fortune--2020-05-20--Blame dumb mistakes for more and more of data breaches

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In the cybersecurity industry, good data is hard to come by.
My email inbox is littered with exaggerated claims and dubious survey results. They purport to reveal frequency of hacks, the prevalence of unaddressed vulnerabilities, or the amount of money businesses lose to cybercriminals. I treat most of these as I do expired milk: with a wrinkled nose and a visit to the trash bin.
There’s an exception to the rule. I always make time for a briefing that covers one particular report. Each year, Verizon publishes a compendium that is among the industry’s finest. I consider the “data breach investigations report,” or DBIR, as it’s known, to be like an annual visit to the doctor for a physical examination; it sets a baseline and gives an overview of one’s health.
This year’s report, Verizon’s 13th edition, is as colorfully written as always (the introduction quotes Oscar Wilde) and equally rigorous. Sourcing data from 81 government and industry partners, the report reviewed a record total of 157,525 security incidents and confirmed 3,950 data breaches across 16 industries. The eye-popping number of incidents—which includes Denial of Service, ransomware, and phishing—far exceed the number of breaches, because the latter requires confirmed exposure of data.
The finding that caught my eye the most this year was the indomitable rise of human “error” as a cause of breaches. It is the only factor that has consistently increased year-over-year since 2015. Other data breach causes, like hacking and malware, are dropping. “If we said last year that humans are the weakest link in the chain and the easiest way into computer networks these days, that’s more true now than it ever has been before,” Bryan Sartin, Verizon’s executive director of global security services, told me.
But don’t lose faith in humanity. Humans are imperfect—but they may be getting better, not worse, despite what the data shows.
“Misdelivery,” like sending sensitive emails to the wrong people, and “misconfiguration,” like putting improperly secured databases online, are among the top five breach causes this year. But as the report’s authors note, that may be because of stricter privacy laws being adopted around the world. New regulations are forcing people to disclose more often when such mishaps happen; the behavior is getting “normalized.”
Internal threat actors, or a company’s own employees, have climbed over the years as a cause of breaches. But this too could simply be a result of more people reporting their mistakes.
“People can, and frequently do, make mistakes and many of them probably work for you,” the report warns. But a deeper analysis suggests, hopefully, that recent regulatory changes appear to be working, leading to more visibility and better data.
“We are getting better at admitting our mistakes rather than trying to simply sweep them under the rug,” the authors write.
Robert Hackett
Twitter: @rhhackett
Email: robert.hackett@fortune.com
THREATS
Sunless skies. Big companies like Cigna, Raytheon Technologies, and FedEx are pushing for uniform cybersecurity and data handling practices to be adopted by cloud computing providers like Amazon Web Services, Microsoft Azure, and Google Cloud, the Wall Street Journal reports. A lack of standardization means more work and unnecessary complication for businesses, the corporate customers say.
Heck, no, we won't go. Anti-lockdown protestors flagrantly defying stay-at-home orders may be spreading coronavirus contagions far and wide, the Guardian reports. Location data from cellphones associated with protestors were seen traveling hundreds of miles and crossing between states. Epidemiologists have warned that such behavior could lead to a surge in infections.
Desert dust-up. A traffic-crippling cyberattack on an Iranian shipping port, Shahid Rajaee, is said to have been the work of Israeli spies, the Washington Post reports. The strike may have been retaliation for an earlier attempted hack of an Israeli water utility, according to intelligence officials. Meanwhile, a new report says that while civilian hacking activity has decreased 90% out of Iran since the onset of pandemic, the country's military hacking escapades have abated less, about 30% to 50%.
Please remain seated until the seat belt light is off. European budget airline EasyJet disclosed a data breach affecting as many as 9 million customers. An unauthorized person or group purloined people's email addresses and travel details. More than 2,200 people also had their credit card information accessed. The airline, which learned of the breach in January, said it plans to notify victims by May 26.
Star-crossed lovers. People are hacking the Nintendo video game Animal Crossing in order to plant trees bearing "star fragments," a hot in-game commodity. The Washington Post warns that engaging in such rogue activity "not only puts you at risk for a potential ban...but could destabilize your game." Meanwhile, someone is hacking supercomputers in Europe to mine virtual currency.
Is the head of U.S. Army Cyber Command trying to flirt with me?
ACCESS GRANTED
Why did Facebook recently buy GIPHY, the ubiquitous search engine for gifs? Owen Williams at tech blog OneZero says the acquisition provides a way for Facebook to peer across the Internet, linking people's devices to the non-Facebook apps they use. Wherever GIPHY has a foothold—from Apple's iOS keyboard to Twitter—Facebook may be able to glean data useful for to its advertising business.
Adam Mosseri, head of Instagram, disputed this idea, saying Facebook is primarily interested in knowing what's trending online—data of another sort. Here's Williams:
Acquiring Giphy is a smart play by Facebook, which has become increasingly unavoidable in life online. While you may successfully block trackers like the Facebook ad pixel following you around online, or even delete your Facebook account, the majority of us wouldn’t suspect we’re being monitored when we’re sending funny images to friends.
FORTUNE RECON
Spotify shares soar on news of Joe Rogan’s exclusive podcast deal by Lucas Shaw
Facebook makes a bigger push into shopping with new online storefronts for businesses by Jeremy Kahn
Walmart’s online sales surge during the pandemic, bolstering its place as a strong No. 2 to Amazon by Phil Wahba
As reopening becomes polarized, businesses need to use common-ground language by Michal Lev-Ram
What will Uber look like after the coronavirus? by Lucinda Shen
How Honeywell’s CEO plans to survive—and thrive—through pandemic by Robert Hackett
ONE MORE THING
A couple years ago, the social fitness app Strava came under fire for exposing the locations of secret U.S. military bases by logging the jogging routes of soldiers. Now Untappd, the social beer-drinking app, is catching heat for enabling military and intelligence personnel to be tracked around the world, a researcher at the investigative site Bellingcat found.
Great, now everyone is gonna learn about my secret martini haunt.


fortune--2020-05-20--Talk shows have been able to continue during the pandemic—but it’s been a tough year

Expedia faces a novel coronavirus challenge : ‘ How long can they operate at near zero revenue ?
’

One day in March, Kelly Clarkson headed out to Montana for what was supposed to be a quick trip to her not-quite-finished vacation home. Within a week, with the coronavirus pandemic worsening, nonessential travel throughout much of the U.S. was shut down. Suddenly, Clarkson found herself adrift in an unusual spot for the host of a daily, syndicated talk show: deep in elk country with no internet, far away from a studio audience.
Soon Clarkson was grappling with an unsettling question, one that hung over everyone in her chatty, glad-handing line of show business. What now?
On March 13, executives at “The Kelly Clarkson Show,” which is produced and distributed by NBC Universal Television, announced that they would be cutting down their production schedule from five new episodes per week to one. Many of the show’s 300 workers would be furloughed indefinitely. Moving forward, there would be no live studio audience and no face-to-face interviews. Everything would be done remotely. Before the start of the pandemic, the show was being hailed as one of the rare, new breakout hits in daytime television. Now, Clarkson and a skeleton crew would have to reinvent it on the fly.
Rather than returning to her home in Los Angeles, Clarkson decided to stay put in Montana. In the weeks that followed, while she waited for her cabin to get wired for high-speed internet, Clarkson and her colleagues improvised as best they could. Her husband used his iPhone to shoot clips of Clarkson puttering around the cabin, singing. Afterward, he would send it to the show’s producers using their Verizon mobile service.
Kelly Clarkson (left) with guest Natalie Dormer (right) is seen in a remotely produced episode of “The Kelly Clarkson Show.” Clarkson has been working from Montana during the coronavirus pandemic. NBCUniversal—NBCU Photo Bank via Getty Images
Clarkson made do without her usual team of hair and makeup stylists. For a while, she lacked a hair dryer, a useful tool in a state that was still cold enough to threaten the wet-headed with pneumonia. Occasionally, things got dire. The cabin’s pipes froze. She was forced to reschedule an appearance by LL Cool J.
“It was like having a picnic in quicksand,” said Alex Duda, the executive producer of “The Kelly Clarkson Show.” “Like, you lay it all out, and it looks so great, and it sinks back down. So we just kept coming up with new plans.”
Duda tried to swap tips with other producers across the talk-TV landscape, but each show seemed to be fumbling through its own, uniquely upside-down world. Jimmy Fallon, the host of “The Tonight Show,” was getting interrupted frequently by his two young daughters, as he used Skype to interview guests from his home. “Late Show” host Stephen Colbert aired a clip of himself cursing after a camera fell off its stand while he was filming his first show from his house.
“Things are not going great,” John Oliver of “Last Week Tonight” joked to Colbert. “I’ve learned, unfortunately, how to make a TV show on my own here, with my staff over Zoom, so I’ve basically been committing union infractions out the wazoo.”
While the coronavirus pandemic has bought much of America’s television production to a halt, including scripted series and live sports, talk shows have been able to limp along, dutifully coping with the unusual constraints. Along the way, the chaos has spurred much creativity, as show-runners have hustled to come up with alternative ways of staging interviews and connecting with anxious viewers. Even so, the current situation, while technically feasible, feels far from sustainable.
Tim Brooks, a TV historian, said that while talk shows have been able to cobble together new episodes from a safe social distance, the necessary compromises are antithetical to the format. Daytime talk shows, in particular, are an intimate medium. The chemistry between a host and a guest is predicated on up-close, personal interaction. The spark of emotion is heightened by a live crowd of observers looking on from inside the studio. “The audience is really part of the show in many ways,” said Brooks.
While some viewers may enjoy watching their favorite hosts battle their new environments, eventually the novelty is likely to wear off. Without the usual slate of new movies, sports, and music tours that typically provides talk shows with a steady stream of newsworthy guests, viewers have less reason to tune in. These days, if you take a glance at the YouTube channel of a major talk show, chances are, the most popular segments will all date back to a time before the onset of the pandemic.
The ongoing predicament is contributing to the broader challenge facing the traditional TV industry. In the first quarter, Comcast Corp. lost 409,000 pay-TV subscribers, the most ever, as the lack of content and a recession hastened a trend away from linear television toward streaming. AT&T Inc. lost 897,000 subscribers. Geetha Ranganathan, a media analyst at Bloomberg Intelligence, described the situation as “a bloodbath.” The main culprit is the lack of live sports. But trimmed-back talk shows are also a threat, with late-night programming declining 6% the week of April 13 compared with a year earlier, according to a report from consultants Magna Global.
There’s only so much producers can do to reverse that trend. For now, it’s a waiting game. According to Duda, this summer, Clarkson will return to a private studio in Los Angeles where she will shoot new episodes during a time of the year when the show would normally be on hiatus. At some point, they’ll start bringing back more crew members in waves, though nobody knows exactly when that will be.
Jason Halbert, Clarkson’s musical director, said that one silver lining is that some changes to the show may stick around. In the past, he said, he would typically start and stop musical recordings constantly to ensure each component was perfect. Under the current circumstances, he’s discovered the value in focusing on the big picture first before drilling down into the details. “It’s almost old-school again, like the Motown days,” he said.
For a new episode of “The Kelly Clarkson Show” in mid-May, Clarkson interviewed NBC News anchor Lester Holt. During the segment, Holt played some bass guitar and introduced Clarkson to his Australian Labradoodle Lucy. “This is my home in Lower Manhattan,” Holt said at one point, gesturing to his surroundings. “Fortunately, we’d done some work, and we got in just in time when all this hit. You just can’t complain in times like this because a lot of folks can’t, like us, work from home.”
“Amen,” said Clarkson. “What’s funny about your statement is, we have been living in temporary housing. And let me tell you, it is not fun.”


fortune--2020-05-20--COVID-19 is crippling the energy market, with one big exception: renewables

This was supposed to be another record year for renewables.
Instead, 2020 represents a sudden break in what appeared to be a nearly unstoppable rise in the capacity of renewable energy, the International Energy Agency said Wednesday—with capacity growth expected to drop by 13% compared with the record pace set in 2019. That marks the first drop in renewable capacity growth in over two decades, the agency said.
That drop is due, of course, to the COVID-19 pandemic—which has delayed installation and financing for projects, particularly rooftop-installed solar panels, a powerful source of renewable energy growth. But it also represents policy shifts that were already in place before global lockdowns began, the Paris-based agency said.
That included a halt to subsidies as many of the green technologies have in recent years become cost-efficient enough for governments to allow state-backed price support schemes to simply lapse. This is even true in China—the single biggest renewables market, as well as the manufacturing center for a large proportion of its infrastructure.
Dwindling prices for green tech, however, are proving to be no match for COVID-19. The economics, while steadily improving, “will not be enough to shelter renewables from the impacts of coronavirus, including the economic downturn,” said Fatih Birol, executive director of the IEA, on a call with reporters on Wednesday.
“Therefore the role of governments is more important than ever in terms of the support for renewables,” he noted.
The IEA also pointed to the “resilience” of renewables as a market advantage in an otherwise battered sector. Even as frozen transport and paused industrial activity wallops overall energy demand—oil demand in 2020 is expected to decline by a record 12 million barrels—the renewable energy market is still expected to increase.
Even with a sharp decline in the pace of renewable energy growth, clean energy will still grow by 6% year over year. Renewable energy also represents a larger proportion of the total energy makeup, the IEA said last month.
That’s partly a reflection of the ways in which energy demand has been hit: Electricity grids can rely more easily on low- or no-carbon energy sources, compared with transport, particularly air travel, where there is still no large-scale low-carbon commercial alternative to jet fuel.
However, that resiliency “cannot be taken for granted,” warned Birol.
While the scale of the shift toward renewable energy, and away from fossil fuels, has been rapid in terms of capacity, the world still remains dependent on fossil fuels for energy, and many countries and regions—including the EU—face the challenge of completely decarbonizing energy systems by 2050, even as energy demand itself continues to grow.
Many of the largest renewable projects—for example, hydropower projects—are also constructed over longer time periods, and so less likely to be threatened by the lockdowns, the IEA said, while smaller projects, particularly solar, are most likely to be hit by financing issues and delays. More than half of this year’s growth is still expected to come in the form of solar power, the agency said.
The IEA has, since the beginning of the pandemic, openly urged governments to make a transition to green, low-carbon energy a fundamental part of rebuilding economies as lockdowns ease and the full-scale of the economic devastation becomes clear. That’s not such a straightforward plea anymore. Governments are racking up historic deficits to quickly get their economies back on track. Meanwhile, companies are forgoing big capital investments. Climate experts have routinely expressed concern that climate goals will get short shrift in the fallout of the global recession we’re heading into. In a recent Fortune poll of CEOs, this sentiment rang out clearly. Chief executives were asked whether they thought “concern about the environment will fall, as a result of more immediate focus on economic problems.” A larger number (42% vs. 35%) agreed with that statement.


fortune--2020-05-20--Everyone wants a piece of Jio Platforms

Everyone wants a piece of Jio Platforms

Everyone seems to want a piece of Indian mobile operator Jio Platforms.
In late April, Facebook paid $5.7 billion for a 10% stake in the company backed by India’s richest man. Two weeks later, private equity firm Silver Lake popped its own $750 million check on the company, valuing it at $65 billion, or a 12.5% premium to the value of Facebook’s investment. Vista Equity followed on days later with $1.5 billion, and General Atlantic said last Sunday it would invest $870 million.
The investments come as Jio has managed to amass 388 million mobile users in the world’s largest untapped internet market by offering cheap plans to the underserved.
So how exactly does Jio plan to serve those 388 million users, and what exactly are Facebook and Silver Lake investing? The company’s got e-commerce plans: In contrast to Amazon or Walmart’s Flipkart, which offer a central site for ordering goods online, Jio’s online shopping business JioMart is on-boarding mom-and-pop shops as hubs for ordering and delivering goods.
But Jio also wants to be so much more than that. With a digitally blank slate in India, the company wants to be a Swiss army knife of tech.
Per the Wall Street Journal: “[Chairman Mukesh] Ambani has said privately that his vision for Jio is to create a company that encompasses a telecommunications firm like Verizon Communications Inc., a service like Google, a digital payments company like PayPal Holdings Inc. and a digital content provider such as Netflix Inc., according to one of the people familiar with the executive’s thinking.”
Back to work: Truework, a San Francisco-based identity platform, raised $30 million in Series B funding led by Activant Capital Wednesday, with existing investors Sequoia Capital and Khosla Ventures joining the round. Truework says it offers a secure and fast way for lenders or rental agencies to verify employment information with companies, and gives employees the ability to consent to the transfer of information.
Truework recently rolled out a coronavirus verification tool for employers after receiving interest. Employers, says Truework CEO Ryan Sandler, wanted a way to track which employees potentially have Covid-19 while storing the information securely. So Truework devised a system with self-reported employee surveys that can be sent daily, weekly, or monthly based on known coronavirus symptoms, and asks for employees to voluntarily share official healthcare documents.
While governments are developing contact-tracing tools, companies too are figuring out how to control their populations.
Lucinda Shen
Twitter: @shenlucinda
Email: lucinda.shen@fortune.com
VENTURE DEALS
- Katerra, a Menlo Park, Calif.-based construction tech company, will raise $200 million in new funding from its biggest backer, SoftBank.
Coalition, a San Francisco-based cyber insurance and security company, raised $90 million. Valor Equity Partners led and was joined by investors including Felicis Ventures and Greyhound Capital.
- Brex, the corporate credit card startup, raised $150 million in Series C extension from existing investors including DST Global and Lone Pine Capital.
- Keep, a Beijing-based fitness app, raised $80 million in Series E funding. Jeneration Capital Management led the round, and was joined by investors including GGV Capital, Tencent, Morningside VC, and Bertelsmann Asia Investments. Read more.
- Khatabook, a New Delhi-based startup focused on tracking business transactions for SMBs, raised $60 million in Series B funding. B Capital Group led the round, and was joined by Sequoia India, Partners of DST Global, Tencent, GGV, RTP Global, Hummingbird Ventures, Falcon Edge Capital, Rocketship.vc, and Unilever Ventures.
- Aqua Security, a Tel Aviv and Boston-based cybersecurity firm focused on cloud native applications, raised $30 million in Series D funding. Greenspring Associates led the round, and was joined by investors including Insight Partners, Lightspeed Venture Partners, and TLV Partners.
- Octant, an Emeryville, Calif.-based synthetic biology drug discovery company, raised $30 million in Series A funding. Andreessen Horowitz led the round.
- PresenceLearning, a New York City-based provider of live online special education, raised $27 million in Series D funding. Bain Capital Double Impact led the round and was joined by investors including Catalyst Investors, New Markets Venture Partners and Catamount Ventures.
- Confluera, a Palo Alto, CA-based cybersecurity company, raised $20 million in Series B funding. Icon Ventures led the round, and was joined by existing investors Lightspeed Venture Partners, John W. Thompson and Lane Bess.
- Zentera Therapeutics, a Shanghai based biopharmaceutical company backed by Zentalis Pharmaceuticals (Nasdaq: ZNTL), raised $20 million Series A funding. Tybourne Capital Management led the round, and was joined by investors including OrbiMed Asia.
- ARTMS, a Vancouver based company focused on diagnostic imaging isotopes, raised $19 million in a Series A funding. Deerfield Management Company led the round, and was joined by investors including GHS Fund.
- C3Nano, a Hayward, Calif.-based maker of transparent conductive films, plans to raise $15 million in funding. Nitto Denko is the first investors.
- Bevy.com, an event software business, raised $15 million in Series B funding. Accel led the round, and was joined by Ryan Smith and Upfront Ventures. Read more.
- Strapi, a Paris and San Francisco-based open-sourced content management system, raised $10 million in Series A funding. Index Ventures led the round.
- Big Sky Health, a Big Sky, Mont.-based maker of a fasting app, raised $8 million in Series A funding. Greycroft led the round.
- Happeo, an Amsterdam-based social intranet, raised $12 million in Series A funding led by INKEF Capital.
- Blink, a London-based maker of a smart employee app, raised £8.2 million ($10.1 million) in funding. Partech led the round.
- Brainbase, a Los Angeles legal tech startup, raised $8 million in a Series A funding. Bessemer Venture Partners led the round, and was joined by investors including Rent-the-Runway co-founder Jenny Fleiss. Read more.
- Syndio, a Seattle-based employee compensation analysis platform, raised $7.5 million in Series A funding. Voyager Capital and the Emerson Collective led the round. Read more.
- Fountain Therapeutics, a San Francisco, Calif.-based company seeking to treat age-related diseases, raised $6 million in Series A-1 funding. Khosla Ventures led the round, and was joined by Nan Fung Life Sciences.
- Seraphina Therapeutics, a San Diego, Calif.-based, company focused on essential fatty acids, raised $5.5 million in Series A funding. Domain Associates led the round.
- Robocorp, a San Francisco-based open-source Robotic Process Automation platform, raised $5.4 million in funding from its existing investors Benchmark, Slow Ventures, and firstminute Capital.
- Command E, a San Francisco-based maker of a unified desktop search tool, raised $4.3 million in seed funding. Investors include Bain Capital Ventures, Craft Ventures, Amplify Partners, Abstract Ventures and Upside Partnership. Read more.
- Tapcart, a Santa Monica, Calif.-based mobile commerce company, raised $10 million in funding. SignalFire led the round, and was joined by investors including Greycroft and Amplify.
- Brytlyt, a London-based data analytics and visualisation tech provider, raised $4 million in Series A funding. Amadeus Capital Partners and Finch Capital were the investors.
- Encamp, an Indianapolis-based environmental, health, and safety software platform, raised $3.1 million in Series A funding. Allos Ventures and High Alpha Capital led the round, and was joined by investors including IU Ventures. Fund.
- Tava Health, a Salt Lake City-based mental telehealth platform for employers, raised $3 million in seed funding. Peterson Ventures was the investor.
- GoodData, a San Francisco-based analytics company, received an undisclosed amount of funding from Visa.
- Kitch, a Lisbon-based startup building delivery-first kitchens, raised €1 million in pre-seed funding. Seedcamp and Mustard Seed MAZE led the round, and was joined by investors including Groupe Keys Asset Management.
PRIVATE EQUITY
- Providence Equity Partners invested in Assembly, a L.A.-based e-commerce software maker. Financial terms weren't disclosed.
- Ontario Systems, a portfolio company of New Mountain Capital, acquired SwervePay, a payment facilitator in the healthcare industry. Financial terms weren't disclosed.
- The Firmament Group invested in Citrus Extracts, a Fort Pierce, Fla.-based firm specializing in dehydrating citrus peel. Financial terms weren't disclosed.
OTHERS
- Coverys invested in VisualDx, a Rochester, N.Y.-based clinical decision support system. Financial terms weren't disclosed.
- Aareal Bank plans to sell a minority stake in Aareon, a German software company. Read more.
BANKRUPTCIES, HANGUPS, AND BREAKUPS
- Pyxus International, a supplier of tobacco, has begun discussions with creditors about a possible bankruptcy, per the Wall Street Journal. Read more.
- Hornbeck Offshore Services, an operator of oil supply and support vessels, filed for bankruptcy. Read more.
IPOS
- Luckin Coffee, the Chinese coffee chain, is being delisted from the Nasdaq. Read more.
EXITS
- Standard Cognition acquired Checkout Technologies, a Milan, Italy-based startup. Firms including Pariter Partners, CRV, and Initialized Capital backed Checkout Technologies. Financial terms weren't disclosed.
- Cboe Global Markets plans to acquire MATCHNow, Canada’s largest dark pool, from Virtu Financial. Financial terms weren't disclosed.
- Netrisk, backed by TA Associates acquired Klikpojisteni.cz, a.s, an online insurance brokerage in the Czech Republic and Slovakia, from Benson Oak Capital. Financial terms weren't disclosed.
- Panasonic Corporation acquired 20% of Blue Yonder, a supply chain software provider, via a secondary sale of shares that values Blue Yonder at $5.5 billion. New Mountain Capital and Blackstone back Blue Yonder.
F+FS
- Lachy Groom, an early Stripe Inc. employee and an angel investor, is raising his second fund targeting about $100 million, per the Wall Street Journal. Read more.
- CapStone Holdings launched GameAbove Capital, a $50 million private venture fund focused on minority- and women-operated businesses engaged in sustainability-related products.


fortune--2020-05-20--The boss in your bedroom: As workplace surveillance spreads, what are your rights?

When employees go into the office, they give up a degree of personal privacy: Their boss may monitor what they do on their phone and computer, and even scrutinize their appearance and behavior with coworkers. But what happens when their workplace suddenly becomes their home?
In the pandemic age, millions of employees are working from home for the first time, and bosses are scrambling to keep track of them. The solution for many companies comes in the form of commercial software that lets them log how staff spend their time—or even turn a camera on them as they sit in their bedroom or living room. This software can be deeply invasive when it is deployed in a person’s home, a place we consider to be the last sanctuary of private life.
This new era of the “boss in the bedroom” can be unsettling, and it raises hard legal questions about just how far employers can go in tracking their employees. Here is a plain English Q&A about what is at stake.
What exactly is workplace surveillance software?
Using software to monitor employee productivity is not a new phenomenon. Some companies have long used such tools to examine how much time employees are spending on Excel vs. Facebook, or to review what they’ve browsed on the web.
Newer surveillance software, though, can also burrow much deeper into what someone is doing. The maker of a tool called Time Doctor boasts that it can take a screenshot of a worker’s screen every few minutes and track what is being typed and when the mouse is moved. Time Doctor says it can even use the computer’s camera to take photos—with or without an employee’s knowledge. Meanwhile, companies like Hubstaff offer location-tracking apps to place on workers’ phones or laptops to determine where they are. Hubstaff says the primary use is to help companies ensure salespeople are meeting with clients, but such apps could also serve as an all-purpose tracking tool.
And these tools are not only for an employee’s direct boss. According to Time Doctor’s website, third parties can use them too. One section reads, “Give your clients white-label access to Time Doctor at no extra cost, under your own brand and domain. Build client trust by showing them the progress on their projects with screenshots and reports about the tasks that are being worked on.”
Both Hubstaff and Time Doctor say interest in their products has tripled since the pandemic began.
Do companies have to tell employees they’re watching them?
Surprisingly, no. According to a 2017 Harvard Business Review report on employee surveillance, only two states—Delaware and Connecticut—have laws requiring companies to inform workers that they will monitor them.
But Jonathan Segal, a labor law lawyer at Duane Morris, notes that informing employees is good practice, in part because it will lessen the legal exposure companies face if a worker says they violated his or her “reasonable expectation of privacy.” In reality, many employees will consent to such practices (whether they realize it or not) through the stack of paperwork they sign during the onboarding process.
More broadly, the issue of employee surveillance is largely unregulated—indeed, existing labor laws did not anticipate widespread working from home. Meanwhile, the power of the technology to monitor employees—for instance by taking photos of them—has taken a big leap forward in recent years.
“What you’re seeing now is what our society at large is grappling with,” says Jena Valdetero, a privacy lawyer at Bryan Cave. “The way tech is being utilized in the workplace and beyond has moved far beyond what the law envisions.”
Can an employer monitor my personal device?
Yes. In the era of BYOD (Bring your own device), many companies already ask employees to install security software to protect sensitive corporate information. Firms could likewise ask employees to install productivity monitoring software as well—and some are already doing so. An employee can of course refuse to do so, but in many cases that could give a company reason to terminate the individual.
Are there any laws that limit workplace surveillance?
Yes, but they are not particularly helpful. A law called the Electronic Communications Privacy Act (ECPA) restricts employers and others from snooping on private conversations. But, as the HBR article notes, there is a giant loophole in the form of a “business purpose exception” that excuses surveillance done with a legitimate business purpose.
This also means employers are off the hook if they happen to witness a worker’s personal email or social media communications, or even see the person undressing in the bedroom. Likewise, an employer’s surveillance software could legally record an employee visiting websites about health or pregnancy.
But Segal says this does not mean employers have carte blanche to do what they wish with such images or information. If they share an image of an undressed employee with a third party, the worker would very likely succeed with a type of privacy lawsuit known as “intrusion on seclusion“—regardless of what a company’s employment contract might say.
In the context of employees working at home, many of these issues represent novel legal frontiers. Segal cautions companies that class action lawyers will be eager to explore them. Finally, while there is little protection in state and federal laws against intrusive surveillance, unionized employees may be able to gain additional protection through collective bargaining agreements—essentially using a union contract to create privacy rights.
Is every company going to embrace monitoring software?
No. Just because a company has the legal right to employ surveillance doesn’t mean it’s a good idea. Segal, the labor lawyer, notes that talented employees will rebel or quit if a firm imposes intrusive or dehumanizing surveillance methods.
“We need to think about whether certain monitoring, as a business matter, does more harm than good. Asking employees to explain where they were if they are inactive for 60 seconds may be lawful but understandably would agitate an employee and invites questions like, ‘Do you want me to report pee breaks?’” Segal says.
He adds that if an employer is concerned about a given worker’s presence or productivity, it is easy enough to see if the person responds to group emails asking for help. If not, Segal advises bosses not to ask “What were you doing?” but rather to inquire why they were not working.
Meanwhile, as more employees shift to remote work permanently, Segal says workers must accept the porous boundaries between work and home. While in the early days of the pandemic, many workers may have been flustered to take a video call in their house or to wear professional clothes at home, he says our new reality means they should be prepared to accept such changes.
More must-read stories from Fortune:
—Real unemployment rate soars past 24.9%—and the U.S. has now lost 33.5 million jobs
—Inside China’s reopening: 7 personal stories of life after lockdown
—Sheryl Sandberg: The pandemic is creating a “double double shift” for women
—Trump’s demand that China pay coronavirus reparations evokes an ugly history
—Now is the time to invest in preschool education. Here’s why
—PODCAST: How Marc Benioff is helping out during the coronavirus pandemic
—WATCH: Why the banks were ready for the financial impact of coronavirus
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fortune--2020-05-20--Why Kohl’s CEO believes stores will still matter post-COVID

Subscribe to How to Reopen, our weekly newsletter on what it takes to reboot business in the midst of a pandemic.
The first-quarter bloodbath could have been much worse for Kohl’s.
The department-store chain on Tuesday reported comparable sales fell 43.5% in the three months ended May 2, largely because the pandemic idled all of its 1,100 stores for half the quarter. Picking up much of the slack was Kohl’s large e-commerce business and its ability to offer curbside pickup of online orders, something it had been testing at only a few stores pre-COVID-19.
“All this accelerated what would have taken years to happen,” Kohl’s chief executive Michelle Gass tells Fortune.
Last year, Kohl’s $4.5 billion e-commerce business represented 24% of sales. For the first quarter, digital sales were 45% of sales. That will normalize as more stores open, though Gass thinks they’ll settle at a higher percentage than last year and continue to rise. Kohl’s started to reopen stores in early May, and by Monday, half of them were open.
But as a greater percentage of sales comes online, it poses a question for Kohl’s: Does this change the role of its stores?
Kohl’s had already been in the process of shrinking hundreds of stores across the country—but not closing them—using stores as a distribution hub for e-commerce and a place to showcase products and stay top-of-mind for consumers.
“In places where we have a strong store base, digital sales are higher because the customer has that brand connection,” says Gass.
While the retailer has had a tough time of it in the past decade, with net annual sales stuck around the $19 billion mark and not budging much, Kohl’s has fared better than Macy’s or bankrupt Sears and J.C. Penney, thanks to being an off-mall retailer with tidier stores and a racetrack layout.
Kohl’s has helped itself by focusing on keeping stores clutter-free with tons of room for social distancing, something analysts say will be crucial for shoppers as stores reopen. The company has already removed racks holding small impulse items that clogged up aisles. Gass says even smaller stores, typically 35,000 square feet versus 80,000 square feet, are also spacious enough for social distancing.
Stores are still crucial to showcase new brands and initiatives, too. Kohl’s will host mini-shops for Lands’ End later this year, though it is dropping its Jennifer Lopez collection after 10 years.
Another way stores are critical: saving a retailer a ton on e-commerce sales. Kohl’s gross margin on merchandise fell a staggering 19.5 percentage points to 17.3% of sales, largely because of markdowns to clear inventory. But 2.5 points of that was from e-commerce. Using stores as pickup spots for orders is key to making the economics of digital sales work for brick-and-mortar stores.
Kohl’s quarter could have been much worse, given its emphasis on apparel. The Department of Commerce said last week apparel sales had fallen 89% in April compared with February. But Kohl’s has pushed hard into activewear in the past few years, offering its own yoga lines and bringing in Under Armour, blunting the blow.
Gass thinks Kohl’s will pick up market share from J.C. Penney, which told a federal bankruptcy court this week it planned to close 242 stores.
As for its own stores, Kohl’s has never closed many of them, and Gass believes physical retail will remain central to the chain’s business, even in the pandemic’s wake.
“As we sit here today, we are still really committed to our stores,” she says. “There is going to be a role for brick-and-mortar retail, but it’s going to look different.”


fortune--2020-05-20--Instagram is scary good at selling us stuff. Can the app keep it up?

Good morning, Broadsheet readers! An animal health CEO says new coronavirus pet owners shop differently, Land O’Lakes CEO Beth Ford talks to the MPW community, and we wonder how Instagram got so good at selling us stuff. Have a great Wednesday.
– Doing it for the ‘gram. Have you been spending a lot more time on Instagram since we’ve been stuck in our houses and apartments? I have. It’s been a great way to keep tabs on family and friends, do home workouts with the instructors from my gym, and pick up quarantine cooking tips from my favorite chefs. And it’s also inspired me to do my part to keep the economy going, prompting impulse buys like a windowsill herb garden and a comfy pair of WFH joggers.
In Fortune’s latest issue, I had a chance to write about the way the app has and continues to change the way many of us shop. The reason that’s a Broadsheet story—aside from the ‘women be shopping!’ jokes—relates to both Instagram’s audience (according recent stats from Pew, 43% of U.S. women are IG users, compared to 31% of men) and the brands that are succeeding in capturing users’ attention (the top categories followed on the app are beauty/cosmetics and women’s apparel, according to Cowen).
What most intrigues me about the platform is how carefully it walks the line between art and commerce—despite being owned by Facebook, which doesn’t have a great track record when it comes to that kind of subtlety. (One of the more surprising stats I ran across in my reporting: in a 2019 Pew poll, just 29% of Americans correctly identified Instagram and messaging service WhatsApp as being owned by Facebook.)
The question, as Instagram grows—and as it becomes more and more essential to Facebook’s future—is whether it can keep its feet on that very narrow tight rope.
Fellow Instagram devotee? You can read my full story here.
****
On a separate note: Fortune gathered the Most Powerful Women community yesterday for a conversation with Land O’Lakes CEO Beth Ford. It was a lively and wide-ranging discussion, touching on the supply chains that are failing to connect farmers’ wares with U.S. consumers, the ways rural America is facing the pandemic, and the farmer-owned co-operations’s decision to ditch its old “butter maiden” packaging.
For me, the real takeaway came near the end of the call, when Ford focused in on central the leadership challenge of the moment: taking care of the people who work for you.
“If you are not putting the focus on your team right now,” she said, “you’ve lost the narrative if you’re not focusing on that as the primary issue.”
You can read more and watch some of the video from our gathering here.
Kristen Bellstrom
kristen.bellstrom@fortune.com
@kayelbee
Today’s Broadsheet was curated by Emma Hinchliffe.
ALSO IN THE HEADLINES
- Talc turnaround. Johnson & Johnson will stop selling talc-based baby powder in the U.S. and Canada. Lawsuits have alleged that the product caused cancer, disproportionately affecting black women. J&J says it "remains steadfastly confident in the safety of talc-based Johnson’s Baby Powder" and still stands by that claim, but blames "changes in consumer habits ... fueled by misinformation around the safety of the product" for decreased sales. CNBC
- Dog days. In the latest issue of Fortune, writer Anne Sraders interviews Kristin Peck, CEO of the animal health company Zoetis and one of the new female chief executives on the Fortune 500 this year. The socially-isolated who adopted or fostered animals during the coronavirus lockdown are approaching pet ownership differently, she says. Fortune
- Tiananmen lockdown. The extension of social distancing guidelines in Hong Kong, led by Carrie Lam, has effectively banned the upcoming annual ceremony honoring the victims of the 1989 Tiananmen Square massacre. The gathering is usually the only commemoration of the event allowed in China. Activists object to the extension of the rules, which will allow school and religious activities to resume but not political rallies. Guardian
MOVERS AND SHAKERS: Chicago's WBEZ named Andi McDaniel, chief content officer at WAMU/88.5 FM, president and CEO. Kira Wampler, operating partner with Redesign Health and former Lyft CMO, joined Doximity's board of directors.
IN CASE YOU MISSED IT
- Flip-flop. The new FX documentary AKA Jane Roe comes complete with a bombshell. Norma McCorvey, the anonymous plaintiff in Roe v. Wade, famously changed her stance about abortion and became an anti-abortion activist in the 1990s. Before her death in 2017, she said that she was paid by anti-abortion groups to switch to their side of the issue. LA Times
- Streaming to the top. Fortune's Aric Jenkins provides some insight into the career of Rebecca Campbell, Disney's new head of streaming. The 23-year Disney vet, who spent most of her Disney career in TV, is now moving from the parks side of the business to its streaming venture. Fortune
- Back in action. Suze Orman was finally retiring when the coronavirus pandemic upended the financial lives of millions of Americans. Now the personal finance guru is back in business for this critical moment. New York Times
ON MY RADAR
Hey, newscasters: You should cry more InStyle
What's next for Tiffany Trump? Vanity Fair
Two coasts. One virus. How New York suffered nearly 10 times the number of deaths as California ProPublica
How would Nora Ephron handle all of this? Vogue
PARTING WORDS
"There’s this kind of pressure to be creative or busy most of the time, with lots of activities and progress, and I’m trying to run from that."
-Pop singer Rosalía


fortune--2020-05-20--‘Negative rates are not the answer’ for Britain’s slumping economy—yet

Cutting interest rates below zero is the last policy option that Bank of England officials would currently choose, according to Barclays.
Renewed asset purchases, potentially with a tilt toward riskier assets, are likely to be the central bank’s first choice, Barclays economists wrote in a report published Tuesday. They expect a further 100 billion pounds ($120 billion) of quantitative easing in June.
After that, the BOE could cut the Term Funding Scheme rate below zero for bank lending and ease accounting or capital rules to reduce the cost of making loans and bolster credit supply, the report said. Yield curve control, with explicit forward guidance to hold rates unchanged or lower over the foreseeable future would be the final option before moving to negative rates.
“In the current phase of the crisis, negative rates are not the answer,” the economists wrote. “The BOE is right to focus on quantitative easing policies and financial market functioning, de facto enabling the government to deploy its policy response to the virus without facing jumpy or adverse funding conditions on financial markets.”
The debate over whether sub-zero rates are the right response to the U.K.’s economic downturn has stepped up a gear in recent weeks, sending gilt yields tumbling as BOE officials emphasized they would rule nothing out. The central bank has already slashed interest rates to 0.1% and restarted bond buying to fight the crisis, which it says may tip the country into its worst downturn in three centuries.
So far, Barclays said, comments from policy makers suggest that while going negative is a potential option, they see no need to cut just yet and consider it a decision that would require careful consideration. However, the discussion implies that they see no specific technical issues that could not be negated.
Governor Andrew Bailey will likely shed new light on his thinking when he faces questions from lawmakers later on Wednesday, alongside his colleagues Ben Broadbent, Jon Cunliffe and Jonathan Haskel.


fortune--2020-05-20--This 23-year-old wants to automate your company’s legal work—and his company Brainbase just raised $

This 23-year-old wants to automate your company’s legal work—and his company Brainbase just raised $8 million

Sanrio, the Japanese conglomerate behind “cute” merchandise like Hello Kitty, presides over thousands of brands—making the task of keeping track of licenses and collecting royalties a tall order. To streamline its licensing operations, Sanrio turned to Brainbase, a Los Angeles startup run by a 23-year-old wunderkind named Nate Cavanaugh.
Launched last summer, Brainbase has already amassed a diverse customer list that includes BuzzFeed, home decor maker Kathy Ireland, and the Vincent Van Gogh museum. And on Tuesday, Brainbase announced it has raised $8 million in a Series A funding round led by Bessemer Venture Partners and other investors, including Rent the Runway cofounder Jenny Fleiss.
Brainbase occupies a decidedly unsexy corner of the tech landscape known as legal tech, which typically entails entrepreneurs seeking to automate a variety of legal work. While the field offers the prospect of high margins, some legal-tech firms have struggled—including buzzy startup Atrium, which raised $75 million only to implode earlier this year.
In an interview with Fortune, Cavanaugh explained that Brainbase began by setting itself a relatively easy task—helping brand owners track their trademark licensing arrangements. After achieving a projected growth rate for this year of 450%, Brainbase plans to use its new funding round to pursue related services. These include a payment feature for clients to collect royalties more promptly, and tools to manage other forms of IP such as copyrights and patents.
“Brainbase is bringing the archaic, paper-shuffling world of IP management into the 21st century. We’re thrilled to partner with this team as they help owners of IP assets capture more value while saving a boatload of time and effort,” said Kent Bennett of Bessemer Venture Partners in a statement.
Oddly, Cavanaugh and his cofounders have no background in law but rather in fields like product design and economics. Cavanaugh says he was inspired to launch a startup focused on intellectual property when he was 19 and heard a talk by venture capitalist Fred Wilson about the problems created for startups by “patent trolls”—firms that don’t make anything but amass IP in order to pursue legal action against companies that do.
The idea for Brainbase took further shape after he learned of Tesla founder Elon Musk’s decision to make the company’s patents available to anyone who wished to use them. Realizing that he lacked the background to build a startup focused entirely on patents, he turned to building a broader licensing platform.
Today, Cavanaugh says, Brainbase works with an outside law firm to handle legal issues, while the company’s 20 employees—a figure he expects to nearly double after the funding round—focuses on software. The startup’s advisers include the former managing director at Sanrio, Ray Rehito Hatoyama, and former Mattel CEO Bryan Stockton.
Cavanaugh notes that he takes pleasure in the complexity and challenge of helping firms manage intellectual property.
“Legal tech is very unsexy, but it suits me as I wanted to do something difficult,” he says.
More must-read finance coverage from Fortune:


fortune--2020-05-21--What happens to an investor’s shares when a company delists?

M & A is showing signs of life in the healthiest and least healthy sectors

On Wednesday, the Senate passed a bill that, if made law, could remove scores of foreign companies—mostly Chinese—from U.S. stock exchanges. The forced delisting would strip affected companies of billions in market value and cause a great deal of reputational damage too.
But what happens to shareholders holding stock in a company that is suddenly no longer on the market?
The short answer: nothing.
Shareholders can keep their shares when a company delists and retain their rights as shareholders in the company. The cash value of those shares, however, might be virtually nil.
Investors witnessed this effect on Wednesday when Nasdaq resumed trading in scandal-plagued Luckin Coffee after announcing the company was due to be delisted. Shares in the Chinese coffee chain—which had been suspended since April 7—collapsed 36% Wednesday to less than $3 (about the price of a Starbucks coffee.) At their peak in January, Luckin shares were trading at $50.
The collapse in price, however, suggests that somewhere out there, investors are still looking to buy the company’s shares. Investors might choose to hold on to shares in a delisted company, hoping that the entity will list again someday and regain its share price.
Delisting does not prevent shares from being traded, either, although the mechanisms for doing so are less convenient. Shareholders may buy and sell shares in a delisted company through so-called over the counter (OTC) exchanges—trades made without the oversight of a centralized market, such as the New York Stock Exchange.
Technically, stocks traded OTC are still listed, as the company needs to register with the Securities and Exchange Commission. The requirements for registering to trade as an OTC stock, however, are less strict than those for an exchange “listed” company. The pink sheet “penny stocks” flogged by Leonardo DiCaprio’s character in The Wolf of Wall Street are one popular form of OTC trading.
If a company goes bankrupt, however, its shares in almost all cases will become worthless. Rapid share-selloffs in the lead-up to a delisting can devastate investors too. According to Bloomberg, there are over 200 firms trading on U.S. stock exchanges at the moment that could be delisted if the Senate’s bill turns to law.
Their removal would decimate retail and institutional investors alike and could shave as much as $1.8 trillion of value from the market. It remains to be seen whether the House and President Donald Trump have the political will to trigger such disruption and effectively cut U.S. investors off from one of the world’s few growth markets at a time when the economy is in tatters.
More must-read finance coverage from Fortune:
—Saving lives vs. saving the economy is a false tradeoff, economists say
—Real unemployment rate soars past 24.9%—and the U.S. has now lost 33.5 million jobs
—17% of unemployed workers aren’t looking for work—and that’s warping the official unemployment rate
—Does Apple’s stock buyback strategy make sense in this market?
—Goldman Sachs doubts there will be a Round 3 of PPP loans for small businesses
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO
—WATCH: Why the banks were ready for the financial impact of coronavirus
Subscribe to How To Reopen, Fortune’s weekly newsletter on what it takes to reboot business in the midst of a pandemic


fortune--2020-05-21--M&A is showing signs of life in the healthiest and least healthy sectors

What happens to an investor ’ s shares when a company delists ?

After coming nearly to a halt amid the coronavirus—deal volumes fell 72% in April alone, compared with a month earlier, according to Refinitiv—the mergers and acquisitions market may be starting to show some early signs of life.
“Dealmaking came to a complete standstill, but now you are beginning to see activity,” says Anu Aiyengar, cohead of global mergers and acquisitions at JPMorgan Chase. “There was almost a time when you saw the mood shift. If you think things are about to resolve, you wait. But if you think things are going to be murky for a period of time, and you are a well-capitalized company, this dislocation may give you an opportunity to be strategic.”
But look closely: Experts say that deals aren’t coming back everywhere. Instead there’s an interesting dichotomy: deals at the top—and bottom—of the food chain. Dusty Philip, cohead of global M&A at Goldman Sachs, expects to see deals in the healthiest of sectors—think tech and health care—and the least viable sectors, like energy. In healthy sectors, M&A will strive for growth, while in the latter, it’s all about survival.
Liberty Global and Telefonica SA, for instance, agreed to merge their U.K. telecommunications businesses in early May through a $39 billion deal that represented the biggest tie-up during the pandemic to date. Demand for the telecom sector is expected to grow in the middle of a global lockdown, putting it in a healthier position than others.
In a similar vein, as executives rely solely on technology to communicate with their teams, companies are finding an appetite for buying up tech to aid their operations, says Philip. “The strategic priorities of many of our clients have changed to reflect the current environment,” he says. “As technology changes and the ESG movement has come to the forefront, we see clients thinking in this way about acquisition targets and about what assets are important to them in achieving their environmental targets over time—and that’s impacting how people add and subtract from their portfolio.”
For example, big industrial businesses are looking to acquire software firms, he says, as the coronavirus pandemic pushes companies to accelerate tech upgrades.
Beyond well-capitalized companies, Aiyengar is also expecting acquisitions of venture-backed tech companies that may have been on a path to an IPO. The coronavirus has certainly made it more difficult to list publicly—meaning some venture capitalists may have to grapple with whether to continue to pour millions into a maturing startup, or give up dreams of a stand-alone company and potentially sell it off to an acquirer.
Smaller deals, lower prices
“The second half of the year is going to be busier, but I think it is likely that is going to be more smaller deals, not transformative ones,” says Morgan Stanley global head of M&A Robert Kindler. “One area to also consider is regulatory scrutiny of transactions.”
Regulators have clamored at cross-border transactions and worried about large companies getting ever larger through acquisitions during the pandemic. In late April, Sen. Elizabeth Warren (D-Mass.) and Rep. Alexandria Ocasio-Cortez (D-N.Y.) proposed new legislation halting “risky” megadeals by those with over $100 million in revenue, presumably with an eye on big tech. While few are expecting the measure to gain traction, it signaled to investors that M&A could fall under greater scrutiny during the crisis.
“While there certainly will be some large deals, they will mostly be in the $2 [billion] to $5 billion range,” Kindler estimates. “I think there are going to be a lot of sellers that lower their price expectations not only because they are worried about a reoccurrence, but also because there is uncertainty about if this market is too high.”
Private equity
But one thing bankers can agree on: Private equity will play a more active role.
Because of a now famous $1.5 trillion pile of cash private equity has amassed waiting for less frothy markets, many expect to see deals take off in 2020. Already this year, Silver Lake and Sixth Street Partners invested some $1 billion in the form of debt and stock in home-sharing platform Airbnb. More recently, KKR took a majority stake in Coty’s professional beauty and retail hair care businesses.
Able to move more quickly and structure deals creatively compared with corporate acquirers, private equity firms have a distinct advantage in a battered market. In the case of the Coty-KKR tie-up, for instance, KKR acquired a partial 60% stake in the Coty businesses rather than buying the company outright. Goldman’s Philip is expecting more partial acquisitions or stock-for-stock deals, as both buyers and sellers seek to benefit from when the valuation rebounds on the other side of the coronavirus pandemic.
That said, things could turn yet again, and, as we’ve seen, markets can sour rapidly—which may be a boon for private equity investors hoping for even lower valuations, but not so beneficial for companies that need to have stronger balance sheets for an acquisition.
“We are seeing transactions come back to life behind the scenes,” says Michael Carr, cohead of global M&A at Goldman Sachs. “We have a fair bit of optimism, but this stuff can change quickly.”


fortune--2020-05-21--CEOs’ favorite metric could be described as a ‘religion’

Good morning.
We write a lot about ‘big data’ at Fortune these days. But in the C-suite, there is a small piece of data that reigns supreme. It’s called Net Promoter Score—NPS—and at Fortune 500 companies, it is all the rage. “One could use the word ‘religion,’” IBM’s Michelle Peluso told Fortune’s Geoffrey Colvin.
I experienced the religious fervor myself about a year ago, when I was moderating a conversation on how to build a “data-driven, consumer-centric” company among a group of very successful Fortune 500 CEOs. We went around the room, asking each what data they paid most attention to. And one after another—CEOs from tech, airlines, retail, diversified manufacturing, you name it—repeated like a mantra: “NPS.”
The measure, invented 17 years ago by a Bain consultant, is deceptively simple. It is based on a single survey question.
1. On a scale of zero to 10, how likely is it that you would recommend XX to a friend or colleague.
The score is calculated by taking the percentage of people who answered 9 or 10 and subtracting the percentage who answered 6 or lower. The “score” can range from -100 to 100.
The beauty of NPS is its simplicity. The problem comes in its ability to be manipulated, abused and misinterpreted. Colvin catalogues the downsides with dexterity in his story, which appears in the June issue of our magazine but is available this morning here. It is a must read. (Warning, you need to be a subscriber to access it. Maybe today is the day to sign up!)
By the way, I’m happy to report that CEO Daily has one of the highest NPS scores of any Fortune product. (And please continue to give me high ratings, so I can feed my family.)
More news below.
Alan Murray
@alansmurray
alan.murray@fortune.com
TOP NEWS
Another spike
The director of the CDC says the U.S. is at risk of another spike of COVID-19 cases this autumn and winter, coinciding with flu season, which is precisely when healthcare systems will be under an additional burden. Robert Redfield said the U.S. would have to rapidly expand its tracking and detection capabilities to limit that prospect, undermining U.S. President Donald Trump's argument that the worst of the pandemic is over. In other news, global coronavirus cases have now topped 5 million. FT
China Fight Escalates
The tension between Trump and his Chinese counterpart, Xi Jinping, continued to escalate, as Trump claimed the leader is behind a “disinformation and propaganda attack on the United States and Europe," in a series of tweets on Wednesday night, while an official responsible for the Communist Party newspaper called the Trump administration "political hooligans." Bloomberg
More negative rates?
The Bank of England is considering how low interest rates can go—and whether following Europe into negative territory is a good idea. Governor Andrew Bailey said that: "we do not rule things out as a matter of principle. That would be a foolish thing to do." Meanwhile, the U.S. Fed is still opposed. Fortune
400 Million Orders
AstraZeneca said Thursday morning that it had booked orders for 400 million doses of an experimental COVID-19 vaccine that it is developing with Oxford University. The company also said it had received more than $1 billion in funding from a subsidiary of the U.S. Health Department. AstraZeneca is one of the frontrunners in a global race to develop a vaccine, and is already building out a supply chain to manufacture doses. FT
AROUND THE WATER COOLER
March 16
This was the day financial markets nearly went over the edge—as the prospect of COVID-19 sent investors scrambling to get out of financial markets on a vast scale. Though a full-out crash was narrowly avoided, the hit was a bigger deal than many realize. “The 2008 financial crisis was a car crash in slow motion,” said Adam Lollos, head of short-term credit at Citigroup Inc. “This was like, ‘Boom!’" WSJ
Ghosn Arrests
Remember Carlos Ghosn? Take a trip down memory lane, because two operatives have been arrested in connection with Ghosn's high-stakes, made for the movies smuggling from Japan to Lebanon, which was briefly the biggest news story in the world. One of the operatives, who has a long and shady legal history himself, said he took the gig out of principle. FT
Venezuelan gold
Venezuela has launched legal proceedings against the Bank of England—asking for the right to sell off its gold. The gold has been retained by the Bank as Venezuelan assets were frozen under sanctions against the country, but the country's leadership says it needs the funds in order to help it pay for the fight against COVID-19 in the country, which is already in a state of prolonged economic and social collapse. BBC
Pizza Arbitrage
The owner of a U.S. pizza restaurant discovered he was (inadvertently) selling pizzas on the food delivery app DoorDash, and then realized he could make a profit through buying back his own pies. The cause was a fee-waiving system designed to bring in business—at a cost. "You have insanely large pools of capital creating an incredibly inefficient money-losing business model," said the writer who documented the discovery. Margins
This edition of CEO Daily was edited by Katherine Dunn.


fortune--2020-05-21--Exclusive: Neo-bank Aspiration raises $135M in Series C funding round

Aspiration, the fintech startup that’s brought a socially and environmentally conscious twist to the burgeoning realm of digital banking, has sealed a $135 million Series C funding round, Fortune has learned.
The Series C takes Aspiration’s total funding raised to date to more than $200 million, the company said, though it declined to provide a post-round valuation. Existing venture capital investor Alpha Edison led the round and was joined by the likes of UBS O’Connor, DNS Capital, Radicle Impact, Sutter Rock, and Social Impact Finance.
Aspiration intends to use the funds to further grow its services and product offerings, which are currently used by more than 1.5 million customers. The branchless Los Angeles–based bank has positioned itself as a “socially conscious, sustainable” alternative to major financial institutions; customer deposits and investment vehicles like its Redwood Fund are free of fossil-fuel investments, while products and features include “Plant Your Change,” which rounds up debit card purchases to the nearest dollar and uses the change to plant trees.
With the coronavirus pandemic disrupting traditional commerce around the world and keeping many indoors, present-day circumstances appear to lend themselves to tech-enabled, online-only “neo-banks” like Aspiration and rivals Chime and Varo.
Andrei Cherny, Aspiration’s cofounder and CEO, tells Fortune that March and April were the bank’s “two biggest months ever” in terms of debit card transactions, adding that the firm has seen “enormous demand” from its customers for additional “sustainability-focused financial products.”
“I think this crisis is accelerating trends that were already occurring, and one of those is the shift toward digital banking,” Cherny says. “We think that this funding round will allow us to build out America’s preeminent socially conscious financial home for millions of people.”
Aspiration’s latest funding round comes in the wake of reports late last year that it was having trouble securing investors for its Series C amid a shaky, post-WeWork private funding environment for startups. While the Series C is by far Aspiration’s largest funding round to date, it falls short of the $200 million that the company was reportedly targeting last spring.
Still, Aspiration managed to seal a larger Series C than its bigger rival Chime, which raised $70 million in May 2018. Chime has since gone on to raise more than $1 billion in total funding at a current valuation of $6 billion, per PitchBook data.
According to Alpha Edison managing partner Nate Redmond, Aspiration’s commitment to social and environmental values differentiates it from major financial institutions that offer a “commodity” banking product. It also addresses some of the “fissures” that have emerged since the global financial crisis between the banking system and an increasingly skeptical general public.
“We see them addressing what’s fundamentally broken in financial services, which is the trust-based relationship between a bank and its customers,” Redmond says. “We had a chance to watch this company operate and to map their progress, and that provided the foundation for us to say, ‘Okay, this company can grow for a long time from a differentiated position.’”
Aspiration and other sustainability-minded financial firms are emerging at a time when ESG investing has gained unprecedented prominence—forcing some of America’s largest financial institutions to recalibrate their own approach to doing business with certain industries.
Among those who have been drawn to Aspiration’s mission include Hollywood actors and environmentalists Leonardo DiCaprio and Orlando Bloom, both of whom are among the startup’s financial backers. DiCaprio joined the company’s board of advisers last year.
More must-read finance coverage from Fortune:
—Saving lives vs. saving the economy is a false tradeoff, economists say
—Real unemployment rate soars past 24.9%—and the U.S. has now lost 33.5 million jobs
—17% of unemployed workers aren’t looking for work—and that’s warping the official unemployment rate
—Does Apple’s stock buyback strategy make sense in this market?
—Goldman Sachs doubts there will be a Round 3 of PPP loans for small businesses
—Listen to Leadership Next, a Fortune podcast examining the evolving role of CEO
—WATCH: Why the banks were ready for the financial impact of coronavirus
Subscribe to How To Reopen, Fortune’s weekly newsletter on what it takes to reboot business in the midst of a pandemic


fortune--2020-05-21--British pharma giant AstraZeneca get $1 billion from the U.S. to make coronavirus vaccine

AstraZeneca Plc received more than $1 billion in U.S. government funding for an experimental Covid-19 vaccine from the University of Oxford, a boost to one of the world’s fastest-moving projects to develop a shot.
The investment accelerates a race to secure vaccine supplies, seen as a key step toward restarting global economies after a lockdown-induced slump. Stock markets have been rising and falling on developments in research labs as investors weigh the prospects.
The U.K. drugmaker received the money from the U.S. Biomedical Advanced Research and Development Authority and said it has secured capacity to make 1 billion doses. Although AstraZeneca has said it expects to have shots ready as soon as September, the company’s vaccine candidate is still in human trials, with no guarantee of success.
The funding for AstraZeneca is part of the Operation Warp Speed effort to secure vaccines for the U.S., according to a statement from the Health and Human Services Department. Astra can receive up to $1.2 billion under the agreement, and the U.S. expects 300 million doses to be available as early as October.
Other Projects
The U.S. “is making multiple major investments in developing and manufacturing promising vaccines long before they’re approved so that a successful vaccine will reach the American people without a day wasted,” HHS Secretary Alex Azar said. Oxford’s vaccine is the fourth to receive BARDA support.
The U.S. agency has also provided funding for French pharmaceutical giant Sanofi, including $30 million for its Covid vaccine and a $226 million award in December to increase production capacity for its pandemic influenza vaccine. A Covid vaccine developed by the company will probably go to Americans first if the company can successfully deliver one, Chief Executive Officer Paul Hudson said last week in an interview with Bloomberg News.
Sanofi said later that it would make the shot available everywhere. While the absence of a European counterpart to BARDA has slowed efforts to secure supplies, Hudson said the French company is in talks with several governments on possible arrangements.
Supplying the U.K. with vaccine will be a priority for AstraZeneca, CEO Pascal Soriot has said. Astra plans to make as many as 30 million doses available in Britain by September and has committed to delivering 100 million this year.
Fair Allocation
Astra said it’s working with groups including the World Health Organization, the Coalition for Epidemic Preparedness Innovations and Gavi, the Vaccine Alliance, on making sure the vaccine is allocated fairly. The company said it has supply agreements for 400 million doses.
“Several more agreements are expected to deliver AstraZeneca’s commitment to ensure global access,” a spokesman said in an email. “These agreements are happening in parallel in order to ensure broad and equitable supply of the vaccine throughout the world at no profit during the pandemic.”
The shares fell 1.1% early Thursday in London.
The U.S. funding will support a final-stage clinical trial with 30,000 participants, as well as tests in children, AstraZeneca said.
Some doubts have been raised about the potential effectiveness of the Oxford vaccine after early results in monkeys were released. While the shot may have protected animals against severe infections, the results were weak compared with those of a test of a vaccine under development by Sinovac Biotech in Beijing, said William Haseltine, a former Harvard University HIV researcher, in a blog post.
Infections in Monkeys
The comparison is inapt for studies carried out with different types of vaccines given in varying doses, in monkeys who were infected with different levels of virus, the Oxford researchers said in a statement. “In the end it is the impact on clinical disease that matters,” they said.
Dozens of other vaccine projects are underway around the world, from the U.S. to China, drawing in major pharma giants, university labs and others. Moderna Inc. shares jumped earlier this week after the U.S. biotech revealed positive early results from its experimental vaccine.
President Xi Jinping of China has said any successful vaccine developed there will be made available as a global public good.


fortune--2020-05-21--The ‘Joe Rogan rally’ hits pause ahead of U.S. jobless data

This is the web version of the Bull Sheet, Fortune’s no-BS daily newsletter on the markets. Sign up to receive it in your inbox here.
Good morning, Bull Sheeters. On Monday, we saw the “vaccine rally.” Yesterday, was what you might call the “Joe Rogan rally.” Both faded pretty fast. Sure enough, equities are broadly lower as we await the latest round of U.S. jobs data.
Let’s check in on the action.
Markets update
Asia
The Asian indices are down, but only slightly, with Japan’s Nikkei off 0.2% .
but only slightly, with Japan’s off . Expect more fireworks in Beijing today after the U.S. Senate approved a bill to delist from U.S. exchanges certain Chinese companies.
approved from U.S. exchanges certain Chinese companies. Hong Kong investors can’t get enough of CanSino Biologics Inc., a Chinese vaccine maker working on a COVID-19 treatment. Its shares are up 380% this year.
Europe
European bourses tumbled sharply at the open, wiping out much of yesterday’s big gains. Germany’s Dax was off 1.2% in early trade.
bourses tumbled sharply at the open, wiping out much of yesterday’s big gains. was off in early trade. The Bank of England isn’t ruling out negative rates to boost investment in its sinking economy. Barclays, for one, thinks that would be an exceptionally bad idea .
isn’t ruling out to boost investment in its sinking economy. Barclays, for one, thinks that would be an exceptionally . More trouble in the aviation sector: Britain’s Rolls-Royce, the maker of jet engines, will lay off 9,000 and consider closing sites as it retrenches amid the biggest drop-off in air travel in anyone’s memory.
U.S.
The Dow , S&P 500 and Nasdaq futures are all in the red, as I type.
, and futures are all in the red, as I type. Shares in Spotify closed up 8.6% yesterday (and it’s trading higher pre-market) after it announced it had clinched an exclusive deal to stream the super-popular “The Joe Rogan Experience” podcast , helping to lift the Nasdaq by 2% on Wednesday.
yesterday (and it’s trading higher pre-market) after it announced it had clinched an exclusive deal to stream the super-popular , helping to lift the by on Wednesday. Expedia shares were up more than 4% in pre-market trading. That’s despite the travel-booking firm reporting an earnings miss yesterday, and at least one analyst wondering: how long can they can operate at “near zero revenue “?
in pre-market trading. That’s despite the travel-booking firm reporting an yesterday, and at least one analyst wondering: how long can they can operate at “near “? We get another update on the brutal U.S. labor market before the bell today. MarketWatch economists predict that 2.35 million unemployment claims were filed in the past week.
Elsewhere
Gold is down.
is down. The dollar is up.
is up. Crude is climbing. Brent, the global benchmark, is trading above $36 per barrel.
Stagflation, protectionism, higher taxes
All 50 U.S. states have now eased stay-at-home measures, which coincidentally came on the same day the world topped 5 million confirmed coronavirus cases. Be that as it may, investors are focussing increasingly on what comes next. The good news: businesses are reopening. The bad news: economies and companies will encounter a new wave of challenges, and a vastly different marketplace.
Again this morning I’m pulling data from the latest BofA Global Fund Manager Survey. A note: the survey involves 223 panelists with $651 billion assets under management. It was conducted the second week of May.
Here is what panelists expect. If you’re a fan of free trade, just-in-time supply chains, low taxes and very little red tape, it’s not a pretty picture.
“In a post COVID-19 world,” the survey’s authors write, “FMS [fund manager survey] investors say the biggest structural shifts will be supply chain reshoring (68%), protectionism (44%), higher taxation (42%), and MMT (24%).”
What else makes their list (though lower down)? They see stagflation and a renewed push to introduce green energy and sustainable infrastructure, which is one of the few growth areas of the energy market.
Towards the bottom of the chart, you get a shout-out for the introduction to universal basic income—which has adherents from Pope Francis to the bond king, Bill Gross. UBI is a getting a serious second look in countries around the world since the start of the economic crisis.
All together, investors are anticipating a whole new world, post COVID-19, one full of new marketplace- and policy disruptions. As I noted yesterday, investors are factoring in a longer U-shaped rebound, and are not discounting a volatile W-shaped one.
Normal will look very different.
***
Have a nice day everyone. I’ll see you here tomorrow.
Bernhard Warner
@BernhardWarner
Bernhard.Warner@Fortune.com
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Today's reads
They go low. Europe's already in negative territory with its interest rates. The BOE is thinking about it. What about the Fed? Goldman Sachs says don't rule it out. Negative interest rates would be good news for those holding a lot of debt, but bad news for savers, pensioners and banks.
Write off your rent? A lot of work-from-home warriors are wondering if there's a tax break to be found in their new work arrangements. Namely, can they deduct mortgage or rent payments from their tax returns? Fortune's Lee Clifford lays out your options.
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Market candy
91
All week here in "Market candy" we're featuring cool facts from the Fortune 500, which went live on the site on Monday.
It's been a rough year for financials, but don't write off the sector. The number of financial services companies to make the 2020 list was 91, (up from 86). Together, they earned $378 billion in profits last year.


fortune--2020-05-21--Nestlé is opening a plant-based meat factory in China, its first in Asia

The world’s largest market for meat is developing a taste for the fake stuff.
According to Euromonitor International, sales of plant-based meat in China increased from $7.2 billion in 2014 to $9.7 billion in 2018. Now Nestlé, the Swiss food and drink giant, plans to build a new manufacturing site in Tianjin—72 miles from Beijing—to churn out meat alternatives.
“In recent years, the food sector has undergone a quiet revolution as people are choosing more and more healthy, nutritious, and environmentally friendly foods,” Nestlé said in a statement Wednesday, announcing a $103 million investment in its China production facilities including the new faux-meat factory, Nestlé’s first in Asia.
Competition in China’s fake-meat industry has increased sharply the past two years as local startups, like three-year-old imitation-pork maker Zhenmeat, vie with long-established alt-meat brands, such as Whole Perfect Food, which was founded in 1993 and has annual sales of $4.6 million.
Last year, Hong Kong–based Green Monday launched its alternative-pork product, called OmniPork, in mainland China. The group partnered with Alibaba to roll out sales online last year and teamed up with Yum China to trial an OmniPork offering across Taco Bell locations.
Besides Nestlé, other overseas manufacturers are jumping on the trend as well. U.S. agriculture giant Cargill partnered with Yum China to trial the release of its meat-free chicken nuggets across KFC in China. Beyond Meat and Impossible Foods—arguably the most famous alternative-meat makers—have recently entered the market as well.
Beyond Meat partnered with Starbucks to enter the market last month, putting vegetarian options on the coffeehouse’s menu. Impossible Foods debuted in mainland China in November 2019, at a one-off event in Shanghai, and has since launched an imitation-pork product no doubt designed to capture more of the China market. (China consumes nearly half the world’s pork.)
Even China’s own major meat manufacturers appear to be falling in line with the trend. WH Group, the world’s largest pig farmer, is a member of the China Plant Based Food Alliance—a government advisory committee formed under the State Administrator for Market Regulation.
By the time Nestlé’s China plant is up and running, the competition will already be far ahead.


fortune--2020-05-21--Photo essay: Italy reopens museums and churches

On a side street around the corner from the Pantheon in Rome’s centro storico, locals again this week spotted a familiar sight: a crowd queuing to get into the church of San Luigi dei Francesi. Even by Roman standards, this is not any old church. It holds the Caravaggio masterpiece The Calling of Matthew—a must-see for any visitor to the Eternal City.
For 10 long weeks, art lovers have been living in a kind of purgatory: a city full of masterpieces—from Michelangelo’s The Last Judgment in the Sistine Chapel to Bernini’s sculpture Apollo and Daphne to Marcel Duchamp’s urinal—all off-limits to the public. The Italian government finally eased stay-at-home measures this week, permitting museums to reopen. Churches, another rich source of art treasures (Leonardo da Vinci’s Last Supper is housed in a convent in Milan), opened their doors on the same day as museums, and Italians, a few at a time, could reacquaint themselves with the treasures of the past.
But things aren’t fully back to normal. Most museums only accept visitors who book in advance. And some must-see landmarks, including Florence’s Duomo, hand out sensors, insisting ticket-holders fasten them to their clothing. To enforce strict social distancing rules, the sensor buzzes whenever it comes within a few feet of another sensor.
Other safety measures are strictly enforced: Masks are obligatory, and at many museum entrances, visitors are required to apply hand sanitizer.
Outside the museums, it still looks like a different Italy: a country without tourists. Rome’s Piazza Navona and Trevi Fountain, usually mobbed in early May with visitors speaking all kinds of languages, are nearly vacant. It makes for an intimate—if not spooky—scene.
Scroll below to explore scenes from Italy this week.
Francesco Pantaleo was the first visitor to enter the Capitoline Museums at its reopening. Only 11 people made the mandatory reservation to visit it on the first day of reopening, May 19. Marco Di Lauro—Getty Images
A woman walks in front of the Pantheon in Rome on May 20. Matteo Trevisan—NurPhoto/Getty Images
A visitor views the newly reopened Capitoline Museums on May 19 in Rome. Alessandra Benedetti—Corbis/Getty Images
A visitor views a room at the Galleria Borghese museum in Rome on May 19. Tiziana Fabi—AFP/Getty Images
A museum employee wearing a face mask stands in the newly reopened Galleria Borghese on May 19 in Rome. Alessandra Benedetti—Corbis via Getty Images
A nun walks past St. Peter’s Basilica on May 20. Andreas Solaro—AFP/Getty Images
The Imperial Forums are seen from one of the balconies of the Capitoline Museums on the first day of opening after more than two months of lockdown in Rome. Marco Di Lauro—Getty Images
People sit by the Trevi Fountain, usually overflowing with tourists, in Rome on May 20. Matteo Trevisan—NurPhoto via Getty Images
A man photographs the Spanish Steps in Rome on May 20. Matteo Trevisan—NurPhoto via Getty Images
A woman attends Mass at the Cappella Feriale of the Duomo di Milano on May 20. MIGUEL MEDINA—AFP via Getty Images
Codogno resident and 74-year-old pensioner Giancarlo Barcellesi poses on his bicycle outside the San Biagio and Santa Maria Immacolata church on May 20 in Codogno, southeast of Milan. MIGUEL MEDINA—AFP via Getty Images
A staff member of the still closed Museum of Palazzo Madama in the historical porch on May 19 in Turin. Giorgio Perottino—Getty Images
Portofino, a town renowned for its beauty, is devoid of tourists who normally crowd the city and make a strong contribution to the economy. Fabrizio Di Nucci—NurPhoto via Getty Images
An employee checks the temperature of a person at the entrance to the Pio Monte della Misericordia museum in Naples. Marco Cantile—LightRocket via Getty Images


fortune--2020-05-21--Promising coronavirus vaccine makes Chinese bio firm the hottest stock in Hong Kong

A 380% surge in CanSino Biologics Inc. this year has made it the hottest stock in Hong Kong.
Shares of the Chinese vaccine maker have outperformed all other companies with a market capitalization exceeding $2 billion, according to data compiled by Bloomberg. The rally has accelerated in recent days, after the company said Health Canada approved its clinical trial application for a coronavirus vaccine. On Thursday, the stock jumped as much as 16% while setting up for an 11th straight day of gains.
It’s also the second-most overbought stock among the mid-cap and big-caps in Hong Kong after Tsim Sha Tsui Properties Ltd., with 14-day relative strength of around 89. A RSI measure that’s more than 70 indicates sentiment is overheated on a stock.
“No one knows how much CanSino is worth” said Castor Pang, head of research at Core Pacific-Yamaichi International Hong Kong. “People are making bets on the success of its vaccine, but the trial is just in stage two and there is possibility for it to fail.”
Other health-care stocks in Hong Kong are also doing well this year. AK Medical Holdings Ltd. is up 184% as of Thursday morning, Alibaba Health Information Technology Ltd. has jumped 130% and Ping An Healthcare and Technology Co. has gained 90%.


fortune--2020-05-22--Hewlett Packard Enterprise to implement major cost cuts because of COVID-19

What to do if your employer stops matching your 401 ( k ) contributions

Amid eroding sales due to the COVID-19 pandemic, business technology giant Hewlett Packard Enterprise plans a major overhaul, including layoffs, that it says will save $1 billion by 2022.
The company, which makes data center hardware and software, announced the plan on Thursday while reporting its fiscal second quarter earnings, which ended April 30. As part of the plan, HPE will temporarily slash employee salaries, from July 1 to Oct. 31, with executives being hit the hardest.
HPE executive salary will be reduced 20% or 25% based on the job, the company said. The company will also close an unspecified number of offices to save on real-estate costs as it shifts to a work-from-home model following shelter-in-place orders across the country.
Asked about the specifics of layoffs, an HPE spokesperson indicated that the number of jobs to be cut had yet to be determined, saying the company would be “working through the details in the next couple months as we evaluate the various areas where we can drive savings.”
“As a CEO telling employees we are going to cut salaries, that’s not an easy thing to do,” HPE CEO Antonio Neri said during a conference call with analysts. “I don’t take that lightly.”
He cited the pandemic’s huge impact on the economy as the reason for the cuts. HPE, and its previous incarnation as part of the Hewlett Packard technology conglomerate, has, over the past few years, periodically fired thousands of workers. Those layoffs were done as the company tried to adapt to a changing technology landscape in which businesses are buying fewer servers and computer storage devices—its core products.
HPE has increasingly pushed into providing IT software services to businesses that are sold in a pay-as-you-go model, but it still relies heavily on selling data center hardware.
In the latest quarter, HPE’s sales dropped 16% year-over-year to $6 billion, which Neri attributed to a disrupted supply chain, resulting from the company being unable to ship products as fast as it previously could.
“We ship three servers every minute, so when the supply chain stops, it’s pretty significant,” Neri said.
Additionally, Neri described how shelter-in-place orders have made it difficult for HPE employees to visit customer facilities to install supercomputers. Those computers must be activated before HPE can recognize any revenue from their sale and for related software services it sells to customers, Neri explained.
On a promising note, Neri said that “China is pretty much back to normal,” which could help with the company’s supply chain woes. But any positive development in China wasn’t enough to reverse HPE’s decision, made in April, due to the pandemic, to withdraw its financial forecast.
HPE shares fell 5.4% to $9.80 in after-hours trading.