseases, raised $20 million. Investors included OrbiMed, TPG Biotech, Brandon Capital’s Medical Research Commercialization Fund, and Ganot Capital.
- Klar, a Mexico City-based fintech, raised $15 million in Series A funding. Prosus Ventures led the round.
- Sym, a Boston and San Francisco-based platform for engineers, raised $9 million in Series A funding. Amplify Partners led the round and was joined by investors including Gerhard Eschelbeck (former CISO of Google), Sri Viswanath (CTO of Atlassian), and Jason Warner, (CTO of GitHub).
- Budderfly, a Shelton, Conn.-based energy efficiency platform, raised $7.8 million in funding. Edison Partners and Balance Point Capital co-led the round and were joined by investors including Connecticut Innovations.
- DANCE, a Berlin-based e-bike subscription company, raised €15 million in Series A funding. HV Holtzbrinck Ventures led the round.
- Intellimize, a San Mateo, Calif.-based website optimization company, raised $12 million in additional Series A funding. Addition led the round and was joined by investors including Amplify Partners, Homebrew, and Precursor Ventures.
- WoHo, a Cambridge, Mass.-based construction startup, raised $4.5 million in seed funding. The Engine led the round.
- Textel, a St. Louis-based provider of a texting platform for contact centers, raised $4 million in Series A funding. Cultivation Capital led the round and was joined by investors including Stout Street Capital and Capital Midwest Fund III.
- Secureframe, a San Francisco, Calif.-based provider of compliance software, raised $4.5 million in seed funding. Base10 Partners and Gradient Ventures led the round and were joined by BoxGroup, Village Global, Soma Capital, Liquid2, Chapter One, Worklife Ventures, and Backend Capital.
- Pillar, a New York-based maker of a platform for storing family information, raised $1.5 million in extended seed funding. Kleiner Perkins led the round.
PRIVATE EQUITY
- Carlyle and KKR have expressed interest in taking over Canyon Bicycles, a German bicycle company. Financial terms weren't disclosed. Read more.
- Brookfield Asset Management and Carlyle Group are bidding for Siemens AG’s mechanical drive unit, per Bloomberg. The deal could be worth 2 billion euros ($2.4 billion). Read more.
- Bain Capital and Cinven are joining to bid on Switzerland-based Lonza Group’s specialty ingredients unit, per Bloomberg. The deal could be worth $3.9 billion, per Bloomberg. Read more.
- Clearview Capital Fund IV recapitalized Capitol Imaging Services, a Metairie, La.-based provider of outpatient diagnostic imaging services. Financial terms weren't disclosed.
- Searchlight Capital Partners and Abry Partners acquired Clearspan from Mitel. Financial terms weren't disclosed.
- Vista Equity Partners invested in SmartBear, a Somerville, Ma.-based provider of software development tools. Financial terms weren't disclosed.
- H.I.G. Capital agreed to acquire Capstone Logistics, a Georgia-based supply chain logistics company, from The Jordan Company. Financial terms weren't disclosed.
- HarbourVest Partners acquired a minority stake in Finalsite, an education technology provider. Financial terms weren't disclosed.
- Madison Dearborn Partners invested in Carnegie Learning, a Pittsburgh maker of artificial intelligence for education and formative assessment. Financial terms weren't disclosed.
- Levine Leichtman Capital Partners acquired Ducares B.V., a Netherlands-based provider of feed testing services, from First Dutch Innovations. Financial terms weren't disclosed.
EXITS
- Advent is looking to sell Mediq, a Dutch medical supplier, in a deal that could raise 1.2 billion euro ($1.4 billion), per Reuters citing sources. Read more.
- Lightyear Capital and the Ontario Teachers' Pension Plan agreed to acquire Allworth Financial from Parthenon Capital Partners.
OTHER
- New Enterprise Associates, the venture capital firm, is in talks to sell a minority stake in itself, per Bloomberg. Read more.
- Sun Life Financial (NYSE: SLF) plans to acquire a majority stake in Crescent Capital Group, a Los Angeles-based alternative credit investment manager for up to $338 million.
- Moody’s acquired Acquire Media, a financial services-focused content provider, from Naviga, a portfolio company of Vista Equity Partners. Financial terms weren't disclosed.
- Uber (NYSE: UBER) offered to acquire Daimler and BMW's joint mobility services company Freenow, for €1 billion ($1.2 billion). Read now.
IPO
- Ant Group, the fintech giant backed by Alibaba, has won the approval from Chinese securities watchdogs for its $35 billion dual-listing. Read more.
- ThredUp, an Oakland, Calif.-based resale clothing company, filed confidentially for an IPO. Investors including Trinity Ventures and Redpoint Ventures back the firm.
- McAfee, the cybersecurity company, raised $620 million in its IPO.
F+FS
- T-Mobile (NASDAQ: TMUS) announced T-Mobile Ventures, an investment fund focused on early and emerging growth companies developing 5G products and services for the T-Mobile network.


fortune--2020-10-22--Is it time for a regulatory revamp in Congress?

Two government officials yesterday admitted what many Big Tech critics have argued for years: Lawmakers and regulators have done a bad job of managing monopolies.
Chairman of the House Judiciary Committee’s antitrust committee David Cicilline and Federal Trade Commissioner Rohit Chopra spoke at a virtual event hosted by the American Economic Liberties Project, a lobbying group focused on battling monopoly power. They suggested that the U.S. needs new laws to prevent companies from engaging in anticompetitive behavior as well as improved regulatory enforcement to crack down on companies that break the rules.
“We need to end the era of weak enforcement,” Chopra said on the Zoom call.
Both Congress and regulators have become increasingly concerned with Big Tech’s growing power and their history of squashing and scooping up rivals. And the battle against Big Tech has bipartisan interest, though in some cases for different reasons.
Already, the antitrust committee had released a report urging for sweeping regulatory changes following its 16-month investigation into Apple, Amazon, Facebook, and Google. The committee suggested breaking up the companies, prohibiting them from giving themselves or others preferential treatment, and strengthening antitrust regulatory bodies and laws.
Now, a couple of weeks later, the DOJ has filed its landmark lawsuit against Google regarding its dominance of search and search ads. It, too, listed recommendations such as splitting up the company or prohibiting certain anticompetitive practices.
But investigations aside, Cicilline said Congress has fallen behind on its duty to create modern laws and ensure regulatory agencies have enough resources to do their jobs. And Chopra said regulators should be doing more within the confines of the current laws.
Recent rulings have benefited tech companies, Chopra added. For example, YouTube and Google agreed to pay the FTC a $170 million settlement for collecting personal information from children on YouTube without parental consent. Factoring in both the settlement and the data that was collected, Chopra believes YouTube ultimately made money from their actions.
Also, the FTC’s $5 billion settlement with Facebook last year gave CEO Mark Zuckerberg and COO Sheryl Sandberg immunity from wrongdoing, Chopra said. “A settlement with a fine and some paperwork is not going to fix the problem,” he said. “It’s only going to incentivize bad behavior.”
Congress’ antitrust investigation is its first in 50 years. If regulators and lawmakers want to make the sweeping changes that Cicilline and Chopra suggest, they have quite the tall task ahead.
Danielle Abril
@DanielleDigest
danielle.abril@fortune.com
***
On the latest episode of our Brainstorm podcast, we explore the impact of social media on the U.S. election. Russian interference in the 2016 election was a wake-up call for many. As Brainstorm host Michal Lev-Ram says, it was the first time the public realized social media platforms could do more harm than good in the world.
Fast forward to today. What have the platforms done to battle misinformation? How effective have their changes been? And how will all of this impact the 2020 election?
Lev-Ram, along with co-host Brian O’Keefe, turn to three experts for answers: tech investor turned activist Roger McNamee, MIT Professor and author of “The Hype Machine,” Sinan Aral, and Data Sheet’s own Danielle Abril.
Listen to the episode here.
NEWSWORTHY
RIP Quibi. Streaming mobile video service Quibi, led by Meg Whitman and Jeffrey Katzenberg, once touted itself as an exciting new form of entertainment that boasted “quick bites,” or shows and movies told in five- to 10-minute chapters. But the service, which raised $1.8 billion from investors including 21st Century Fox and MGM Studios, never lived up to its hype. The service has hired a restructuring firm to explore its options, and on Wednesday, the worst outcome came to fruition: Quibi is shutting down.
TikTok tackles hate. The social media network that became popular for its teen dance challenges is now dealing with a problem familiar to some of its more mature competitors: hateful content. On Wednesday TikTok announced that it’s expanding its hate speech policies that already prohibit neo-Nazism and white supremacy to include “neighboring ideologies” like white nationalism and genocide theory. The service also said it will crack down on coded language and symbols TikTokers may use to spread hate speech.
¡Qué horror! Conspiracy theories have made their way into Spanish media and are being spread to Spanish speakers across the nation on social media, The New York Times reports. That includes messages aimed at pitting Latino and Black voters against each other, using racist language to villainize people who protest police brutality. And as they do with misinformation in English, Internet services are struggling to police the harmful content.
New neighbor. Facebook is developing a new feature called Neighborhoods that will provide users a private space to connect with their neighbors. Sound familiar? That’s probably because NextDoor, which is considering filing for an initial public offering, already does that. Facebook told Bloomberg it's testing the feature in Calgary, Canada. True to form, the social media giant aims to recreate the success of a soon-to-be rival on its own service.
Difficulty with diversity. A month after the rise of the racial justice movement, Microsoft announced that it planned to double the number of Black managers and senior leaders in the U.S. over the next five years. But in its latest diversity report, the company revealed that it still has a long way to go reach that goal. The report shows that in the past year, Microsoft only increased the representation of Latinos and Black people by .3 percentage points, with both groups heavily underrepresented in management roles.
FOOD FOR THOUGHT
Racism and hate speech has been an ongoing problem for Facebook. But the issue became particularly troubling following the murder of George Floyd in Minneapolis, according to a report from the Anti-Defamation League. Derogatory anti-Black posts quadrupled on Facebook in June from 20 posts per month to 80 posts per month and remained consistent until Sept. 1.
The report also revealed that, between January and September, derogatory comments accounted for 7% of posts referring to Black Americans and 9% of posts referring to Jewish Americans on Facebook pages and public groups.
“Tech companies should design their products to prevent hateful content from multiplying inside defined online spaces like Facebook groups as well as hate movements from ‘breaking out’ into public social media,” the report reads. “This is not simply a question of stricter moderation, but will likely require additional safety features and changes to existing aspects of these platforms.”
IN CASE YOU MISSED IT
Tesla beats the Street again as profits, deliveries, and margins surge By David Z. Morris
Stripe invests in a Carta competitor, Pulley By Lucinda Shen
PayPal will soon offer Bitcoin and other cryptocurrency purchase options By David Z. Morris
The blockchain industry faces a moment of truth as high-profile projects go live By Jeff John Roberts
BEFORE YOU GO
Some encouraging news during an exhausting election season: Thousands of young women are stepping up to serve as poll workers after the pandemic created a shortage, according to nonprofit news outlet The 19th. Many of these young women are 16 and 17 years old, not yet old enough to vote, and they’re pulling 14- and 16-hour shifts. Talk about dedication to democracy.
Emily Ramshaw, co-founder and CEO of The 19th, tweeted the story on Wednesday, asking: “Want to get goosebumps?” Goosebumps indeed, Emily.


fortune--2020-10-22--76% of American CEOs say they may shrink office space

Among CEOs, 76% told Fortune their company will need less office space in the future. And 28% say they’ll need a lot less office space. That’s the finding from a Fortune survey of 171 CEOs in collaboration with Deloitte between September 23 to 30.*
If those reductions come to fruition, it could have a big impact on everyone from restaurant owners in central business districts to the financial institutions holding commercial real estate.
CEOs are finding that without a draining commute or office distractions, some employees are thriving from remote work. Among CEOs we surveyed, 40% say virtual working has increased employee productivity.
On the flip side, 31% say it has decreased productivity. Fortune Analytics has found the results are split among age groups, with Gen Z struggling the most to stay productive while working remotely. But so are some of their older colleagues: Many parents are challenged by increased childcare responsibilities at home due to virtual schooling. The employees eager to get back to their desks will be the saving grace for many office buildings.
It’s not quite doomsday, either way: If corporate America does scale back on space, it might turn out to be a modest cutback. Gary Norcross, CEO of Fidelity National Information Services (No. 303 on the Fortune 500), told Fortune that although the new normal will involve more WFH, small satellite offices will be the most likely to go.
*Methodology: Fortune surveyed CEOs in collaboration with Deloitte between September 23 to 30. A total of 171 CEOs responded to the survey, which was sent to Fortune CEO Community. That Fortune CEO Community includes Fortune 1000 CEOs, Global 1000 CEOs, and CEOs who attend Fortune conferences.


fortune--2020-10-22--How Alicia Boler Davis helped guide Amazon through the pandemic

This is the web version of The Broadsheet, a daily newsletter for and about the world’s most powerful women. Sign up to get it delivered free to your inbox.
Good morning, Broadsheet readers! Quibi nears its end, Kristen Welker is set to moderate tonight’s presidential debate, and we learn more about one of newbies on this year’s Fortune MPW list. Have a terrific Thursday.
-Engineering Amazon’s future. One of the most interesting aspects of putting together our annual Most Powerful Women lists is learning more about the newbies—i.e. the executives making their debut on the ranking.
This year, that cohort includes Alicia Boler Davis, a 25-year GM vet and engineer who joined Amazon as VP of global customer fulfillment last spring and lands at No. 12 on our list. In his new profile, Fortune’s Aaron Pressman establishes her purview—hundreds of Amazon warehouses worldwide, as well as customer service—as the heartbeat of the retail giant, making Boler Davis Amazon’s “pacemaker.”
A complex job even at the simplest of times, Boler Davis’s role became all the more difficult when the pandemic hit. Orders surged, supply chains strained, and the workers who staff the company’s network of warehouses were suddenly at risk of exposure to COVID-19. In his piece, Aaron dives into how Boler Davis tackled these challenges—meeting some with flying colors and others with mixed results.
Ultimately, her efforts have made her a rising star at Amazon, landing her a spot on the S-team, the select inner circle that advises CEO and founder Jeff Bezos. (She’s the first Black person and fourth woman ever named to the group.) And Aaron reports that some analysts are speculating that she may rise further next year, in a reshuffling after the planned retirement of Jeff Wilke, CEO of consumer at Amazon and Bezos’s longtime No. 2.
To learn more about Boler Davis—and what might come next for her, read the full profile here.
Kristen Bellstrom
kristen.bellstrom@fortune.com
@kayelbee
Today’s Broadsheet was curated by Emma Hinchliffe.
ALSO IN THE HEADLINES
- Shortform, short-lived. Quibi, the shortform video startup headed by CEO Meg Whitman, is shutting down. The company raised $1.75 billion in funding but fell far short of expectations after its debut in April. Fortune
- Debate watch. NBC News journalist Kristen Welker is scheduled to moderate tonight's presidential debate. After a week of criticism lobbed at the anchor by President Trump, her colleagues say she's well-prepared for the task. She's the first Black woman to take on the role since 1992. Associated Press
- Protest movement. Novelist Chimamanda Ngozi Adichie writes about the protests in Nigeria against SARS, the Special Anti-Robbery Squad; social media video earlier this week captured soldiers shooting into a crowd of peaceful demonstrators. New York Times
- Netflix meets Shondaland. Shonda Rhimes is on the cover of The Hollywood Reporter, where the showrunner discusses her move from ABC to Netflix—the final straw that got her to make the jump was a comment from an ABC exec over Disneyland passes—and the first of her projects airing at the streaming service in December. "I spend a lot of time going, like, 'We should have made 50 shows by now,'" Rhimes says of taking three years to debut her material—a departure from her usual speedy pace. The Hollywood Reporter
MOVERS AND SHAKERS: Time promoted Michelle Evers to VP, partnerships for the U.S. west coast and midwest. A Cloud Guru hired Mendix chief people officer Lorraine Vargas Townsend in the same role.
IN CASE YOU MISSED IT
- Costly mistakes. Economist Dana Peterson began in May to try to quantify the cost of racism to the U.S. economy. She found that closing racial gaps would have added $16 trillion to the country's economic output in the past two decades. Peterson, who left her role at Citigroup for the Conference Board, says the project "gave [her] a chance to talk about everything." Bloomberg
- Stacey on the South. In an op-ed, Stacey Abrams writes that voters in the South must think about access to health care as they head to the polls over the next two weeks. In a region where politicians have rejected Medicaid expansion, voters must remember the policies—and not just the candidates—on the ballot, the former gubernatorial candidate argues. The Root
- In the line of duty. The Army ruled that the death of Vanessa Guillen, who was found dismembered after she had reported sexual harassment by a fellow solider, was in the line of duty. The determination allows Guillen's family to receive her Army benefits. New York Times
- Unhealthy environments. Three physicians who sued Mount Sinai Health System for sex, age, and race discrimination in 2019 write about their experience in this piece. The women say that years of demotions, unequal pay, denied opportunities for advancement, and menial tasks "sank [their] careers." Mount Sinai and other named defendants have denied any wrongdoing. STAT News
ON MY RADAR
Pope Francis backs same-sex civil unions Politico
Being a White House reporter wasn’t supposed to be dangerous. Then came COVID-19 Elle
Placing women on a different sort of pedestal New York Times
PARTING WORDS
"I shouldn’t be the first, you know what I mean? Why is it now? It’s like you guys are so far behind."
-Model Liya Kebede on moments in her career when she was the first Black woman to achieve something


fortune--2020-10-22--Here’s what Amazon’s new Echo speakers are like

Amazon’s latest Echo looks markedly different—like an oversize shot put rather than the canister design of its predecessor. But the smart speaker still retains the core features that the company hopes will lure people to buy its other smart-home gadgets.
For the past couple of days I’ve been trying out the new Echo, which debuted on Thursday. It’s a fun device, and contrary to what I thought, the novelty of asking the speaker to play a song didn’t get old. Although it’s no replacement for my existing stereo, I’d be comfortable using it as an extra speaker for the bedroom.
A few weeks ago, while showing off the new Echo, Tom Taylor, Amazon senior vice president of Alexa, told Fortune that one of the reasons for the Echo’s redesign was to allow sound to better disperse through a room. And indeed, when I placed the Echo on my living room coffee table to play songs, I didn’t notice any sharp drop in volume as I walked around. It generally sounded good wherever I was standing, as long as I wasn’t too far away.
Setting up the Echo is relatively easy. All I had to do was to download the Alexa app and tie it to my Amazon account.
Activating the device requires only saying “Alexa,” at which point a colorful ring lights up on the speaker’s base, letting you know that Alexa is listening and ready to take a command. While I didn’t mind the bright blue light, my wife found it a bit gaudy.
The Echo’s biggest rival is arguably the Google Nest Audio speaker, which the search giant debuted earlier this month. Both speakers cost $100, are dependent on their respective company’s digital assistants, and have undergone redesigns to make them look sleeker and sound better than their predecessors.
At least to my ears, the Nest Audio speaker produced a clearer sound than the Echo, and I was able to pinpoint individual notes and sounds easier. For instance, the percussion and light cymbal hits from John Coltrane’s “My Favorite Things” sound more distinct playing through the Nest Audio than the Echo.
Music generally sounds flabbier through the Echo compared to the Nest Audio. Paul McCartney’s bass lines from the Beatles’ “Cry Baby Cry,” for instance, sound muffled coming from the Echo, but they were clear from the Nest Audio.
Fans of bass may like how the Echo produces a heavier low end than the Nest Audio. The funky disco beats of “Rain on Me” by Lady Gaga and Ariana Grande, for example, sounded slightly louder from the Echo than the Nest speaker. But that louder bass comes with a tradeoff; it sounded more muffled.
Where the Echo bests Nest Audio is the capabilities of the Alexa voice-activated assistant and its numerous “skills” that developers have created. As other reviewers have previously noted, people can use Alexa for more complex tasks at home like automatically turning on Internet-connected lights if the assistant hears a fire alarm.
If I had to choose between the Echo or the Nest Audio, it would come down to how much I would use the speakers. If I wanted to eventually buy more smart home gadgets and have my smart speaker act as the central command center, I’d probably go for the Echo speaker because there’s a broader range of options available.
But as a speaker, the Nest Audio overall sounds better to my ears.


fortune--2020-10-22--A possible semiconductor shortage looms over Huawei’s new smartphone launch

Chinese telecommunications giant Huawei Technologies released its new Mate 40 smartphone series on Thursday in a live-streamed global launch.
The Mate 40 is the latest in Huawei’s Mate series of smartphones, which come equipped with Leica camera lenses. The new series includes the Mate 40, Mate 40 Pro, Mate 40 Pro+, and Mate 40 RS Porsche. The phones feature numerous camera upgrades, better graphics, faster processing speeds, a longer battery life, and faster charging speeds. The Pro and Pro+ feature a hands-free device control that lets users swipe through their phone without touching it, by hovering in the air over the phone.
The Mate 40 is the first smartphone Huawei has launched since the U.S. government imposed new rules in August that banned semiconductor makers who rely on U.S. technology from selling chips to Huawei. And the uncertainty imposed by the U.S. restrictions loomed over the Mate 40 debut.
Semiconductor chips are an essential component of smartphones. Huawei has a stockpile of chips, but that stockpile will eventually run out—possibly by March or April 2021, according to a Counterpoint Research analysis. The Mate 40 will be Huawei’s last phone to use Kirin chipsets, produced before the U.S. restrictions came into effect.
It’s not clear if Huawei will be able to obtain the chips it needs to produce phones in the future, and that unknown could hurt the company’s market share in and outside China, its largest market, said Neil Shah, analyst at Counterpoint. Huawei declined to comment.
Shah expects the Mate 40 to sell well in China, where Huawei has a nearly 50% share of the smartphone market. Huawei’s strong performance in China “has offset the decline in shipments outside of China,” where Huawei sales have slumped because its phones no longer support Google apps—including Google Maps, Gmail, and the Play Store. A 2019 U.S. government rule largely banned U.S. companies like Google from working with Huawei; Huawei has been unable to secure the license needed for its phones to use Google services.
In the longer term, domestic rivals in China could benefit from Huawei’s dwindling chip supply, as consumers grow wary of buying a phone from a brand with an uncertain future. They may start to wonder, for example, if they will be able to procure a replacement part if their Huawei phone breaks, Shah said.
In China, domestic competitors like Oppo and Vivo could vie for some of Huawei’s smartphone market share when it comes to higher-end devices. On the lower end of the price range, Huawei-owned brand Honor could face competition from Xiaomi.
After Huawei exhausts its stockpile of chips, said Shah, “it’s going to be very difficult for Huawei to have components inventory in house to manufacture phones unless the [U.S.] ban and restrictions ease.”


fortune--2020-10-22--What will it take for Beijing to meet its climate goals? Changing how it governs entirely

On Sept. 22, Chinese President Xi Jinping declared to the United Nations that China would become carbon neutral by 2060, a bold pledge for the world’s largest carbon emitter.
Xi’s pronouncement drew praise and scrutiny from experts. Some believe that China is showing its readiness to assume a leadership position on global climate initiatives, while others doubted the sincerity of Xi’s vow.
Skepticism aside, China’s ability to meet its pledge rests on whether its leadership is willing to fundamentally change how it governs, argues Yanzhong Huang, senior fellow for global health at the Council on Foreign Relations and author of the new book Toxic Politics: China’s Environmental Health Crisis and Its Challenge to the Chinese State.
In an Eastworld Spotlight conversation with Fortune, Huang argues that the Chinese Communist Party has long derived its legitimacy from its ability to grow its economy, which often comes at the expense of the environment. The party ensures economic dividends and earns the people’s support in return. China may only succeed at protecting the environment by embracing a different governing philosophy; one based on rule of law, he says. Huang also explains that the COVID-19 pandemic has tarnished China’s global image, but its vaccine diplomacy is a chance to assume more leadership on the global stage. The conversation below has been edited for length and clarity.
Fortune: Will China have to sacrifice economic growth to meet climate targets?
Yanzhong Huang: Despite the strong commitment to pollution control, to tackle climate change, the dilemma between economic growth and environmental protection is continuing in the Xi Jinping era. This dilemma has been reinforced in China’s post-COVID era, as local governments try to stimulate economic growth to make up losses incurred during COVID. We’ve actually seen the permits issued to coal-fired power plants increase in 2020, more than those that were issued in 2018 and 2019.
What changes does China need to make to meet its 2060 carbon neutral target?
They do have strong incentives to tackle climate change and environmental health issues. But the problem is that unless they are willing to fundamentally shift their legitimacy base, which focuses on delivering economic growth and [manufacturing exports], to a rule of law–based legitimacy, they will still have strong incentives to pursue economic growth to the detriment of the environment.
Does the U.S.’s lack of participation in international agreements like the Paris climate agreement and the COVAX vaccine initiative open up space for China on the global stage?
Exactly, it is not good news for U.S. global leadership. If you don’t want to engage with China, then you basically allow Beijing to be the standard-bearer or pace-setter in handling global challenges like the environment, pollution, or climate change.
How has China’s role in the world changed amid the pandemic?
China’s relationship with the rest of the world, and especially with the West, has fundamentally changed [amid COVID-19]. We see that in surveys, and even Chinese studies, which show how international public opinion has become significantly more negative towards China. China’s vaccine diplomacy, and especially its recent decision to join COVAX, is China’s response to international criticism, and [it’s] trying to improve its tarnished image during the pandemic. That is also good news for global equitable access to vaccines, but [China’s joining] is not good news to the U.S., unless it’s also willing to be part of this process.
Will China produce a successful vaccine? If so, who will take it?
My educated guess is that China will announce successful development of at least one of their vaccines. They have already been using vaccines to vaccinate hundreds of thousands of people in China, and they are certainly going to use the vaccines as a tool for diplomacy, allowing some countries to have priority access.
I expect we will see a divided world in terms of vaccine use. You will find that OECD [Organization for Economic Cooperation and Development] countries will prefer U.S.-made vaccines, and many developing countries will have no other choice but to use Chinese-made vaccines. A divided vaccine world is not necessarily a bad thing as long as the vaccines prove safe and effective. It’s just that the U.S. and China could have collaborated with each other in making vaccines a global public good. That would have done a better job in helping the world get out of the pandemic sooner rather than later.
This interview is part of Eastworld Spotlight, a series of conversations on matters of business, tech, and finance with executives, experts, entrepreneurs, and investors in Asia. Subscribe to Fortune’s Eastworld newsletter to get them in your inbox.


fortune--2020-10-22--I’m shocked—shocked!—that Donald Trump has a Chinese bank account

This is the web version of Eastworld, Fortune’s newsletter focused on business and technology in Asia. Subscribe here to get future editions in your inbox.
This week we learned, via the New York Times, that President Donald Trump has invested in a handful of small Chinese companies, has an account with a Chinese bank, and paid nearly $200,000 in taxes in China while pursuing licensing deals there from 2013 to 2015.
Trump’s political rivals were quick to exploit the report. “Can you imagine if I had a secret Chinese bank account when I was running for re-election?” asked Trump’s White House predecessor, Barack Obama, in mock horror. “They would’ve called me Beijing Barry!”
House Speaker Nancy Pelosi called Trump’s newly disclosed account a “serious national security issue.“
It’s not hard to understand the gleeful tone of Obama’s taunt. Trump has excoriated American companies for doing business in China for years. And as Joe Biden emerged as front-runner in the Democratic primaries, Trump has sought to portray the former vice president as “soft on China,” and discredit his son Hunter as financially beholden to Beijing.
“China ate your lunch, Joe,” Trump sneered in the first presidential debate.
In the aftermath of that debate, Washington Post columnist Josh Rogin opined that, “for all its confusion and chaos,” one thing the encounter highlighted vividly is that our national policy debate on China is “fundamentally broken.”
Rogin’s right. Obama’s faux outrage over Trump’s “secret China bank account” underscores the point.
The Times reports that the bank account was held by Trump International Hotels, not Trump himself. Alan Garten, a lawyer for the Trump Organization, declined to identify the Chinese bank, but told the Times that the account had been opened with a U.S. branch of the lender in order to pay local taxes associated with efforts to do business in China. Garten said the company opened the account after establishing a business office in China “to explore the potential for hotel deals in Asia,” but that “no deals, transactions or other business activities ever materialized and, since 2015, the office has remained inactive.”
Does the Times‘ “revelation” that Trump opened an account with Chinese bank and chased licensing deals in China before he became president show the cynicism and hypocrisy of his anti-Chinese bombast since becoming a politician? Yes. Is there any reliable evidence to support Trump’s assertions about Hunter Biden’s business dealings in China? No. Should Trump have disclosed his own Chinese business dealings when he declared his candidacy in the last election? Of course.
But should we be shocked, appalled, outraged that, before he became a presidential candidate, Trump sought, as the Times puts it, “to join the myriad American firms that have long done business” in the world’s second-largest economy? Absolutely not.
At the risk of stating the obvious: Of itself, doing business in China is not a crime. It shouldn’t automatically be deplored as unpatriotic, a national security threat, or morally reprehensible.
And yet one would never guess that from the rhetoric on the U.S. campaign trail, where any association with China now is decried by leaders from both parties. As Rogin notes: “China has become so politicized that politicians can seemingly talk about it only as an attack line—even though both parties know their voters want substantive responses to China’s malign actions….”
This week brought more evidence (as if it were needed) that American businesses can’t afford to indiscriminately “decouple” from China. China’s third-quarter GDP numbers, announced Monday, showed China’s economy expanded by 4.9% compared to the same period last year—slower than the 6% pace of the second quarter but enough to make it the world’s only major growth engine. The International Monetary Fund upgraded its forecast for China’s full-year GDP to 1.9%; the Fund expects the U.S. to contract by 4.3% in 2020. Next year, the IMF predicts growth in China to rise to 8.2%, compared to a gain of 3.1% for the U.S.
Meanwhile, news of Trump’s Chinese bank account and tax payments has inspired much mirth on Chinese social media, where users joked that “Comrade Trump” was just paying his Communist Party membership dues.
This week’s Eastworld Spotlight conversation is with Yanzhong Huang, a senior fellow for global health at the Council on Foreign Relations. Huang tells us why China will struggle to meet its ambitious target to be carbon neutral by 2060.
More Eastworld news below.
Clay Chandler
clay.chandler@fortune.com
This edition of Eastworld was curated and produced by Grady McGregor. Reach him at grady.mcgregor@fortune.com.
Eastworld news
Fox-conned
In Wisconsin, locals hoped the Foxconn factory that President Trump claimed credit for would help the state regain its manufacturing prowess. Instead, roughly three years after Foxconn announced the project, and Wisconsin agreed to heavily subsidize it, neither the company nor the state has anything meaningful to show for it. Foxconn ultimately decided that going through with its initial manufacturing plans would be too costly, and instead hired workers to do nothing in order to meet tax-break requirements. The company also spent years “jumping from idea to idea—fish farms, exporting ice cream, storing boats—in an increasingly surreal search for some way to generate money from a doomed project," according to The Verge.
The cobalt vault
China has a stranglehold over cobalt, a mineral used in lithium-ion batteries that may be the key to the future of the global electric vehicle industry. Cobalt is mined almost exclusively in the Democratic Republic of Congo, but nearly two decades ago China made a long-term bet to invest in Congo cobalt mines and build its own cobalt refining facilities in China. Now, companies like Tesla are seeking to reduce their dependence on Chinese cobalt, but the cobalt-free batteries still underperform their cobalt-based competitors. With the global electric vehicle market expected to boom in coming years, China’s cobalt leverage may give it an upper hand. The Wire China
No rest in Thailand
On Wednesday, Thailand Prime Minister Prayuth Chan-ocha said that he would make the “first move to de-escalate” tensions between the government and pro-democracy protesters, and announced that he would lift Bangkok’s week-old state of emergency order that was aimed at quelling the protest movement. In the last week, thousands of activists have defied Chan-ocha’s emergency order by taking to the streets; they continued to call for his resignation, along with a slate of other reforms to Thailand’s government and monarchy, even after his latest concession. New York Times
'Not anybody's guinea pig'
This week, Brazil authorities gave a vote of confidence to China’s Sinovac vaccine maker, and Sao Paolo Governor Joao Doria said that Sinovac’s CoronaVac candidate was the “safest” and “most promising” of the numerous vaccines being tested in Brazil. On Wednesday, Brazilian President Jair Bolsonaro shot back at the governor, writing on Twitter that Brazil wouldn’t be “anyone’s guinea pig” and wouldn’t purchase the vaccine. Fortune
Xi's rise to power
Chinese President Xi Jinping has arguably amassed more power than any Chinese leader since Mao Zedong, the founder of modern-day China. But, unlike Mao, Xi is a “disciplinarian, not a revolutionary,” the Los Angeles Times writes in a profile of China's president this week. “[Xi] speaks in Marxist terms of class struggle and uses Maoist tactics such as self-criticism and rectification,” the LAT writes. “But his brand of communism also promotes Confucius and e-commerce.” Los Angeles Times
Coronavirus by country
Singapore
Since June, Singapore has been in what it calls ‘phase two’ of its reopening process. Businesses like malls and restaurants are largely reopened, but they must adhere to restrictions like limits on group gatherings and early closing hours. Now, as Singapore’s new COVID-19 cases dwindle to just a handful per day, the city is making plans for a full economic reopening. But officials there say the re-opening may hinge on whether Singaporeans become more willing to be tracked on their smartphones. Currently 45% of Singapore residents are on TraceTogether, the government-run contact tracing app. Officials say that 70% may need to download it before the city considers further easing of social-distancing rules, such as raising group gathering limits and re-opening more entertainment venues like nightclubs and karaoke parlors. SCMP
Markets and movers
Ant Group — The Alibaba-backed Chinese fintech firm won final approval from Chinese regulators for its upcoming blockbuster dual IPO in Hong Kong and Shanghai. Ant Group is reportedly aiming to raise $35 billion, which would make it the world’s largest ever debut. Reuters
Cathay Pacific – Hong Kong’s flagship airline is cutting 8,500 jobs and closing down its subsidiary, Dragon Air, as it endures heavy losses from the pandemic, the company announced this week. “The future remains highly uncertain, and it is clear that recovery is slow,” Cathay said on Wednesday. Fortune
Renrenche – The Chinese online car dealer, which was once one of the country’s hottest tech unicorns and valued at $1.4 billion, may be sold for just over $1,000 as it faces bankruptcy amid the downfall of China’s once-booming sharing economy. Bloomberg
Didi Chuxing – On Tuesday, Reuters reported that China’s largest ride-hailer is considering a debut in Hong Kong in the first half of 2021 and may target a $60 billion valuation in the IPO. Didi Chuxing denied the report to Chinese state media. Reuters
Huawei – Sweden became the latest country this week to ban the Chinese telecom operators Huawei and ZTE from building its 5G networks, and argued that the companies posed a national security threat. Financial Times
Final figure
$1.5 trillion
In China, like in the U.S. and elsewhere, the pandemic has been boom time billionaires. Over the past year, China has minted 278 new billionaires and, in total, Chinese billionaires have added $1.5 trillion to their wealth, according to a new report from the Hurun Report, a research firm based in Shanghai. “The world has never seen this much wealth created in just one year,” Rupert Hoogewerf, founder of Hurun, said in a statement. “China’s entrepreneurs have done much better than expected. Despite COVID-19, they have risen to record levels.” Alibaba’s Jack Ma ($58.8 billion) and Tencent’s Pony Ma ($57.4 billion) ranked one and two on the list, boosting their fortunes by 45% and 50%, respectively, over the past year. Meanwhile, China’s bottom 60% of households lost a reported $200 billion in income amid the pandemic. CNBC


fortune--2020-10-22--As sales dropped, some pharmacies turned to pet meds to stay open

When stay-at-home orders began to spread across the country, Shantelle Brown, owner of Hope Pharmacy in Richmond’s Church Hill neighborhood, saw a rush. People stocked up on their medications as they prepared to wait out the coronavirus pandemic. By the beginning of April, though, business had dried up.
One of the greatest ironies of the pandemic is that fewer people are visiting health care professionals—and that has impacted many pharmacies across the country. An August study from the Peterson Center on Healthcare and the Kaiser Family Foundation (KFF) shows the total number of filled prescriptions, as of late April, was down compared with January and February, but there are some signs of recent rebounding.
That initial gap was especially hard on small independent drugstores, including Brown’s.
Initially, Hope Pharmacy shifted by making hand sanitizer. The business distributed it to first responders for no charge and sold it to customers. The company vastly expanded its delivery business, as well. But as elective procedures were canceled, and apprehension grew about visiting the emergency room in that community, Brown knew she had to look for new ways to increase revenue.
One of the most successful initiatives has been adding pets to the patient list.
Before opening her own pharmacy, Brown worked at Sam’s Club, which included pet meds among its offerings while she was there. As she met with a strategic planning group in the early days of the pandemic, the idea popped into her head.
Getting access to the meds wasn’t hard. Many pets take the same medicines humans do for things like blood pressure and heart conditions. The trick was letting people know they had an option other than buying directly from their vet.
Brown’s not much for social media. She says she prefers a more “old-fashioned” way of attracting business, so she and her husband made up signs that people could put in their yards and flyers that accompanied deliveries. Before long, business picked up.
Hope Pharmacy, which opened at the end of April 2018, currently serves “800-something” people in the community, but since it began selling pet meds, it has been adding an average of two new patients per day. And while those aren’t numbers that would ping the radar at CVS, they’re huge for a small independent pharmacy.
“We had a couple of people advise us that we should partner with a vet,” says Brown. “I tried, but…I didn’t realize at the time how much vets were making off of pet meds. Our prices are so much cheaper, and we’re able to save patients quite a bit of money.”
COVID-19 hit as independent pharmacies were already facing challenges. Between 2009 and 2015, 9,654 pharmacies shut down—and independent pharmacies were three times as likely to close as chain pharmacies, according to U.S. News.
There was a fear that customers would rely more on mail-order pharmacies as the pandemic has continued, but Antonio Ciaccia, senior adviser for disruptive innovation and practice transformation at the American Pharmacists Association, says business has now largely returned to normal for many pharmacies.
People are still avoiding doctor’s offices, though, and the pharmacy industry is hoping to persuade regulators to let them integrate more clinical services into their practices, serving as a partner of sorts with physicians—another pandemic pivot that would bolster small practices.
“We’ve had conversations about getting pharmacists paid for things like pain management,” says Ciaccia. “We don’t want to replace primary care visits, but we’re interested in what opportunities exist where you can have the second most educated health care professional to engage the patient…Pharmacists certainly have the expertise and training. It just makes sense, given the accessibility they have to the patient.”
The goal with this, as with the carrying of pet meds or other products that aren’t traditional pharmacy staples, is the same, though: build a closer relationship with the patient-customer to earn his or her loyalty. In the event that another substantial wave of COVID hits the country—or some other pandemic forces people back into their homes—those customers will be more apt to return quickly.
“In the pharmacy business, it takes a while to build a clientele because people are used to going where they go,” says Brown. “Our hope and goal is not to just get the animal—we want the whole family.”