fortune--2020-12-01--‘Like drowning in slow motion’: Life on the ground at one of America’s hardest-hit COVID-19 hospital

‘Like drowning in slow motion’: Life on the ground at one of America’s hardest-hit COVID-19 hospitals

He was young, polite, and nondescript. Even though he said he felt fine, he looked as though he had just finished running sprints. The symptoms were there: a cough, a low-grade fever, shortness of breath. His oxygen levels were low enough that his doctor admitted him. And thus did Oscar join the ranks of patients at one of the country’s hotspot hospitals, El Centro Regional Medical Center.
When his doctor, Andrew LaFree, the medical director of the center’s emergency department, saw him again a week later, Oscar’s condition had worsened. He looked scared and was struggling to breathe, requiring a machine to assist him. Summoned from the ER to see the patient just a few days after that, LaFree told me, “I had the surreal impression that we were underwater…It occurred to me that the gradual respiratory deterioration of COVID-19 was like drowning in slow motion.”
Oscar died after multiple cardiac arrests. His doctor remains haunted by the fact “that his last memories are of him staring up at my yellow space suit, struggling to breathe, drifting in and out of darkness as we gave him sedatives to put him to sleep.” But the truth is, such has been the near-daily sojourn of the physicians and nurses in this border town in Imperial County, Calif.
For many weeks this summer, the metro area that El Centro Regional Medical Center (ECRMC) serves led the nation in cumulative COVID cases per capita. Unlike many counties with multiple facilities, Imperial has only two small hospitals to serve its community. El Centro Regional was overwhelmed in May and June, its first surge of cases coinciding with an outbreak that occurred in Mexicali, in Baja California. LaFree said patients are often brought by ambulance to the U.S.-Mexico border, dropped off, and then rushed to the nearest hospital—his hospital.
This process, inelegantly referred to as a border dump, is common. According to Adolphe Edward, CEO of El Centro Regional, more than 275,000 Americans live in Mexicali, along with thousands of green-card holders. Many of them choose to cross the border for care at his hospital.
With 24% of people in Imperial County living in poverty, the hospital has long served a diverse patient population which includes those from marginalized communities, with fewer resources and less access. Christian Tomaszewski, the chief medical officer of ECRMC, notes that the county has a 21% unemployment rate and that comorbidities are prevalent, including diabetes, high blood pressure, and obesity. There also is a high proportion of elderly residents, who are at higher risk for more severe outcomes with COVID.
All of this may help explain the numbers. Los Angeles Times data shows that the cumulative COVID death rate in Imperial County is more than twice that of any other county in California, and that it continues to rank No. 1 in the state for cumulative cases per capita.
‘COVID fatigue is setting in’
Edward referred to the initial summer wave of cases as COVID 1.0, which he attributed mostly to patients arriving from across the border. But now, as cases rip across the nation, El Centro is seeing its second wave. “COVID 2.0 is a little bit different,” said Edward, with more local, community-acquired infections from superspreader events, like gatherings at skate parks, restaurants, and the like. “COVID fatigue is setting in,” he continued. “I think our resiliency is breaking down.”
Imperial County’s resolve has been tested many times this year. In May and June alone, 1,400 COVID-19 patients came through the ER, of which 497 required admission. Twenty percent of patients were transferred out-of-county, often by helicopter, to other intensive care units around the state, including some hundreds of miles away in San Francisco and Sacramento. By August, nearly 500 patients in total had been transferred out of Imperial County to approximately 90 hospitals.
An aerial view of the tent structures erected by El Centro Regional Medical Center to triage this year’s influx of COVID-19 patients. Courtesy of ECRMC
Those transfers sometimes took three to four days, according to several members of the hospital staff with whom I spoke. One reason for these delays, as reported by the Wall Street Journal, was that several Southern California hospitals improperly denied or delayed accepting COVID-19 patients based on their insurance status, per the newspaper’s review of internal emails.
In our correspondence, Tomaszewski confirmed these actions were a factor contributing to delays in transfers. He added that the state is “trying to guarantee some kind of payment [to the receiving hospitals], but it’s not always working out.” Multiple studies, meanwhile, have shown that the longer patients are boarded in emergency departments awaiting admission, the worse their mortality rate is.
LaFree believes Imperial County is “headed into the fray again.” Numbers began ticking up in mid-October and took off shortly before Thanksgiving, rising more than 180% in a week, per the CDC COVID data tracker. According to Tomaszewski, ECRMC is seeing 30 to 50 COVID patients per day right now, up from 20 to 30 per day just a month ago, and 30% to 45% of admitted patients are COVID-positive. In preparation, the hospital “has doubled, even tripled ICU capacity,” he said, and canceled all elective surgeries for now so they can shift nurses over to care for COVID patients.
“We are surging,” said Tomaszewski. “It will be really bad starting the week after Thanksgiving, I’m sure.”
At a facility as small as El Centro, the scales of balance can tip quickly. In one day last week, a single physician ran four different code blues of pulseless COVID-19 patients, LaFree told me. As ER physicians, we sometimes don’t have a single patient code for a week or two. Are these providers and caretakers superheroes? I think we have our answer.
‘A heck of a lot more prepared’
El Centro Regional is not a tertiary or quaternary care center, meaning it’s not a hospital with extensive specialty service or care. In the past, the hospital had functioned with just six to eight ICU beds. Now, Edward said, the center has ramped up capacity to 20 ICU beds and hired intensive-care specialists from a nearby hospital to help manage all of the critically ill patients. Edward said the plan is to have 32 or even 42 ICU beds shortly; the primary limitation right now is a countrywide staffing shortfall of ICU nurses.
Because of all this planning and preparation, “We’re not going to be headed to the same place this time,” Edward said. “We’ve got Regeneron’s antibody cocktail, monoclonal antibodies, and other sophisticated treatments, so patients are recovering faster. I think the clinical lessons learned earlier are very critical for us because we’re at a much better place in terms of treatment of the disease.” Added Tomaszewski, “We’ve taken advantage of this opportunity to become a critical-care hospital that is offering high-level care.”
In the time of COVID, preparation is everything. Venktesh Ramnath, medical director of critical care and telemedicine outreach at UC San Diego Health, helped build out the expanded ICU program at El Centro. “I think we’re a heck of a lot more prepared than we were during the first surge,” Ramnath said. “Now we have the engine operating in a real, critical care sort of modern approach. We’re much better staffed, we’ve made outcome improvements…So now some patients are actually coming off the ventilators. They are actually getting better.”
Since the pandemic hit, El Centro Regional has built nine tent structures in its parking lot. Edward, himself retired from the Air Force, noted that the military branch has a saying: “Flexibility is the key to power.” In March, Edward recognized that he needed to build capacity in order to help meet the needs of his county, and the COVID tent is treating approximately 25 patients daily on average in the past week alone.
The ECRMC tents, from ground level. Courtesy of ECRMC
Another tent is dedicated solely for infusions of bamlanivimab, a new monoclonal antibody that has recently received emergency use authorization from the Food and Drug Administration. LaFree said that within days, El Centro “burned through” the 26 doses that the state gave it last week.
Edward has seen projections from now until March of 2021, and they are again troubling. Since his hospital already has been full for most of the last month, his team has just erected a new large tent, a 50-bed medical/surgical unit that will handle non-COVID patients to help decompress hospital bed space.
And transfers of COVID patients likely will continue, with the ICU and hospital at full capacity. Last week, LaFree said, all he could offer one of his COVID patients was transfer to a hospital in Modesto, 520 miles away. His patient refused and went home, only to return 24 hours later “much, much sicker.”
Once again a hotspot, El Centro stands ready but constantly on the verge of being overwhelmed. “What’s scary this time is that it looks like the numbers are blowing up all around California,” LaFree said. “My fear is that we are going to hit a wall transferring patients out this go-round, because other institutions are going to have limited capacity.” LaFree is also concerned about the shortage of available ICU nurses and the acceleration of cases many are predicting following holiday gatherings.
Ramnath has been trying to think outside the box. If staffing issues become a bottleneck, he ruminates that it might be possible to employ an augmented-reality platform (similar to what the Navy uses) for the ICU. “Perhaps you have a less-skilled nurse or physician attending to the patient, but they are coached in real time by someone remotely,” Ramnath said.
It may sound extreme. But with this pandemic, any such solution ought to be at least considered. Very clearly, a vaccine cannot come soon enough. In the meantime, Edward and his team soldier on, treating patients from both sides of the border as COVID 2.0 hits with its full force. Tomaszewski has nicknamed El Centro Regional “The Little Hospital That Could.” Once again, its ability to deliver will be stretched to the limits.
Carolyn Barber, MD, has been an emergency department physician for 25 years. She is cofounder of the homeless work program Wheels of Change and the author of Runaway Medicine: What You Don’t Know May Kill You.


fortune--2020-12-01--Big Chocolate’s trip to the Supreme Court could have big implications for corporations

The S & P 500 has been eerily mirroring 2009 for months .
Now , here ’ s what might @ @ @ @ @

After years facing accusations over child labor, Big Chocolate took its case on Tuesday to the U.S. Supreme Court, with two companies—Nestlé USA and Cargill—arguing that they are not liable for human rights abuses committed on cocoa farms in Ivory Coast, the country that supplies much of the raw ingredient for their chocolates.
At issue is a legalistic question of whether the 18th-century Alien Tort Claims Act, or Alien Tort Statute (ATS), can be used by foreigners to sue U.S. corporations for gross violations abroad, including ones that violate international law like child slavery. That debate seems abstract on the surface, but it could have major implications for American businesses, whose labyrinthine global supply chains may reach into poor countries with patchy labor conditions far away from corporate headquarters.
The foreigners at the heart of Tuesday’s Supreme Court hearing could hardly be a starker contrast to the nine justices sitting in Washington. Six Malian former child slaves were trafficked to Ivory Coast and forced to work up to 14 hours a day, six days a week, without pay, in the backbreaking harvest of cocoa beans, according to the lawsuit brought on their behalf against the two companies. The lawsuit says they slept on the ground under armed guard to prevent them from escaping. Ivory Coast and Mali supply about 70% of the world’s cocoa beans, including large quantities to U.S. chocolate companies. In October, a report commissioned by the U.S. Department of Labor found that 1.5 million children work on cocoa farms, despite repeated promises over the years by the $100 billion industry to try to root out the practice.
On Tuesday, Nestlé and Cargill, as well as the U.S. Solicitor General, asked the Supreme Court justices to throw out the case against them, which has wound its way through years of litigation. It’s a delicate line to tread as they try to defend themselves while still appearing not to condone the horrific abuses child cocoa pickers suffer.
“We are not seeking any sort of corporate impunity,” said Neal Katyal, the attorney arguing the case for both Nestlé, the world’s biggest food services company, and Cargill, one of the biggest privately traded U.S. companies. “We are saying you have to go after individuals.” He argued that the companies’ connection to the specific farms in the case was unproved—and unprovable—and that the ATS law should be used only when the actual wrongdoers are identified.
That argument did not go over well.
Katyal admitted that former slaves could sue a slave owner under the Alien Tort Statute, or even 10 slave owners, but not a company. “So, when those 10 slave owners form a corporation, why can’t you bring a suit against a corporation?” asked Elena Kagan, one of the court’s liberal judges. “What sense does that make?” Under that argument, Kagan said, slave owners would form corporations simply in order “to remove liability from themselves.”
That might well be the case, according to Los Angeles attorney Paul Hoffman, who represented the six former child slaves in Tuesday’s hearing.
Hoffman said U.S. chocolate companies had long tolerated the use of child labor on African farms since it enabled them “to gain a competitive advantage in the U.S. market,” knowing that they could operate cheaply and face few legal risks. “These corporations set up a supply chain where they know cocoa beans are being [farmed] by child labor,” he told the justices. “They knew exactly what they were doing.”
Despite its conservative tilt, the Supreme Court justices—like the chocolate companies—seemed wary of appearing to condone child labor, repeatedly asking Katyal why corporations should not have to face legal consequences for abuses in their supply chain. “Why would we allow suits by aliens only against individuals and only for torts that occurred in the U.S.?” asked Justice Brett Kavanaugh, who was nominated to the court by President Trump in 2017.
Katyal said that since the ATS was enacted about 230 years ago, “there has not been a single case like this ever.”
The justices are expected to rule before June.
But well before then, the incoming Biden administration could choose to withdraw the U.S. government’s support for Nestlé and Cargill and allow the case to advance. That issue—unspoken during Tuesday’s hearings—might have influenced the Supreme Court justices, according to the experts who submitted legal briefs in support of the former child slaves.
“A lot of the questions were quite skeptical of the corporate position,” said Beth Van Schaack, a human rights professor at Stanford Law School, speaking to reporters on a video call after the hearing, along with other legal experts. “This court does not want to be the court that says, ‘Yes, okay, the corporations should be immune on child labor and trafficking.’”
While the case focuses only on the chocolate industry, Hoffman says the impact could extend to many other businesses, including in up to 10 pending Alien Tort Statute cases. “What is at stake is whether the ATS is still available to bring any claims against U.S. corporations for their conduct in forced labor or other issues,” he told reporters. “That is an important question.”


fortune--2020-12-01--Amazon is laying the groundwork for its own quantum computer

Amazon.com is laying the groundwork for a quantum computer, deepening efforts to harness technology that can crunch in seconds vast amounts of data that take even the most powerful supercomputers hours or days to process.
Amazon has been hiring for a Quantum Hardware Team within its Amazon Web Services Center for Quantum Computing, according to internal job postings and information on LinkedIn. Marc Runyan, a former engineer with NASA’s Jet Propulsion Laboratory, lists his title on the professional social network as senior quantum research scientist at Amazon and describes his role as “helping to design and build a quantum computer for Amazon Web Services.”
A spokesman for Amazon Web Services, the company’s cloud-computing group, declined to comment. Runyan didn’t immediately respond to a LinkedIn message.
Proponents of quantum computing say the technology will exponentially improve the processing speed and power of computers, enabling them to simulate large systems and drive advances in physics, chemistry and other fields. Rather than storing information in binary 0s or 1s like classical computers, quantum computers rely on “qubits”, which can be both 0 and 1 simultaneously, dramatically increasing the amount of information that can be encoded.
The technology is in its infancy and largely limited to prototypes and demonstrations. Scientists say practical, widespread applications for quantum computers are likely years away.
Among Amazon’s recent hires are research scientists focusing on designing a new superconducting quantum device as well as device fabrication. Developing its own quantum computer would let Amazon more closely mirror the approach taken by its major cloud rivals. International Business Machines Corp. first made a quantum computer available to the public in 2016 and has rolled out regular upgrades.
Last year, Alphabet Inc.’s Google said it had built a computer that’s reached “quantum supremacy,” performing a computation in 200 seconds that would take the fastest supercomputers about 10,000 years. But with the rivalrous spirit that has characterized the race to build a quantum computer, IBM cast doubt on Google’s claim. In a blog post, it said that a simulation of Google’s task could be done in 2.5 days on a conventional computer with enough hard drive storage, not 10,000 years.
Amazon announced its entry into the arena last year and, in August, launched its first quantum computing service, called Braket, which helps cloud clients experiment with quantum algorithms run on AWS. Once they’ve designed their algorithms, clients can choose to run them on quantum processing systems built by other companies, including D-Wave Systems Inc., IonQ Inc., and Rigetti Computing. At the time, Amazon noted its interest in developing hardware, but stopped short of announcing plans to build its own computer.
One person briefed on Amazon’s plans, but not authorized to discuss them, says the company is using a superconductor model, a similar approach to that used by Google and IBM, among others. The person said Amazon has been on a hiring spree to staff its quantum computing group.
Last year Amazon announced the launch of the AWS Center for Quantum Computing, which aimed to bring together researchers from Amazon, the California Institute of Technology and other academic research institutions to develop new quantum computing technologies.


fortune--2020-12-01--Google Cloud is experimenting with the ‘on-site offsite’ to fuel creativity

In the continuing public health emergency brought about by COVID-19, few companies have done more to encourage their employees to work from home than Alphabet Inc.’s Google. Over the summer, the search and advertising giant announced that it would let employees work from home until July 2021.
But Google’s leaders are also keenly aware that creativity and cohesion can suffer when coworkers don’t share the same physical space. And as Google Cloud CEO Thomas Kurian explained in an interview at this year’s Fortune Brainstorm Tech virtual summit, his division of the company has begun experimenting with a solution: the “on-site offsite.”
Pre-pandemic, tech engineering leaders have long used offsite excursions outside the office to kick off new concepts or develop product plans—”to find uninterrupted time,” as Kurian told Fortune’s Aaron Pressman. “But now with everybody offsite every day, how do you bring people together?”
To make that happen, Google Cloud is now trying out “on-site offsites,” in which staffers gather at company facilities to meet en masse in spaces where they can follow social distancing guidelines. “In some places, on campuses where we have lawns and other things, they sit outside,” Kurian said. “It allows them to have more of a physically intimate team meeting, rather than just doing everything digitally. And we’ve seen that that has helped a lot to bring greater cohesion to some of our teams, particularly for newer employees to meet their managers.”
Such meetings are currently happening only in a few locations where it’s safe and legal to do so and where employees are comfortable with the concept. Kurian characterized that approach as part of a broader Google policy of being ultra-flexible and ultra-local about work environments. “Some parts of the world are largely back to normal. Other parts of the world are still affected,” Kurian said. “And so rather than have a global policy, we’ve been very adaptive, letting leaders in our different cities and countries make decisions because people do work in a local context.”
The global work-from-home situation has helped fuel a boom year for Google Cloud. While cloud services still account for a relatively small share of Google’s overall sales, the company reported $3.4 billion in cloud revenue in the most recent quarter, a 45% year-over-year increase. Research firm Canalys estimates that Google Cloud accounted for about 7% of global cloud infrastructure market share in the quarter, putting it at No. 3 worldwide behind Amazon Web Services (32%) and Microsoft Azure (19%).


fortune--2020-12-01--To address health disparities, we need better data

With what appear to be two (and soon three) safe and highly effective vaccines against COVID-19 hurtling towards the finish line, it has felt like a triumphant few weeks for science.
But of course, on public health’s front lines, the immediate picture is considerably more bleak: the pandemic rages on, and as we reach what may be its most devastating phase yet, the glaring disparities that have defined the pandemic in the U.S.—and disproportionately claimed Black, brown and indigenous populations as its victims—remain. One challenge in responding to, or even understanding, these uneven impacts, is surprisingly basic explained Dr. Este Geraghty, the Chief Medical Officer at Esri, the GIS mapping and analytics company, at Fortune’s Brainstorm Tech conference on Tuesday afternoon: We need better data.
“We need to do a better job of disaggregating aggregate data so we can understand gender issues, race and ethnicity issues, age cohort issues and get a handle with what is going on with different populations,” she said. “In public health and health care, we haven’t had that disaggregation of data at a scale where we can easily do the research and understand what is going on behind aggregate numbers. When you aggregate data, you miss disparities.”
She added the country also need finer-scale data mapping. “When we see mapping across the country, often the best we can do is at the county level. Problems happen at the community level. We need to be able to hone in on what is going on in different communities to make really targeted interventions.”
Dr. Michelle Williams, Dean of the Harvard School of Public Health agreed, stressing how fundamental good data is to public health. “Using data to identify and frame the challenge and identify where the problems are where the vulnerable populations are. Once you get past that, then there has to be very clear effective thoughtful communication about what the risks are of the status quo versus the opportunities for interventions that will make the status quo better.”
Beyond basic COVID stats, Williams highlighted the need to think about food, housing, childcare, and job insecurity to address disparities and public health needs created and exacerbated by the pandemic. “We have to think really think about how interconnected all these functions are for us to reimagine what our communities are going to look like coming out of COVID.”
Both Williams and Geraghty acknowledged the promise of new, less traditional data sources like mobile data and telemedicine uptake information in making sense of public health issues. “Being able to track people’s use of technology will actually help us digitally track phenotypes so we can more quickly and easily identify those people who are isolating, who are moving into depressive episodes and provide treatment faster.”


fortune--2020-12-01--One side effect of the crisis? Employees of color risk losing their networks, Accenture CEO Julie Sw

One side effect of the crisis? Employees of color risk losing their networks, Accenture CEO Julie Sweet warns

The disproportionate impact of the coronavirus pandemic on communities of color and caregivers has been well-documented. But there’s another way people of color are being further disadvantaged by the crisis, this time at work: Their networks are falling behind.
Accenture CEO Julie Sweet joined Fortune Brainstorm Tech on Tuesday, where she sounded the alarm. “Those networks, smaller and more fragile before COVID, have been really challenged in a world where things are remote and it’s harder to connect,” she told Fortune‘s Ellen McGirt.
The racial gap in access to the kinds of personal and professional networks that help career advancement is something Accenture noted before the pandemic, Sweet said. Accenture has worked to help employees of color at its company and beyond maximize their own networks and access new ones, but that progress has been “challenged” by the pandemic.
Sweet, who is No. 1 on Fortune‘s 2020 Most Powerful Women list, advises other companies to ask themselves the question: “Have you focused on the impact of COVID on networks and advancement for your diverse employees?”
The trend is just one way the impact of the crisis is playing out differently for different kinds of employees at work. This perspective is also one that businesses should keep in mind when reopening their offices, for example. “How do you bring people back and not disproportionately affect those who are not able to go back?” Sweet asked, citing employees with young children.


fortune--2020-12-01--Cruise CEO: Self-driving car market is ‘literally trillions of dollars’

Dan Ammann, CEO of Cruise, the self-driving technology subsidiary of GM, is planning to hit the streets of San Francisco this month after receiving permission from California’s Department of Motor Vehicles in October to run fully unmanned vehicle tests there.
At Fortune’s Brainstorm Tech virtual conference on Tuesday, Ammann showed a video of a couple of Cruise’s autonomous cars—still featuring human backup drivers—zipping through the busy city. The demo displayed a representation of the cars’ fields of vision, including Cruise’s computer-modeling of routes, traffic, pedestrians, and other urban obstacles.
Ammann called the DMV’s approval “a real milestone in terms of the technical progress that we’ve made.” He said it represents the beginning of a transition “from R&D mode to the earliest stages of commercialization.”
Last year Cruise indefinitely postponed a commercial, autonomous ride-hailing service it had planned to roll out in San Francisco by the end of 2019. Leaders in the young, buzzy industry have had to temper initially exuberant timeline estimates as they focus on safety and satisfying regulators.
The complexity of the task ahead is not lost on Ammann. “San Francisco is one of the most demanding and challenging driving environments,” he said.
“Some might ask me, ‘Why are we doing this in such a difficult place?’” Ammann continued. “The short answer is that our cities are where the transportation crisis is most severe, and that’s where we believe we can have the biggest impact with this technology. It’s the place where we need to figure out how to make this happen.”
Although Cruise’s rivals, such as Alphabet’s Waymo and Amazon’s Zoox, plus startups AutoX and Nuro, received earlier permission to pilot unmanned cars in the state, none have been testing their tech in such a frenetic environment as the foggy city.
The business opportunity is a large one. Asked to quantify the potential market in terms of revenue, Ammann said, “It’s literally measured in the trillions of dollars.” To be exact: $8 trillion.
That explains why SoftBank’s Vision Fund and Honda plunked down more than a billion dollars of investment in Cruise last year. The fundraising round propelled Cruise’s private market valuation to $19 billion.
But there’s much work to be done before those riches can be realized. “It’s a big moment on the one hand,” Ammann said of Cruise’s San Francisco testing, “but it’s just another waypoint on a much, much longer journey.”
Correction: An earlier version of this article incorrectly implied that Cruise had already begun fully unmanned vehicle testing in San Francisco. The company said it is planning to start these tests before the end of the year.


fortune--2020-12-01--Facebook-backed Libra association changes its name to Diem

Libra Association, a cryptocurrency project started by Facebook that drew regulatory blowback worldwide, is hoping a new name offers a fresh chance to win over regulators and gain a foothold in the emerging market.
The group will now be known as Diem Association, named for the word “day” in Latin, with its subsidiary Diem Networks serving as the payment system operator. It’s readying a currency that will be called the Diem Dollar.
“We like the connotation of it kind of being a new day for the project,” the group’s chief executive officer, Stuart Levey, said in an interview. “We wanted a new start.”
Almost immediately after Libra launched in June 2019, politicians and regulators raised concerns about the effort. They worried about privacy, money laundering and companies like Facebook taking power away from central banks. Supporters like PayPal and Visa fled the project, which initially hoped to attract 100 members before launch.
The new Diem, which has 27 participants today, has abandoned the 100-member goal and is taking things more slowly. The group plans to issue a stablecoin — a digital currency pegged to an outside asset — that’s tied to the U.S. dollar. Later, Diem may pursue additional fiat-based cryptocurrencies, Levey said.
Initially, Libra had proposed creating a cryptocurrency supported by a basket of government-issued fiat currencies and securities.
The association also no longer plans to eventually transition to a so-called permissionless blockchain, which would have let anyone participate in verifying transactions.
Other inner workings of the project may have changed as well. Levey declined to comment on whether investors in the association will end up receiving a special governance coin, as per an earlier plan.
With the project’s ambitions scaled down, its appeal may have dwindled. There’s plenty of competition from existing U.S. dollar-based stablecoins, such as Tether and USD Coin. One rival, called Celo Dollar, is also governed by an association, which attracted many of the same companies that initially flocked to Libra.
Facebook has more than 2 billion users, some of whom may be persuaded to give Diem a try. But the social-networking giant has previously worked to distance itself from Libra. In May, it renamed its Calibra blockchain group Novi to make it sound less like Libra.
The Novi team is building a digital wallet that will eventually hold Diem coins, Levey said.
The Diem effort is waiting to be issued a license by Swiss regulators to launch, Levey said. Diem is also in talks with U.S. federal and state regulators, but isn’t waiting for any specific licenses or approvals from them, he said.
To satisfy regulators, Diem’s system will honor Western sanctions and regulatory reporting requirements.
“All of these design features we think make for a project we think that regulators will welcome,” Levey said, adding that he hopes central banks may wish to use the infrastructure in the future to issue their own digital currencies.


fortune--2020-12-01--Students are falling behind in math during the pandemic

A disproportionately large number of poor and minority students were not in schools for assessments this fall, complicating efforts to measure the pandemic’s effects on some of the most vulnerable students, a not-for-profit company that administers standardized testing said Tuesday.
Overall, NWEA’s fall assessments showed elementary and middle school students have fallen measurably behind in math, while most appear to be progressing at a normal pace in reading since schools were forced to abruptly close in March and pickup online.
The analysis of data from nearly 4.4 million U.S. students in grades 3-8 represents one of the first significant measures of the pandemic’s impacts on learning.
But researchers at NWEA, whose MAP Growth assessments are meant to measure student proficiency, caution they may be underestimating the effects on minority and economically disadvantaged groups. Those students made up a significant portion of the roughly 1 in 4 students who tested in 2019 but were missing from 2020 testing.
NWEA said they may have opted out of the assessments, which were given in-person and remotely, because they lacked reliable technology or stopped going to school.
“Given we’ve also seen school district reports of higher levels of absenteeism in many different school districts, this is something to really be concerned about,” researcher Megan Kuhfeld said on a call with reporters.
The NWEA findings show that, compared to last year, students scored an average of 5 to 10 percentile points lower in math, with students in grades three, four and five experiencing the largest drops.
English language arts scores were largely the same as last year.
NWEA Chief Executive Chris Minnich pointed to the sequential nature of math, where one year’s skills — or deficits — carry over into the next year.
“The challenge around mathematics is an acute one, and it’s something we’re going to be dealing with even after we get back in school,” he said.
NWEA compared grade-level performance on the 2019 and 2020 tests. It also analyzed student growth over time, based on how individual students did on assessments given shortly before schools closed and those given this fall.
Both measures indicated that students are advancing in math, but not as rapidly as in a typical year. The findings confirm expectations that students are losing ground during the pandemic, but show those losses are not as great as projections made in spring that were based in part on typical “summer slide” learning losses.
A November report by Renaissance Learning Inc., based on its own standardized testing, similarly found troubling setbacks in math and lesser reading losses.
The Renaissance Learning analysis looked at results from 5 million students in grades 1-8 who took Star Early Literacy reading or math assessments in fall 2019 and 2020. It found students of all grades were performing below expectations in math at the beginning of the school year, with some grades 12 or more weeks behind.
Black, Hispanic, American Indian and students in schools serving largely low-income families fared worse but the pandemic so far hasn’t widened existing achievement gaps, the Renaissance report said.
NWEA said that while it saw some differences by racial and ethnic groups emerging in its data, it was too early to draw conclusions.
Andre Pecina, assistant superintendent of student services at Golden Plains Unified School District in San Joaquin, California, said his district has scrambled to stem learning loss by issuing devices to all of its students, but the district continues to struggle with connectivity for students at home.
Students who are typically 1.5 grades behind are now two grades behind, he said.
“We’ve really just gone back to the basics where we’re focusing on literacy and math. That’s all we do,” Pecina said.
“I feel like we’re trying our best,” he said. “Our students are engaged, but it’s not optimal. The learning environment is not optimal.”


fortune--2020-12-01--Stimulus update: What the bipartisan senators’ $900 billion package does and doesn’t include

For the latest information on the ongoing stimulus negotiations, please check out our coverage here
On Tuesday, a bipartisan group of senators unveiled a stimulus package in the $900 billion ballpark.
The bipartisan package proposed by senators including Republicans Susan Collins and Mitt Romney, and Democrats Joe Manchin and Mark Warner, would come in around $908 billion. That is well below the $2.2 trillion price tag sought by House Speaker Nancy Pelosi, while far greater than the $500 billion packages voted on this fall by Senate Republicans, though the specifics of the deal are subject to change. Details of the deal were earlier reported by The Washington Post and Politico.
For starters, the bill sets aside $180 billion to pay out weekly $300 enhanced unemployment benefits, which would be paid on top of state benefits. That would replace the weekly $600 enhanced unemployment benefits which expired in late July. In addition, the package would include $82 billion for education, $45 billion for transportation such as airlines, and $25 billion in housing assistance.
The stimulus deal would also include $160 billion in state and local government funding—well under the roughly $900 billion House Democrats had been seeking— and $288 billion in small business funding for the Paycheck Protection Program. The biggest item left out: Another round of $1,200 stimulus checks.
“If there’s one thing I’m hearing uniformly it’s, ‘Congress, do not leave town for the holidays leaving the country and the economy adrift with all these initial CARES [Act] programs running out,’” Sen. Warner said Tuesday on CNBC.
It’s unclear if this bipartisan $900 billion economic aid package will gain traction. At the end of the day, the bill can’t go to a vote without the buy-in from Pelosi and Senate Majority Leader Mitch McConnell. Since talks started in July, Democratic and Republican leaders have been locked in a stalemate on the next stimulus package. Pelosi has called plans under $1 trillion “non-starters” and inadequate to meet the current economic situation. Additionally, some Democrats have viewed this as their only window to get aid dollars for fiscally-drained state and local municipalities—an area in which the bipartisan bill offers just a fraction of their asking price. And on the Republican side, they’ve become wary of another massive stimulus package given job gains: The unemployment rate sits at 6.9%, down from its peak of 14.7% in April.
On Tuesday, Pelosi will speak with Treasury Secretary Steven Mnuchin to discuss a spending bill and coronavirus aid.
At a Senate hearing Tuesday, Mnuchin said he’d “urge Congress to pass something quickly to make sure we get something done in this session,” but it’s unclear if a deal could be struck before January, and many on Capitol Hill are skeptical. And the fate of the bill may well rest with the pair of Senate runoffs in Georgia on January 5 that will determine control of the Senate. If Republicans retain the Senate, Congress will be divided. If Democrats win the chamber, President-elect Joe Biden would enter office with all legislative bodies controlled by his party.


fortune--2020-12-01--Don’t forget the other virus: How to keep COVID from reversing progress on AIDS

Yoram Siame is looking at the canary in the coal mine. A senior leader with CHAZ (Churches Health Association of Zambia), Yoram and his team have spent decades providing young women and girls with HIV/AIDS education and prevention options, and ensuring that HIV-positive pregnant women have access to a drug that blocks the transmission of the virus to their unborn babies. But since March, Yoram has noticed that fewer people are coming to CHAZ’s clinics, out of fear of catching the coronavirus. Many are delaying their visits until they are severely ill, making the risk of infection, or even death, much greater.
Talking about AIDS in the middle of the still-unchecked coronavirus pandemic may seem out of tune. But even as we fight this latest virus, we can’t lose sight of another—one that still infects 1.7 million people each year. The world has made stunning progress in the fight against AIDS, as well as against TB and malaria—but that progress is at risk if we lose our focus and resources dwindle.
As we mark World AIDS Day this week, the alarm bells ringing in Zambia are going off all over the world. A recent survey by the Global Fund to Fight AIDS, Tuberculosis, and Malaria finds that 80% of HIV programs are currently facing moderate to very high disruptions due to the coronavirus; the organization estimates that more than half a million people could lose their lives by the end of next year as a result.
AIDS has been stealing lives and stalling economic progress in many countries for more than 30 years. As with most viruses, everyone is at risk, but that risk is not equally shared. In the U.S., for example, HIV/AIDS disproportionately impacts Black Americans, who make up 12% of the U.S. population but 43% of new HIV infections, according to the Kaiser Family Foundation. In sub-Saharan Africa, which continues to have the highest rates of HIV infection globally, it is young women who face the greatest risk, with double the infection rate of young men. Poverty, inequality, gender discrimination, and social stigma are the powerful forces driving these disparities, but they are challenges to be overcome, not roadblocks.
Almost 33 million people have died from AIDS-related illnesses since 1981, but with lifesaving ARV medication now costing just 20¢ a day, most people with HIV can live long, healthy lives. The challenge is to get more treatment to more people. The number of people we’re reaching is up, with over 25 million on treatment as of 2019 compared with 6.4 million in 2009. And we’ve also learned that treating HIV-positive people stems the spread of the disease. The fact is that we know how to defeat this epidemic, and the world is gaining ground against the virus, but it is equally true that we’re at risk of losing that ground if we don’t maintain and in fact accelerate the pace of our response.
The “we” in the fight against AIDS comprises a broad coalition of governments, foundations, NGOs, multilateral organizations, and, on the front lines, health workers. One of us is (RED), an organization that launched in 2006 with a simple formula to mobilize urgently needed resources: We’d partner with private sector companies who would turn their products or services red—the color that signals the heat of an emergency—and give the proceeds to the Global Fund to Fight AIDS, Tuberculosis, and Malaria. To date, that formula has yielded over $650 million for the Global Fund. And (RED)’s latest commitment is to deliver another $150 million to the Global Fund by the end of 2022, including a $35 million commitment through 2025 by Bank of America.
We hear a lot about partnerships these days, and this is one that works. It reflects (RED)’s commitment to partner with a range of organizations to help address one of society’s biggest issues. In addition, (RED)’s sister organization, the ONE Campaign, is calling on Congress to provide $20 billion for the global response to coronavirus, including for the Global Fund to adapt HIV, TB, and malaria programs to mitigate the impact of coronavirus by training and protecting health workers, reinforcing health systems to prevent collapse, and responding to the coronavirus itself. For decades, Congress has acted on a strong bipartisan consensus that America should lead the fight against AIDS, and it now needs to protect decades of investment while enabling the world to fight two viruses at the same time.
Existential threats like coronavirus and AIDS will not be conquered by any one sector alone, and collaboration is vital. Governments have the biggest role to play, urged on by their citizens and advocacy groups like ONE. But corporations also have the responsibility to help—by providing financial support, expertise, and the power of their global reach.
Many people think AIDS is “old news” and not the present danger that it is for millions of people around the world. We need to turn up the heat on the fight against AIDS, even as we battle another pandemic. But to cut through the cacophony of news that bombards us daily, we need more companies to sign up and more megaphones to alert the world to that canary in the coal mine. The early AIDS activists said that Silence = Death, and they were right. The iconic red ribbon that symbolizes AIDS cannot now be allowed to become a white flag of surrender.
Anne Finucane is vice chairman of Bank of America, and chairman of the board, Bank of America Europe. She leads the company’s environmental, social, governance, and public policy strategy. Gayle E. Smith, former administrator of USAID, is president and CEO of the ONE Campaign. Follow them: @GayleSmith; Linkedin.com/in/AnneFinucane


fortune--2020-12-01--Manhattan hasn’t had this much available office space since 2003

Manhattan hasn’t had this much available office space since 2003, according to a report by Colliers International.
The availability rate rose to 13.5% in November, with more companies looking to sublease their offices, Colliers said.
The pandemic has emptied out Manhattan offices and prompted companies to reconsider how much space they need as they try to trim costs. That’s weighed on the shares of prominent New York building owners SL Green Realy Corp. and Vornado Realty Trust.
Vornado is redeveloping the area around Pennsylvania Station, a bustling commuter hub that has largely gone quiet with many office workers staying home. The company said Tuesday it was cutting jobs and reducing compensation as it trims costs.
For November, 790,000 square feet (73,400 square meters) was leased in Manhattan, down nearly 80% from a year earlier, according to Colliers. With space flooding the market, average asking rents have dropped more than 3% this year and are now at the lowest level since June 2018.


fortune--2020-12-01--Lessons from DeepMind’s breakthrough in protein-folding A.I.

This is the web version of Eye on A.I., Fortune’s weekly newsletter covering artificial intelligence and business. To get it delivered weekly to your in-box, sign up here.
The biggest news in A.I. this week is DeepMind’s breakthrough on protein-folding.
A question that had confounded scientists for more than 50 years—how to use a protein’s genetic sequence to predict the exact three-dimensional shape that a protein will take—has effectively been answered by DeepMind’s A.I. system, which can now predict the structure of a protein to within an atom’s width of accuracy in many cases.
I got exclusive access to DeepMind’s protein-folding team in the run up to Monday’s announcement. You can read my in-depth feature on exactly how the London-based A.I. company accomplished this goal here. You can also read about how its A.I. system, called AlphaFold 2, has already contributed to the fight against the COVID-19 pandemic here.
Today, I’ll highlight some lessons that emerged from DeepMind’s work on AlphaFold 2 that could apply to any company building an A.I. system.
• “Off-the-shelf” A.I. will only get you so far. Two years ago, DeepMind created a different A.I. system to predict protein structures. That original AlphaFold—AlphaFold 1.0 if you will—was pretty good, but not good enough to be very useful for biologists and medical researchers.
John Jumper, the senior researcher who leads DeepMind’s protein folding team, tells me that the original AlphaFold used “relatively off the shelf neural network technology,” in this case a standard type of neural network architecture originally used to classify objects in images. When it came time to try to improve the system, he says, “What we found is we’ve hit a real wall in what we were able to do with these types of techniques.”
To get better performance, DeepMind had to go back to the drawing board and design a neural network that was much more bespoke to the problem it was trying to solve. It began with a first principles question, Jumper says: “What should the solution look like? And how do we put that into our neural network instead of around it?”
That’s an important lesson for companies to remember, particularly if they are considering using outside vendors and pre-built A.I. components.
•End-to-end systems are better than assemblages of components… The 2018 AlphaFold was a collection of parts: one neural network predicted the distance between amino acid pairs in a protein, another tried to determine the most likely angles between them, and a third piece refined the overall structure. By contrast, AlphaFold 2 is what’s known as an “end-to-end system”—it takes the genetic information as an input and directly outputs a three-dimensional structure. It’s a good reminder that end-to-end systems generally achieve better performance.
•…but don’t ignore the “trust” factor. But a big problem with neural networks that perform a task end-to-end is that they can be highly inscrutable. And that opacity can make it difficult for humans using the software to trust it.
In fact, this is why, in 2018, when DeepMind built a different A.I. system to diagnose 50 different sight-threatening eye diseases from a particular kind of eye scan, it used a system consisting of two different neural networks: One took in the raw data from the scanner and turned that into disease features; one then made diagnoses. This allowed human doctors to have more insight into why the diagnostic system was making its decisions.
In the case of AlphaFold 2, what DeepMind has done instead is build in a confidence gauge, which asks AlphaFold 2 to say how confident it is in its own predictions for each part of the protein structure. That confidence doesn’t really explain why AlphaFold 2 is predicting the structure, but it will give biologists and medical researchers some sense of when they should trust the predictions and when to treat them with more skepticism
•Domain expertise matters. DeepMind trounced academic molecular biology labs that had been working on the protein-folding problem for a lot longer. Part of the reason is that while these academic labs are full of people who deeply understand protein structure, they are not computer scientists. DeepMind has a level of machine learning expertise and engineering resources that these academic labs lack. But, that being said, the team required input from protein structure experts. “We are always collaborative with domain experts,” Demis Hassabis, DeepMind’s co-founder and chief executive officer says. Eventually DeepMind even hired some of these experts, like Jumper.
•But having a diverse team matters too. DeepMind also had people on the team from a range of different science backgrounds. That diversity is helpful, Pushmeet Kohli, the head of DeepMind’s A.I. for science division, tells me, because sometimes people coming from outside the field will have an insight that people from within the field can miss.
The key to making a diverse team work? “Respect,” Kohli says. “Being respectful of all different ways that people contribute and all the different insights that all these different people have.”
But, Kohli tells me, each person on the team should never lose sight of the fact that the goal is to solve the problem—not to prove that a particular approach to solving it is the right one. “The problem is the most important thing and everyone is contributing towards it in their own different way,” he says.
•Try more than one “mode” of working. Researchers who worked on AlphaFold 2 told me that they got stuck many times and couldn’t figure out how they were ever going to make more progress. In such moments, Hassabis says, it is worth switching between two different modes of working: One, which he calls “strike mode,” involves pushing the team to ring as much performance as possible out of the existing approach. But, when this stops working, he says, it is critical to switch to a “creative mode.” In this work style, Hassabis no longer presses the team on performance—in fact, he tolerates and even expects some temporary declines—and instead encourages the team to experiment widely. “You want to encourage as many crazy ideas as possible, brainstorming,” he says.
While some people can work equally well in both modes, others are more comfortable with one work style. Hassabis says it is important to recognize this—and even be prepared to change up the team’s composition and bring in fresh people with new ideas or people better suited to a particular work mode.
Now, here’s the rest of this week’s A.I. news.
Jeremy Kahn
@jeremyakahn
jeremy.kahn@fortune.com
A.I. IN THE NEWS
Facebook's use of A.I. for content moderation under fire for failures. Last month Facebook announced that its automated content moderation systems had gotten good enough that they would take over triaging the posts that are brought to the company's 15,000 human content moderators for review. But the new system doesn't seem to have pleased many folks. Bloomberg reported that many small businesses have had their advertising accounts banned in error by the new software and that they've been unable to get the company to address the problems. Facebook has issued a statement apologizing for "any inconvenience recent disruptions may have caused" but the underlying issue does not seem to have been remedied.
For more about how Facebook is using A.I. across its business and whether it is actually making a dent in the company's massive issues with hate speech, disinformation, phony accounts and more, tune into Web Summit for my fireside chat with Mike "Schrep" Schroepfer, Facebook's chief technology officer, on December 2nd at 7:25 p.m. GMT (2:25 pm EST).
ServiceNow acquires Element AI. The Montreal-based Element AI, which builds machine learning systems for industry customers, is being acquired by ServiceNow, the cloud-based IT services company, for $500 million, according to a story in TechCrunch. The acquisition represents a major push into A.I. for ServiceNow, which is now being helmed by former SAP CEO Bill McDermott, who has made a series of deals recently as he seeks to turn ServiceNow into a one-stop shop for managing companies' digital transformation efforts.
Cerebras claims its massive A.I. computer chip can map fluid dynamics faster than a supercomputer. The Silicon Valley-based A.I. computer chip startup says that its CS-1 system, which consists of a single 18-gigabyte chip that has to be kept in a cooling device about the size of a mini-refrigerator, was 200 times faster at running a complex fluid dynamics simulation than the U.S. Department of Energy's Joule supercomputer, according to a story in tech publication The Register. But the CS-1 was only racing against Joule's largest processing cluster, consisting of 16,384 cores, and not Joule's complete arsenal of 84,000 cores. Plus, "the results should be taken with a pinch of salt," The Register cautions, "as the company has yet to publicly disclose its chip performance in more typical benchmarking tests used for AI and machine learning."
FAA gets closer to approving commercial drones that can operate autonomously. In a move that brings drone delivery operations in the U.S. one step closer to reality, the U.S. Federal Aviation Authority has issued airworthiness criteria for 10 drones, some of which are designed to operate autonomously out of the line of sight of their operators, the agency said. The criteria were issued for drones made by Amazon, as well as startup Airobtoics, Zipline and Wingcopter, among others.
A Supreme Court case could make it easier for researchers to find security flaws in A.I. systems. This week the U.S. Supreme Court heard oral arguments in Van Buren v. United States which will test whether cybersecurity researchers are potentially violating the 1986 Computer Fraud and Abuse Act (CFAA) when they try to find vulnerabilities in existing software and systems. A lower court ruled that this sort of research should not run afoul of the law. If the Supreme Court agrees, it will also make it easier for researchers interested in adversarial machine learning—a field of research which deals with how A.I. systems can be tricked into incorrect classification decisions or predictions. But if the Court reverses the lower court and says that security researchers can be prosecuted for improper use of software, it is likely to have a chilling effect on the field, according to a story in Venture Beat. My colleague Aaron Pressman also has more about the law and the case in Monday's Data Sheet newsletter.
Archaeologists are using machine learning to take the grunt work out of their jobs. A.I. is starting to have a major impact on science, as the DeepMind protein-folding breakthrough shows. But so far, most uses of machine learning in science are less about these fundamental advances and more about process: automating time-consuming and tedious data-collection processes, as a story in The New York Times demonstrates. The paper looks at how A.I. is being used to spot possible Scythian burial mounds in satellite images, count and classify Roman pottery sherds, or identify human bones illegally being sold on the Internet.
EYE ON A.I. TALENT
ABBYY, a digital intelligence and robotic process automation company based in Milpitas, California, has named Weronika Niemczyk as chief people officer, the company said in a statement. Niemczyk previously led human resources Ascential, a British media business specializing in events, exhibitions and festivals.
Orbital Insight, the Palo Alto, California-based satellite imagery analytics company, has appointed Kevin O'Brien as its new chief executive officer, the company said in a news release. O'Brien had previously been the company's chief operating officer. Company founder James Crawford, who had been CEO, is transitioning to become chairman of the board as well as chief technology officer.
EYE ON A.I. RESEARCH
Your fancy-pants sales forecasting A.I. might not be as good as you think. That's the conclusion of a study conducted by researchers from Naver, the South Korea Internet company. In a paper published on the research repository arxiv.org, the Naver team looked at the performance of probabilistic time-series models that have become popular lately for sales forecasting tasks and compared them to a simpler machine learning model and to linear regression. The bad news? Both the simple methods outperformed three supposedly state-of-the-art probabilistic A.I. techniques.
Part of the problem, the researchers report, is that past tests of the probabilistic methods mostly evaluated them on whether they were above or below a certain limit, but not how well they did at forecasting a precise future sales figure. But having an exact forecast "is essential in industries that require specific numbers, such as the number of delivery people in a logistics company." What's more, many of the more sophisticated sales forecasting models had erratic performance on different tests, the researchers found.
They issued a fairly stinging indictment of the way research on probabilistic models has been conducted and suggest that many previous studies may have cherry-picked the data used to evaluate these systems. "Prominent probabilistic time-series models do not work effectively especially for other datasets not used in the original papers," the researchers report.
FORTUNE ON A.I.
As libraries fight for access to e-books, a new copyright champion emerges—by Jeff John Roberts
This new VR simulator helps you prepare for the most awkward office encounters—by Lee Clifford
Why India’s software startups are poised for global dominance—by Atul Jalan and Brewer Stone
Know when to fold ’em: How a company best known for playing games used A.I. to solve one of biology’s greatest mysteries—by Jeremy Kahn
BRAIN FOOD
The technological arms race between the U.S. and China over artificial intelligence is growing.
Both nations believe that A.I. could give their respective militaries a big strategic and tactical advantage. But Avi Goldfarb and Jon Lindsay take a sober look at just what kind of military advantage A.I. may convey in a new report published by The Brookings Institution. The answer, they say, has as much to do with the human strengths of the military organization using A.I. as it does the technological capabilities themselves.
"In cases where decision problems are well-defined and plentiful relevant data is available, it may indeed be possible for machines to replace humans. In the military context, however, such situations are rare. Military problems tend to be more ambiguous while reliable data is sparse. Therefore, we expect AI to enhance the need for military personnel to determine which data to collect, which predictions to make, and which decisions to take."
Goldfarb and Lindsay say that it is critical that junior military staff understand the data that is fed into automated decision systems, and how an enemy might try to target or manipulate that data. More human judgment is needed in the lower ranks, not less.
They also write that having better A.I. prediction systems may also lead to a kind of analysis-paralysis on the part of human decision makers: "Ironically, however, the same organizational capacity that enables judgment, and thereby makes war fighting more predictable and controllable, also has the potential to make conflict more ambiguous and less decisive. In short, the ability to automate aspects of decisionmaking can make it harder to come to a decision within an organization or on the battlefield."
Do these same lessons apply in many business contexts? I am always wary about analogies between business and war, and between the organization of militaries and companies, but my guess is that they probably do.


fortune--2020-12-01--Ex-Tesla employee who tussled with Elon Musk must pay up

A former Tesla employee who locked horns with CEO Elon Musk has agreed to pay the company $400,000 for telling reporters about production delays at its Gigafactory in Nevada, according to a court filing.
The payment is part of a proposed settlement of a lawsuit Tesla filed in 2018 that accused Martin Tripp of illegally divulging trade secrets about the production of Tesla’s Model 3.
As part of the accord, Tripp admitted to violating trade secret laws and confidentiality agreements. He also owes Tesla an additional $25,000 for previously revealing information about the company, despite being ordered to stop by a judge.
Tripp was a process technician at Tesla’s Gigafactory from 2017 to 2018. While still at the company, he sent emails to reporters saying that it would be unable to reach Musk’s publicly stated goal of producing 5,000 Model 3s a week.
Tesla fired Tripp when the company found out he was the source of the information. Subsequently, he and Musk publicly traded insults.
Tripp countersued Musk for defamation, but the federal judge handling the case threw it out, ruling that the technician had failed to show that the CEO had acted with actual malice.


fortune--2020-12-01--Kohl’s replaces J.C. Penney as Sephora’s U.S. big retail partner

It’s “Hello, Kohl’s—farewell, J.C. Penney” for Sephora.
The beauty retailer will open 850 permanent Sephora shops inside Kohl’s stores by 2023, the companies said on Tuesday. The 2,500 square-foot shop-in-shops will replace the arrangement Sephora has had for years with J.C. Penney, which earlier this year filed for bankruptcy protection and has closed hundreds of stores.
The 10-year partnership will instantly catapult Kohl’s into the major leagues of beauty, a category in which it has tried to carve a niche for itself in recent years to little avail, putting it at a big disadvantage among rivals like Penney and Macy’s. And it will allow Kohl’s, which has 1,100 stores in all, to better compete with its strip-mall rivals Ulta Beauty and Target, which announced a similar arrangement only three weeks ago.
Kohl’s shares rose 15% Tuesday morning on the news.
Sephora and Kohl’s, which started talking about the potential partnership around the time Penney filed for Chapter 11 bankruptcy in the spring, will start with 200 locations next year, and build up to 850 by 2023.
The shops will offer some 100 brands, many higher-end and quite a few exclusive to Sephora, and will carry about 90% of what a stand-alone Sephora does. Sephora will train the Kohl’s employees staffing the shops. They will replace Kohl’s current beauty areas.
In October, Kohl’s chief executive Michelle Gass announced a turnaround plan to return the retailer to growth after years of treading water. The strategy hinges on finally developing a sizable beauty business, essential for drumming up store traffic and winning the younger shoppers Kohl’s needs to survive.
“By partnering with Sephora, this will quickly help Kohl’s become a leading player and destination in the beauty industry,” Gass told Fortune.
For Sephora, which is owned by French luxury conglomerate LVMH, the partnership is a way to replace business lost amid the hundreds of J.C. Penney store closings in recent years. When Penney and Sephora struck their deal in 2006, Penney was about three times its current size in terms of store count and revenue. (In an emailed statement, J.C. Penney said that the company’s partnership with Sephora “remains strong and will continue until the end of the agreement. In tandem with operating Sephora inside J.C. Penney throughout that time period, we are developing a new, inclusive beauty concept that offers our customers a wide array of product.”)
What’s more, Sephora stores tend to be in city centers, minimizing overlap with Kohl’s. So the thinking is that Kohl’s will get Sephora in front of new customers and away from the shopping malls that are home to Penney and have been withering for years. The vast majority of Kohl’s stores are in strip centers or stand-alone.
“The problem we had is that our store network is primarily in urban malls and downtowns,” said Jean-André Rougeot, president and CEO of Sephora Americas, in an interview. He added that his stores “don’t allow us to reach deep into suburbia.” For Sephora, the hope is to reach “many millions of new customers,” Rougeot said.
Kohl’s will give Sephora prime real estate within its stores and at many locations will have large signage on the exterior of the store.
The challenge for Kohl’s will be to avoid the trap Penney fell into, thinking that Sephora was a panacea to its overall difficulties. In the past few years, Penney struggled to get people coming into its Sephora shops to visit the rest of the store.
Kohl’s is betting that its strategy to build up its activewear business centered on Nike, Under Armour, and Adidas by 30%, and to reinvigorate its housewares business while dropping weak store brands, will make its stores more alluring.
“Winning in beauty is a key part of that,” said Gass.
Editor’s note: This story has been updated to include a statement from J.C. Penney.


fortune--2020-12-01--Facebook’s latest acquisition pushes outside its comfort zone

As if to thumb its nose at regulators readying imminent antitrust suits, Facebook snuck in an acquisition yesterday.
The media giant is buying Kustomer, a service that helps companies manage interactions with—you guessed it—customers. Imagine seeing an advertisement for an Alpaca wool coat on Instagram, sending its Peru-based retailer a DM, and then shifting the conversation to WhatsApp. Later, when you realize this essential wardrobe item doesn’t fit properly, you might try to return it by contacting the business through Facebook Messenger. Kustomer tracks all that and helps automate the business-to-customer correspondence.
Facebook’s deal, worth about $1 billion according to sources, may seem minor compared to others in the works. S&P Global just agreed to pay $44 billion to buy financial data provider IHS Markit in what is so far the biggest non-Chinese M&A move of the year. Salesforce is expected to lay out at least $20 billion, and likely more, for office chat app Slack after reporting earnings later today. What’s a piddling billion next to these titanic tech mega-mergers?
For one thing, Facebook is undertaking its purchase just days before federal and state authorities are planning to file antitrust lawsuits against the company, per the Wall Street Journal. Regulators are concerned about the tech giant’s dominance and its habit of squashing competition, frequently through M&A. (Remember that $1 billion buyout of a tiny startup called Instagram?)
The timing may be propitious though. Perhaps Facebook wishes to ink a deal before the lawsuits land and the company comes under even closer scrutiny. Or maybe it believes it better make moves now, before a possibly less-permissive—indeed, potentially trust-busting—Biden administration enters the White House. Maybe, too, in this particular case, the sheer explosion of online shopping this season—forecast to be up by a third year over year, to $189 billion by year-end, per Adobe Analytics—proved persuasive.
The acquisition is bold for another reason. It hints at how intent the company is on expanding its business model from the mainstay of advertising to a new growth area: e-commerce. This is an existential move for Facebook, which has seen advertising revenue affected by ad sponsor boycotts and the rise of rivals like Snapchat, Pinterest, and latest flavor-of-the-week TikTok.
Recent changes across Facebook’s stable of apps point the way ahead. Facebook, the stalwart app, beefed up its online marketplace amid the pandemic. Instagram added a whole new tab devoted to shopping last month. Just this year WhatsApp added shopping buttons, amped up its offerings for businesses, and even debuted in-app payments in India. Libra, the Facebook-led payments platform since renamed Diem, is said to be eyeing a 2021 launch.
Later today I’ll be interviewing Will Cathcart, head of WhatsApp, at Fortune’s Brainstorm Tech conference. We’ll be discussing all the changes and challenges facing Facebook as well as his messaging app’s pandemic-fueled growth. The event kicks off at 1 P.M. ET, and my session, which closes out the first day, starts at 3:15 P.M. ET. It’s just one of the many conversations my colleagues and I will be hosting about where the world is headed from the people who are building the future.
Robert Hackett
Twitter: @rhhackett
robert.hackett@fortune.com
THREATS
Zoom nom nom. Zoom's earnings report blew out Wall Street analyst expectations. The teleconferencing darling posted a lucky $777 million in revenue, a figure that quadrupled, for the second consecutive quarter, year over year. (Analysts predicted $694 million in revenue.) Even so, investors had hoped for more; Zoom's share price opened nearly 13% down compared to yesterday. People are never content.
Git 'er done. Zoom isn't the only company whose use has surged during the pandemic. Gitlab, a private startup that competes with Microsoft's Github as a code-sharing repository, is getting a boost. The company is letting some employees sell shares at a price that would value the company at $6 billion, CNBC reports. That's more than double the $2.7 billion private market valuation Gitlab earned in a September 2019 venture capital fundraising round. Word on the Street is the firm could go public next year.
The Elysee levy. Apple and Amazon were notable absences from a list of Big Tech executives—including Google, Microsoft, and Facebook—who signed French President Emmanuel Macron's "tech for good" call. A big sticking point: The initiative includes a commitment that companies agree to pay a fair share of taxes. Southeast Asian governments are seeking a cut of the action though digital business taxes too. Meanwhile, Facebook, one of the French pledge-signers, says it will pay UK media outlets millions of pounds per year to license their articles.
Tasting forbidden fruit. Apple is among the companies, including Nike and Coca-Cola, lobbying to limit provisions in a bill that would ban imported goods made with forced labor in China's Xinjiang region, the New York Times reports. The bill has broad government support across the aisle and is expected to be signed into law. Meanwhile, Apple is hiring Josh Elman, a former investor at Greylock Partners with a knack for spotting hits like Discord, to work on the App Store. Perhaps the former head of product at investing app Robinhood will help smooth over relationships with developers.
Market movers. Salesforce is expected to announce its rumored-to-be-pending acquisition of Slack after reporting earnings at market close today, CNBC reports. Airbnb released a filing this morning that says it plans to price its IPO shares between $44 and $50, a range that would grant the company a market valuation as high as $35 billion. Electric vehicle startup Nikola's stock crashed after GM turned tail on a planned investment and co-development deal. And, in the past 24 hours, Bitcoin hit an all-time high just under $20,000, then promptly crashed to $18,360, before rebounding to $19,300 (where it is trading as I write this morning).
We'll always remember you, Star Wars jeans guy.
ACCESS GRANTED
As noted above, Google's DeepMind A.I. division figured out something spectacular: How to determine the complicated folding structure of proteins, an achievement with big implications for medicine. Here's Fortune's own Jeremy Kahn with the inside track on how a game-playing computer system sliced open this Gordian Knot of computational biology.
By then, [Demis Hassabis] had already embarked on the crusade that would lead him to co-found DeepMind in 2010: the creation of artificial general intelligence—software capable of learning to perform many disparate tasks as well or better than people. DeepMind’s lofty goal, Hassabis once said, was “to solve intelligence, and then use it to solve everything else.” Hassabis already had an inkling that protein folding just might be one of those first “everything elses.”
FORTUNE RECON
Cyber Monday sales could hit a record $12.7 billion. Can retailers handle the surge? By Phil Wahba
Meet Rumble, the YouTube rival that’s popular with conservatives by Danielle Abril
Why today’s GM news is devastating for Nikola by David Z. Morris
DeepMind’s new protein-folding A.I. is already helping in the fight against COVID-19 by Jeremy Kahn
Know when to fold ’em: How a company best known for playing games used A.I. to solve one of biology’s greatest mysteries by Jeremy Kahn
FCC chief who ended net neutrality says he’ll quit on Jan. 20 by Todd Shields
How water-resistant is the iPhone? Italian watchdog says Apple’s claims are overblown by David Meyer
(Some of these stories require a subscription to access.Thank you for supporting our journalism.)
ONE MORE THING
As Aaron wrote about yesterday, the Computer Fraud and Abuse Act—America's controversial, Reagan-era anti-hacking law—is finally getting its day in court. The legal eagles of the U.S. Supreme Court heard oral arguments yesterday. It's unclear which way the court will rule, but it appears some Justices are at least sympathetic to the idea that the law needs reining in. Justice Neil Gorsuch said some readings of the law, including the government's own, risked “making a federal criminal of us all."


fortune--2020-12-01--The 2020 election’s polling errors are eerily similar to four years ago

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Joe Biden was forecast to win the election comfortably with wide margins. And while he did pull out a victory—claiming 306 electors—the state-level results are much closer than expected: The Democratic nominee was forecast by Nate Silver’s FiveThirtyEight to win Wisconsin by 8.3 percentage points and Pennsylvania by 4.7 points, however, he took the states by only 0.6 points and 1.2 points, respectively.
So just how far off are pollsters and forecasters?
Now that most states have certified their election results, Fortune calculated 2020 model/polling errors. The difference between a battleground state’s projected margin and the final result is its “polling error.”
We found that polling errors this cycle are on par with those of 2016. In the 14 battleground states, FiveThirtyEight was off by an average margin of 4.1 points in 2020.* In those same battleground states, FiveThirtyEight was off by an average margin of 3.4 points in 2016. Talk about déjà vu.
This time around the backlash to pollsters is likely subdued by the fact that the forecasted 2020 winner (Biden) came out on top. Despite similarly big model errors in both years, FiveThirtyEight got the winner wrong in only two states this year: Florida and North Carolina. In 2016, that happened in five states: Florida, Michigan, North Carolina, Pennsylvania, and Wisconsin.
And it wasn’t just FiveThirtyEight. The Economist’s model was off by an average margin of 4.5 points in 2020 battleground states, according to Fortune calculations. RealClearPolitics poll averages were off by an average of 2.9 points in 2020, compared with an average miss of 3 points in 2016. The industry goal is to keep those figures under 2 points.
Almost without exception, 2020 model and polling errors were in Trump’s favor. The Republican outperformed FiveThirtyEight’s forecast in all 14 battleground states with his biggest surprises coming in the Midwest. The largest error came in Wisconsin where Trump outperformed the model by 7.7 points. That was followed by Ohio, where Trump won and outperformed the model by 7.4 points, and Iowa, where the President pulled out a win following a 6.8 point swing in his favor.
The President’s strong performance in the Badger State might have even been a shock to the Trump campaign. In the final weeks of the campaign, Trump was pulling ads in the state and moving money to Pennsylvania. In the end, Biden’s Pennsylvania win (1.2 points) was twice the size of his Wisconsin win (0.6 points).
These polling errors—especially in the Midwest—are eerily similar to those from four years ago. In fact, FiveThirtyEight’s three biggest battleground misses in 2020 are the same three states where it had the largest model errors in 2016: Iowa (6.6 points), Ohio (6.2 points), and Wisconsin (6.0 points).
Following the big battleground misses in 2016, a study commissioned by the American Association for Public Opinion Research concluded polling—which feeds models like FiveThirtyEight’s—had missed some of Trump’s white working-class vote by not weighing survey populations by education. Heading into 2020, many pollsters revised their methodologies to account for that error. But the similarly big 2020 polling misses show that alone didn’t fix it.
So what exactly is driving the errors?
A leading theory: Trump supporters are simply less likely to respond to pollsters. The President has repeatedly called unfavorable polls “fake news.” Supporting this theory is the fact that in recent years telephone polls have seen their response rates decline. Dan Wagner, CEO of Civis Analytics and former chief analytics officer for Barack Obama’s 2012 election campaign, told Fortune that these non-responding Trump supporters are likely contributing to the polling errors. To help account for the issue, Civis Analytics, which does work for Democratic campaigns, increased its investments in outreach methods and statistical controls prior to the election cycle.
The title for most accurate pollster this cycle goes to IBD/TIPP, which had Biden up 4 points nationally. As of Tuesday, Biden leads Trump in the popular vote by 4 points, well under the RealClearPolitics national poll average of 7.2 points. Raghavan Mayur, president of TechnoMetrica (IBD’s polling partner), told Fortune they were successful by not relying on one single polling method, instead using a combination of outreach by mobile phone, landline, and online.
So what’s the deal for future election cycles? Expect pollsters to do some serious soul-searching and evaluations of their methodologies.
*Battleground states as determined by Fortune include Arizona, Florida, Georgia, Iowa, Maine, Michigan, Minnesota, Nevada, New Hampshire, North Carolina, Ohio, Pennsylvania, Texas, and Wisconsin.


fortune--2020-12-01--Why Facebook just made one of its biggest acquisitions yet

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It might be facing scrutiny from antitrust regulators—but Facebook has just made one of its largest bets yet.
On Monday, the social media giant announced plans to acquire Kustomer, a customer management platform. While Facebook was mum on the financial terms of the transaction, sources at multiple publications peg the price at around $1 billion—below the acquisitions of Whatsapp for $19 billion and Oculus VR for $2 billion in 2014, but in the range of the famed acquisition of Instagram for $1 billion in 2012.
So why is Facebook making the acquisition? Facebook has been growing its base of e-commerce tools in a bid to increase its business users. In May, Facebook rolled out Facebook Shops, which allow businesses to create online stores via Facebook or Instagram. Whatsapp recently made it possible for businesses to chat directly with customers through the app. The pandemic seems to have only accelerated the focus on the sector.
“Increasingly, texts and messages have become just as important as that phone call—and businesses need to adapt,” Facebook’s Vice President of Ads and Business Products Dan Levy and Whatsapp COO Matt Idema wrote in a post on the Kustomer acquisition. “Messaging provides a better overall customer experience and drives sales for businesses.”
Companies that focus specifically on customer communication—like Twilio—have lately seen demand for both their services and stock soar.
That said, while Facebook may be best known for its social media platform rather than customer support business, the Kustomer acquisition will undoubtedly add to the antitrust grilling it is currently undergoing. Federal and state antitrust authorities are expected to file new lawsuits against Facebook or Google by the end of January, according to the Wall Street Journal.
But Facebook will still argue that Kustomer is not a core part of its business and is not a social networking app. As a Facebook spokesperson told the New York Times: “We will continue to demonstrate to regulators that competition in the technology sector is vibrant.”
Lucinda Shen
Twitter: @shenlucinda
Email: lucinda.shen@fortune.com
VENTURE DEALS
- Scale AI, a San Francisco-based A.I. training startup, raised $155 million in funding. Tiger Global led the round valuing it at over $3.5 billion.
- FLEXE, a Seattle-based on-demand warehousing and fulfillment company, raised $70 million in Series C funding. Investors included Activate Capital, Tiger Global, Madrona Ventures, Redpoint Ventures, Prologis Ventures, and T. Rowe Price Associates.
- Spotlight Therapeutics, a San Francisco-based company developing non-viral gene editing therapeutics for direct in vivo editing of target genes, raised a total $30 million. GV led the Series A.
- Ankorstore, a Paris-based marketplace for specialist brands and neighbourhood retailers, raised €25 million ($30 million) in Series A funding. Index Ventures led the round and was joined by investors including GFC, Alven and Aglaé.
- Ekimetrics, a Paris-based data science company, raised €24 million ($28.7 million) in funding. Tikehau Capital and Bpifrance are the investors.
- Proscia, a Philadelphia-based provider of computational pathology software, raised $23 million in Series B funding. Scale Venture Partners led the round and was joined by investors including Hitachi Ventures.
- Infogrid, a London-based startup adding IoT devices to existing buildings, raised $15.5 million in Series A funding. Northzone led the round and was joined by investors including JLL Spark, Concrete VC, The Venture Collective, and Jigsaw VC. Read more.
- Databand, a New York and Tel Aviv-based maker of data health monitoring software, raised $14.5 million in Series A funding. Accel led the round and was joined by investors including Blumberg Capital, Lerer Hippeau, Ubiquity Ventures, Differential Ventures, F2 Venture Capital, and Bessemer Venture Partners.
- Totum Labs, a San Diego, Calif.-based satellite tracking company, raised $13 million in Series A funding. Heroic Ventures and Space Capital led the round and were joined by Qualcomm Co-founder Dr. Andrew Viterbi and Qamcom.
- iVexSol, a Worcester, Mass.-based maker of products for gene therapy programs, raised $13 million in Series A funding. Investors in the company have included Casdin Capital and BioLife Solutions .
- vivenu, a German-based maker of a ticketing platform, raised €12.6 million ($15.1 million) in Series A funding. Balderton Capital led the round and was joined by investors including Redalpine.
- Deduce, a New York-based provider of cybersecurity, raised $7.3 million in seed funding. True Ventures led the round and was joined by investors including Ridge Ventures.
- Sanity Group, a Berlin-based provider of a CBD brand, raised $4.8 million from celebrity investors including musician Will.i.am, actress Alyssa Milano, German soccer player Mario Goetze and model Stefanie Giesinger along with Bitburger Ventures.
- Fakespot, a New York-based maker of a way to check for scams on Amazon, Walmart and Shopify sites, raised $4 million in Series A funding. Bullpen Capital led the round and was joined by investors including Graph Ventures, Ty Shay, 500 Startups, and Faith Capital Holdings.
- Reposite, a New York-based maker of software for travel agents and advisors, raised $2.5 million in funding. Liberty City Ventures led the round.
- Contingent, a London-based supplier risk and resilience company, raised $2.3 million in seed funding. Connect Ventures led the round.
- SuperNormal, a maker of an A.I. platform for business video recordings, raised $2 million in seed funding. EQT Ventures led the round.
- Phood Solutions, a New York-based food supply chain company, raised $2 million in seed funding. New Stack Ventures led the round alongside Story Ventures.
PRIVATE EQUITY
- Francisco Partners agreed to acquire CDK Global’s (Nasdaq:CDK) International business segment, a provider of automotive retail software solutions in EMEA and Asia, for $1.5 billion. Financial terms weren't disclosed.
- Vista Equity Partners acquired Gainsight, a San Francisco-based provider of customer support software, for about $1.1 billion.
- AEA Investors made a majority investment in Process Sensing Technologies, a Boston, Mass.-based maker of monitoring equipment. Battery Ventures will maintain a minority stake in the business. Financial terms weren't disclosed.
- ASGARD Partners & Co agreed to acquire a controlling stake in Angstrom Technology, a Grand Rapids, Mich.-based provider of cleanrooms. Financial terms weren't disclosed.
- Alliance Holdings, backed by Align Capital Partners, acquired Almega Environmental, a Cypress, Calif.-based provider of ambient air testing, on-site analysis and EPA compliance to the manufacturing, metals and renewable energy industries. Financial terms weren't disclosed.
- CarepathRx, backed by Nautic Partners, acquired UPMC's Chartwell subsidiary, which includes specialty pharmacy and home infusion services. UPMC will become a strategic investor in CarepathRx. Financial terms weren't disclosed.
- Entrepreneurial Equity Partners invested in Salm Partners, a Denmark, Wis.-based manufacturer of fully cooked sausages. Financial terms weren't disclosed.
- Select Rehabilitation, backed by Flexpoint Ford, acquired RehabCare, a Louisville, Ky.-based provider of rehab services, from Kindred Healthcare. Financial terms weren't disclosed.
- SFERRA Fine Linens, owned by Highlander Partners, acquired Pratesi, an Italian-based maker of luxury linens. Financial terms weren't disclosed.
- Core Specialty Insurance Holdings recapped StarStone U.S. Holdings, an insurance provider. SkyKnight Capital, Dragoneer Investment Group, and Aquiline Capital Partners led the recap. Financial terms weren't disclosed.
- Paceline Equity Partner will acquire the assets of Quick Fitting, a Providence, R.I.-based supplier of fitting devices such as pulling and connecting copper, stainless steel, PEX, and CPVC piping in plumbing. Financial terms weren't disclosed.
EXITS
- MidOcean Partners acquired FullSpeed Automotive, a Greenwood Village, Co.-based provider of car services including oil changes, tire sales and rotations, brake services, and car washes, from CenterOak Partners.
- Zimmer Biomet (NYSE: ZBH) acquired A&E Medical Corporation, a provider of musculoskeletal care, from Vance Street Capital, for $250 million.
OTHER
- GlobalWafers says it is in talks to acquire Siltronic AG, a German silicon wafer manufacturer for about €3.8 billion ($4.5 billion). Read more.
- PPG (NYSE:PPG) agreed to acquire Ennis-Flint, a Greensboro, N.C.-based manufacturer of coatings and pavement marking products for about $1.2 billion.
- SoftBank invested about $690 million in Sinch, a Sweden-based cloud communications platform.
- Blackstone (NYSE: BX) agreed to acquire DCI, a San Francisco-based quantitative credit investing firm with $7.5 billion in assets under management. Financial terms weren't disclosed.
- ServiceNow (NYSE: NOW) agreed to acquire Element AI, a provider of A.I. Financial terms weren't disclosed.
- Seismic acquired Grapevine6, a Toronto-based social and digital sales engagement platform. Financial terms weren't disclosed.
IPO
- Doordash, a San Francisco, Calif.-based food delivery company, plans to raise $2.6 billion in an offering of 33 million shares priced between $75 to $85, potentially valuing the firm close to $31 billion. The SoftBank Vision Fund and Sequoia Capital back the firm. Read more.
- C3.ai, a Redwood City, Calif.-based company developing ways to deploy AI applications, plans to raise $504 million in an offering of 15.5 million shares priced between $31 to $34. Existing investor BlackRock and new investor Capital Research Global Investors plan to buy 20% of the shares in the IPO while Koch Industries and Microsoft plan to buy $150 million worth of shares in a private placement. TPG and Baker Hughes back the firm. Read more.
- Seer, a Redwood City, Calif.-based maker of analysis tests for biomedical research, says it plans to raise $150 million in an offering of 8.8 million shares priced between $16 to $18. Investors Fidelity, SoftBank, T. Rowe Price, and aMoon Fund will also acquire $135 million in shares via private placement. Read more.
- Sigilon Therapeutics, a Cambridge, Mass.-based biotech developing therapeutics for chronic diseases, plans to raise $101 million in an offering of 5.6 million shares priced between $17 to $19. Flagship Pioneering and Eli Lilly back the firm. Read more.
- Kinnate Biopharma, a San Diego, Calif.-based oncology biotech, plans to raise $170 million in an offering of 10 million shares priced between $16 to $18. Its backers include Foresite Capital, OrbiMed, and RA Capital Management. Read more.
- Silverback Therapeutics, a Seattle-based company developing therapies for solid tumors, says it plans to raise $125 million in an offering of 7 million shares priced between $17 to $19. Orbimed and U.S. Venture Partners back the firm. Read more.
- PubMatic, a Redwood City, Calif.-based adtech company, says it plans to raise $100 million in an offering of 5.9 million shares (55% sold by existing shareholders) priced between $16 to $18. Read more.
SPAC
- Klaus Kleinfeld, the former CEO of Arconic, plans to raise funds via a SPAC, according to Bloomberg citing sources. Read more.
- ScION Tech Growth I, formed by ION Investment Group seeking a technology company, filed to raise up to $500 million. Read more.
- Corner Growth Acquisition, founded by Corner Ventures seeking a tech target, plans to raise $300 million. Read more.
- MedTech Acquisition, which is seeking a medical tech target, filed to raise $200 million. Read more.
F+FS
- An investor group led by Neuberger Berman’s Dyal Capital Partners and Wafra is in talks to acquire a minority stake in venture firm New Enterprise Associates, per Bloomberg citing sources. Read more.
PEOPLE
- Josh Elman says he will join Apple and work on the company’s App Store.
- Vista Equity Partners co-founder and president Brian Sheth resigned.
- Greenbriar Equity Group, a New York-based private equity firm, promoted Matthew Burke to managing director.


fortune--2020-12-01--COVID-19 chaos: U.K. retail giants Arcadia and Debenhams collapse, threatening 25,000 jobs

Just as the coronavirus pandemic forced big U.S. retail names such as J.C. Penney and Neiman Marcus into bankruptcy, it is now wreaking similar havoc in the U.K.
On Tuesday, the Debenhams department store chain collapsed, possibly spelling the end of a business that has been running for nearly two and a half centuries. The implosion was the indirect result of the collapse, one day previously, of Topshop owner Arcadia Group.
In total, around 25,000 jobs are now at risk.
Cascading collapse
Arcadia Group, whose other properties include high-street staples such as Dorothy Perkins and Miss Selfridge, went into a form of bankruptcy protection on Monday following the reported failure of emergency financing talks.
The fashion empire, run for the last 18 years by the flamboyant and controversial magnate Philip Green, is not laying people off immediately, but 13,000 jobs hang in the balance, particularly if no buyers can be found for its businesses.
“The impact of the Covid-19 pandemic, including the forced closure of our stores for prolonged periods, has severely impacted on trading across all of our brands,” said CEO Ian Grabiner in a statement.
That first domino then pushed over Debenhams, which was also on the brink.
The sportswear retailer JD Sports had been in talks to rescue the venerable chain, which had been looking for a buyer since going into administration in April. But, as Arcadia’s businesses were the biggest concession operators in Debenhams’ department stores, JD Sports took Monday’s news as its exit cue.
“The sale process has not resulted in a deliverable proposal,” Debenhams said in a Tuesday statement.
“Given the current trading environment and the likely prolonged effects of the COVID-19 pandemic, the outlook for a restructured operation is highly uncertain. The administrators have therefore regretfully concluded that they should commence a wind-down of Debenhams UK, whilst continuing to seek offers for all or parts of the business.”
The U.K. is due to leave its second national lockdown period Wednesday, moving instead to a tiered system of regional restrictions that will allow non-essential shops to reopen. Debenhams will reportedly use the “Wild Wednesday” opportunity for a fire-sale of its stock.
Arcadia post-mortem
The difficulties of the department-store model in the age of ecommerce are by now well-known, with COVID-19 in many cases being the straw that broke the camel’s back. Arcadia is also seen as a victim of existing weaknesses, such as its positioning in a time of widening income inequality, as well as the pandemic.
“Most of the brands under Arcadia Group, especially Topshop, sit in the mid-range for price points,” said Melissa Minkow, retail industry lead at digital consultancy CI&T, in an emailed statement.
“We’ve seen mid-priced retailers struggle across the board because of the massive rift between low- and high-income groups. As the middle-income demographic shrinks, so does the success of mid-range retail. On a similar note, Arcadia Group’s brands’ failure to identify with either fast fashion or more quality, high-end messaging means a failure to connect with consumers at a values-based level.”
The news of the collapses prompted words of sympathy from leading politicians.
Alok Sharma, the business secretary, tweeted Monday evening that the Arcadia collapse was “incredibly sad news” and the government “stands ready to support those affected during this difficult period.” The next morning, shadow business secretary Ed Miliband—a former leader of the Labour Party—responded to the combined Arcadia and Debenhams news by decrying “a devastating day for the high street.”
Miliband went on to urge the government to “press Philip Green to do the right thing for his employees’ pensions.” Arcadia’s pension scheme is reportedly £350million ($466 million) in the red.
Green and his wife Tina Green (the actual owner of Arcadia, via her Taveta Investments vehicle) are controversial figures for many reasons.
High on the list is their lavish, Monaco-based lifestyle—they have a £100 million ($134 million) super-yacht moored in the tax haven—but Philip Green has also been accused of of sexual and racial harassment, and a parliamentary report in 2016 described him as the “unacceptable face of capitalism” over his role in the collapse of the BHS retail chain, which he sold the year before for just £1.