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● Chobani’s secret ingredient 50December 28, 2020 ● SPECIAL DOUBLE ISSUE

So much went terribly wrong this year, and then the most loathed industry gave us vaccines—and hope 34

The Good Business Issue

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December 28, 2020

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SPECIAL ISSUE 34 Good Business

34 The world’s most loathed industry gave us a vaccine in record time40 Hunger-conquering World Central Kitchen’s recipe for pandemic relief46 ESG is on the rise, but the idea that profit isn’t everything is getting pushback

50 How Hamdi Ulukaya made Chobani a household name and stayed a good guy

◀ Charles Steiner, manager of Blueprint Cafe Lounge in Newark, N.J., boxes up meals for the hungry paid for by World Central Kitchen

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◼ CONTENTS Bloomberg Businessweek December 28, 2020

Cover: Photograph byIan Loring Siverfor BloombergBusinessweek; propstylist: David Probasco T

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◼ IN BRIEF 6 A gaming blockbuster bust ● Kilauea ● Musk loves Bitcoin◼ OPINION 7 Covid relief: Better than nothing, but more must be done

◼ REMARKS 8 You’re vulnerable to hackers in ways you can’t control

11 BUSINESS 12 The cancellation of Ant’s IPO shocked investors, butJack Ma’s comeuppance was years in the making

22 TECHNOLOGY 18 ▼ Opendoor: How to be a hit startup and lose a fortune

19 Biden and China have very different visions of the internet21 A miserable year, but not for tech

33 FINANCE 22 Forget the present; for Wall Street the future is now24 The rising star helping call the M&A shots at JPMorgan

44 ECONOMICS 26 It’s a V-shaped recovery. No, K-shaped. No…27 The stimulus deal is too little, too late for many renters29 Just how much power should the Fed have in a crisis?

55 POLITICS 30 Job One for climate czar Kerry: Regain the world’s trust32 How Trump could (still) manipulate census data33 Immigrants remain targets in struggling South Africa

◼ PURSUITS 55 Instant coffee, matcha, and meals that actually taste good58 Little carpets can be big room-brighteners60 Thanks to Phillip Sarofim, dune buggies are hot again62 Multiplexes, never fear! Wonder Woman’s here63 Homebodies can wriggle their feet into these beauties

◼ LAST THING 64 Livestreaming won’t kill theater. It may even help it

How to Contact Bloomberg Businessweek EDITORIAL 212 617-8120 ● AD SALES 212 617-2900, 731 Lexington Ave. New York, NY 10022 ● EMAIL bwreader@bloomberg.net ● FAX 212 617-9065 ● SUBSCRIPTION CUSTOMER SERVICE URL businessweekmag.com/service ● REPRINTS/PERMISSIONS 800 290-5460 x100 or email businessweekreprints@theygsgroup.com ● Letters to the Editor can be sent by email, fax, or regular mail. They should include the sender’s address, phone number(s), and email address if available. Connections with the subject of the letter should be disclosed. We reserve the right to edit for sense, style, and space ● Follow us on social media ▶ FACEBOOK facebook.com/bloombergbusinessweek/ ▶TWITTER @BW ▶ INSTAGRAM @businessweek

◼ COVER TRAILHow the cover

gets made

① “So this week we’re

doing our annual Good Business Issue.”

“Good what? Have you even lived this year?”

“It was pretty crap. But—silver lining alert!”

“Oh, God.”

“Thanks to the cooperative ingenuity of business, government, and science, multiple companies came up

with a vaccine in just a few months!”

“OK. So, like, one good thing in 12 months.”

“Plus, I do love me some dry ice. Think we

could do a shoot?”

“If there’s a block of dry ice between here and

Miami, I’ll find it.”

②

“Wow, beautiful. That’s dry ice?”

“Well, no, actually. But the smoke is from dry ice. Looks pretty

sick, right?”

“It’s like a miracle … on—”

“Spare me, please.”

“Where’s your Good Business spirit?”

Learn more:

bloomberg.com/mortgages

6

� IN BRIEF

○ Pakistan was granted

$2.55bin debt payment relief onDec. 22 from creditorsincluding the Groupof 20 nations. It’s awelcome respite for PrimeMinister Imran Khan andshould aid his efforts toshore up the country’sreserves.

○ There have been morethan 77.7 million coronaviruscases worldwide, and

1.7mpeople have died. Amutation that may makethe virus more infectiousemerged in the U.K., forcingLondon into a full lockdownon Dec. 19 and leadinggovernments to suspendtravel to the country.

○ The U.S.Congress passeda $900 billionpandemic reliefbill on Dec. 21.

○ The six biggest U.S.banks will be allowed tobuy back as much as

$11bof their own shares inthe first quarter, after theFederal Reserve gavelenders the green light toresume purchases.

○ Elon Musk fueled theBitcoin hype in a seriesof tweets on Dec. 20.The Tesla CEO musedwhether it would bepossible to buy Bitcoin in“large transactions” so hiscompany could convert itsU.S. dollar reserves intothe digital currency, whichhas more than tripled invalue this year.

○ The U.S.blamedMoscow fora massivecyberattack.

○ Sony removed one ofthe year’s most keenlyawaited gaming titles,Cyberpunk 2077, fromits PlayStation Storeon Dec. 18, a little morethan a week after itsblockbuster debut. Thereversal followed customercomplaints about bugsand poor performance.

○ The U.S.Departmentof Commerceblacklisted morethan 60 Chinesecompanies.

○ “I believe we have failed.”King Carl XVI Gustaf took the unusual step of openly criticizing Sweden’s lax coronavirus rules. Experts blame the government’s aversion to lockdowns for the country’s higher-than-average death rate, particularly among the elderly.

Bloomberg Businessweek By Benedikt Kammel

○ The Kilauea volcano erupted on Dec. 20 for the first time in more than two years, placing Hawaii’s Big Island on high alert.

The package includes help for small businesses and the jobless and a $600 one-time payment to most Americans. It also provides funds for vaccine distribution, food assistance, education, and child care.

The hack targeted at least 200 U.S. government agencies, companies worldwide, and other organizations. Moscow denies the accusation. President Trump undercut his administration’s finding by downplaying the intrusion’s severity and suggesting instead that China might be behind it. � 8

It says the companies—including drone maker SZ DJI Technology and Semiconductor Manufacturing International—threaten U.S. national security.

a ue s yea

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○ Peloton Interactive plans to buy fitness-equipment company Precor for

$420mThe deal is the largest yet for the maker of pricey bikes and treadmills, whose sales have soared during the pandemic.

○ Tropical cyclone Yasa lashed Fiji on Dec. 17, causing widespread destruction and forcing more than23,000 people to seek shelter in evacuation centers.

○ The USS Georgia, a nuclear submarine carrying as many as 154 Tomahawk cruise missiles, entered the Persian Gulf on Dec. 21, in the latest deterrence mission against Iran. The U.S. Navy said it was the first “overt” transit by a nuclear sub since 2012.

○ A statue of Confederate leader Robert E. Lee was removed from Statuary Hall in the U.S. Capitol on Dec. 21, where for the past century it had illustrated the state of Virginia’s history alongside a figure of George Washington.

○ Private equity firm Thoma Bravo agreed to buy out RealPage, a maker of U.S. real estate software, in a deal valued at $9.6 billion.

○ Fearing a coal shortage, China has begun rationing electricity use across the country. The move affects more than a dozen major cities, including Shenzhen and the industrial centers Dongguan, Zhongshan, and Zhuhai.

December 28, 2020� BLOOMBERG OPINION

The pandemic relief bill passed by Congress on Dec. 21 will provide vital support for the economy and for millions of Americans struggling to cope with the public-health emer-gency. At several points in recent weeks, after months of needless delay, lawmakers seemed ready to settle for doing nothing at all. In view of the stress that many households are under, that would’ve been unconscionable. Certainly this long-overdue agreement is welcome.

That said, it’s only a stopgap. Congress and President-elect Joe Biden’s administration will need to come forward as quickly as possible with another package—ideally one that remedies the defects of this deal.

The $900  billion plan was initially put together by a bipartisan group of senators acting at the last moment before Congress begins its yearend break. It provides new one-off payments of $600 for Americans making as much as $75,000 a year ($150,000 for married couples). It boosts unemployment assistance by $300 a week until mid-March. Related programs for gig workers and the long-term unemployed will stay in place for the time being. Almost $300 billion will be spent on forgivable loans for small businesses. There will be more aid for schools, vaccine distribution, testing and tracing, trans-portation, and other needs.

The plan’s biggest defect is that it fails to provide the help for state and local governments that Democrats have long sought. Their budgets are under enormous pressure, thanks to heavy pandemic-related costs and the squeeze on tax rev-enue because of falling incomes. And these levels of govern-ment face much stricter budget restraints than Washington does. Republican resistance to such help seems grounded less in fiscal responsibility than in the indefensible view that the aid would go mostly to places that have elected Democrats.

It bears noting that, judged as legislative process, the bill is a mess—and not just because of all the delays. It’s bundled with a bigger government-funding measure and a bushel of other add-ons dealing with tax, energy, and national security matters, to name but a few. The text released by the House of Representatives runs to more than 5,000 pages, and this mon-strous document appeared just hours before the intended vote. From start to finish, this effort has followed every rubric of how not to run a government.

The deal, however, is a lot better than nothing. It will do for now. But Congress really ought to conduct its affairs with some small semblance of competence. And, at the earliest opportunity, the Biden administration needs to look afresh at further pandemic relief measures. � For more commentary, go to bloomberg.com/opinion

The Covid BillIs Welcome, But More Help Will Be Needed

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◼ REMARKS

The world has a way of reminding us of our own helplessness. The year 2020 has had more than its share of examples to choose from, but for those who prefer to direct their existen-tial dread toward the inability of anyone to protect their dig-ital data, the recent revelation of one of the most significant cybersecurity attacks in history is an excellent place to start.

This past spring hackers managed to insert malicious code into a software product from an IT provider called SolarWinds Corp. whose client list includes 300,000 institutions. About 18,000 of them were exposed when they downloaded a legit-imate update from SolarWinds—which of course is the exact thing you’re supposed to do to keep your defenses fresh. The attackers spent months running free through their victims’

networks before anyone noticed, harvesting secrets, and could also have been inserting other vulnerabilities and doing God knows what else. The U.S. government and independent cybersecurity experts have tied the attack to hackers affili-ated with the Russian government, and its victims include the U.S. departments of Commerce, State, and Treasury, Microsoft Corp., and cybersecurity firm FireEye Inc.

But sure, go ahead and mix a few special characters into the password on your email account if it makes you feel better.

In a sense, the SolarWinds attack is far removed from the security concerns of individual users, who are more vul-nerable to things like having their computers locked untilthey cough up a ransom denominated in Bitcoin. It’s notworth thinking too much about hardening yourself againststate-sponsored hackers, in the same way you wouldn’tchoose a deadbolt for your front door based on how well itwould stand up to an intercontinental ballistic missile.

The options a government may consider to respond tocybersecurity threats are also not really available to individ-uals. Much of the discussion in the wake of the SolarWindshack centers on how the U.S. can increase deterrence, whichcomes with the implicit assumption that there’s no purely

● A massive data breach is a reminder that in all corners of cyberspace, the advantage is with the attackers

● By Joshua Brustein

That Hack Is the Sound of Inevitability

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◼ REMARKS Bloomberg Businessweek December 28, 2020

technical fix to cybersecurity at the nation-state level. In that respect, the breach has highlighted a weakness

shared by large institutions and individuals. The digital land-scape is far too complex for those who rely on it—you know,all of us—to monitor all the ways we’re exposed. Major fac-tors determining whether your data will be used against youare completely out of your control.

The SolarWinds incident is a kind of intrusion called asupply chain attack, where attackers sneak into a system bycompromising a product on which it relies. Individuals havetheir own supply chains over which they have some but nottotal control. At times they inadvertently open themselves upto infiltration by choosing to use certain products, as in the2017 attack on CCleaner, in which hackers altered the codeof a product designed to erase web cookies and otherwisebolster users’ privacy protections. Just as in the SolarWindsattack, victims were then compromised when they availedthemselves of the official update. At the time of that hack,CCleaner had been downloaded about 2 billion times.

In other cases, people are exposed when the digital sup-ply chain of an institution they do business with is compro-mised, as with the 2013 hack of Target Corp. In that case,perpetrators made off with more than 100 million credit cardnumbers, addresses, phone numbers, and other pieces ofpersonal data after compromising the company responsi-ble for the retail chain’s HVAC system. There’s evidence thatTarget missed obvious warning signs, but it’s hard to say whatthe people whose credit scores were damaged as a result ofthe breach could have done differently.

The year before the hack, Target became a prominentexample of another kind of personal data vulnerability, whenthe New York Times detailed how the retail chain analyzedshopping patterns to determine which of its customers wereprobably pregnant. It then sent them ads for relevant prod-ucts, in one case outing a 15-year-old girl who hadn’t told herfather about her pregnancy.

A cyberattack and a violation of privacy aren’t the samething, but both illustrate the consequences of individuals losingcontrol of what others know about them and how those partiesuse it, says Dennis Hirsch, a professor at Ohio State University’slaw school. Hoping to solve endemic weaknesses related toeither security or privacy by relying on personal vigilance islike hoping to slow down climate change by persuading enoughpeople to turn down their home thermostats. “The individualcontrol model doesn’t work,” says Hirsch, who believes thedebate over privacy policy has focused too much on givingindividuals more choice about how they share personal infor-mation. “I can’t know enough to choose which credit card com-pany is likely to spill my data because of its cybersecurity, and Ican’t know which company is going to analyze my data to infermy mental health status and determine my creditworthiness.”

Chris Pierson, founder and chief executive officerof BlackCloak Inc., a company that provides personalcybersecurity for corporate executives and celebrities, is sim-ilarly pessimistic about anyone reclaiming control over all the

information available online. “It’s something that honestly is worrisome, but you can’t mitigate it,” he says. He’s primar-ily concerned with the lengths people can go to reduce what he calls their privacy attack surface. “Can you remove your information from data broker websites so you’re a harder tar-get? The answer is yes, absolutely doable,” Pierson says. “Will it actually decrease scams and all the rest? Yeah, it’ll make it much harder.”

BlackCloak offers a combination of securing passwords(using password vaults and setting up two-factor authenti-cation on critical accounts), protecting physical devices (put that phone in a Faraday bag when traveling abroad), and con-stantly probing clients’ systems for weaknesses.

Weaknesses aren’t hard to find. Pierson says about 40% of clients come to BlackCloak unaware that they’ve already been hacked, which can mean anything from having malware installed on a personal device to having a security camera in their home livestreaming to a public website. For about 70% of new clients, the company finds a password to at least one of their accounts in the black market on the dark web.

Other services offer to give customers control over their data by maintaining physical control over it. One such com-pany, Helm, sells physical servers that individuals can use as an alternative to email providers, photo-storage systems, and other services that store data on corporate servers. A per-son can allow new devices or accounts to access Helm’s data only after demonstrating that she has had physical access to the server itself.

Doing this eliminates one way that attackers—ormarketers—gain access to personal data. But it also intro-duces other risks, such as having to be the physical custo-dian of your digital life, and headaches. As Giri Sreenivas, Helm’s CEO, says “it’s about how much friction you’re will-ing to accept.” And it becomes complicated, if not impossi-ble, to opt out entirely. There are entire industries based on gathering such data without bothering to check with you first.

The last decade or so of building a global technology indus-try that seeks to maximize consumer convenience has ledsome privacy experts to bemoan a rising data nihilism. Anoften-repeated dynamic is the tendency of U.S. internet users to say they value privacy while demonstrating an unwilling-ness to do anything about it. It would be understandable just to give up, given the numbing procession of examples demon-strating how difficult it is to protect against privacy intrusions or cyberattacks.

But people do keep trying, says Lorrie Cranor, director of the CyLab Usable Privacy and Security Laboratory at Carnegie Mellon University. The lab studies the approaches to privacy and security by nonexperts, who Cranor says tend to see those as a single issue. People are trying to reduce risks even if they know it won’t stop them from feeling exposed. After all, what else are they going to do? “There definitely is a sense of resignation,” she says. “They say, ‘I have no privacy.’ But they’re still closing their blinds and locking their doors, both literally and digitally.” <BW>

Photographed responsibly by Pablo with a tripod

We keep on.So you can keep on.

Some things you see coming.Some things you don’t.The trick is to be readyfor anything.

Pablo from Infrastructure Support isworking every day to keep essential market data fl owing. Seamlessly.

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When Jack Ma took to a Shanghai conference stage in October, China’s most famous entrepreneur was on the brink of pulling off an unprecedented $35 billion initial public offering for the finance juggernaut he co-founded two decades earlier. Ant Group Co.’s listing would value the company at more than $300 billion and swell Ma’s own fortune beyond its already blistering $61  bil-lion, cementing his position as the nation’s richest man.

Ma, a co-founder of e-commerce giant Alibaba Group Holding Ltd., China’s largest company, told the audience that day at the Bund Summit that he was torn about speaking, but felt this was a “most critical” moment in the development of finance. What followed was a 20-minute roast-ing of anachronistic government regulation that would suffocate innovation in China. It was a vin-tage performance by the famously outspoken executive, known for his confident swagger and soaring rhetoric. But this time, like Icarus after he flew too close to the sun, Ma has found him-self quickly brought back to earth.

Since September, China’s government has launched a coordinated regulatory crackdown, which in November scuttled the Ant public

The Very Public Humbling of Jack Ma

○ He was set to raise $35 billion from Ant’s IPO. Then China showed him who’s boss

◼ BUSINESS Bloomberg Businessweek December 28, 2020

13

offering and, together with tough new antitrustrules, triggered about a $140 billion, or 17%,decline in the market value of Ma’s Alibaba.

Meanwhile, the flamboyant Ma has all but van-ished from public view. As of early December, withhis empire under regulatory scrutiny, the man mostclosely identified with the meteoric rise of China Inc.was advised by the government to stay in the coun-try, according to a person familiar with the matter.

While his wealth and influence are being curbed,Ma isn’t on the verge of a personal downfall, saythose familiar with the situation, who requestedanonymity to discuss sensitive matters, as did otherofficials and executives with whom Bloomberg Newsspoke for this story. Instead, his public rebuke is awarning that Beijing has lost patience with the out-size power of its technology moguls, increasinglyperceived as a threat to the political and financialstability President Xi Jinping prizes most.

Once hailed as drivers of economic prosperityand symbols of the country’s technologicalprowess, the empires built by Ma, Tencent HoldingsLtd.’s chairman, “Pony” Ma Huateng, and othertycoons are now suspect after amassing hundreds ofmillions of users and gaining influence over almostevery aspect of daily life in China. “The [Communist]Party is trying to make it clear that Ma is not biggerthan the party,” says Rana Mitter, a professor special-izing in Chinese politics at Oxford University. “Butthey also want to show that China is a good place todo business, and that means that the party needs toshow that entrepreneurs can succeed.”

It’s a precarious balancing act that Ma hadseemed to master over his two decades at the helmof China’s biggest e-commerce and financial technol-ogy companies. He was well aware of an approach-ing avalanche of rules when he infamously calledout “pawn shop” Chinese lenders, regulators whodon’t understand the internet, and the “old men” ofthe global banking community during the speech inShanghai. Seen as an attempt to deflect the impend-ing regulatory onslaught, the speech set in motionan unprecedented series of events.

First came the suspension of the world’s largestIPO, a late-night announcement on Nov. 3 thatstunned financiers from New York to Shanghai. Aweek later the antitrust authority issued 22 pages ofproposed anti-monopoly rules, which many read asa veiled warning to Ma and fellow entrepreneurs totone down the swagger. There are also new guide-lines to grapple with for some large conglomerateslike Ant that are involved in finance, as well as onlinelenders and insurers.

As the attacks mounted, China’s Politburo, thetop decision-making body of the Communist Party,

in December emphasized the need for strongerantitrust oversight and to prevent the “disorderlyexpansion of capital”—a signal that privateenterprises can expect stricter controls.

Ma’s empire is in crisis mode. His topexecutives are part of a task force that has almostdaily interactions with watchdogs. Meanwhile,regulators, including the China Banking and Insurance Regulatory Commission, are weighingwhich businesses Ant should give up control of tocontain the risks it poses to the economy, accordingto officials with knowledge of the matter. They hav-en’t settled on whether to carve up its differentlines of operation, split its online and offlineservices, or pursue a different path altogether.

In his first public address since the IPO wassuspended, Ant Chairman Eric Jing was contrite. The company, he said on Dec. 15, was listening care-fully to criticisms and conducting a “comprehensive self-review.” Ant declined to comment for this story. China’s banking regulator didn’t reply to a request for comment.

At Alibaba, executives are dealing with theantitrust legislation, which analysts say targetscutthroat competitive tactics in e-commerce. The company isn’t shielded from the Ant fallout either:Ant’s payments platform is used for most of Alibaba’sonline transactions, and its lending services drive consumption on its sites.

Ma’s spectacular fall from grace has been yearsin the making. The former schoolteacher, who builtAsia’s largest digital corporations, embodies a gen-eration of self-made entrepreneurs, from Tencent’sPony Ma to younger ones including ByteDance Ltd. founder Zhang Yiming and Meituan’s WangXing. They’ve balanced the sometimes conflictingdemands of Beijing and powerful foreign investorsto build hugely profitable private empires in com-munist China.

“Sometimes it’s hard to see clearly and under-stand where your limitations are,” says Eric Schiffer,chief executive officer of Los Angeles-based privateequity firm Patriarch Organization, referring to Ma’sinfluence. “He has limitations. That is President Xi.He is not going to win that war.”

Ma has long cultivated his image as a rebelfighting the system, knocking down walls protecting state-owned enterprises. Time and time again, he emerged from the scuffles stronger.

Ma first rose to prominence as the online retail-ing genius behind Alibaba, which took on anddispatched one of the U.S.’s foremost corporations, EBay Inc., en route to becoming China’s biggest com-pany. But it’s his second mammoth creation that’s landed him in hot water.

“He has limitations. That is President Xi. He is not going to win that war”

◼ BUSINESS Bloomberg Businessweek December 28, 2020

14

Ant was born 17 years ago under perilouscircumstances, when China hadn’t yet grantedprivate companies permission to operate in finance.With Silicon Valley-based PayPal Holdings Inc. ashis model, Ma created the now ubiquitous Alipayservice, used to pay for everything from loans totravel to McDonald’s deliveries. In the early days heemboldened staffers with promises like “If some-one has to go to jail, I’ll go,” which he recalled at theWorld Economic Forum two years ago.

Alipay thrived. Its 2013 Quick Pay feature wasa hit. The service, which effectively created a pay-ments ledger connecting 200 Chinese banks, sim-plified the online payment procedure, boosting thesuccess rate for online purchases by a third, to 90%,and cementing Ant’s dominance in digital payments.

Its success rankled local banks. “We are notnecessarily interested in buying a bank to changeit. But because we have been chasing them around,they reformed,” Ma said in a 2017 BloombergTelevision interview. “When a tiger follows you, youcan run much faster than you thought.”

He next envisioned a business line that would“stir things up” in China’s heavily regulated statebank sector. Ant created the money-market fundYu’ebao—or “leftover treasure”—requiring balancesof only 1 yuan (15¢) and allowing withdrawals any-time. Rolled out in 2013, it was part of his goal ofcreating a more transparent financial system thatwould disrupt banks, which for years had beensucking in cheap deposits and earning handsomenet interest margins. The gamble paid off. In lessthan a year, assets under management grew to100 billion yuan ($15.3 billion), with 30 millionusers signing up. Yu’ebao would go on to amass$270 billion, at one point becoming the world’slargest money-market fund.

Ma again drew the ire of banks, and Niu Wenxin,a prominent commentator for China CentralTelevision, attacked Ant on his blog, labeling it a“vampire” and “financial parasite.” Soon regulators,concerned that state-backed banks would be crip-pled by an exodus of deposits and by the hugeamount of money sloshing around outside thecentral bank’s purview, rushed in to curb inflows.

Ma blasted out a pithy public statementaccusing banks of tampering with people’s free-dom on where to put their deposits. But he under-estimated the power of China’s state-ownedenterprises, whose entreaties to regulatorsresulted in rules restraining Ant’s activities.

Former People’s Bank of China Governor ZhouXiaochuan acknowledged in 2016 that Ant as ashadow lender was subject to lighter capital require-ments than traditional banks. “So you know it gives

signals for many others to follow. Sooner or later, I think we are going to study on this issue, to setup a more equal footing competition,” he said inan interview with Christine Lagarde, who was then chair of the International Monetary Fund.

Ma’s lieutenant Lucy Peng, when she served as Ant’s CEO, persuaded the company to embrace reg-ulators. Ant shifted its focus to playing matchmaker between financial institutions and its hundreds of millions of payment clients. The platform now sells mutual funds for more than 20 asset managers and has partnered with about 200 banks on loans.

About the time Yu’ebao was creating waves at home, Alibaba was making news in New York, where in 2014 it pulled off what was then the world’s largest IPO. Its stock soared 38% on the first day. In a CBS News interview aired shortly after the IPO, Ma said his method of dealing with authorities was to “never ever do business with government. Be in love withthem, don’t marry them.”

By January 2015, Ma’s already chilly relationship with Chinese authorities hit a new low. The State Administration for Industry and Commercereleased a report accusing Alibaba of hosting shadymerchants, carrying counterfeit products, and eventaking bribes and false advertising, saying the com-pany had a “credibility crisis.”

The scathing report came on the heels of anappearance by Ma at the World Economic Forum in Davos, Switzerland, where he said he’d never shareuser data with Beijing unless it was investigatingterrorism or other crimes. And it came a day after a letter to the agency appeared on one of Alibaba’s official Weibo accounts complaining that govern-ment inspectors applied standards inconsistently and didn’t give merchants enough time to respond to accusations. The increasingly acrid dispute rattledinvestors, sending Alibaba’s share price tumbling.

To limit the crisis, Ma paid at least three visits toregulators, including making a speech at an internal meeting of the China Securities RegulatoryCommission. In it, he acknowledged the need to tighten supervision and beseeched regulators with the argument that Alibaba wasn’t “too big to fail.”

The Industry and Commerce watchdogrelented, issuing a letter later that month sayingthe views of certain officials weren’t shared by theadministration, bringing the conflict to an end.The episode bolstered investor confidence in Ma’sability to navigate regulatory waters. For a period, it seemed he’d found the right balance when itcame to picking battles with watchdogs.

“When you enter new fields without clearregulations, it is always a painful thing. They say, ‘Hey, my job is to regulate, not innovate. That’s Other 2.4

Media and advertising4.3

Transport5.1

Software11.0

Retail18.0

Internet$30.7b

▼ Alibaba’s investments, by sector

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◼ BUSINESS Bloomberg Businessweek December 28, 2020

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THE BOTTOM LINE As Ma rose to become one of China’s richestmen, he was known for a willingness to criticize the government. But a crackdown by authorities has silenced the billionaire.

your job,’ ” Ma told Bloomberg TV in 2017. “We have had terrible experiences, but we’ve learned how to work with regulators.”

The peace was broken in September of this yearin the lead-up to Ant’s IPO. Heavyweight investorslined up for a piece of the financial-servicespowerhouse at a time when China’s banks weresacrificing profits to support an economy ravagedby the coronavirus pandemic.

As plans for the offering gathered steam—valuing the company at $315 billion—regulators pushed out a series of coordinated policies to curtail it, with Beijing blessing the abrupt halt to an IPO that was to trumpet China’s indepen-dence from U.S. capital markets. “It is not newthat the party regulates everything, including pri-vate businesses and especially private financial businesses, as this had been … explicitly stated inChina’s constitution,” says Zhiwu Chen, a financeprofessor and director of the Asia Global Instituteat the University of Hong Kong. “But many pri-vate businessmen did not take this seriously. Therecent Ant episode was a wake-up call.”

On Nov. 2, days before Ant’s scheduled IPO, Maand his top executives were summoned before thenation’s main financial regulators in Beijing for awarning. The listing was halted the following day.

A joint task force has been set up to oversee Ant,led by the Financial Stability and DevelopmentCommittee, a financial system regulator, alongwith various departments of the central bank andother regulators. The group is in frequent contactwith Ant to collect data and other material, study itsrestructuring, and draft more rules for the industry.

While Ant hasn’t been given specific guidanceon an overhaul, the overriding message is for thecompany to rethink its business, comply withnew rules, and toe the line on increased scrutinyoutlined for conglomerates operating in more thanone financial sector.

In the process, Ant will need billions in additionalcapital and will likely lose one of two licenses thatallow it to run its microlending platforms: Huabei(or “Just Spend”) and Jiebei (“Just Lend”). Its mostlucrative business—extending about 1.7 trillion yuanin consumer credit as of June—will find less will-ing partners in banks and others as regulators criti-cize the relationships for leaving traditional lendersholding all the risk.

Institutions have been told to report on theirco-lending with Ant, with some already seeking toshrink that exposure. Ant has said it retained onlyabout 2% of loans on its own balance sheet as of June,with the rest funded by third parties or packaged assecurities and sold off. “Fintech is a ‘winner takes

all’ industry,” Guo Shuqing, China’s top bankingregulator, said at a December conference. “Withthe advantage of data monopoly, big tech firms tendto hinder fair competition and seek excess profits.”Guo also promised to “encourage innovation while enhancing risk control.”

Ant’s own task force dealing with regulators, including Jing, its chairman, and CEO Simon Hu, has been providing almost daily updates to officials to buttress lines of communication. Executives await final guidelines for online lending and are bracing for further oversight in sectors such as insurance and wealth management.

The expected changes have narrowed thechances of Ant reviving its IPO before 2022, people familiar with the regulatory thinking said. Company executives remain optimistic that they’ll once againbe able to appease the watchdogs and carry on,people familiar with the company said.

Ma’s humbling has driven home the inconvenient truth that one of the richest businessmen in China will always be at the mercy of the ruling Communist Party. “The current clampdown is just the next batch of businesspeople being reminded by the gov-ernment: ‘You can be rich. You can have a power-ful company. But you’ve got to play by our rules,’ ” says Andrew Polk, co-founder and head of economic research at Trivium China, a Beijing-based consulting firm. “For me, it’s less of a surprise that Jack is get-ting his comeuppance and more of a surprise that it took this long.” �Lulu Yilun Chen and Coco Liu, with Zheping Huang, Colum Murphy, Heng Xie, Zheng Li, Jun Luo, John Liu, and Dingmin Zhang

▲ A Hong Kong subway ticket machine that accepts Ant’s Alipay

TECHNOLOGY

22

18

hours and, if the owner accepts, buys the home, makes light repairs, and puts it back on the market. Unlike traditional flippers, Opendoor isn’t trying tobuy low and sell high but seeks to profit by chargingsellers a fee—usually a 6% to 9% commission—for simplifying the process.

None of that is easy. From the minute the aver-age couple buys a home they’re constantly calcu-lating how much they’ll make when they eventually sell it, and most won’t settle for much less once that day comes. Opendoor has to estimate both how much a home will be worth in a few months and how long the resale process will take. The second part is crucial, because interest payments, property taxes, and insurance premiums accrue as long as it holds on to a property.

Opendoor’s profit margin was less than 1% on homes sold in 2019, a figure that includes interest

Bloomberg Businessweek December 28, 2020

Edited by Joshua Brustein

The startup Opendoor raised billions of dollars by convincing investors it would reshape the U.S. housing market to work better for consumers. Sure enough, its method of high-volume house flipping has proved popular with home sellers and inspired copycats throughout the industry, paving the way for it to go public through a merger with a special purpose acquisition company. But before it can declare success, it needs to stop bleeding cash.

Opendoor, whose shares increased 5.9% on its first day of trading on Dec. 21, is built around the premise that many people who want to sell their homes will be willing to accept a smaller profit if offered a quick transaction that allows them to avoid hiring a broker, opening their houses to and haggling with strangers, and waiting weeks for their buyer’s mortgage to be approved. The company uses algorithms to come up with an offer within

As it goes public, the real estate startup is still feeling around for a way to stop bleeding money

Opendoor’s Costly Path to Success

◼ TECHNOLOGY Bloomberg Businessweek December 28, 2020

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expense but not the salaries of the people whobuild the price algorithms or the cost of the adcampaigns it uses to woo sellers. The company hascompleted 80,000 transactions over the past sixyears and lost $989 million over the same period.“The narrative that Opendoor is pitching is thisdigital utopia for buying and selling houses,” saysMike DelPrete, a real estate tech strategist who’sstudied the company. “They’re pretty good at whatthey do, and they’re losing a lot of money.”

The most obvious risk is that home prices willdrop while Opendoor is holding a bunch of houses.This looked set to happen in the early days of thecoronavirus pandemic, and the company fired600 employees, about a third of its staff, and con-sidered converting some of its inventory to rentalproperties. Then a hot housing market emerged,fueled by cooped-up Americans seeking largerabodes they could also use as offices.

Frothy demand for technology stocks hasalso made profitability a secondary concern. InSeptember, Opendoor struck a deal to go publicthrough a merger with a special purpose acquisi-tion company led by venture capitalist ChamathPalihapitiya. The deal provided Opendoor with$1 billion, which it says will fuel an expansionthat will allow it to sell more than 37,000 homesin 2023, the same year it believes it will achieveadjusted profit before interest, taxes, deprecia-tion, and amortization. By that point, it will beselling more homes a year than all but the twolargest U.S. homebuilders.

Opendoor Chief Executive Officer Eric Wu,whose first foray into real estate came when heused college scholarship money as a down pay-ment on a rental investment, is also betting thecompany can expand into more profitable busi-ness lines. It now originates mortgages andemploys agents to broker sales the traditional way,two businesses that should bring in higher mar-gins than the algorithm-fueled sales.

The company is also experimenting with front-ing homebuyers cash to make no-contingencyoffers in competitive housing markets and consid-ering homeowners insurance, home warranties,and other services. It attached title and escrowservices to 83% of its transactions in the thirdquarter, according to a filing. And revenue growthwill help improve margins, allowing Opendoor tonegotiate better rates on everything from interestrates on the credit facilities it uses to buy propertyto supplies such as the 300,000 gallons of paint itbought last year.

Wu’s unifying theory is that customers willwant to deal with Opendoor for many things once

Almost a decade ago as vice president, Joe Biden believed that the internet was at an inflection point. In a 2011 speech he warned other countries that they wouldn’t be able to reap the internet’s eco-nomic benefits if they undermined its openness byimposing national-level censorship rules and other technical roadblocks. “There isn’t a separate eco-nomic internet, political internet, and social inter-net,” he said. “They are all one.” 

When Biden becomes president in January, he’ll confront the reality that some key nations haven’t heeded his warning. National policies in various countries have reduced the range of glob-ally shared websites and platforms while adding obstacles to online communication and commerce. Officials who served with Biden in the Obama

● The U.S. and China pitch the rest of the world very different visions of the web

it’s earned their trust. “What is the consumergoing to want to experience?” he says. “It’s nothaving a bunch of companies handling differentparts of the transaction. If we’re able to deliveron our vision, to make it possible to buy and sella home in a few clicks, we should be able to mon-etize the entire ecosystem.”

But building out successful businesses in mort-gages or insurance will be a long climb. Real estatebrokerages have been trying to sell ancillary ser-vices for years, without much success. Breakinginto home loans and insurance products meansworking in new regulatory frameworks and takingon established companies, not to mention break-ing the inertia of the status quo.

Still, Opendoor has gotten further than manyexpected. Clelia Warburg Peters, a venture partnerat Bain Capital Ventures who’s also president of aManhattan real estate brokerage, is one early skep-tic who’s been convinced. “What they’ve accom-plished so far isn’t enough,” she says. “But themountains ahead of them are smaller than the onesthey’ve already climbed.” �Patrick Clark

THE BOTTOM LINE Opendoor’s algorithmic model is popular among house sellers, but the company has lost almost $1 billion over the last six years.

◀ Wu wants to expand into more profitable business lines

Biden Faces a Battle to Hold The Internet T o g e t h e r

◼ TECHNOLOGY Bloomberg Businessweek December 28, 2020

20

Biden’s 2011 speech. Christopher Painter, the for-mer top cybersecurity diplomat who served in the State Department under Barack Obama and Trump, believes China has made progress in promoting itsview of the internet in recent years. “China has beenstrategic about getting countries on its side,” he says.

One of the most promising options open tothe Biden administration could be a concertedeffort to pressure other countries to embrace theWestern approach, former U.S. officials say. Asidefrom using diplomatic tools, the administrationshould counter arguments that internet censor-ship and other policies are needed to control localpopulations by highlighting the economic bene-fits of an open system, they say. But Biden’s teamof diplomats will make this case amid an explo-sion of concern globally about disinformation andinternet-fueled political polarization. It’s harder forthe U.S. to argue its model is working when it’s pub-licly grappling with a domestic crisis over the rolethe internet plays in its own politics.

The Biden administration may also emphasizeinternet freedom in its broader negotiations withChina, Russia, and other countries, something theTrump administration didn’t prioritize, experts say.In that regard, Biden takes office at a critical time.Elsa Kania, a technology and national security fel-low at the Center for a New American Security inWashington, believes that “today’s rivalries overstandards” will have long-term effects. They “willshape the future of emerging industries and tech-nologies, including enabling competitive advan-tage,” she says. �Alyza Sebenius

administration expect that he will push the vision he laid out then, but some experts who track the internet believe it may already be too late.

“The idea of an open, borderless internet is gone, and it’s not likely to come back,” says Darrell West, a senior technology fellow at the Brookings Institution. “It’s just not possible anymore.”

Many of the policies balkanizing the internet are undercutting its users’ rights. Internet freedom has steadily declined for a decade, according to a report by the democracy watchdog Freedom House. The U.S. isn’t immune to this: Freedom House found that the country lost ground every year of the Trump administration. But the group says the main offender by far has been China, which has long made clear it won’t embrace America’s vision of cyberspace.

The Chinese government has increasingly walled off its own online population while stepping up its leadership on the international bodies that set tech-nology standards to push its own national policy objectives, according to a 2020 report by the U.S.-China Economic and Security Review Commission, which was created by Congress. China has pushed the idea of sovereign internets, where countries manage their own networks and decide where and how they connect to those of other nations, instead of agreeing to a global set of technical standards.

The Trump administration took various approaches to internet governance. Tom Bossert, who served as homeland security adviser for the first year of the administration and now leads the security company Trinity Cyber Inc., says he believed that a single, worldwide internet had become unrealistic. He argued the internet had already split between autocratic and free coun-tries, and he urged the U.S. to accept this reality and attempt to lead the Western version of the web. 

John Bolton, who asked Bossert to resign when he became U.S. national security adviser in April 2018, was convinced that China’s attempt to insulate itself from the rest of the world would fail.“A national internet that is completely separatefrom the internet as we know it, to me, is a self-defeating proposition,” Bolton says.  

Bolton did want to keep China from dominating international standard-setting bodies, even as he argued for limiting those bodies’ power, because he believed that they served as “a gift to China and other authoritarian societies.” His goal was to hold the line in the short term while weakening those international organizations over time.

Biden is expected to pursue active collabora-tion with U.S. allies and partners who share interestin fighting the spread of the authoritarian inter-net. The landscape has changed significantly since

THE BOTTOM LINE The Biden administration is expected to push the idea that the internet should work the same way across borders. China and Russia have thoughts about that.

▼ Biggest declines in internet freedom 2011-20, 100-point scale

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The Year in TechReview

21

At the beginning of 2020, the verb “to zoom” had nothing to dowith video chatting. Then the pandemic upended everything,in ways that often benefited tech. Streaming and gamingboomed, of course, as did businesses involved in deliveringsomething—anything!—to your house.

Shares of big U.S. technology companies soaredTop and bottom performers in the S&P 500 InformationTechnology Index by total return, 12/27/19 to 12/19/20

Weekly change in S&P 500since Dec. 27, 2019

12/27/19 12/18/20

40%

0

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Info techsubindex

Full index

Nvidia

Advanced Micro Devices

PayPal

ServiceNow

Cadence Design Systems

Intel

FLIR Systems

Hewlett Packard Enterprise

DXC Technology

Xerox

125%

-36%

U.S. video game spending, year-over-year change

30%

0

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Streaming and gaming spending increased

Disney online videopaid subscribers

11/2019 11/2020

The populace could be lesshousebound by the middle of 2021,so we may learn whether hugeincreases in online grocery ordersand remote working are here tostay. Things still look bright forthe chip companies that werethe biggest winners in the stockmarket. And for online travelagents and ride-hailing platforms,the return of public life can’t comesoon enough.

Jobs went online

7/2019 10/2020

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60

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Amazon trucks were everywhere

U.S. e-commerce retail sales,seasonally adjusted

U.S. e-commerce retail salesas a percent of total sales

16%

13

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$200b

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▼ Change from Q3 ’19 to Q3 ’20

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310%Online grocery sales in the U.S.*

237%DoorDash orders

123%Shipments of Chromebooks

86%Hours of video watched by users of the game streaming site Twitch

79%Walmart U.S. e-commerce sales

39%Amazon North America retail revenue

37%Monthly active users, Pinterest

23%Netflix memberships

15%Monthly active users, Facebook family of apps

-35%Uber trips

-44%Lyft active riders

-68%Value of gross bookings, Expedia

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Edited byPat Regnier

berg Businessweek December 28, 2020

○ 2020 was a great year forstocks but a “bear marketfor humans”

At the same time, the number of small businessesoperating in the U.S. has plunged 25%, accordingto a Harvard tracker.

Tesla Inc. Chief Executive Officer Elon Musk’swealth has increased by an estimated $140 billionthis year thanks to the stock market, while a com-bined $100 billion was added to the fortunes ofAmazon.com Inc.’s Jeff Bezos and Facebook Inc.’sMark Zuckerberg. Meanwhile, the estimated num-ber of American adults who don’t have enough toeat has risen to about 27 million.

“The stock market is not the economy” is acommon refrain on Wall Street when it comes toexplaining away apparent disconnects. Rarely, if

The stock market was on fire in 2020, with theDow Jones Industrial Average poised to end theyear above 30,000 for the first time. Meanwhile,30,000 people in the U.S. died of the coronavirusin just the past two weeks.

Shares of smaller public companies havecaught up to the blue chips lately, with theRussell 2000 Index up almost 17% so far this year.

Wish I could celebrate how

wesome my stocks did

his year...

Speculation Everywhere

Animal spirits are running wild across Wall Street

Investors are enjoying some of the most favorable financial conditions in U.S. history, according to a Goldman Sachs index that measures interest rates, credit availability, stock prices, and the dollar.

Goldman Sachs U.S. financial conditions index

� Tighter

Companies are rushing to go public, and investors are snapping up their shares.

Average first-day returns for U.S. IPOs

1/1990 11/2020 1990 2020

As ofDec. 11

103

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◼ FINANCE Bloomberg Businessweek December 28, 2020

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ever, has the axiom been trotted out as much as itwas in 2020, amid the unsettling contrast betweensuperlatives of prosperity and hardship. As casu-alties of the virus started ticking into the thou-sands, then tens of thousands, then hundreds ofthousands of souls, U.S. politics grew even moredivided. In the summer, cities were gripped byprotests in response to police violence. Since theelection, the outgoing president has raged daily,calling American democracy, without evidence, arigged and corrupt game.

And the mood on Wall Street? Well, somehowthe theme of the year became ignoring all of thechaos and suffering of this dystopian present andskipping right ahead to a utopian future.

There were some good reasons to do so. Forthose of us lucky enough to hold on to jobs in 2020,many outlets for discretionary spending were shutdown, so savings swelled. Much of that spare cashlikely flowed into the stock market, whether viaRobinhood traders chasing story stocks or moreconservative investors seeking diversification.Investors poured $29.4 billion into U.S. equityfunds in the week through Dec. 15, the fifth-biggest weekly inflow ever, according to researcher EPFR Global. Exchange-traded funds tracking equities have pulled in $46 billion so far in December, after luring in $81 billion the month before. The rest of those savings, the thinking goes, will stream back into the economy with gusto via consumer spend-ing when the threat of the virus recedes.

The events of the year highlight the awesome power—and heartbreaking limitations—of cen-tral bank monetary policy. The Federal Reserve’s efforts to keep interest rates as low as possible to bolster the economy squashed the returns avail-able in fixed-income markets, pushing investorsinto equities. In essence, the central bank incen-tivized risk-taking in finance at a time when riskaversion was advised—no, required—for everyday

activities like simply going out to dinner. Fed Chair Jerome Powell made it clear on Dec. 16 that he doesn’t think the market’s euphoric embrace of risk has gotten extreme enough for him to worry about a hard economic landing.

Maintaining a warm environment in the capi-tal markets is helping keep businesses alive, and that ought to help recoup the lost jobs that have yet to return in 2020—about 10 million—when the pandemic recedes. So one way of explaining inves-tors’ behavior is that they’ve been looking beyond a crisis the Fed is determined will be temporary.

But the stock market is a cruel and calculating beast, and helping people get jobs isn’t high on its list of priorities. Investors also seemed to be bet-ting on a permanent shift in the structure of work and the economy. The market has always cheered companies that are able to reduce labor costs, but the phenomenon was turbocharged in the pan-demic year. “I would summarize 2020 as the bear market for humans,” Vincent Deluard, director of global macro strategy at brokerage StoneX Group Inc., told Bloomberg in August. “Like many things, Covid is just accelerating social transformation, concentration of wealth in a few hands, massive inequalities, competition issues, and all that.”

An analysis Deluard did then showed that stocks of companies that rely least on their employees were surging ahead of labor-intensive ones. The trend is hard to miss when looking at the winners and losers of 2020. The bad-boy protagonist of the market story this year was Musk’s Tesla, whose shares rose almost 700% to bloat its price-sales ratio to 22, from 3. It’s a valuation that screams “bubble” to many but is much more reasonable to those who envision a world where Tesla is first tomarket with a global fleet of driverless taxis.

The future isn’t all robots: After all, the next-best-performing stock in the S&P 500 this year was Etsy Inc., which could be a nice sign for the

Bitcoin price

And then there’s the new bellwether for speculativesentiment: Bitcoin...

1/1/20 12/21/20

$20k

10

0

Traders who bet against stocks are in pain as shareprices of the most-shorted companies keep rising.

Index of most shorted stocks

1/1/20 12/21/20

250

150

50

Credit is getting easier. Investors are paying more for bonds, driving down yields and interest rates.

Global corporate bond yields

9/2000 11/2020

8%

4

0

◼ FINANCE Bloomberg Businessweek December 28, 2020

24

● Anu Aiyengar became co-head of global M&Ajust before the lockdown changed everything

A Dealmaker RisesAt JPMorgan

As JPMorgan Chase & Co. searches for its first majoracquisition in more than a decade, Anu Aiyengarwill have a hand in shaping the giant bank’sfuture. She’s the co-head of its global mergers-and-acquisitions business, as well as the only personof color and only woman to hold that position onWall Street. It’s been a remarkable trajectory for anIndian immigrant who moved to the U.S. as a teen-ager to study at Smith College, shivering through thebitter Massachusetts winter in a $5 coat.

“M&A was traditionally a male bastion—oftencigar-smoking men in suspenders—and now she

is at the top of the field, because she is simply outstanding at what she does,” says her boss,JPMorgan Chief Executive Officer Jamie Dimon.

Advising companies on M&A is one of theprestige roles in investment banking, generatingboth huge fees and headlines when a deal comestogether. Aiyengar was promoted to her currentposition in February, almost 20 years after ignor-ing one Wall Street interviewer who told her shecouldn’t be hired for M&A because she was of thewrong color, gender, and country of origin. Heryear began with a bang when JPMorgan advisedETrade on its $13 billion sale to Morgan Stanley, adeal that earned the bank $81 million in fees.

That same deal has put JPMorgan and otherbig banks under some pressure. In the years sincethe 2008 financial crisis subsided, there havebeen hardly any major acquisitions by top WallStreet firms. Morgan Stanley’s buying spree—italso snapped up a fund company JPMorgan hadapproached—may have signaled the start of a waveof takeovers. At a conference in December, Dimonjoked that bankers at other firms with good ideasfor acquisitions should give him a call. If JPMorgandoes find a tempting target, Aiyengar will be amongthe key executives helping to negotiate a deal.

At the same time, Aiyengar is guiding JPMorgan’sM&A shop through an unprecedented disruption.Soon after she took over, the global pandemicand lockdowns dragged deal activity in April andMay to its lowest level for any two-month periodin 22 years, while companies were forced to focuson survival. After traveling every week for twodecades to meet clients across the U.S. and some-times overseas, Aiyengar found herself grounded.She didn’t leave her Midtown Manhattan apartmentfor 66 days, running her team over Zoom and devis-ing new ways of thinking about dealmaking amidwhat she calls a “seismic shift.”

“The future of work and the future of how thingshappen in all industries is forever changed,” shesays. The pandemic has shown how technology-driven almost every successful business is, blur-ring the lines between traditional sectors. “So M&A bankers need to have the ability to cross-pollinate among different industries,” she says.

It’s something she’s done before. Jeffrey Sprecher, CEO of Intercontinental Exchange Inc., owner of the New York Stock Exchange, says Aiyengar has been helpful as they consid-ered unique ideas, including the company’s foiled attempt at a tieup with a different kind of electronic market: online auction site EBay Inc. “We had doz-ens and dozens of conversations over a period of years thinking about EBay and what parts might

THE BOTTOM LINE The bull market of 2020 showed the power ofcentral bank policy to focus investors’ minds on a better future. Butthe future isn’t bright for everyone in the economy.

legions of crafters, knitters, potters, and painters selling their wares on the site. Still, knitting at homeis a tough way to pay for health insurance.

Investors’ can’t-stop-thinking-about-tomorrow mentality is also on display in the market for ini-tial public offerings, where a doubling in price has become commonplace for this year’s fresh-man class of would-be disrupters. Just check out the charts of artificial intelligence software com-pany C3.ai, food delivery service DoorDash, and home-rental company Airbnb.

You can insert your own comparison to the dot-com bubble here—and take a side in the “this time it’s different” vs. “no, it’s not” debate as well. But you don’t need to go back 20 years for an exam-ple of Wall Street getting ahead of itself. The S&P 500 surged 19% in 2017 amid excitement about President Trump’s plans to cut corporate taxes. Investors predicted the future correctly: The bill was signed in late December of that year and went into effect in 2018. But they arguably overshot. The index’s performance in 2018? It dropped 6.2%.

They say hindsight is 20/20, but when it comes to the stock market, the year 2020 has been all about foresight. That is, of course, a much blurrier field of view. �Michael P. Regan, with Sarah Ponczek

● Value of transactions by JPMorgan’s global M&A team this year

$575b

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THE BOTTOM LINE Aiyengar sees technology blurring thelines between industries and urges her bankers to look forsurprising connections.

fit with ICE and whether other partners couldbe involved and who those partners should be,”Sprecher says. “My shareholders didn’t like theidea, but part of my job is thinking about growingthe company, and internally we were very proud ofit. She was very blunt and thoughtful about think-ing through things.”

Sprecher’s deal wasn’t to be, but Aiyengar andher co-head, Dirk Albersmeier, have notched morethan $575 billion of transactions this year, accordingto data compiled by Bloomberg. The list includesLVMH’s $16 billion purchase of Tiffany—the biggest-ever deal in the luxury industry—and last month’s $8.7 billion merger of Home Depot Inc. and HD Supply Holdings Inc.

In the rankings of top M&A advisers, JPMorgan slipped one spot in 2020 to third place. But Carlos Hernandez, executive chair of investment and cor-porate banking at JPMorgan, isn’t worried about that. He says Aiyengar had already helped take the bank “from good to great” during her stint as co-head of its North American M&A team, noting that one of her major achievements was to negotiate higher fees for the bank’s services. “She is definitely part of the next generation who will be running this place for the next 20, 30 years, and this job is going to get her ready for that,” Hernandez says.

Hernandez, part of the JPMorgan team thathired Aiyengar in 1999, says he was immediatelyimpressed with both her drive and her principles.“I am from El Salvador myself, and I came to thiscountry to go to school the way she did, and insome ways you have to go through some adver-sity along the way,” he says. “What you learn fromthat is invaluable.”

Aiyengar grew up in the southern Indian state of Kerala. Her father worked for the government; her mother didn’t work but went back to school and later became a teacher. Aiyengar says she struggled in her early days at the bank—not with the work but with the culture. “I didn’t know basic things like how you behave and how you talk and how you present and how you dress in a profes-sional environment,” she says.

She tried to change her Indian accent to sound more American and fretted about how to do her hair and makeup. She asked the assistant of the only senior female on her floor for advice on where toshop for clothes, but the prices at the boutique hercolleague recommended shocked her. She turnedinstead to Dress for Success, a charity that providesprofessional attire for women. “They assume youdon’t know what to do, and they say ‘let me helpyou’—very different from some retail stores, wholook at you like you don’t belong,” she says. Aiyengarwas honored last year for her work with the charity.

Women at JPMorgan threw Aiyengar a partywhen she was promoted to co-head of North American M&A in 2015. Dimon says he was a rare male invitee to the celebration. It was an import-ant moment for Aiyengar, whose mother became enthralled by Dimon after his discussion of cor-porate social responsibility on a trip to India. “Ifyou go to Google on her iPad, the thing that popsup is ‘JPMorgan, Jamie Dimon,’” Aiyengar says. “She doesn’t follow me, she only follows Jamie.” �Nabila Ahmed

◀ Aiyengar

“She is definitely part of the next generation who will be running this place”

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● From the prosaic to the poetic, economists vie to define the shape of the recovery

It’s a V. It’s a Baa. It’s a Swoosh

Economists have run through the alphabet this year.They’ve turned to letters and shapes in an effort

to illustrate the unprecedented economic upheaval caused by the pandemic. The 2008-09 financial cri-sis had Ben Bernanke’s “green shoots” and angst about a “double-dip” recession. In 2020 we’ve heard about not only a V-, U-, L-, and K-shaped recovery, but also a Nike Swoosh and Cape Cod in winter. The econospeak has even cracked into the mainstream, showing up in presidential debates and in major media.

At the onset of the pandemic, many econo-mists predicted a quick bounce back to normal activity following a sharp downturn triggered by

the widespread closure of businesses and schools. Countries with relatively healthy economies going into the pandemic seemed best poised for the so-called V-shaped recovery. Some had their own spin on the V, such as former U.S. Treasury Secretary Larry Summers, who compared it to “Cape Cod in winter,” whereupon a tourism-fueled local economy shuts down in the frigid months to rebound when beach weather returns.

But as the virus proved more and more difficult to control, with many nations enduring successive waves of infection, economists scrambled to revise their forecasts. Descriptions of the shape of the com-ing recovery became more fanciful. There was the Nike Swoosh (aka the recumbent J). Also, the square root sign or what France’s central bank governor called “the bird’s wing”—that is, a big contraction followed by a quick turn up and then a plateau.

In the U.S., one Federal Reserve official pre-dicted virus resurgences would create a pattern

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of ups and downs in economic activity that wouldresemble a W with “a wiggly tail.”

The Latin alphabet might not be the best choiceto depict the longer periods of sluggish growth wemay be in for. Analysts at Robeco Institutional AssetManagement offered up the Arabic letter Baa, argu-ing that its long horizontal sweep is better suited toillustrate our economic reality.

At least the economy is past what JoachimFels, global chief economic adviser at PacificInvestment Management Co., described back inMarch as the I-shaped phase of the cycle, wheregrowth drops off precipitously with no clear pros-pect of a bounce back.

Another theory is that the pandemic hasinflicted long-lasting economic damage, settingthe stage for a very slow recovery or outrightstagnation: the dreaded L shape. Although such ascenario looks unlikely, the fear that many work-ers may be locked out of the job market for years,or even forever, has been palpable among someEuropean Central Bank policymakers. Japan’sexperience in the 1990s, known as the lost decade,is a worrying precedent.

Math and shape arguments aside, one let-ter has captured the stark reality of what manyare seeing in 2020: the K. The pandemic hasn’taffected everyone equally and has widened manyexisting inequalities. The two diverging strokesof the K illustrate this: Those who weren’t inthe best economic position before the crisis—forinstance, low-income workers in tourism, enter-tainment, hospitality, and other industries dev-astated by the virus—are more likely to have lostjobs this year. The top of the K represents peo-ple in better circumstances, including those whocan work from home and may have seen theirstock portfolios soar.

The arrival of vaccines is giving economistshope. Some say we could still see a V-shapedbounce back if sufficient numbers of people areinoculated. Others, taking into account the pro-longed period of low growth we’ve had in the pastyear, say a strong rebound would make this periodresemble a U or J.

Complicating the debate around the recovery’strajectory, some analysts have taken to applying aV shape to certain segments of the economy, or toparticular countries. But a V shape can be mislead-ing: A 5% rebound from a 5% drop doesn’t bringan economy back to its prior health. �CatarinaSaraiva, Michelle Jamrisko, and Piotr Skolimowski

● A patchwork of prohibitions doesn’t stop landlords from pushing people out

Evictions Climb, Despite Bans

Mari Finkley has already been homeless once during the pandemic. For two weeks in October, she lived out of her Dodge Journey sport utility vehicle with her dog and 11-year-old godson. The 29-year-old found a new place, and fresh hope. But she’s behind on her rent again.

Finkley was pushed out of her Gainesville, Fla., home by her previous landlord after she stoppeddriving for Uber and fell behind on rent. She suffersfrom severe asthma, and her doctor warned thatthe job put her at high risk for exposure to Covid-19.“Are you going to risk potentially dying just to paya bill?” Finkley says. “But if you don’t pay the bill,you’re going to be homeless. You have to literallydecide what’s worse.”

Finkley is a member of a burgeoning classof long-term underemployed and unemployedAmericans who have slipped into poverty duringthe pandemic. Many are renters teetering on theverge of homelessness, even as large swaths of theU.S. economy have rebounded and coronavirusvaccines raise hopes for a brighter 2021.

The looming rental crisis, the result of a lop-sided recovery that’s largely spared white-collarworkers while pushing many hourly and gig work-ers to the brink, is among the most urgent thatPresident-elect Joe Biden will face.

Even as unemployment has declined by morethan half from its pandemic peak in April, the pov-erty rate shot up 2.4 percentage points from June,the fastest pace in records that date to the 1960s. Ithit 11.7% in November, with 7.8 million Americansadded to the ranks of the poor since midyear,according to povertymeasurement.org, a monthlyCovid poverty tracker devised by two economists.

Many landlords are also struggling to keep upwith their bills, especially small property ownersrenting to the low-wage workers who’ve borne thebrunt of Covid layoffs.

Democrats and Republicans broke a monthslongstalemate to pass a $900 billion stimulus package onDec. 21, the first major pandemic relief legislationsince the Coronavirus Aid, Relief and EconomicSecurity Act was enacted in March. Yet even that,which extends the federal eviction ban through

THE BOTTOM LINE The arrival of vaccines has rekindled hopes that a V-shaped bounce back is still possible for some countries, but many economists expect the recovery to be drawn out.

1/2020 11/2020

▼ Conflicting signs

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THE BOTTOM LINE Legislation approved on Dec. 21 sets aside $25 billion for renters, but that’s well short of the $70 billion in accumulated back rent.

January and earmarks $25 billion for renters, is dwarfed by the magnitude of the need.

Tenants owe landlords more than $70 billion in back rent, utilities, and additional fees, according to an estimate by Mark Zandi, chief economist at Moody’s Analytics. The long-predicted flood of evictions has been slowed by government aid and a patchwork of short-term tenant protec-tions. Congress extended the Centers for Disease Control and Prevention’s eviction ban, which was set to expire at the end of December, through January, but the two parties have yet to agree on a long-term solution.

“Congress should enact this compromise legislation immediately, then get back to work in January on comprehensive solutions,” says Diane Yentel, president and chief executive officer of the National Low Income Housing Coalition. “Extending the CDC’s eviction mora-torium through January provides time for emer-gency rental assistance to be distributed, and for President-elect Biden to improve and further extend the moratorium immediately after being sworn into office.”

Despite the various bans in place, the pace of eviction filings is already accelerating across the country. In New York City, where a state law protects people facing Covid hardships as long as the pandemic lasts, landlords filed more than 7,300 evictions in November, nearly quadru-ple the number in July, according to data from Princeton University’s Eviction Lab. And property owners filed more than 2,600 cases in November in both Phoenix and Houston, where there are fewer safeguards.

Tenants, who rarely can afford legal repre-sentation, often move out before their case ever reaches a judge, to avoid the trauma of being ejected and the black mark of eviction that will make it harder to find a willing landlord again. Many then enter a precarious existence of sleep-ing on friends’ couches, in cars, and in homeless shelters, which is contributing to the spread of the coronavirus.

“Our collective health depends on our ability to stay safe at home, so we all have a stake in ensuring that tens of millions don’t lose theirs,” Yentel says.

In Gainesville, a college town where Finkley says students often go maskless, she started fer-rying food instead of passengers to stay safe. Her goal was to earn at least $100 a day. But Uber Eats now has so many drivers that on a recent week she made just $184, despite sometimes staying out until 2 a.m.

She gave her landlord half of the $725 in rent

she owes for December. The rest will be cov-ered by a federal grant that she was approved for but that won’t arrive until the end of the month. Finkley tried to get help before. She was supposed to receive $1,200 in Cares Act money to cover rent for July and August at her last apartment. But she says the landlord was slow filling out the neces-sary paperwork and then posted a late-rent notice on her door. Next, she says, she tried to get pro-tection from the CDC eviction ban, declaring as required that she had lost income because of Covid and would be homeless without help.

But the federal ban applies only to tenantsbeing kicked out for nonpayment. Finkley saysGreat Jones, a New York-based property manage-ment company with units in nine states, said her lease would not be renewed.

Great Jones said it can’t comment on individual cases. In a statement, the company said that since the start of the pandemic it’s “worked with over 200 residents and property owners to enable pay-ment plans that have allowed residents to stay in their homes.”

Finkley then moved into the three-row Dodge SUV that doubles as her source of income and set up a GoFundMe page. She raised enough to secure her current apartment and now hopes her new landlord will be patient. She says her last landlord notified her that she still owes more than $2,000 in back rent. “I’ve been homeless, and I can’t do that again,” she said. “It’s a constant feeling that you’re drowning, all the time.” �Prashant Gopal and Patrick Clark

▲ Finkley

� ECONOMICS Bloomberg Businessweek December 28, 2020

A last-minute compromise that helped break amonthslong congressional impasse on Covid-19relief may set up a political clash over how theFederal Reserve can respond to future crises.

The disagreement between Democrats andRepublicans centered on a bit of central bank-ing arcana known as Section 13(3) of the FederalReserve Act. It allows the Fed to create emergencylending programs during “unusual and exigentcircumstances,” with approval from the TreasuryDepartment. The provision was invoked by FedChair Jerome Powell and his colleagues in thespring to launch a barrage of programs to shoreup markets for everything from U.S. governmentbonds to the debt of corporations and strappedmunicipalities. Some of them relied on fundsappropriated by Congress in the Cares Act to func-tion as a cushion against potential losses.

It is generally acknowledged that the Fed’s rapidresponse helped stem panic among investors thatthreatened to freeze financial markets as the pan-demic took hold. Still, many Republicans have beenvocal about their desire to place stricter limits onthe Fed’s exercise of its emergency powers.

Senator Pat Toomey, a Republican fromPennsylvania, insisted on tacking a provision ontothe $900 billion stimulus that would prohibit theFed from restarting programs supporting corporatebonds, small and midsize companies, and munici-palities. These are set to expire on Dec. 31.

Democrats resisted, but they relented once lan-guage from Toomey’s proposal that also banned“similar” programs from ever being launchedwithout congressional approval was excised. Ina Dec. 20 conference call with reporters, Toomeysaid he felt confident the compromise wordingwould still ban “clone” programs without freshapproval from Congress.

Democrats interpreted the compromise lan-guage differently. A Democratic congressional aide,who asked not to be named because they werenot authorized to speak publicly about the pend-ing legislation, said the new language imposes nomeaningful limits on the Fed’s ability to create newfacilities for state and local governments and smallbusinesses. The apparent gap in interpretation

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THE BOTTOM LINE A compromise that broke the stimuluslogjam laid bare the divergent views of Democrats and Republicans on the scope of the Fed’s emergency powers.

○ Political wrangling over the Fed’s latitude in responding to crises may set the stage for a future showdown

sets up a possible clash if financial markets were to plunge back into chaos and the Fed felt it neces-sary to act quickly with similar facilities.

Former Fed Chairman Ben Bernanke issued a rare public warning on Dec. 19 urging that the cen-tral bank’s ability to respond to future crises be left “fully intact.” Powell and his colleagues have made plain their opposition to any measures that limit their emergency lending powers. They have repeat-edly and publicly stressed that all these facilities played an important role in supporting the econ-omy during the pandemic. Fed spokeswoman Michelle Smith declined to comment.

In his comments to journalists, Toomey reiter-ated that his goal was not to limit the incoming Biden administration’s ability to deal with economic chal-lenges, as some Democrats have suggested. Still, some are concerned that Toomey, by putting the Fed at the center of a public political fight, something the institution’s leaders have strenuously avoided, may have discouraged Powell and future Fed chairs from jumping in the next time there’s a crisis.

“Big picture, I am concerned that the Fed’s emergency lending powers keep coming under fire by Congress,” says Jeremy Kress, an assistant pro-fessor of business law at the University of Michigan and a former Fed attorney. He notes that legislators moved to curtail some of the Fed’s authority in the aftermath of the financial crisis via the Dodd-Frank Act of 2010. “The fact that here we are 10 years later arguing over the Fed’s emergency lending is prob-lematic, because even if Toomey doesn’t succeed in enacting long-lasting legal prohibitions on Federal Reserve emergency powers, this political debate could have the effect of chilling the Fed’s willing-ness to step in when needed in the future.”

Roberto Perli, a partner at research firm Cornerstone Macro, expresses a similar view. “I think it would have been a lot better if this stuff hadn’t happened,” he says. “This whole episode, I think, highlighted the fact that Section 13(3) has become politicized.” —Christopher Condon, Laura Davison, and Matt Boesler

○ Toomey

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○ John Kerry will be the most senior U.S. climate official ever. It won’t be an easy job

In 2017, Trump announced America’s intent to withdraw from the 189-party Paris Agreement, which seeks to limit global temperature increases to 2C through steep reductions in greenhouse gas emissions. Scientists have warned that severe impacts from climate change could arrive as soon as 2040 and that quick action to curb emissions is critical. The U.S. formally withdrew from Paris in November; in the meantime, the Trump adminis-tration has rolled back dozens of environmental rules and regulations.

For Kerry to bring skeptical countries along on future climate negotiations, the U.S. will first need to show it’s serious in reversing the damage wrought over the past four years, diplomats and experts say. “We are at a point in history when we have to do something dramatic,” says Andrew Steer, president and chief executive officer of the World Resources Institute. “Kerry’s reputation globally is deeply impressive and speaks very well to U.S. leadership. But the U.S. itself will have to come up with its own plans to deal with climate change first.”

Kerry has worked with most of Biden’s national security appointments, from Anthony Blinken,

To show the world that the U.S. will be an environmental leader once again, President-elect Joe Biden is turning to the driving force behind the climate agreement President Trump has spent four years undermining.

John Kerry, who was secretary of state under President Barack Obama and helped craft the 2016 Paris climate accord, will assume a newly created role in the Biden administration: special presiden-tial envoy on climate change. Kerry’s appointment marks the first time an official dedicated to climate change will have a seat on the National Security Council, putting the environment, in principle, at the center of every foreign policy decision. The role could prove challenging to navigate polit-ically, because its powers are so far vague, and Kerry will have to coordinate with multiple agen-cies across the administration.

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Bending the Temperature CurveBaseline projection Countries’ current policies Countries’ pledges and targets

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THE BOTTOM LINE John Kerry’s new role signals the elevation ofclimate change as a priority under Biden. But the U.S. will have totackle emissions at home to win the trust of other nations.

chosen for the secretary of state job, to Jake Sullivan, picked to head the National Security Council. Blinken was once Kerry’s deputy at the State Department, and the two will have to grap-ple with constant overlap between their jobs. A person on the transition team says details on the personnel and size of Kerry’s staff haven’t been hashed out.

Because of Kerry’s high profile and deep expe-rience, “he will get his calls answered, both domestically and internationally. He comes to it with built-in relationships,” says Jared Leopold, co-founder of the Evergreen Action group and a former adviser on Washington Governor Jay Inslee’s presidential campaign.

With Republicans set to hold at least 50 seats in the Senate, Biden may have to lean heavily on reg-ulations and executive orders to achieve his goals to decarbonize the electric grid, advance renew-able energy, and curb fossil fuel development on federal lands. The administration will issue sev-eral executive orders in Biden’s first days in office to roll back Trump-era actions seen as destructive, according to the person involved in the transition. The U.S. is planning to hold a climate summit soon after the inauguration, the person says.

The Biden administration should commit to cut-ting emissions by 50% over the next decade with the goal of reaching a net-zero target by 2050, a move that’ll still leave it behind some countries but would be seen as a “good offer,” Steer says. The U.S., with only 4% of the world’s population, is responsible for about 15% of its carbon dioxide emissions.

In addition to Kerry, Biden has begun to assem-ble the team that will drive his clean energy and climate agenda. Gina McCarthy, who ran the Environmental Protection Agency under Obama, is his choice to head a new White House office on climate change. She’ll work closely with Kerry. North Carolina environmental regulator Michael Regan is the nominee to lead the EPA, and Jennifer Granholm, the former governor of Michigan, was chosen to helm the Department of Energy.

The incoming administration is looking at new regulations that could have a big impact on cli-mate emissions, such as standards for pollution from cars and power plants. “Biden recognizes that we made a down payment in the Obamaadministration but also recognizes we need togo much further—as fast as we possibly can,” saysHeather Zichal, a former environmental aide toObama who previously worked as Kerry’s legis-lative director.

A critical question for Kerry will be howto bring along developing countries where

deforestation is rampant, from Indonesia to Brazil. One consequence of Trump’s withdrawal from the Paris Agreement is that it gave leaders such as Brazil’s Jair Bolsonaro political cover to ignore their own pledges.

Kerry will also have to work closely with China as trust between the world’s two superpowers is waning. President Xi Jinping surprised the world in September with a pledge to make China carbon neutral by 2060. While Biden isn’t likely to let up on confronting Beijing on issues such as human rights and intellectual property theft, Kerry may have to play the good cop with China, because any serious action on climate will require collabora-tion between the two nations.

Placing a senior climate official on the National Security Council recognizes what experts and America’s own military have long warned about: From powerful storms that can hit coastal mili-tary installations to shortages of water and food that can stoke conflict, a changing climate poses a threat to U.S. interests at home and abroad.

Kerry can use U.S. technological and economic resources, along with diplomatic muscle, to get countries that have been less bold with their cli-mate goals, such as India, to move faster. A mem-ber of the transition team says the U.S. plans to deploy climate finance and technical expertise to partner with countries that are on the fence. Still, bringing them around won’t be easy, Zichal says.

“How do you possibly go to a global leaderand say, ‘I know we’ve been AWOL for the lastfours years, but we’re back now, baby?’” she asks. “I think there is going to be a credibility issue.” �David Wainer and Ari Natter

◼ POLITICS Bloomberg Businessweek December 28, 2020

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Messing With the Census

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● Trump could still manage to subtract millions of people—but his time is running out

The count for the 2020 census is done. Despite thedangers of the pandemic and seismic shifts in thepolitical landscape, the U.S. Census Bureau ful-filled its constitutional duty. Against the wishes ofPresident Trump, the census questionnaire didn’tinclude a citizenship question.

But the task before the Census Bureau isn’tquite finished. Before it can ship the numbersoff to federal and state governments, its statisti-cians must complete a monumental task of dataprocessing—a standard yet exacting array of impu-tations, de-duplications, and other refinements. TheTrump administration is leaning on the bureau toproduce statistics that census experts worry couldbe used for highly partisan purposes. If Trump getshis way, the census count could give a boost to theGOP in the apportionment of districts for the Houseof Representatives, removing seats from urban areasin immigrant-rich states and reassigning them torural parts of Whiter states.

The U.S. Supreme Court cleared the decks forthe president on Dec. 18. It threw out a challenge toa July order in which Trump told the Census Bureauto send him two sets of numbers: the “whole num-ber” of people in each state and a number minusundocumented immigrants, to be used for Houseapportionment. The high court didn’t decide themerits of the case, which was brought by 23 statesand various immigrant rights groups. Instead, itdeclared in a 6–3 judgment that it wasn’t clear yetwhat the Trump administration planned to do.

That deferral gives the White House a narrowwindow to keep trying. If it gets two sets of num-bers from the bureau, it could make both available

to states and let them decide which to use, or it could just decide that the lower numbers are the official ones.

Last year, after the high court blocked the cit-izenship question, the White House took up the Census Bureau on an earlier offer to estimate the number of noncitizen residents using administra-tive records. One source the bureau might tap, the Citizens of Voting Age special tabulation, allows resolution down to the block group level. That’s census-ese for a dataset that looks at groupings of roughly 8 to 10 city blocks. But the White House may ask for datasets that count down to the indi-vidual block level, which would yield a much more detailed picture of ethnic and racial dividing lines (yet less accurate counts for redistricting).

It’s unclear that sufficient administrative data exist to capture the number of unauthorized immi-grants living in the U.S. Assuming the White Housegets the data before Trump leaves office, “you can besure there will be a subtraction” from the total pop-ulation count, says Thomas Louis, professor emeri-tus for biostatistics at the Johns Hopkins BloombergSchool of Public Health. (The school has receivedsignificant funding from Michael Bloomberg, themajority owner of Bloomberg Businessweek’s parent company.) “Most people who know what kind of data are available to use for that subtraction think it’s not possible to do a very good job” at it, Louis says.

The odds are against the president. The Census Bureau has already stated that it can’t complete its report to the White House before Dec. 31. Even if the Trump administration does get the adjusted data in time, lawsuits are certain to follow. “If adjustments are made to the whole person count that the Census Bureau submits, like taking up guesstimates—it’s favorable to call them ‘guessti-mates’—that’s going to lead to lots of litigation,” says Robert Santos, vice president and chief methodol-ogist for the Urban Institute and president-elect of the American Statistical Association.

The House could even direct the clerk to delay the certification of the count. Dec. 31 is only the deadline for House apportionment; counts for state redistricting aren’t due until March 31.

Census chaos may still serve the GOP in the long run. Populations considered hard to

“Taking up guesstimates … that’s going to lead to lots of litigation”

◼ POLITICS Bloomberg Businessweek December 28, 2020

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● With the economy reeling from the pandemic, sentiment hardens against immigrants

Xenophobia Flares In South Africa

As Covid-19 has slammed the South African economyand pushed unemployment to a 17-year high, it’sstoking a recurrent social ill: xenophobia.

Anti-immigrant groups have staged demonstra-tions in recent months in Johannesburg, the coun-try’s biggest city, and Pretoria, the capital, callingfor the mass deportation of foreigners. The provin-cial government of Gauteng, the nation’s economichub, wants to pass a law in 2021 to limit ownershipof businesses in low-income areas, or townships, tocitizens and foreigners who are fully legalized.

“Every foreign national that came to our coun-try since 1994 must be deported,” said VictoriaMamogobo, the 34-year-old chair of the SouthAfrican First party, as she demonstrated on Nov. 27in Johannesburg. “You’ve got people all the wayfrom Nigeria who are here to sell tomatoes on ourstreets. How is that helping us grow our economy?”

The Gauteng bill threatens to upend an industryof more than 100,000 foreigner-run conveniencestores across the country, with annual revenue of100 billion rand ($6.83 billion), according to GGAlcock, a consultant on township marketing.

South African First and the Put South AfricansFirst movement are demanding other govern-ment actions including an end to the issuing ofnonessential work permits. The African DiasporaForum, which campaigns for migrant rights, says itwill challenge the township bill in court if it’s passed.

The government of Gauteng denies that the billunfairly targets foreigners. “Which part is xeno-phobic? Because what that bill is saying is that youmust be a South African, you must be in South

THE BOTTOM LINE Immigrant convenience-store owners andother foreigners in South Africa are prime targets for resentment—and for politicians vowing to get tough on illegal immigration.

Africa legally,” says Vuyo Mhaga, spokesperson for Gauteng Premier David Makhura.

Since the apartheid system of racial discrimina-tion ended in 1994, Africa’s most developed econ-omy has been a magnet for migrants from across the continent and as far afield as Bangladesh. This increased migration has sparked bouts of violence every few years—and today, social media helps whip up the hatred. Xenowatch, which gathers information on xenophobic attacks in South Africa, says that from January 2019 to November 2020, 1,376 shops were looted and 37 people were killed.

Many of the migrants are refugees, who are in the country legally and allowed to work. Others are economic migrants, either undocumented or holders of work permits. Although it’s unclear how many migrants are in South Africa, estimates of the number of Zimbabweans alone exceed 2 million.

Immigrants, many from Ethiopia and Somalia, dominate the running of township shops because they’re better able to compete against formal super-market chains, Alcock says. Whereas South African store owners tend to operate independently, Somalians and Ethiopians band together and buy in bulk, allowing them to offer lower prices. South Africans still own the properties and, according to Alcock’s estimates, immigrants pay 20 billion rand in rent in townships annually. “The assump-tion is that if they stop illegal immigrants from trad-ing, then immediately those jobs will be taken up,

or those small businesses will be taken up by South Africans,” he says. “That’s not true.”

As he listens to Nigerian gospel music and eats bread dipped in tea in downtown Johannesburg, Ekechukwu Nnadi points to a street corner where he was beaten by anti-immigrant rioters three years ago. The incident hasn’t stopped him from coming back: “This is where I make my ends meet to pay my rent and take care of my family,” he says. �Gemma Gatticchi and Lwazi Maseko, with Karl Maier

◀ A march against xenophobic attacks in Johannesburg in 2019

THE BOTTOM LINE Although a citizenship question was blocked,other ways to strip noncitizens from census counts remain a fleeting possibility.

count only got harder to count in 2020, namelyimmigrants, American Indians, and people of color. Contagion fears, economic lockdowns, col-lege campus closures: All of the ways the pan-demic upended daily life served as strikes against the census. �Kriston Capps

Bloomberg Businessweek December 28, 2020

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With a big hand from the government, pharmaceuticalcompanies delivered the vaccine that the worlddesperately needed. Here’s how something in 2020 wentright for a change

Business

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Photograph By IAN LORING SHIVERBy DREW ARMSTRONG

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A T THE END OF 2019,before the corona-

virus pandemic started, the two best-known faces of the pharmaceutical business were the imprisoned Martin Shkreli and the lawsuit-laden opioid makers at Purdue Pharma LP. The rest of the industry was perhaps best known for the skyrocket-ing prices of its medicines. In a Gallup Poll of the pub-lic’s view of various business sectors, pharma was ranked at the bottom, behind the oil industry, advertis-ing and public relations, and lawyers.

Who’d have guessed that a year later pharma would be getting credit for saving the world? From cruise lines to meatpackers, business will have plenty to answer for in its handling of the pandemic, but this part of it worked. The Covid-19 vaccines devel-oped by the drug industry, in partnership with govern-ments, will almost certainly prevent hundreds of thou-sands of American deaths and millions more around the world. They will revive trillions of dollars in eco-nomic activity, let grand-parents see grandchildren, and finally bring an end to a year that has—sing it together one last time as the ball drops over an empty Times Square—really sucked. In a time where almost every-thing else went wrong, the

vaccine effort was somethingthat went (mostly) right.

The quest started in early January, before most peo-ple in the U.S. and Europe were even thinking about a pandemic. The biotechnol-ogy company Moderna Inc. had downloaded the genetic code for the novel corona-virus from researchers in China. Within a few days, scientists there had devel-oped a vaccine with the U.S. National Institute of Allergy and Infectious Diseases, the research agency led by Anthony Fauci. By mid-March, they’d started a clinical trial.

Pfizer Inc. announced its own plans around the same time. A year and a half before, it had signed a deal with a German biotech com-pany, BioNTech SE, that has similar messenger RNA tech-nology to Moderna’s that could, in theory, rapidly assemble and test vaccines. Like Moderna, the compa-nies thought the technology could make it possible to quickly turn around a proto-type. “The world hasn’t seen an emergency like this in 100 years,” says Steven Joffe, the interim chairman of the department of medi-cal ethics and health policy at the Perelman School of Medicine at the University of Pennsylvania. “We are lucky in the sense that the science was there.”

Other crucial pieces fellinto place behind the scenes. For years the research chiefs of the top pharmaceutical companies have had an annual gathering to talk about ways to speed up their work. As the Covid cri-sis got worse, about 20 drug companies started a work-ing group with the National Institutes of Health and other govern ment agencies, meeting every other week to look at potential thera-pies and coordinate clini-cal trials, says Paul Stoffels, the chief scientific officer at Johnson & Johnson, which has a large-scale Covid vac-cine trial expected to pro-duce results in January.

Those efforts would even-tually be folded into what’s now known as the Trump administration’s Operation Warp Speed program. Warp Speed was revealed at the end of April, when the pan-demic had killed close to 60,000 Americans. The goal was to develop and pro-duce enough shots to inocu-late 300 million Americans before the new year. Some companies, including Moderna and J&J, would get direct funding for their efforts. Pfizer got an agree-ment from the govern-ment to buy the vaccine it produced if it worked.

Crucially, the govern-ment was shouldering some risk, financing the

advance production of the experimental vaccines while clinical trials were still going on. “The most risk-averse people on Earth in the riskiest business on Earth” is how U.S. Health and Human Services Secretary Alex Azar describes the drug indus-try. “Probably the most com-mon words said in a pharma company are, ‘How do you de-risk this?’ ” Azar, whose department helped over-see Warp Speed, says he understood how tricky a bet on vaccines can be for a business. “These com-panies are looking at mak-ing the multibillion- dollar investments in R&D and manufacturing capacity,” he says. “And they had just been through Zika, SARS, they’ve been through MERS”—viruses for which the pharmaceutical indus-try investigated vaccines that never saw the outside of a clinical trial before those outbreaks dissipated or were squashed.

The government’s back-ing let smaller players get in the game and take some risk-ier technologies forward. Smaller companies such as Moderna “don’t have the resources to do this on their own,” Joffe says of large-scale clinical trials. Pfizer, despite its corporate repu-tation as a rival- consuming shark, said it would offer up any excess manufacturing

KIZZMEKIA CORBETTViral immunologist, National Instituteof Allergy and Infectious Diseases

STEPHEN HAHNCommissioner, U.S. Food andDrug Administration

SARAH GILBERT Professor of vaccinology, University of Oxford

An All-Hands-on-Deck EffortJust a few in the army of scientists and leaders who made the record-fast development of a Covid-19 vaccine happen

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capacity it might have—potentially producing competitors’ vaccines.

But even a company of J&J’s size—it reported $15.1 billion in profits last year—needs incentives to rapidly start up a costly vaccine development and testing effort, Stoffels says. Pharma companies could reasonably predict that Covid would be bad and that a vaccine would have a market. “But to mobilize a billion, maybe $2 billion to start manufacturing and do the R&D” is daunting, he says. “While we are big com-panies, nobody can free up $2 billion in their [profit-and-loss statement] overnight.”

Moderna, AstraZeneca Plc, and other vaccine devel-opers who joined Warp Speed agreed to use similar structures for their clinical trials, so they could easily be compared with one another and so it would be easier to see clear winners. The gov-ernment also put together a single safety board to over-see them, which Penn’s Joffe sits on. It was an unusual approach, but it let the safety monitors look for worrying side effects or problems that could show up in more than one trial. In usual circum-stances, drugmakers might design their experiments to show advantages over com-petitors’ or dodge a potential head-to-head analysis.

Big Pfizer and tinyModerna both got their vaccines across the fin-ish line. The shots cleared in December, have been shipped out to states, and are now going into people’s arms. Barring surprises, by spring, tens of millions of Americans will have got-ten them. By summer, hun-dreds of millions more will have. It’s an achievement worth celebrating—a shining example of people under-standing what their job really is, then doing it. And it’s not a story with a single hero. It’s one about government sci-entists and private- sector researchers, the trial volun-teers who put their bodies on the line, the doctors run-ning the trials, the FedEx and UPS workers making sure the vaccine is delivered during a pandemic winter, the nurses donning PPE to administer the shots, down to the first person being vaccinated after the FDA’s authorization. Go through the chain, and that’s who made this happen.

B UT IT’S ALSO A STORY that highlights just

how badly the U.S. screwed up almost everything else to do with controlling the pandemic. The nation had every asset needed to curb the virus: The world’s best scientists, the biggest col-lection of biotechnology

and pharma companies, a powerful government, and well- established public- health institutions. The U.S. even had unlimited financ-ing. (Perhaps the one other thing policymakers got right is that they pumped enough money into the system to keep the economy alive, but even then Congress was slow to strike a second relief deal.) And Americans still ended up with a badly con-tained, deadly outbreak. Schools have gone remote. Lots of restaurants will never reopen. Chances are, you know somebody who was sick enough to be hospital-ized or to have died.

Michael Mina, an assis-tant professor of epidemiol-ogy at the Harvard T.H. Chan School of Public Health, believes that cheap, plen-tiful, rapid tests long ago could have done more to stop the pandemic than just about anything else we’ve done over the past few months while watch-ing cases and deaths stack up and hoping for a vaccine. “The only way to deal with a virus like this appropriately is to try and identify people who are infectious,” he says. He’s helped develop an inex-pensive, mostly accurate test with rapid results that can be done on a strip of paper. It’s not as accurate as the diagnostic tests you have to wait hours in line for

and often days to get a result back from, but it costs pretty much nothing and is easy to make. “We make more bags of Doritos than I’m asking for,” he says of the number of tests needed. “These are paper strips that get cut from one big piece of paper.”

His idea is that if you test like crazy, you can find enough cases to tell peo-ple who are infectious not to be out and about, and you halt a huge amount of trans-mission. “There are people who aren’t wearing a mask because of politics or what-ever,” Mina says. “But they may still not want to get their 80-year-old mom sick at Sunday dinner.” He’s pushed the idea to anyone who will listen, but it would need reg-ulators to sign off and has never gotten off the ground.

So where was the Warp Speed for testing? Fauci, who’s been the face of the U.S. response to the outbreak—or at least the face of what it could have looked like—said at a Dec. 9 event at Harvard’s school of public health that it’s not as if a pro-gram of mass, cheap testing would have been impossible to achieve. “We have done things infinitely more com-plicated than that,” he said. “We have the technology. We can do it.”

Which, when you think about it, brings up more questions. Where was the Warp Speed for contact trac-ing? For public-health mea-sures? For data? For making sure health-care workers had protective gear? Where was the Warp Speed for keeping open businesses, churches, and schools? For everything that went wrong, where was that combination of

HAMILTON BENNETT Senior director of vaccine access and partnerships, Moderna

OZLEM TURECI Chief medical officer, BioNTech

ALEX AZAR Secretary, U.S. Health and Human Services

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leadership and industryand money that could havemade it go right? Whilewe’ve been marveling,rightly, at the science that’smade a vaccine possible,most of that other stuff nevergot going at the same level.

HHS Secretary Azar saysthere was a national strat­egy for much of this—it justwasn’t as visible as WarpSpeed. But we’re still facing atough winter even with large­scale vaccination efforts onthe horizon. Tests are morecommon now but hardlyplentiful, at least not in thevolume you’d need to trulyuse them for broad, con­stant public­health surveil­lance, the kind that wouldallow people en masse to goto school or work, travel onairplanes, or attend concertsor sporting events. In theNew York City suburb whereI live, my wife and I spentdays trying to book a just­to­be­sure Covid test before weheaded south to visit rela­tives for Christmas. As I’m fil­ing this to my editor, we’rebarreling down the interstatewith plans to eat food out ofa cooler, pee on the side ofthe road, and brave 14 hoursin a midsize SUV with twosmall children—one of whomis disastrously vomit­prone—all to preserve the little bub­ble of isolation we’ve kept upahead of the trip.

Even the uncomplicated

things have been hard formuch of the country. Notwearing a mask is seen asa political act by a signifi­cant portion of the popula­tion, unhelped by a mixedmessage from governmentleaders, some of whomhave suggested that, basi­cally, masks are for losers.“We love to inject ourselveswith stuff, but when it comesto simple messaging abouthealth, doing somethingthat would help people,we hate it,” Mina says. “Weare very willing to mop upmesses, but we have no will­ingness to stop them beforethey occur.”

There is one moreopportunity to get a bigthing right. The U.S. getscredit for having pushedthe development of the vac­cines. Now it has to makesure people take them.

First, the governmenthas to guarantee there’senough vaccine. That wasa key part of the goal ofWarp Speed. Since the pro­gram started, the U.S. hassigned deals for enoughshots to cover 505 millionpeople, with the optionto buy more. But it hasonly enough from Pfizer,so far, for 50 million. Andfrom Moderna for 100 mil­lion. Other vaccines it’smade deals for, such asAstraZeneca’s and J&J’s, arestill in development.

There are growing con­cerns that the U.S., afterleading development of vac­cines, may not get them asfast as it had hoped. Insteadof 300 million covered bythe end of 2020, the U.S.is now aiming to supplyvaccine for 20 million peo­ple by the end of Decemberand getting to a total of

100 million by the end ofFebruary. Vaccinating all ofAmerica now looks morelike an end­of­2021 goal.

Even if there is enoughvaccine, of course, peoplehave to be willing to take it.“If we have a 95% effectivevaccine and only 40% to50% of the people in societyget vaccinated, it’s going totake quite a while to get tothat blanket of herd immu­nity that’s going to pro­tect us,” Fauci said at theHarvard event.

E ARLY ON IN THEdevelopment of the

vaccines, there was debateabout whether to run whatare known as challenge tri­als. In these, healthy volun­teers get an experimentalvaccine and are deliber­ately exposed. It’s an ethi­cal razor’s edge. Is it moralto give somebody a virusyou know kills a small per­centage of patients, withtheir best defense being avaccine that isn’t knownto work? Because thereweren’t Covid therapiesthat could cure an infectedpatient, researchers passedon the idea. It wasn’t worththe chance that someonecould die.

Instead, the vaccine tri­als signed up tens of thou­sands of volunteers, splitinto those who got the realshot and those who got aplacebo. To find out if thevaccine was effective, theyhad to go back out into thereal world and bump intothe virus on their own. Theidea with these large trials—the gold standard for test­ing a vaccine’s efficacy andsafety—is that if the vaccineworks, Covid cases rapidlyaccumulate in the group

that got the placebo but not in those who got the real thing. Get enough cases, and you can perform a sta­tistical analysis of exactly how effective the vaccine is. But if there isn’t enough virus circulating, few in the trial get infected, and results take longer.

Over the summer, Pfizer’s and Moderna’s tri­als went into lulls as thepandemic waned. Then inthe fall, cases exploded—millions of infections were tallied around the coun­try and thousands of peo­ple died—and the results started pouring in on the trials. J&J said in Decemberit would shrink the sizeof its 60,000­person trial because the cases were coming in so fast. The U.S., because of its failure to con­trol the pandemic, had essentially created one big challenge trial.

“There is an irony and a situation that we all hoped wouldn’t have occurred,” U.S. Food and Drug Administration Commissioner Stephen Hahn says. “The number of cases did help expedite the performance of clinical tri­als, both here and abroad. That did help us get to this point. But I think none of us would have wanted it to bethat way.”

That’s the contradiction of the U.S.’s vaccine suc­cess. The governmentand scientists all work­ing together came up with a shot to save the world—and then they were able to prove so quickly that itworked only because thosesame institutions couldn’t save us from ourselves. <BW> �With Robert Langreth

“We are lucky in the sense that the science was there”

JENNIFER PACKER

Jennifer Packer: The Eye Is Not Satisfied With Seeing

» Opens 18 November 2020

+ Free Entry + Booking Essential

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World Central Kitchen, founded by chef José Andrés, has helped millions of people through disasters. The pandemic brought a new challenge

By ROBB MANDELBAUM

Feeding

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� Carole Dubois (above) and workers

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THE RUSH BEGANearly in the kitchen of

Blueprint Cafe Lounge, afusion restaurant in theEast Ward of Newark,N.J. On a Thursday morn-ing in December, IsabelMelo, a chef, arrived at5:30, well before sunrise.First she retrieved trays ofzucchini-carrot salad, pre-pared the night before,from the cooler, then filleda couple of large stockpotswith water to boil penne—20 pounds of it. As thepasta cooked, she finishedoff a cream sauce simmer-ing in a large saucepan withcurry. By 9 a.m., assistantAntonio Flores had begungrilling trays of chicken thathad marinated overnight ina savory mix of basil, cinna-mon, and garlic.

It was a lot of food fora restaurant in a city thatwas once again on the brinkof lockdown. And that wasonly half the morning’sorder—the chefs also pre-pared a banquet’s worth offried fish with potato casse-role and roasted vegetables.But none of these mealswere meant for Blueprint’sregular clientele. At about10:40, the restaurant’s

manager, Charles Steiner,loaded up his Audi with ahundred freshly boxed fishmeals bound for a com-munity service organiza-tion a few miles away inNewark’s North End. Thenhe came back for a hun-dred chicken meals totake to the MetropolitanBaptist Church.

The meals were arrangedand paid for by WorldCentral Kitchen, the relieforganization founded bySpanish-born chef andrestaurateur José Andrés.World Central Kitchenbecame something of ahousehold name in theU.S. after Hurricane Mariamade landfall in PuertoRico in September 2017.Andrés, working mostlywith volunteers recruitedon the spot or pulled fromhis restaurant empire,ThinkFoodGroup, didwhat no other relieforganization—not theFederal EmergencyManagement Agency northe Red Cross—managed todo: serve millions of fresh,often hot, meals to peoplewho would otherwise havegone hungry.

In the three years sinceMaria, WCK has respondedto wildfires, erupting volca-noes, and more hurricaneswith makeshift kitch-ens in shuttered schools,catering halls, and otherinstitutions. It’s sourcedingredients from local sup-pliers and pulled togethernetworks of chefs, kitchenworkers, food trucks,and volunteers—in otherwords, from existing foodinfrastructure—to cook anddistribute meals. In the pro-cess, it’s rewritten the play-book for disaster relief

strategies that long relied on shipping in precooked, heavily processed meals. (Andrés has participated in events organized by Bloomberg Philanthropies; the organization also has donated to World Central Kitchen.)

The arrival early this year of the novel corona-virus in so many places atonce, and the subsequenteconomic shutdowns meantto contain it, requiredan even more ambitiousrethink. “We have an ethosas an organization thatyou can’t do what’s alwaysbeen done,” says NateMook, WCK’s chief execu-tive officer. “If you end upoperating the same way aseveryone else, then you’regoing to have the sameissues that they have at theend of the day.”

In early March, WCKbegan talking to restaurantsin a half-dozen cities on thecoasts, the first in a nation-wide initiative that it callsRestaurants for the People.By July the program wasserving more than 200,000meals a day to the hungry,made by 2,400 restaurants,caterers, and food trucksin almost every major U.S.metro area and dozens ofsmaller cities and towns.WCK provides nutrition andother guidance to restau-rants, sets their cookingschedules, and determineswhere the meals go.

Right now, about 1 in5 households can’t besure where its next mealwill come from, accord-ing to Elaine Waxman, asenior fellow at the UrbanInstitute who studies foodinsecurity. It’s worse forfamilies with kids, with

1 in 4 food-insecure. Thesituation is so dire that “justadapting the tools we have is not sufficient,” she says. It’s about “thinking outside the system.”

With Restaurants for the People, WCK has trans-formed itself from a merely effective relief organiza-tion into something moreresembling an upstart techcompany—it’s developed a fairly radical, scalable pro-gram not just for getting hot food to people who need it but also for keeping the money spent on food aid in the affected communities by using their small busi-nesses. Paying a restaurant to make an individual meal typically costs about $10, about two to three times more than having volun-teers cook it in bulk in an arena commissary, but the extra money keeps restau-rant workers employed, and when they spend their paychecks they keep other people at work.

At Blueprint, co-owner Carole Dubois has kept her nine-person staff together, but she and her partner have dipped into their pockets to do it. “They would come in, but there was nothing that was being sold,” she says. Dubois opened Blueprint Cafe three years ago in a brick building that used to be a Breyers Ice Cream factory. She worked hard to make it a destination for din-ers in an otherwise indus-trial neighborhood. As last spring approached, so did the break-even point for the business. “Then the pan-demic struck,” she says. “We dipped about 80%.” When WCK entered the

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picture, she says, “it’s likeyou’re drowning, and theythrow a floater at you.”

The organization orig-inally committed $10 mil-lion to the program, butit quickly struck a chord.Buoyed by a surge of dona-tions, much of it in smallcontributions, it’s spentabout $150 million. Ofthat, $135 million has goneto restaurants. AlthoughRestaurants for the Peoplelargely wound down in thefall as its funding commit-ments ran dry, it contin-ues to operate in Newarkand a handful of other cit-ies, where companies andphilanthropists support it.With Covid-19 cases risingsharply across the coun-try, relaunching the pro-gram nationally would be amonumental effort. Andrésbelieves only one donor iscapable of sustaining it: thefederal government.

UNTIL 2017, ANDRÉSwas best known as

a TV-friendly chef whohosted a show aboutSpanish cooking on PBSand beat Bobby Flay onIron Chef. From the early1990s in Washington, D.C.,Andrés had built an empireof fancy-casual eateries,mostly serving variationson Mediterranean and Latincooking. But he rocketedto fame on the strength ofa handful of avant-garderestaurants that most peo-ple will only ever knowby reputation. (One of hisfirst restaurant jobs, as ateenager, was at El Bulli,Ferran Adrià’s seminalmodernist restaurant out-side Barcelona.)

Andrés used his ownmoney to open a six-seat

restaurant called Minibar in2003, on the second floorof one of his D.C. restau-rants; it won two Michelinstars in 2016. By the late2000s, as he opened spotsaround the country, he’dtaken to adding “by JoséAndrés” as a suffix to theestablishments’ names. Yet

though he was catering toan increasingly rarefied cli-entele, Andrés has oftensaid he longed to “feed themany.” Soon after he firstmoved to D.C. in 1993, toopen the tapas bar Jaleo,he’d begun volunteering,first at Share Our Strength,then at DC Central Kitchen,a local organization thattrains unemployed people

to work in the restaurantindustry and serves foodto at-risk populations. “I’man immigrant. I like beingpart of the community,”Andrés says. He foundthe experience of cookingnext to homeless peopleand ex-convicts humbling.“I began growing up as

a young man,” he says,“but more importantly, Ibegan growing up as anAmerican.”

When a devastatingearthquake struck Haitiin January 2010, Andréswent there to cook. WorldCentral Kitchen came out ofthat trip. The early work ofthe group, which until threeyears ago was really just an

employee or three, focusedon long-term development,such as bringing clean-burning stoves to Haitianhomes. But as Andrés vis-ited more disaster zones,he took note of what helpedand what didn’t.

When he boardeda flight to San Juan inSeptember 2017, five daysafter Maria, Andrés had lit-tle but the phone num-bers of some contacts in thelocal restaurant industry.And in the seat beside him,he had Mook.

Mook, 39, left collegebefore his sophomore yearto start a network of web-sites and spent the nextdecade creating and run-ning a series of small,modestly successful techventures. Eventually,he started a TEDx chap-ter, producing local TEDTalk-style events in theWashington area. Soon,Mook found the extracur-ricular work more compel-ling than his workday. In2011 he moved to Doha toorganize a TEDx summitthere and fell in with a bandof filmmakers.

Mook got to know Andrésin Doha, when the chef vis-ited to scout restaurantlocations. The restaurateurtalked so passionately aboutWCK and Haiti that Mookinvited him back to the con-ference the next spring tospeak about the effort. A fewmonths later, Mook offeredto travel to Haiti with hisfriends and film Andrésat work. Within days, thetwo were reunited in Port-au-Prince. Ultimately theymade a documentary aboutHaiti for PBS.

When Hurricane Mariahit, Andrés called Mook

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Mook at WCK’s operations center

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looking for a satellitephone. He got, instead, acolleague. In December,just after returning fromPuerto Rico, Mook trav-eled to Ventura County,northwest of Los Angeles,as wildfires raged and orga-nized another feeding mis-sion, for firefighters andevacuees. “A lot of peopleattributed José’s work inPuerto Rico to a flash in thepan—they said Puerto Ricowas a unique situation,”Mook says. But now thepair realized they could dothis work almost anywhere.A month later, Andrésasked Mook to build WCKinto a rapid-response relieforganization.

“He’s become a guy thatI learn every day from,”says Andrés. “He’s like aJedi, this guy.”

THE IDEA THATrestaurants could

serve as meal productionsources for disaster ref-ugees first occurred toAndrés in Puerto Rico.But in the kinds of disas-ters World Central Kitchenbegan responding to, rely-ing on restaurants usuallywasn’t practical: Either thepremises were damaged,or their supplies were dis-rupted, or their staff hadevacuated with the rest ofthe community.

Covid was different. Therestaurants were standing,the food was available—suppliers, in fact, were des-perate for customers—andemployees were waiting forwork. But in the early daysof the pandemic, when thevirus was more of a rumorthan a fact on the ground inmost of the U.S., it wasn’tclear how or whether food

could even be distributedsafely. When WCK went toJapan to feed the passengersmarooned on the DiamondPrincess cruise ship, it hadto find special oven trucksto reheat meals before theywere hoisted up from thedock to the ship’s deck.

Flexibility is the hall-

mark of a WCK operation.Andrés is famously averseto meetings, at both hisday job and his aid group.“Everybody kept sayingwe needed to have a plan,but we never organized,”he wrote in a memoir ofMaria. “How many days areyou going to organize whenpeople are going hungry?”Even as WCK has grown,

Mook has resisted addingmuch structure.

“A lot of times, it’simpossible to know whatis really needed untilyou’re there,” Mook says.“The first rule of what wedo is adaptation—get onthe ground, figure out theneeds, and adapt to the

circumstances. You createthe framework, and peopleunderstand the framework,knowing that the details aregoing to change.”

When Mook sent a teamto reconnoiter the NavajoNation, which lies in a vastand remote expanse of des-ert in northern Arizona andNew Mexico yet had one ofthe highest rates of infection

this spring, WCK discovered that restaurants were too few and too far from many small communities to sup-ply hot food. So the orga-nization made fresh food boxes for recipients to cook at home. Ultimately, WCK deployed a variety of strate-gies, including institutional kitchens and food trucks.

But restaurants are still the biggest arrow in its quiver. WCK isn’t alone in appreciating the double benefit of tapping restau-rants as agents of disas-ter response. Groups in Boston, New Orleans, and San Francisco all more orless simultaneously hatchedindependent crowdfundingcampaigns that would goto pay restaurants to cook meals for front-line work-ers. The Boston and San Francisco organizations quickly joined forces with WCK. In Newark, Audible, Amazon.com Inc.’s pod-casting subsidiary, which has long subsidized weekly lunches for its employ-ees in the city’s down-town restaurants, started its own effort to fund meals for the needy prepared by those restaurants. It also wound up joining WCK:Audible has funded theproject—$4 million of its own money, plus $8 million in corporate and individual donations—while WCK man-ages the work.

As word spread about the program, more restau-rants than WCK could pos-sibly support wanted in. Mook says the organiza-tion considered both geog-raphy and who needed the work most. It often came down to being in the right network. In Newark, WCK

THE GOOD BUSINESS ISSUE

Andrés in Puerto Rico in 2017

Bloomberg Businessweek December 28, 2020

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Bloomberg Businessweek December 28, 2020

“The firstrule of whatwe do isadaptation—get on theground,figure outthe needs”

made a deliberate effort toexpand beyond the CentralWard and to work withmore minority-owned, andparticularly Black-owned,businesses, says EmmaHaberman, who man-ages the Newark opera-tion. Haberman normallyoversees the organiza-tion’s events, but whenCovid struck, “it was kindof all hands on deck,”she says. “Nothing is notyour job at World CentralKitchen.” In most cases,she took recommenda-tions from Audible employ-ees or the mayor’s office.But not always: AndrosDiner joined the ranks toserve Metropolitan BaptistChurch at the behest ofNew Jersey Senator CoryBooker, who asked Andrésdirectly. The diner is oneof the senator’s favoriterestaurants, and he’s amember of the church.

Because where WCKlands—and whom it helpsonce there, on either end—is often a matter of happen-stance and connections,there have been nota-ble omissions. The orga-nization had almost nopresence in Phoenix, the

country’s 10th-largestmetro area, or in the wholeof Alabama or Mississippi,all of which had becomered zones by June.

Still, for the restau-rants in the program andfor recipients, it’s almostimpossible to overstateWCK’s value. Since March,Newark restaurants haveprepared almost 650,000meals for hungry resi-dents and collected closeto $6.5 million in reve-nue. For Blueprint, thepayments were essen-tial. Business returnedas deliveries and pickupsordered through such appsas DoorDash, but “thosethird parties are taking 30%of your revenues,” saysDubois. At the program’speak, when Blueprint wasmaking a thousand mealsa week, she says, it waslike having five really goodpre-pandemic days.

Meanwhile, a handful oflocal governments aroundthe country have followedWCK’s lead and set up theirown restaurant feedingprograms. City officials inNew Orleans, inspired byWCK’s early work there,deployed $18 million tofeed residents who live ina household with some-one who has Covid. At itspeak, the program servedabout 12,000 people twomeals a day; now, about5,800 people are enrolled.The program is scheduledto run through the end ofthe month. In California,31 cities and counties areusing restaurants to delivermeals to senior citizens.Currently, some 54,000seniors are enrolled inGreat Plates Delivered,as the program is called;

since April, when GovernorGavin Newsom announcedit, it’s served almost20 million meals.

Both of these initia-tives are funded largelywith reimbursementsfrom FEMA; and theyappear to be the first timethat local jurisdictionshave used FEMA disas-ter money to provide foodrelief through their restau-rants. WCK, for its part,would like others to follow.Even as it began rollingout Restaurants for thePeople, Andrés started dial-ing up friends on CapitolHill. In May, RepresentativeMike Thompson and fel-low California DemocratSenator Kamala Harris,along with co-sponsorsfrom both parties,introduced the FEMAEmpowering EssentialDeliveries (FEED) Act,which invites the federalgovernment to approvelocal plans to contract outdisaster meal services tosmall and mid-size restau-rants and nonprofits for theduration of the pandemic.

The FEED Act doesn’treally remove most of theobstacles that discour-age local governmentsfrom getting federal helpon costs, such as FEMA’sexceedingly slow timeta-ble for paying up. But thebill does make one cru-cial change: The federalgovernment would paythe full tab for these pro-grams during the pan-demic. Under existing law,the state must cover 25%of the cost of aid, a sharethat’s put meal assistancebeyond the reach of manycommunities. California,for example, requires local

governments to pay 6% (the state pays 19%), and even that’s too much for most jurisdictions.

It’s unclear whether the FEED Act will become law—the Democratic House has passed it, but it’s stalled in the Senate. The Biden administration could decide on its own to raise the fed-eral government’s share of disaster costs to 100%.

Already, WCK andother like-minded groups,including Audible in Newark, are starting to think about life after Covid and whether restaurants can become an endur-ing tool for addressing endemic food insecurity in their communities. It will be a difficult discus-sion. Over the long term, says the Urban Institute’s Waxman, that’s a better job for government. And Andrés, for his part, would prefer to see WCK stay lean, agile, and focused. But he also thinks govern-ment has failed at provid-ing this basic need. “This should be a moment of no compromises,” he says.

STEINER, BLUEPRINT’S manager, pulled into the

parking lot of Metropolitan Baptist’s community cen-ter at around noon. The church’s twice-weekly meal program takes 750 meals from six restaurants. As Steiner left, an Audible van pulled in with its own deliv-ery. Volunteers packed two lunches into a bag with a bottle of water and a gra-nola bar as people began lining up on the sidewalk outside. The doors opened at 1 p.m. By 2:15 the meals were gone. <BW>

THE GOOD BUSINESS ISSUE

Bloomberg Businessweek December 28, 2020

Big shareholders are pushing companies to think about society and the environment. But there’s a new legal backlash

Is It

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Bloomberg Businessweek December 28, 2020

should be little ambiguitywhen it comes to the fiduciaryresponsibilities of the board ofa corporation or the trusteesof a pension fund. On Sept. 4,the Department of Labor citedthe legal principle of “eyesingle” in justifying a proposedrule in the Federal Register: Inother words, fiduciaries of apension fund must promotethe welfare of participants andbeneficiaries to the exclusionof all other concerns. The eyesingle formulation, which hasa long legal history, may traceback to none other than Jesus,who said in the Sermon onthe Mount (Matthew 6:22, KingJames Version): “The light ofthe body is the eye: if thereforethine eye be single, thy wholebody shall be full of light.”

These, then, are the battlelines. The century-long debatehas intensified lately becausethe ESG movement has gottenstronger. According to theDeloitte consulting firm, 26%of professionally managedassets in the U.S. had ESGmandates in 2018, up from 11%in 2012. The trend has beenbolstered by the concentra-tion of assets in the hands ofa few giant money managers.BlackRock, Vanguard, andState Street together own 25%of the shares in S&P 500 com-panies. Those asset manag-ers are increasingly likely tosupport shareholder resolu-tions by ESG activists. A smallshareholder who disapprovesof what a company is doingcan simply sell, but BlackRockand peers that run index fundshave to own shares in every-thing. So voting for change is their only option.

But the power of big holders and the proxy advi-sory firms that help them decide how to vote their shares rubs some people the

wrong way. “A small number of unelected agents, oper-ating largely behind closed doors, are increasingly important to the lives of mil-lions who barely know of the existence much less the identity or inclinations of those agents,” Harvard Law School professor John Coates wrote in a 2018 paper. Jamie Dimon, chief executive officer of JPMorgan Chase & Co., complained in 2015 about “lazy” shareholders who just follow the recommen-dations of proxy advisers on votes. (Advisers had rec-ommended voting against his pay package, which was nevertheless approved.) Bloomberg has reported that Dimon pushed the Business Roundtable, a Washington trade group he chaired at the time, to lobby the U.S. Securities and Exchange Commission and lawmakers on proxy-voting rules.

The Labor Department, headed by Eugene Scalia, son of the late conserva-tive Supreme Court Justice Antonin Scalia, this year final-ized a rule stating that retire-ment plan fiduciaries must base investment decisions solely on pecuniary factors. Nonmonetary considerations can be taken into account only as a tiebreaker in the “rare” case where two invest-ments are otherwise equal. Critics of the pension rule consider it a victory that the final version deletes most ref-erences to ESG by name. It takes effect on Jan. 12, just before Trump leaves office, but it may not last long. “It seems very likely it will be reopened and undone by the next administration,” says Michael Kreps, a former U.S. Senate staffer who’s a

THE GOOD BUSINESS ISSUE

T HE LEGAL PRINCIPLEthat corporate boards

must focus exclusively onmaximizing value for share-holders wasn’t always takenfor granted. It was enshrinedin a 1919 court decisioninvolving Henry Ford and twoof his car company’s share-holders, the Dodge brothers.As chairman and majorityowner of Ford Motor Co.,he had repeatedly raised hisworkers’ pay, cut the price ofthe Model T, and reinvestedprofits in expansion. If Fordwere around today his stancemight be applauded by theenvironmental, social, andgovernance (ESG) movementon Wall Street. “My ambitionis to employ still more men,to spread the benefits ofthis industrial system to thegreatest possible number, tohelp them build up their livesand their homes,” he said in aspeech introduced at trial.

Ford lost, though notentirely. Minority share-holders John Francis Dodgeand Horace Elgin Dodge,who were scraping togethermoney to launch a rival auto-maker, sued him to stop frit-tering away profits and toraise dividends. In Dodge v.Ford Motor Co., the MichiganSupreme Court ordered Fordto pay an extra dividend. Butit simultaneously undercutthe principle of shareholderprimacy by affirming what’snow known as the businessjudgment rule, which givesboards of directors widelatitude to decide what’sin the best interest of thecorporation.

That ambiguity hasnever been resolved. For acentury there’s been a strug-gle between advocates ofshareholder primacy and those who say corporations

should take into account other priorities, particularly environmental, social, and governance issues. As ESG has gained prominence it’s generated a quiet backlash. In the waning days of the Trump administration, three federal agencies are promulgating rules to narrow the scope for considering ESG factors in business and investing deci-sions, even as lawyers predict the Biden administration will go in the other direction.

Which side is right? Well, that’s where it gets interest-ing. The latter-day Henry Fords are correct that com-panies can and should aspire to more than just pushing up their stock prices, while today’s Dodge brothers are right that managers and boards shouldn’t have free rein to do whatever they wish with a company’s money.

Managing conflict over the purpose of the corpo-ration is difficult, but some see it as part of the art of running a company. Barnali Choudhury, a law professor at the UCL Faculty of Laws in London, compares corpo-rate directors to the resource-ful main character Truffaldino in The Servant of Two Masters, an Italian comedy written in 1746. “Like Truffaldino, cor-porate managers should also be able to serve both the financial interests of share-holders and the interests ofnon-shareholder corporate constituents through use of the ambiguity of the corpo-rate purpose,” she wrote in a 2009 article for the University of Pennsylvania Journal of Business Law when she was at Charleston School of Law.

The Trump administra-tion has taken a very different approach, arguing that there

Bloomberg Businessweek December 28, 2020

THE GOOD BUSINESS ISSUE

lawyer at Groom Law Group in Washington.

The SEC has gone easier on ESG than Labor has, because the fiduciary standard in the law for corporate boards is more relaxed than the one for retirement plan trustees. But in July the SEC approved a rule effectively making proxy advi-sory firms run their recom-mendations past companies at the same time they release them to investor clients. Institutional Shareholder Services Inc., the biggest proxy advisory firm, sued the SEC and Chairman Jay Clayton over the rule, which is also consid-ered vulnerable to elimination under Biden.

Perhaps the most direct assault on ESG, albeit not one involving directors’ duties to shareholders, is being mounted by the Office of the Comptroller of the Currency, which is proposing to penal-ize big banks that base lending decisions on anything other than financial consider-ations. It was instigated by Alaska’s congressional delega-tion, which complained that banks had stopped lending for new oil and gas projects in the Arctic. Gunmakers and private prison owners have also complained of losing financing. The OCC may pro-mulgate the rule before Trump leaves office—public comments are due on Jan. 4. If it does, it won’t be easy for the Biden administration to reverse because many Democrats, as well as Republicans, are leery of blacklisting entire sectors of the economy.

The Trump administra-tion does have a point that there’s a potential conflict between ESG and a board’s fiduciary duties. Some ESG advocates try to elide the

conflict by arguing that doing good for the environment, society, and governance increases corporate profit-ability in the long run. That’s true in some cases, but ESG isn’t simply a $100 bill on the sidewalk. The profitable parts of it are already being done willingly, or at least could be done soon. The resistance, political and otherwise, is to the unprofitable parts. “You can’t get away from the idea that ESG takes away from profitability,” says Wayne Winegarden, a senior fellow in business and econom-ics at the free-market Pacific Research Institute. “In that type of environment you’re talking about political issues, not economic issues.”

Shouldn’t shareholders be able to push companies to do whatever they want, even if it seems political? In theory, yes, says Eugene Fama, a Nobel laureate economist at the University of Chicago Booth School of Business. But in practice it’s impossible to coor-dinate their efforts, so profit maximization is the next best goal, Fama wrote in October in an essay for the Harvard Law School Forum on Corporate Governance. Using “E” and “S” to refer to environmental and social, Fama wrote, “For some investors with tastes for E&S actions, 50 percent may be too much, and for others it is too little. There is also likely to be disagreement on how the 50 percent is split among different E and different S actions.”

A cynical take on ESG is that it’s a way for CEOs and boards to avoid accountability. If profits come in below expectations, they can point to some wind farm as an explanation. “As profit

maximization proponents have warned, vastly broadening the discretion of corporate managers can leave management with so much discretion that neither shareholder, employee, nor consumer wealth is maximized, but instead only their own,” Choudhury wrote in her law journal article.

Luigi Zingales is more of a proponent of ESG than Fama, his colleague at Chicago’s Booth School, but says its critics should be taken seri-ously. He co-organized a conference in September to mark the 50th anniver-sary of Milton Friedman’s landmark essay “The Social Responsibility of Business Is to Increase Its Profits.” Says Zingales: “As usual, the guy was very smart, and what he said was very coherent.”

There are three strong lines of attack on the share-holder primacy argument, Zingales says. One is that shareholders may choose to go beyond what the govern-ment requires because the government doesn’t always do what’s right. A second is that “corporations were born as public institutions with special privileges granted by the state,” and with those privileges come responsibil-ities. A third is the argument from absurdity: “In princi-ple, if you take Friedman to an extreme, I should sue a CEO who doesn’t buy off all the members of Congress.” Almost nobody believes that.

Even if it’s only about money, diversified inves-tors care about maximizing their overall returns, so they have a financial incentive to, say, push one company to reduce greenhouse gas emis-sions if it would benefit other

companies whose shares they own that are harmed by climate change. Big money managers such as BlackRock are in a good position to coor-dinate that sort of thing.

It’s not economic theory or corporate law or any lofty principle that stops CEOs and directors from pursuing ESG goals, says Judy Samuelson, founder and executive direc-tor of the Aspen Institute’s Business and Society Program. The real obstacle, she says, is far more prosaic: the way CEOs’ bonuses are based on short-term financial perfor-mance. In a book on ESG to be published in January, The Six New Rules of Business: Creating Real Value in a Changing World, Samuelson names companies that she says have done it right: CVS Pharmacy, which stopped selling tobacco; Royal Dutch Shell, which dropped out of the U.S. oil lobby; and Merck, which makes a drug to prevent river blindness that will never be a moneymaker.

Tesla Inc. co-founderElon Musk, who’s becomethe world’s second-richestperson while doing what-ever he wants, is living proof that shareholders don’t have to come first. When it comes to laughing them off, Musk is Henry Ford reincarnate. In a conference call with inves-tors in July, he said, “We need to, you know, not go bank-rupt, obviously, that’s import-ant. … But we’re not trying to be super profitable, either.” He added, “I think just we want to be, like, slightly prof-itable and maximize growth and make the cars as afford-able as possible.” Building cheap, zero-emission vehicles is totally ESG. It may not please the shareholder primacy theo-rists. But it works. <BW>

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December 28, 2020◼ DEBRIEF

Fifteen years ago, the Chobani founder bought a shuttered dairy factory and began making Greek-style yogurt. His privately held company now earns morethan $1.5 billion in annual revenue—all while distinguishing itself as a championof Good Business. Here, Ulukaya explains his magic formula to BloombergBusinessweek Editor Joel Weber.

“The men andwomen we work with are the reason we exist”

HamdiUlukayaCEO, Chobani LLC

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THE GOOD BUSINESS ISSUE

JOEL WEBER: Hamdi, you’re a Turkish Kurd who came to the U.S. and became a billionaire selling Greek yogurt to Americans. What other food could have taken you on such a journey?HAMDI ULUKAYA: I cannot imagine anything that could replace the magic of yogurt, which transcends cultures and lands. Tea, maybe? And what is it about yogurt?

I go back to my childhood in Turkey. That’s where this journey started. It didn’t matter if you were poor or rich, you couldn’t imagine a table with-out yogurt. It’s something that rep-resents equality, nature, nutrition. I always missed it when I got here—living in upstate New York, I always thought, “Where is that yogurt? It can’t be so hard to make.” And I was also sad that such a simple food was absent on

kitchen tables here in the U.S.This has been such a challenging year. What lessons have guided you?

That life is fragile. That we could make long-term plans but, you know, life brings surprises—some good and some not so good. That human fun-damentals are what matter most, and sometimes we don’t talk about it. We don’t acknowledge it—it’s just there. And I think this pandemic brought a consciousness to those fundamentals. In business, fundamentals are, for us, the culture. And you don’t build cul-tures for defensive reasons. You do it because that’s the way you want to live. But it turns out, the most power-ful engines during this time are these unspoken rules. This motion just takes over, and everything operates.Chobani got its start with a loan from the

Small Business Administration. What more should the U.S. be doing right now to support small businesses?

I think every effort. Whether you believe in government help or not, [we need to] do everything to keep these places open and help them through this pandemic. We shouldn’t be shy about it—we should be all for it. Small businesses are the engine for the economy: They become tomor-row’s large companies and innova-tors. And they are devastated. We as consumers, we have to be con-scious of that and act accordingly. Buy locally, buy locally online, and show up—go to your local stores. In the past decade, America has lost thou-sands of small dairy farms. The econom-ics are just awful; the suicides of dairy farmers have been especially troubling.

Photograph by GUARIONEX RODRIGUEZ JR.

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Bloomberg Businessweek December 28, 2020

How can we help the industry and thesevulnerable farmers?

I grew up on a farm, and I worked on a farm when I arrived here. Seeingthat small farmers, many of them mul-tigenerational, are going through this—it’s heartbreaking and alarming. So what happens? They close down. Andthen what happens? Some of the farm-ers, they get larger.

A lot of farmers do this work not because it’s profitable; they do it because they love it. They do it because that’s what they learned fromtheir fathers, their grandmothers. It’sa tradition they hold and advance, andthey exist in these places where hardwork is essential and respected.

At Chobani, we know we also haveto make conditions on the farms align with today’s and tomorrow’s consumers. We started Milk Matters about a year ago, drafting a coali-tion with farms, universities, and fairtrade where tomorrow’s farms andfarm conditions can be designed.Otherwise, we are moving forwardwith these really tough conditions,and that would be bad for society.Between upstate New York, whereChobani started, and Idaho, whereyou’ve expanded, you have intimate rela-tionships with rural America. What doyou want others to know about thesecommunities they might be missing?

Whatever success we have expe-rienced, I give all the credit to thesecommunities. That’s where the magichappens. My story started with aclosed factory in a small upstatetown. The men and women I workwith at Chobani have a human spiritthat is something I cannot put a valueon. And I’ve always said: Close youreyes. Put your finger on a map. Picka town where you haven’t been, andgo there—start whatever you want tostart. I guarantee you will be blownaway with your journey.In a TED Talk you gave last year, youtalked about the anti-CEO, a nobleleader who puts his employees beforeanything else. How has that ideaevolved since?

The pandemic has just made it very

clear. The men and women we workwith are the reason we exist. Lookingback at the year, Chobani broke allthe records we had in the past, eventhough the conditions are completelydifferent. The pandemic showed usthat investing in our people, in theirfamilies, that thinking of them in thewhole picture, is not an expense.How soon do you think we’ll see a$15-an-hour minimum wage at thefederal level?

I don’t know about the federallevel. There are states who will leadthis and shape this. To me, we as com-panies have responsibilities to dothese things; we cannot let the gov-ernment decide. There were times weneeded that, but it’s now our responsi-bility. The numbers are very clear. It’simpossible to make a living, even with$15. So no matter what happens on thefederal or state level, we have to dowhat’s right, which is to bring the min-imum wage to at least $15.Something like 30% of Chobani’semployees are immigrants and refugees.What do you hope to see from theincoming Biden administration on theimmigration front?

I’m an immigrant. I came here25 years ago. And this is what we knowAmerica’s all about. It’s this placewhere you can come and be part ofthe dream. I think what America hasis a magic. That whoever you are andwhatever your background, if you havethe right intentions and an imagina-tion, and you obey the law, you canreach your dream and be accepted aswho you are. This is what America’sall about. If we care about society as awhole and this country as a whole, weshould preserve what this country’s

been about for all its existence.If you could persuade hundreds ofbusiness leaders to make one change,what would it be?

Hire refugees. We have createda coalition of 140 large organiza-tions around the globe, all of us try-ing to help this vulnerable humanpopulation—millions of people who arejust looking for an opportunity to bepart of something. And this isn’t char-ity, it’s a business practice. We askcompanies to be part of social issues:Your responsibility is not only to makemoney for your shareholders, but toall stakeholders. Where we are goingthe role of business is very clear. Ithink the question is how. How do I getinvolved with this new kind of operat-ing the business? Simple. Just make thefirst step. We can make an impact insociety really fast.Millions of Americans have becomefood-insecure this year. What can we do?

We’ve always partnered with foodbanks, which are amazing, as are theirvolunteers. But today, you’re look-ing at the cars that are driving to thesefood banks and the type of peoplethat are coming into the food banks,and it’s like, “Whoa, we have a majorissue on our hands.” You know, keep-ing schools open—don’t forget: A lot ofkids, that’s where they get their onlymeals of the day. So access to good,nutritional food is an essential topichere. We’ve tried to do our part duringthe pandemic by sending a truckloadof yogurt every single day to a foodbank around the country. No one inthis country should go hungry. Weneed to remove this from our societyonce and for all, and especially for ourchildren. I think this is a topic where

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“Food should remind you to be good to yourself ”

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Bloomberg Businessweek December 28, 2020

we all can get together, whether you’rea Republican or Democrat.I want to go back to 2005, when youbought a dairy factory but didn’t yetknow you were going to start Chobani,or even make yogurt. What do you knownow that you wish you’d known then?

Not knowing much at the time actu-ally worked for me. Sometimes wecrowd our minds with too much infor-mation. And at the time, I had a gutfeeling. Our experience and resourceswere so limited. But we had a bigdream, and that dream was mixedwith passion, love, and—I’ll be honest—anger. Why was this place being aban-doned by business?

When I look back, I always tryto see if I am too distanced fromthat person who started that place,who got on the factory floor to workshoulder to shoulder every day. Not to make so much money, but to bring the dream alive—to fix this place so we can fix ourselves.When you look at yogurt, there’sBefore Chobani and After Chobani.Consumption, especially of Greekyogurt, has increased dramatically.And it shows that any category can beupended quickly. What advice do youhave for Davids fighting Goliaths?

One thing people don’t realize infood is it’s not the product idea that’simportant. It’s in the fundamentalsof operation. I personally believe, atChobani, we are all factory workers.I am a factory worker before I’m any-thing else. Our plants are the core ofwhat we do. People don’t see that,they think it’s just cute-looking ads andcups. But the retailers are going to askyou, “Can you deliver?” In a way, weare an operations company.

My advice to food people is, No. 1,product—you have to have a product,or at least a vision of a product. AndNo. 2, pay attention to the fundamen-tals, operations, and food safety.

I started Chobani Incubator tobring food startups and entrepre-neurs a similar mindset, to show themthat this is not a big deal. What’s mostimportant is what’s in you—how yousee the world and how big you dream.

And if I was talking to myself in the beginning, this is what I would have loved someone to tell me: Pay atten-tion to your people, your product, and food safety. And have a good finan-cial partner in place aligned with your view of the world.

Unfortunately, a lot of amazing startups and good food companies who could make a massive impact on the food system end up being in the hands of large corporations. So what I say to entrepreneurs is pick partners aligned with your views. Either make money and move on, or go for some-thing more long-term. Chobani has gone through maybe three, four, five stages already. Where we are today is more like an established corporation without being too big or too slow, yet with resources and capabilities, so we can innovate and move forward and produce and deliver. Chobani’s portfolio has grown recently—nondairy products as well as a big pushwith probiotics. What’s the most chal-lenging aspect of expansion?

I think the challenge is know-how.Do you know about this? Do you knowwhat you want to do? What about themarket? And there’s new competition.

What is the biggest challenge tocompanies like Chobani is having dis-cipline around why you innovate.Because ideas come from all over theplace. And there’s this stigma: If yourbrand is loud, then you can put yourbrand on anything and it will sell. Andthat’s the worst thing you can do.

You need to be connected to whyyou innovate. What kind of solutionare you going to offer? And why is thataligned with what you believe andwhat you want to do? What we wantto do is go from category to categoryand say: Is this a good category? Isthis good for people? And how can Imake it better? Food should make youfeel good. Food should remind you tobe good to yourself.How big of an opportunity is probiotics?

I don’t know. But every cup ofyogurt we’ve ever produced had hun-dreds of billions of probiotic counts.We never talked about it; we just

made sure the yogurt had it. And we got better and better at it, and now we know more. Personally, I believe that taking care of the gut can pre-vent illnesses and conditions. It’s food as medicine, and I think probioticsplays a massive role. The science iscatching up. How were you able to innovate in a pandemic?

It’s been crazy. I’m very close to the product. We connect over Zoom, we send samples to each other. I think that’s what makes us very unique, that we are really all about the product. And we are very lean. We don’t have a lot of hierarchy.

I’m pretty amazed how on innova-tion, production, sales, distribution, and also doing good in the community, how well the team has performed. It’s amazing. And on top of it, my responsi-bilities have never been this few, ever. So the team has actually taken over and does these things by themselves.You have some side businesses—Euphrates feta cheese, which predates Chobani, and La Colombe Coffee Roasters. How involved are you?

I have a very emotional connec-tion to Euphrates, because that’s where I started everything. They do a lot better than what I did back then. It’s making what it’s making, and they do a great job. I love La Colombe, and I see myself more like an inves-tor, or a partner to the founders, Todd [Carmichael] and J.P. [Iberti]. I’ve always loved what they do and how they do it. I think it holds a seed that could [reshape] the category in a very dramatic way. They just take their time, because there’s no rush. They just want to make things right. But I don’t get involved too much.If you weren’t in the food business, what would you be doing?

First, I would have loved to be a soccer player. I was good at it. And I love the game. Otherwise I think I would have been associated with farms somehow, something close to nature. <BW>

Edited for space and clarity.

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Pandemic-exhausted consumers are turning toa new class of easy-to-make matcha, coffee,

cocktails—and, yes, even TV dinners. By Kat Odell Photograph by Hannah Whitaker

December 28, 2020

Edited byJames Gaddy

Businessweek.com

58A small way to make a

huge difference at home

60The original dune

buggy gets a lifeline

62Wonder Woman,

harbinger of doom

63There’s no shame inthese house shoes

Instant greengoodness fromCuzen Matcha

The Tovala cloud-connectedsmart oven is engineered tocook its own line of composeddishes—plus some from TraderJoe’s and other brands—inas little as 20 minutes. Usersjust scan the bar code on the

package, then control the ovenremotely through the app. Inmy test it fared well, whethertoasting bread or bakingspanakopita, the classic Greekspinach and feta pie. $299;tovala.com

56

Eileen Rinaldi was visiting Brazil a decade ago to buycoffee beans when a traveling companion openeda pack of Via, Starbucks Corp.’s instant coffee, fora quick morning fix. Despite her own desperationfor a cup, the founder of San Francisco’s third-

wave shop Ritual Coffee Roasters couldn’t bring herself todrink what she calls “that swill.”

But that moment—on the road and craving caffeine—nudgedRinaldi to consider how she might produce an instant cof-fee that could rival the brews she’d gone to South Americato experience.

She joined forces with Sudden Coffee, a startup acclaimedfor its proprietary method of freeze-drying, which helpspreserve flavor in instant form. In 2019, after four years ofresearch and development, they released co-branded packetsusing beans sourced from notable regions. Pleased with theresults, Rinaldi introduced Ritual’s first single-origin instantcoffee in September. It’s made from Ethiopian beans with acelebrated floral flavor.

Rinaldi’s foresight—that consumers would pay for a quickcup of joe that still tastes like something special—has paid off.During the coronavirus pandemic her instant coffee salesalmost tripled last year’s, an indication that consumers arebrewing more coffee themselves with a keen eye for a pre-mium product that’s quick and easy to make.

Ritual is one of the many food and beverage brands tak-ing note of changing consumer behavior during the pan-demic. Others include Steep’t Cocktail Co., which promisesan Old-Fashioned that takes only two minutes to prepare,

and Balmuda, which makes a smart oven that uses steam technology to quickly heat frozen foods.

The corporate giants are taking notice, too. In October, Nestlé SA acquired Freshly Inc., a subscription-based outfit delivering prepacked healthy meals that heat up in three min-utes or less. The $950 million bet assumes—despite trendingGoogle searches last spring for time-consuming recipes for sourdough bread and yogurt—that Americans still want every-thing, like, now.

As economics and safety concerns force cafes and restau-rants to close, consumers have become both barista and chef. The difference today, as opposed to the era of the microwav-able TV dinner, is that companies are finally prioritizing the quality of the ingredients. “I have seen more focus on better-for-you products” that are “convenient at the same time,” says Kenshiro Uki, president of Honolulu-based Sun Noodle North America, a specialty noodle manufacturer that supplies David Chang’s Momofuku outlets, Masaharu Morimoto’s namesake modern Japanese empire, and other top restaurants.

Uki has offered packaged ramens for 18 years, but it wasonly after seeing sales spike early in the pandemic—at grocery stores and online—that it occurred to him to introduce an even more special specialty product. In August he teamed up with six of the New York area’s most respected ramen chefs to start selling frozen versions of their signature bowls.

New technology is driving some of this interest. Smart kitchen gadgets don’t always work out (remember the Juicero?), but some companies are capitalizing on the moment. Sales of the June oven—which comes with advanced settings

FOOD & DRINKS Bloomberg Pursuits December 28, 2020

In October, Japaneseentrepreneur Eijiro Tsukadaunveiled Cuzen Matcha, amachine that aims to accomplishfor green tea what Nespressodoes for coffee. Press a button,and the compact, minimalist

device grinds whole tenchaleaves into a fine powder.Then a mechanical whisk whirls into action, turning out an almost-ideal frothy quaff in a mere 30 seconds. $369; cuzenmatcha.com

THE MICROWAVE ALTERNATIVE

THE MATCHA MAKER

57

to dehydrate, air fry, and slow cook—have been so robust, it’sbeen sold out for months. An updated iteration going on salein late December can grill, proof, and prepare pizza.

Chicago-based Tovala also makes a smart oven that con-nects to Wi-Fi and can steam, bake, and broil all in one cookcycle. The brand also has its own refrigerated line of preparedfoods, including lavender-glazed salmon and beet quinoa, thatare easy to pop in the machine and forget about until it’s timeto eat. Founder David Rabie says the company added more cus-tomers in November than during its entire first two years onthe market. Balmuda says its Japanese toaster and steam oven,introduced in April, has also exceeded sales expectations.

“ ‘Instant’ doesn’t mean low-quality,” says ChristophBertsch, who introduced his mini, pod-based electric blender,Vejo, a year ago. The Santa Monica, Calif.-based companyoffers strawberry-lime-flavored Collagen Glow smoothies anda green juice from freeze-dried, powdered fruits and vegeta-bles that can be prepared in less than a minute.

Matcha expert Eijiro Tsukada sees I-want-it-now poten-tial in the trendy green tea, too. “I’m very excited about how

technology and innovation can lower barriers so more peoplecan experience higher-quality foods,” he says. He unveiled theworld’s first instant matcha maker, Cuzen Matcha, in October.

Steep’t co-founder Alison Nathanson says that evenbefore the pandemic, the booze industry’s ready-to-drink category was exploding. She and friend ChloeAucoin met at Harvard Business School and, frustratedwith how difficult they felt it was to make cocktails athome, had a soft opening for their infused libation linein May. The process to make one of their drinks is fairlyidiot-proof: Steep a teabag that’s been filled with dehydratedand powdered fruits and herbs in cold water for two minutes,then add a spirit and ice.

“Our lives are busier than ever, even in quarantine,” saysIlana Kruger, founder of Stumptown Coffee’s Dripkit, anotherfresh take on quick coffee, in Portland, Ore. The specialtybrand introduced instant pour-over kits a year ago and hassince seen “exponential” growth in the at-home brewing mar-ket, according to company spokesperson Samantha Chulick.

There are compromises, of course. “Am I going to tell youthat it’s as delicious as a cup of coffee from one of my cafes?”Rinaldi asks, laughing. “No, I’m not.” But Ritual’s instant cof-fee isn’t looking to compete with a perfectly timed pour-over or a precisely pulled espresso from a shiny La Marzoccomachine. It’s offering a better-tasting solution for occasionswhen a proper cup of coffee is unattainable or time is limited.Even when cafes and offices open again after the pandemic,Rinaldi says, we’ll no longer need to choose “between conve-nience and quality.” <BW>

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Orders from Steep’t Cocktailcome as tea bags filled withdehydrated fruits, herbs, anda bit of sugar. Submerge incold water for two minutes,then follow with your favoritetequila for a spicy margarita

or bourbon whiskey fora classic Old-Fashioned.They’re surprisingly deliciouslibations even though thereare no fresh ingredients. $30for a pack of 10 tea bags; steeptcocktails.com

Olyxir creates its instantly dissolving, caffeine-free “tea” strips from biodynamically grown olive leaves. They come either unflavored or with ingredients such as ginger and peach or lemon and rose.

The company says its energy-boosting strips have no sugar or soy and are loaded with antioxidants. When I slipped them into hot water, the result was a delicately floral-tasting drink. From $12; olyxir.com

“OUR LIVES ARE BUSIER THAN EVER,

EVEN IN QUARANTINE”

THE EFFORTLESS MIXOLOGIST

THE TEA STRIPS

A vibrant 2-by-3-foot rug is the easiest way to adda jolt of personality to your home. By Monica Khemsurov

Photographs by Sarah Anne Ward

Magic Carpets

58

① KULFI ROSENamed after therich, unchurnedIndian ice creamknown as kulfi, Tantuvi’s abstract, candy-colored design will pop in a room despite its size. Handwoven using 30% more cotton than typical flatweaves, it offers extra durability no matter which of the five patterns you choose. From $216; tantuvistudio.com

② METRONOMEThe geometricmotif of Block Shop’srug is inspired bythe midcentury buildings of Italian architect Carlo Scarpa—especially his showroom for typewriter maker Olivetti in Venice. This lightweight dhurrie—a handwoven, thin carpet—is almost indestructible. $130; blockshop textiles.com

③ BLOOMOrley Shabahang makes rugs with high-end, organically dyed Iranian wool that employ traditional Persian handweaving techniques. It’s one of the few luxury carpet brands to offer this small-yet-versatile size. $1,240; orleyshabahang.com

④ FRAMESThis rug was inspired by paintings of ruins and architecture that Minna founder Sara Berks made after her first trip to Peru. The series is ethically woven by a local cooperative. $280; minna-goods.com

DESIGN Bloomberg Pursuits December 28, 2020

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⑤ MATILDAIllustrator Alex Proba’s newest rugs were designed by children—in this particular case, a 7-year-old named Matilda—during a Matisse-inspired collage class Proba taught. Handmade from high-pile New Zealand wool and bamboo silk, they will also appeal to more adult tastes. From $425; studioproba.com ⑥ MARGAUXThis Leah Singh rug is made from eco-friendly, quick-drying, and easy-to-clean jute, an ideal fiber for mudrooms or other high-traffic areas. She designed it during the pandemic’s first wave this spring, hoping its neutral colors and basic shapes would have a calming effect. $260; leahsingh.com

③

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⑥

60

The centerpiece of Phillip Sarofim’s Los Angeles home is hisgarage. The immaculate space holds two of the most collectiblecars in the world: his Ruf CTR Yellowbird and Lancia StratosZero, a wedge-on-four-wheels in burnt caramelized orange.

It’s fair to say the venture capitalist, oil scion, and formerAvril Lavigne paramour has access to pretty much whateverhis heart desires. But his recent acquisition of Meyers ManxLLC runs slightly counter to the image of that blue-chip garage.

Sure, the fiberglass-tubed Manx dune buggies gained globalattention when Steve McQueen drove one in 1968’s The ThomasCrown Affair. An edition from that year sold for $55,200 atan RM Sotheby’s auction in 2019. But at 1,200 pounds, just90 horsepower on its four-cylinder engine, and not even thecourtesy of a radio, the open-top rambler with knobby wheelsis better suited to cruising deserted beaches than the Monacopromenades where you’d find that Lancia.

Its humble pedigree has no bearing on just how fun theManx is to drive, Sarofim says: “It’s a very pure sensation.” F

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OFF ROAD Bloomberg Pursuits December 28, 2020

The 34-year-old is the son of Fayez Sarofim, the billionairepart owner of the NFL’s Houston Texans and one of the larg-est shareholders of pipeline company Kinder Morgan Inc. Trousdale Ventures LLC, based in Los Angeles and Austin, which the younger Sarofim founded, completed the acquisi-tion of Meyers Manx on Nov. 9.

The buggies come with seating for two or four, a gleam-ing metal roll bar, and happy, round headlights that sit high on the short hood. Designer and company founder Bruce Meyers started building them in the 1960s while he was hang-ing out with surfers and abalone divers around California’s Pismo Beach.

A prolific artist and musician, Meyers also built some of Cal Yachts’ first mass-produced fiberglass sailboats. For his dune buggies, he cobbled components together from Volkswagen Beetles, Chevrolet Corvairs, and whatever else he could get his hands on. The DIY aesthetic captures “the essence of that 1960s period of freedom and love,” Sarofim says.

A new owner aims to return Meyers Manx, the original dune buggy, to relevance. By Hannah Elliott

Back on the Scene

Faye Dunaway and Steve McQueen in The Thomas Crown Affair (1968)

61

OFF ROAD Bloomberg Pursuits December 28, 2020

He bought the brand from Meyers, now 94, and his wife,Winnie, on the recommendation of a mutual friend, the autodesigner Freeman Thomas. Sarofim declined to disclose theprice, though previous reports note most Trousdale Venturesdeals have been valued at $1 million to $5 million.

“The Manx is all about the ’60s love and rebellion,” saysThomas, who’s credited with designing Volkswagen’s NewBeetle and will lead the Manx team. “We want to capturethat.” He’s known the Meyers since the 1990s, but the acquisi-tion still took two years to complete. “Bruce had a lot of peo-ple trying to pursue the brand,” he says, “and everybody justreally didn’t understand what it meant.”

Manx is the latest in a spate of fresh funds reigniting agingautomotive brands—similar to the way investment firms havebeen tapping nostalgia through acquisitions of heritage fash-ion brands such as Halston and Borsalino hats.

In 2009 former Fiat executive Gian Mario Rossignolopurchased De Tomaso, famous for its 1970s Pantera super-car, which spawned the band of the same name. But inFebruary 2019, Rossignolo was sentenced to five years in prisonfor misappropriating government funds. Hong Kong invest-ment fund Ideal Team Ventures acquired the branding rightsin 2015, and this October it announced the company headquar-ters would relocate from Italy to Detroit in 2021.

In November, Rezam Mohammad Al-Roumi announcedhe had added Bizzarrini, aka the “thinking-man’s Ferrari,” tohis Pegasus Brands, which owns a 50% share in Aston MartinWorks. Neither has produced a modern road-going model yet.

Consumers tend to grant prolonged honeymoon periods for such storied names, though. Cars from the heritage brands “are spectacular, and there is a lot of appeal to that,” says David Gooding, president of the Gooding & Co. auction house. “The Manx in particular is such a time-transcendent object that it makes a lot of sense, too. It’s a great product. With the new life and enthusiasm that Phillip will bring to it, it’s got a lot of potential.”

Sarofim comes by his love for the Manx honestly. He’s owned them for nearly two decades, including his current stash of a yellow 1964 model nicknamed “Sunshine” and a 1967 version in emerald green. “They put such a smile on my face, and others’,” Sarofim says. “It’s the only car I own that my 5-year-old daughter even cares about going for rides in. She is just crazy over it.”

The first objectives for the brand new LLC include overhauling the archaic website and building an online config-urator; the primary focus for new products will be an electric version. “There is no fun EV on the market, so we intend to change that,” Sarofim says. (True, the Moke is an open-top EV, but it’s more similar to an urban golf cart for riding around St. Barts than a rugged dune buggy.) Eventually, he plans to add powerful, street-legal models that can carve Mulholland Drive, as well as off-road versions suitable for desert racing.

Pricing will remain as accessible as when the Manx made its debut—a base model then cost about $600. New ones start at $2,400. But you’d better be good with a wrench: They’ll ship in parts, so full assembly is required. <BW>

Old Red, the first Meyers Manx dune buggy

62

The last time Wonder Woman blazed the silver screen, shewas saving the world from her half-brother, the god Ares—plussome poison-gas-wielding Germans during World War I—on thecusp of the 1918 influenza pandemic.

It’s almost ironic that she’s back again with another pan-demic on our hands. Had this been any other year, the criticallyacclaimed Wonder Woman 1984, directed by Patty Jenkins andstarring Gal Gadot, would be a certified blockbuster. Her latestadventures in the Reagan era against superhuman villainessCheetah took in only $38.5 million overseas its first weekend.

But while Wonder Woman is saving the world on screen,she’s become an unintentional harbinger of doom off it. Thefilm was expected to open in the U.S. and Canada on ChristmasDay in about a third as many theaters as its 2017 franchise starterdid—and simultaneously in more than 12 million living rooms(the current number of subscribers to HBO Max). Warner Bros.,a unit of AT&T Inc., plans to release all its 2021 movies this way.

Multiplex owners have feared the shattering of the “theatri-cal window,” a roughly 90-day period for the exclusive rights toshow new films. If audiences can see highly anticipated moviesat home, the logic goes, why spend the extra money to pack inshoulder to shoulder with the heavy-breathing masses?

Studios argue that they don’t have a choice but to upendnorms as hundreds of millions of dollars’ worth of films collect IL

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dust. Behind the scenes, however, they’re happy to leverage the crisis to expand their own streaming services.

The disruption this year has led some pundits and inves-tors to embrace the melodrama and pronounce the death of the movie theater, but that’s just silly. Despite AMC Entertainment Holdings Inc.’s warning of bankruptcy, many theaters are well-capitalized enough to survive not onlythis year but next year as well. In the century-plus sincenickel-a-pictures arrived in Los Angeles, there’s never beena crisis like this, but it’s making real evolution possible—and necessary. The ad nauseam cycle of upgrading seats, expand-ing refreshments, and raising prices won’t suffice.

For one, the theatrical window will probably be hashed out on a case-by-case basis, says Mark Zoradi, chief execu-tive officer of Cinemark Holdings Inc. A blockbuster such as Paramount Pictures’ Top Gun: Maverick will still be able to enjoy an exclusive theatrical run and dominate the 40,000 U.S.screens on its opening weekend. Further into the future,dynamic pricing, with fanboys facing higher ticket prices, oreven seat auctions on opening night, is possible.

For midbudget fare, the adult dramas and romantic com-edies of the world, some may make their debut on the bigscreen, while others may be distributed in theaters and thehome at once. Presumably this solves a dispute with NetflixInc., whose films have been boycotted by large theater chains.Subscriptions like MoviePass, the popular but ultimately failedstartup, may also be a linchpin of recovery. In addition to theusual fare, Tiger King marathons and Taylor Swift concertscould lure concessions-buying viewers through the door.

Streaming services are devaluing movies as appointmentviewing, but there’s already evidence that theaters can succeedby making the experience more, well, special. Late in 2019,Austin-based Alamo Drafthouse offered extremely popular“rowdy” showings of the panned Cats, encouraging audiencesto shout and laugh at the terrifying, gyrating computer-generated felines on screen. It also delivers restaurant-quality food and dozens of craft beers straight to patrons’ seats.

Alamo Drafthouse has also discovered that customers want to privately rent entire theaters during the pandemic, a service that makes up 50% of its top-line revenue today. (Cinemark says it has sold more than 100,000 private watch parties, generating at least $10 million in revenue.) That ser-vice may also be easier to book in the future. “I’ve never con-sidered at-home streaming our competitor,” says Tim League, founder of Alamo Drafthouse. “We are an out-of-home experi-ence. We’re competing against restaurants, bars, and clubs.”

Despite their newfound devotion to the small screen, stu-dios still want cinemas to succeed. An industry-funded Ernst & Young study earlier this year found that the longer mov-ies stayed exclusively in theaters the more money they made outside of them.

The economics and the times may be changing, but the sofa is still no match for the giant subwoofers, the ultracrisp picture, the butter-laden trance of crunching popcorn, and the energy of a crowd. <BW>

Ignore the melodrama: The big screen isn’t going anywhere

By Kelly Gilblom

A Superhuman Resilience

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THE ONE Bloomberg Pursuits December 28, 2020

House shoes can be comfortable and cool Photograph by Ted + Chelsea Cavanaugh

Happy Feet

When fashion designer Jonathan Anderson sent these

nubby, backless slippers down the catwalk in 2019, he couldn’t have

known that by the time they were available to buy, we’d all be homebodies in dire need of house shoes with pizzazz. A witty update to the rustic Birkenstock clog, his unisex $420 felt mules are made of a pleasingly tactile material that’s topped with a handsome leather buckle. They come

in colors including a respectable gray (pictured), a preppy pink, and an

optimistic shade of orange.

THE COMPETITION• John Lobb’s suede Knightons ($665) boil the traditional slipper down to its most elegant essence. A pillowy sole gives a cushioned, cocooning feel.• Furry, flashy, and fabulous, Fendi’s $850 shearling slippers are patterned with the brand’s “FF” logo over a smooth lambskin interior. The folding backs mean they’ll pass for traditional shoes if you have to step out.• The $205 Zavo-Mab suede mules from Suicoke sport a Velcro strap, sheepskin lining, and a treaded Vibram sole—perfect for the streetwear enthusiast who still wants to peacock from the couch.

THE CASEUnlike most slippers, these offer some support thanks to a malleable cork-and-leather footbed and a grippy rubber sole. They’re also a master class in being distinctively, unexpectedly cool—their rounded shape and woolly texture make for a shoe that’s wearable and just a little waggish. (More formal leather and suede versions are available for $590.) Anderson says he designed the slipper with “escapism and fantasy” in mind, but he offers a more straightforward assessment of their present-day appeal: “They are simple and comfortable.” $420; jwanderson.com

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If theatergoers have learned one thingthis year, it’s that watching live produc-tions online isn’t a substitute for seeingthe performances in person. That’s alsowhy theaters shouldn’t see streamingas a threat. It’s an opportunity.

Stage writers and directors havebeen wary of broadcasting their pro-ductions. There are the artistic consid-erations: The show was developed witha theatrical audience in mind, so watch-ing it on a 32-inch screen compromisesthe experience. And there are otherworries: that audiences won’t buy $90 tickets if they’vealready seen it on the box and that subsequent rights fora TV or film adaptation might become harder to sell.

This year audience-deprived playhouses have had tofind creative ways to plug the revenue gap. Many havelooked online, either broadcasting shows they’ve alreadyrecorded or adapting them specifically for a web audience.

London has been at the forefront. Two weeks after theNational Theatre shut down in March, it started broadcast-ing a play a week for free on YouTube. It had a head start,of course: As part of its public-service remit, the Nationalalready records and broadcasts productions to cinemas, soit used that library. The 16 shows it posted on YouTube for aweek at a time—including the Tony Award-winning One Man,Two Guvnors with James Corden, Frankenstein with BenedictCumberbatch, and A Streetcar Named Desire with GillianAnderson—attracted 15 million views, more than Broadway’scumulative attendance in the 12 months through May 2019.

◼ LAST THING With Bloomberg Opinion

By Alex Webb

Streaming Isn’t a Threat To Live Theater

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In other words, the National wasluring new audiences. The Old Vic the-ater had a similar experience. Its live-streaming of Lungs, with Claire Foy and Matt Smith, attracted 25,000 paying viewers in 69 countries during a week of performances.

Research shows the phenomenonisn’t just a product of lockdowns. A 2016U.K. study found that viewing live-to-digital performances didn’t reduce the frequency with which audiences attended live cultural performances.

Among theatergoers, people who watched streamed per-formances went to the theater more than those who didn’t.

There are hurdles. It can cost several hundredthousand dollars to shoot a play well. But it looks like a cost worth bearing given the seemingly insatiable appe-tite for online content. Hamilton led to a huge spike in sign-ups for Disney+, even if many customers didn’t retain the subscription. “Producers have become more sophisti-cated in their approach and better understand the mod-els, that a screen version can drive the appetite,” says Neil Adleman, a lawyer who specializes in theater work at Harbottle & Lewis in London.

The National Theatre has launched its own paid sub-scription streaming offering. It’s a way of reaching audi-ences who might not otherwise get to attend, while also serving as a tidy little earner. Broadway should take heed. <BW> �Webb is the European technology columnist for Bloomberg Opinion