M AY 2 0 2 0 ■ FORTUNE.

COM

The Coronavirus Economy

H O W T H E PA N D E M I C I S R E S H A P I N G E V E RY A S P EC T O F B U S I N E S S .
METHOD
 MADNESS

PERFORMANCE, CRAFTED TO THE EXTREME. LC 500

Pushing Lexus LC performance to its most extreme requires a fanatical belief in the 5.0-LITER V8 ENGINE
power of engineering and craftsmanship. This has resulted in a chassis engineered to 10-SPEED DIRECT-SHIFT
have a lower center of gravity. Engine components forged of titanium for greater strength. TRANSMISSION
Laser welding for increased rigidity. Carbon fiber for lighter, yet stronger, body panels. 471 HP*
Because if you want to craft extreme performance, you have to take extreme measures. lexus.com/performance | #Lexus

Options shown. *Ratings achieved using the required premium unleaded gasoline with an octane rating of 91 or higher. If premium fuel is not used, performance will decrease. ©2020 Lexus
For an open relationship with your data.

Multi-cloud Data Integration & Analytics | qlik.com

 CONTENTS FO R T U N E M AY 2 0 2 0 3

Features May 2020

VOLUME 181 • NUMBER 5

SPECIAL
REPORT
THE
CORONAVIRUS
ECONOMY

38
Strategies
for Survival
From restaurants
to retail, airlines
to energy, how
hard-hit industries
are adapting in a
time of crisis.

56
Will Medicine
Makers Come to
the Rescue?
The pandemic may
finally do for the phar-
maceutical industry
what relentless TV ads
cannot: show off its
power to innovate.
BY SY MUKHERJEE

60 70 74 82
Seattle How Zoom The Grocery WORLD’S
G R E AT E S T L E A D E R S
Under Siege Zoomed Robots on
When the city became A quiet hit among the Pandemic Heroes of the
the first epicenter business users when Front Lines Pandemic
I L L U S T R AT I O N B Y S H AW N A X

of the coronavirus the pandemic struck, Fortune’s seventh

Ocado built a buzzy
outbreak in the a young company annual list honors
business helping super-
U.S., the companies struggles to serve those who have
markets survive online.
headquartered there consumers. rallied the world
The COVID-19 crisis has
found themselves in BY MICHAL LEV-RAM behind them in this COVER
become its trial by fire. ILLUSTRATION
the fight of their lives. decisive moment. BY
BY JEREMY KAHN
BY ERIKA FRY MANSHEN LO
4 FO R T U N E M AY 2 0 2 0 CONTENTS

Departments

WHAT OUR
EDITORS
Foreword ARE UP TO
THIS MONTH

7 What We Know
About COVID-19
BY CLIF TON LE AF THE ANDROMEDA
CHAIN
Subscribe to
Fortune’s first
The Brief pop-up newslet-
ter, Outbreak,
11 Has the Coronavirus tracking the
Crisis Changed COVID-19 pan-
Business? You demic. fortune
Bet It Has. .com/newsletters
BY GEOFF C OLVIN The Conversation
18 Privacy in a Pandemic: 86 LISA SU WRY SOCIET Y
Less Might Be Best An annotated discussion with the CEO of chipmaker AMD. Stuck working
for Public Health INTERVIE W BY A ARON PRES SMAN at home? Follow
BY DAVID ME YER your favorite
Fortune writers
21 China’s Apps for and editors
Tracking the Outbreak on Twitter
Are Efficient— with one click.
and Worrying Passions The Cartographer twitter.com/i/
BY NAOMI XU ELEGANT & lists/9732988/
CL AY CHANDLER 90 Buying Time: 96 Mapping the Dramatic
Watch Lovers Sell Drop in Market
22 Ford Shifts Gears: the Most Analog of Indexes Worldwide SALON DES
The Automaker and Collectibles Online BY BRIAN O’KEEFE & ACCEPTÉS
Its Competitors BY DANIEL BENTLE Y NIC OL AS R APP Look out
Pivot to Produce for Fortune
Medical Supplies Connect, our
BY MARIA ASPAN forthcoming
THE BIG IDEA membership
28 Can Thermal-Imaging BY MICHAEL T. OSTERHOLM community for
Tech Help Stem Viral & MARK OLSHAKER rising business
Spread? stars.
BY A ARON PRES SMAN

31 What’s the Smart Money

Doing? Five Market
To Battle a Pandemic, Stay on top
of our ever-
changing world
Veterans Weigh In
BY ANNE SR ADERS &
JEN WIECZNER
Think Like the Military
PAG E 34
at fortune.com/
newsletters.

Fortune (ISSN 0015-8259) is published monthly with two double issues (June and December), for a total of 14 issues, by Fortune
DREW ANTHONY SMITH

Media (USA) Corporation, Principal Office: 40 Fulton Street, New York, NY 10038. Periodicals postage paid at New York, NY, and
additional mailing offices. Postmaster: Send all UAA to CFS. (See DMM 507.1.5.2). Non-Postal and Military Facilities: Send address
corrections to Fortune Magazine, P.O. Box 37508, Boone, IA 50037-0508. Canada Post Publications Mail Agreement #40069223.
BN# 888381621RT0001. © 2020 Fortune Media IP Limited. Printed in the U.S.A. Customer Service and Subscriptions: For 24/7 service,
please use our website: www.fortune.com/myaccount. You can also call 1-800-621-8000 or write to Fortune Magazine, P.O. Box
37508, Boone, IA 50037-0508. Reproduction in whole or in part without written permission is strictly prohibited. Your bank may
provide updates to the card information we have on file. You may opt out of this service at any time.
A so-so
brokerage
will only get
you so-so far.
Some brokerages try to sell you their subpar experience by calling it “simple.” But at
TD Ameritrade, we know that to perform your best, you need best-in-class platforms,
award-winning service, and personalized education. Considering selling all of that short?
Might not be the smartest trade.
Visit tdameritrade.com/whytda to learn more.

Reviewed against 14 other online brokers, TD Ameritrade was named #1 for Platforms & Tools, Customer Service, and Education in the
StockBrokers.com 2020 Online Brokers Review. TD Ameritrade, Inc., member FINRA/SIPC. © 2020 TD Ameritrade.
FOREWORD FO R T U N E M AY 2 0 2 0 7

What We Know
About COVID-19
EPIDEMIOLOGY is a science of “seems to As we enter the fifth month of this
worldwide crisis—a viral pandemic
be” steps. Researchers plot data points on a that has grown feverishly to nearly
map and speculate connections between them, 2 million confirmed cases in 185
conjuring up likely nodes of infection and countries or regions, and more
than 125,000 deaths, according
possible vectors of transmission. Such guessing, if to researchers at Johns Hopkins
you will, forms the basis for hypotheses, and then University—there are still plenty of
mysteries to solve. How many people
the truly hard work begins: Scientists gather are unknowingly infected with (and
evidence—systematically, painstakingly—until possibly spreading) the virus? How
they can prove or disprove those theories. long will the pandemic last? When is
it safe to go back to work? Well, no
That’s what John Snow, history’s one quite knows.
most famous epidemiologist, did in As to the question of how the
1854, when he plotted deadly cases of coronavirus will reshape the global
cholera on a map of London, eventu- economy—How much damage will it
ally tracing the outbreak to a single do? Which industries will suffer the
contaminated well and water pump. most, bounce back, be reinvented?—
And that’s what’s happening now, we have devoted this entire issue and
PANDEMIC with the novel coronavirus and respi- most of our daily online coverage to
POTLUCK ratory disease it causes, COVID-19. investigating. Virtually our entire
STATES HAVE LARGELY
PUT IN PLACE THEIR OWN
COVID -19 MITIGATION
STR ATEGIES. (THE VIRUS
MISSISSIPPI

MISSOURI
MAY NOT HAVE NOTICED.)
ALABAMA
GEORGIA,
FLORIDA,
WASH., D.C., NEVADA,

MAINE, TEXAS
ARIZONA, TENNESSEE

PENNSYLVANIA
KANSAS, MARYLAND,

300 MILLION POPULATION

NORTH CAROLINA,
MASSACHUSETTS, MICHIGAN,
NEW MEXICO, WEST VIRGINIA
CONNECTICUT, LOUISIANA, OHIO,

COLORADO, KENTUCKY

ALASKA, MONTANA,
NEW HAMPSHIRE,

250
IDAHO, WISCONSIN
DELAWARE, INDIANA,

VERMONT, HAWAII,

RHODE ISLAND

VIRGINIA
OREGON, WASHINGTON

MINNESOTA

200
ILLINOIS, NEW JERSEY

150
NEW YORK
CALIFORNIA

100

STATEWIDE STAY-AT-HOME ORDERS,

50 BY EFFECTIVE DATE AND U.S. TOTAL POPULATION UNDER ORDERS

0 SOURCES: KAISER FAMILY FOUNDATION; CENSUS BUREAU

MAR. 19 20 21 22 23 24 25 26 27 28 29 30 31 APR. 1 2 3 4 5 6
8 FO R T U N E M AY 2 0 2 0

Bruce Gellin, president of

global immunization at the
Sabin Vaccine Institute, at
home with his pandemic
preparedness plans.

editorial team has spent the past

few months plotting data points
on unfinished maps and doing our
best to draw meaningful patterns
among them. It’s guesswork, to be
sure—though you might think of it
as financial epidemiology as well.
But in the sea of seems-to-bes,
maybes, and outright unknowns,
there are also things that we do
know—and cataloging those lessons
will perhaps keep us from repeating
our mistakes again.
“Let’s start with the premise that
we’ve been complacent about our
preparation for such a pandemic,”
says Steven Corwin, who is both a
physician and the president and CEO
of New York–Presbyterian hospi-
tal. “And I don’t think there’s any
question—whether it’s an individual
hospital, whether it’s as a country,
we’ve been able to skate by.” For
all the would-be plagues that have
threatened American shores in the
past couple of decades—SARS,
MERS-CoV, H1N1 influenza, even
Ebola—none delivered the knock-
out blow to the U.S. that COVID-19
has, even if a few were devastating
elsewhere. Our false sense of security York system—which works out to vulnerable. It’s not only masks and
has led us to put off tackling impor- 3.5 million masks this week for the other personal protective equipment
tant questions, Corwin says: “What downstate New York area. At that (PPE) that largely come from China.
do you need in the Strategic National rate, the Strategic National Stockpile That nation, for example, is also the
Stockpile? How fragile is the supply doesn’t go a long way.” Health and world’s largest producer and exporter
chain? How much are we dependent Human Services Secretary Alex Azar of active pharmaceutical ingredients,
upon just-in-time delivery—which, told a Senate committee in February the chemical feedstock of modern
though it makes us more efficient in that the Strategic National Stockpile medicine. China also produces many
terms of health care, doesn’t neces- had a mere 30 million surgical masks of the chemical reagents that are
sarily provide resiliency?” and 12 million respirators (the N95 used in disease diagnostics, such as
As it happens, the pandemic masks that filter out most smaller polymerase chain reaction (or PCR)
answered those questions for us. viral particles) in reserve, plus a few tests that identify viral strains. So, if
“We’re now at the peak of this in million more that were likely past in the midst of a pandemic, the sup-
SHARON GELLIN

New York,” says Corwin, in early their expiration date. ply starts there, the chain may break
April. “We’re using 700,000 masks We know that our medical and before it gets here.
a week, and we’re 20% of the New pharmaceutical supply chains are On that front, we know that, when

“If we had the capacity in
place in mid-February
to test 100,000 samples a
week, it could have made
a very big difference.”
it comes to a potentially pandemic
strain—a virus that is both virulent
and easily transmissible from human
to human—any lag in diagnostic
testing can be catastrophic. That has
been the case with the novel corona-
virus, for which widespread testing
was badly delayed due to the develop-
ment of a flawed diagnostic test at the
CDC. But the bigger problem wasn’t
the glitch in the government’s assay;
rather, it was the policy of centralizing
testing at one federal lab. Centralizing,
in short, just meant bottlenecking.
“Even if everything went perfectly,
even if the CDC tests had rolled out
perfectly, there was no way that the
screening capacity in the U.S. was go-
ing to be robust enough to deal with
a pandemic strain here in the U.S.,”
says Scott Gottlieb, a physician and
former commissioner of the FDA,
which regulates such diagnostics.
“You always had to get the academic
labs [at universities] and the clini-
cal labs in the game. And that takes
time. So you needed to be working
with them in January to get them
ready for February and March.
“If we had the capacity in place
in mid-February to test 100,000
samples a week,” says Gottlieb, “it
could have made a very big dif-
ference.” Corwin agrees: “All the
scenario planning around this type of
virus was predicated on early testing
and diagnosis.”
Which brings up something else we
know: A plan is not a process. When
I reach Bruce Gellin, the president
of global immunization at the Sabin
Vaccine Institute, he—like most
everyone else in America—is under
home quarantine, which has afforded
him time to clean out his garage.
There, under piles of Beanie Babies
and other 1990s detritus, Gellin has
found volumes of several of the fed-
eral government’s plans to fight a viral
scourge. “We had a plandemic,” quips
Gellin, a former deputy assistant sec-
retary for Health and leader of HHS’s
National Vaccine Program Office. In
2005, under the Bush administration,
he led the creation of America’s first
pandemic influenza preparedness and
response plan.
This was the “bird flu” era, and
federal policy makers were imagin-
ing the economic and social costs
of quarantining huge swaths of the
population, if it came to that. “One
of the principles was outlining the
backstops that needed to be in place
to allow people to stay in place,”
Gellin recalls. “How would a nurse
be able to work if her school-age kids
were home, for example? How would
someone living hand-to-mouth not
get kicked out of her house if she
can’t work—or a homeowner not de-
fault on a mortgage? There is a huge
cascade of stuff that has to happen if
you’re going to force people to stay at
home.” Such “community mitigation,”
as they called it, was just part of the
FOREWORD
planning within the plan. In the era
of COVID-19, we are all learning how
essential such questions are.
Finally, the most powerful lesson
of all may come from witnessing
government inaction in the face of a
once-in-a-generation challenge—and
knowing the cost of that paralysis.
After President George W. Bush
tapped Michael Leavitt to succeed
former Wisconsin Gov. Tommy
Thompson as secretary of Health and
Human Services in December 2004,
Leavitt asked all of the agency’s
operating and staff division heads
to come over and brief him on their
respective portfolios.
“He was trying to decide who to
keep, maybe, and who not to keep,”
says Stewart Simonson, then a former
assistant secretary for Public Health
Emergency Preparedness and now as-
sistant director-general for the World
Health Organization’s office at the
United Nations. “And so I went over
to brief on the preparedness and re-
sponse portfolio, and then at the end
of the meeting, I gave him two books:
The Great Influenza—John Barry’s
book on the 1918 flu epidemic—and
the 9/11 Commission Report.
“And what I said is—something
to the effect of that we know we will
have another 1918. It’s inevitable.
It’s just a matter of time. And if it
happens while you’re secretary, and
you’re not aware of the threat, this
other book’s next volume will be
about you.”
CLIFTON LEAF
Editor-in-Chief, Fortune
@CliftonLeaf
In uncertain
times, you can be
certain of this:
Your generosity
will make
a difference.

Today, thanks to donors like you, The Salvation Army is helping those affected by COVID-19.
We are there for the most vulnerable in our community. For those whose wages are gone, for those
who need food, for those who have no place to call home, and for so many others who desperately
need help and hope in this time of crisis. To see how you can continue to make a difference in your
community, give today at SalvationArmyUSA.org.
 FO R T U N E M AY 2 0 2 0 1 1

THE BRIEF BUSINESS. DISTILLED.

Mainstream
economists
forecast that
U.S. GDP will
shrink 30%
to 50% in
the second
quarter.
L A N E T U R N E R —T H E B O S T O N G L O B E / G E T T Y I M A G E S

EC O N O M I C S

Has the Coronavirus Crisis

Changed Business? You Bet It Has.
America’s consumer-driven economy has been dealt a powerful setback.
Here’s how we can recover—and what the long-term effects of the pandemic will be.
BY GEOFF COLVIN
1 2 FO R T U N E M AY 2 0 2 0
To those on the front lines of the coronavirus crisis,
it’s ultimately about fear. “People are terrified,” says
Kathryn Lott, executive director of Houston’s Southern
Smoke Foundation, a crisis relief organization for people
in the food and beverage industry. “All are afraid they
will lose their homes, and the terror in their voices
is something I have never experienced. I have done
casework for years, during natural disasters, people who
have been gunned down, new mothers on the streets
with infants during winter. I have never heard this.”
No one has ever heard this, the
pleas for help from so many Ameri-
cans rendered jobless with stunning
suddenness—more than 16 million
and counting as of early April. For
them, the COVID-19 pandemic
has triggered intertwined crises
of personal health and personal
finance, threatening disaster for them
individually and, in the aggregate,
for the country. The great challenge
facing each person—and the nation
overall—is overcoming the two crises
together. In the modern economy
there is no playbook for how to do it.
More than in any past economic
collapse, U.S. consumers are at the
heart of this one. Not only do they face
the threat of getting sick, but they’re
also getting fired or furloughed by the
millions because their workplaces are
being shut down to prevent others
from being infected. As a result, they
can’t spend, forcing more businesses
to close, and so on—“an aggregate
demand doom loop” says Glenn Hub-
bard, chairman of the White House
Council of Economic Advisers from
2001 to 2003. “The problem is radiat-
ing from consumption demand by
households,” says Matthew Slaughter,
a CEA member from 2005 to 2007.
“It’s unprecedented—an involuntary
shock to consumption demand. The
magnitude of it is huge.”
For consumers, the cosmic injustice
of it all is head-spinning. The U.S.
economy has long been consumer-
driven, and over the past five years
consumers have powered
economic growth even
more than usual, expand-
ing America’s economy
faster than those of most
other big, developed
economies. Consumers’
share of GDP reached a
towering 68% in last year’s
fourth quarter, higher than
it got even in the 2006 to
2008 shopping festival
that preceded the financial
crisis and recession. Yet
unlike then, consumers in
recent years have increased
their buying responsibly,
saving a prudent 8% of
their disposable personal
income on average vs. near
0% back then. Household
debt reached 99% of GDP
in the last boom; at the end
of 2019, it was just 76%.
And now, having kept the
economy cruising along,
consumers are suddenly
under intense financial
pressure. Of those who still
have jobs, millions cannot
work from home and must
choose between risking
their health (and potentially
their lives) by working in
grocery stores, warehouses,
post offices, hospitals, and
other high-contact settings,
or not working.
On top of it all is a
crowning irony: Because
the U.S. is still fundamen-
tally a consumer-driven
economy—and can’t trans-
form overnight—consum-
ers as a group will have
to get themselves and the
whole economy out of this.
No one knows how deep
a hole they’ll have to climb
out of; everything is hap-
pening too fast for official
statistics to keep up. But
we know this is the steepest
economic plunge in mod-
ern history. More people
lost their jobs in two weeks
in March than in the entire
2008–2009 recession.
In the Great Depression,
real GDP declined for 43
months, eventually shrink-
ing by 30%. This time,
Morgan Stanley forecasts a
30% decline in the second
quarter; Goldman Sachs
says 34%; and St. Louis
Fed president James Bul-
lard says 50%. For now, the
most important indicators
to watch aren’t economic
ones. They’re the weekly
trends in new COVID-19
cases, number of deaths,
and governors making
isolation orders more strin-
gent or lenient.
BREAKING THE
“DOOM LOOP”
Consumers can’t bring
back the economy without
help. Reviving consump-
tion is a major goal of the
Coronavirus Aid, Relief,
and Economic Security
(CARES) Act and the many
other actions by federal
agencies, states, and the
Fed to put more cash in
consumers’ hands. But dol-
ing out money isn’t enough.
“There’s the immediate loss
of the job, but the bigger
 HOW THE CORONAVIRUS IS RESHAPING BUSINES S — ECONOMIC S

issue is uncertainty,” says HOW FAR WILL GDP FALL? is health care don’t pad G. The
Hubbard, who advised spending, which $16 billion to
IT’S THE TRILLION-DOLLAR QUESTION may climb 1.6%. purchase vital
Senate Republicans on AS ECONOMISTS CALCULATE THE “I,” or busi- medical gear in
the CARES Act. Getting a FALLOUT FROM THE GREAT CESSATION. ness investment, the CARES Act,
$1,200 check, augmented BY BERNHARD WARNER meanwhile, for example, does
unemployment benefits, accounts for count—though
and tax relief may offer about 17% of it’s a sum that’s
GDP. Goldman unlikely to make
some respite, but consum- We know this: 68% of U.S. GDP. forecasts a 35% much of a differ-
ers won’t spend much and The coronavirus Drilling down, decline in overall ence.
employers won’t hire if will result in a “services” makes manufacturing Finally the net
they’re braced for still worse hit to the U.S. up 69% of C, and activity—with the exports (“X”–”M”)
economy unlike the figures are biggest hits to tally will actually
to come. any ever seen. dire: Goldman automobiles and worsen in 2020,
That’s why the Paycheck All we’re left to Sachs calculates parts suppliers. Goldman says.
Protection Program, an argue over is how a 90% decline Which brings With consensus
innovative element of the long, and how in April sports us to one area expectations for
CARES Act that got off to bad. Everyone and entertain- of the equation second-quarter
who has ventured ment spending set to grow: “G,” GDP expected
a rocky start, is especially a prediction on and 75% falls for government to be down more
worth watching. It offers GDP is starting in spending on spending. But than 30%, we
small businesses (up to 500 from the same public transpor- that’s tricky. You’d could be looking
employees) Small Busi- Econ 101 equa- tation and food think a $2.2 tril- at Depression-era
tion: GDP = C + I + services, plus a lion stimulus bill jobless numbers.
ness Administration loans G + (X – M). 65% drop in hotel would lift GDP. Meaning the his-
equaling about 20 weeks The most bookings. But technically, tory majors may
of major expenses, includ- important part of About the most of that is have as much in-
ing payroll, mortgage, and that equation is only sector of defined as trans- sight as the econ
rent. If a business gets “C”: Consump- consumption fer payments, majors about
tion accounts for that could rise which, as a rule, what’s ahead.
the loan by June 30 and
restores staffing and pay
to pre-Feb. 15 levels, while
also meeting other tests, the ESTIMATED CORONAVIRUS EFFECT ON U.S. REAL GDP POSITIVE EFFECT
loan can be forgiven. The FROM FISCAL
NEGATIVE EFFECT FROM DECLINE IN SPENDING RESPONSE
effect could be significant:
–14% –12 –10 –8 –6 –4 –2 0 0 2 4%
Firms with 500 or fewer
workers account for over FEB.
2020
half of U.S. employment.
In theory it’s a sensible
policy response, helping
to break the doom loop JUNE
by giving businesses and
workers certainty. Employ-
ers will know they can keep
paying employees, even
if there’s no work to do,
confident that it won’t cost JAN.
them a thing; employees 2021

will know their employer

has a strong incentive to
keep paying them, so they’ll
be more inclined to spend.
At least it’s a certainty until
June 30, by which time,
the policymakers hope,
the pandemic will be in
decline, and the economy
will have turned up.
JUNE
DECLINE IN SERVICES CONSUMPTION
DECLINE IN MANUFACTURING
DECLINE IN CONSTRUCTION
SECOND-ROUND INCOME EFFECTS
DEC.
SOURCE: GOLDMAN SACHS 2021
1 4 FO R T U N E M AY 2 0 2 0
But at least initially the
program has spawned
massive uncertainty among
prospective borrowers and
the banks through which
loans are being made. The
hastily written law only
outlined the program, leav-
ing the Treasury to write,
at warp speed, 31 pages of
regulations. The SBA was
entirely unprepared to lend
10 times as much money in
a few weeks as it normally
lends in a year, and the
amount appropriated for
lending, $299.4 billion,
was clearly far too little.
A larger risk: Maybe the
pandemic won’t be under
control by June 30; either
the economy will sink back
into the depths when the
program ends, or Congress
will extend it at a cost of still
more hundreds of billions.
LONG-TERM “SCARS”
FOR CONSUMERS
For the moment that’s
unknowable. But we can
say with some confidence
how this already traumatic
experience will change the
behavior of shaken consum-
ers. In the near term, those
who have income will save
more of it if they possibly
can. The dominant feeling
of consumers in an eco-
nomic meltdown is loss of
control, and having money
put away, even just a little,
gives them a feeling of more
control. Of the money they
spend, they’ll spend more
of it on necessities, again be-
cause they feel more control
when their necessities are
on hand. The NPD Group, a
retail research firm, has ob-
served this shift already and
says that “wrestling with
necessities vs. discretionary
products will play a huge
role” in how retailers adjust
through the pandemic.
In the longer term,
the pandemic experience
will change consumers
for decades. “We will be
different,” says economist
Ulrike Malmendier of the
University of California
at Berkeley. “We’ll make
different product choices,
consumption choices, hu-
man capital choices.” This
is beyond economics; it’s
neuroscience. A crisis expe-
rience is deeply emotional,
and “stronger emotions get
anchored more strongly in
our memories,” she says.
“Our hard wiring changes.”
We will buy differently.
“Macroeconomic crises
appear to leave long-term
‘scars’ on consumer behav-
We will be different. We’ll make different
product choices … Our hard wiring changes.
ULRIKE MALMENDIER, UNIVERSITY OF CALIFORNIA AT BERKELEY ECONOMIST
ON HOW THE CRISIS WILL AFFECT CONSUMERS
ior,” write Malmendier and
coauthor Leslie Sheng Shen
in a pioneering 2018 study.
They found, for example,
that regardless of income,
households that experi-
ence high unemployment
personally or in the mac-
roeconomy consume less,
including less food, than
other households. They use
significantly more coupons
when they shop and buy
more sale items and prod-
ucts of lower quality, again
regardless of their income.
Such households also save
more. Those effects fade
over time but are still mea-
surable years later.
It’s a similar story with
investing. In a separate
study, Malmendier and
coauthor Stefan Nagel
found that households’
financial risk-taking is
strongly related to how well
or poorly markets have per-
formed during their lives,
and again, the effects are
long-lasting. “Even returns
experienced decades earlier
still have some impact,”
they report.
One more key finding: In
addition to recent experi-
ences being most influen-
tial among all age groups,
they are most powerful by
far among the young, who
increase consumption more
during booms and cut back
more during busts. They
may be living on way, way
less for some time.
For two groups of young
people—those graduating
from high school or college
this spring—that’s just the
beginning of the dispirit-
ing news. College students
who graduate into the labor
force during a recession
suffer reduced earnings for
10 years on average, and
for those with the lowest
predicted earnings (based
on college and major), the
earnings penalty may last
much longer. It gets worse.
Some research finds that in
midlife, recession graduates
on average work more and
earn less, are less likely to
be married and more likely
to be childless, and suffer
higher death rates. One
researcher on this topic,
Northwestern University’s
Hannes Schwandt, sums up
the findings thus: “The bad
luck of leaving school dur-
ing hard times can lead to
higher rates of early death
and permanent differences
in life circumstances.”
If past trends from seri-
ous recessions hold true, the
pandemic might alter the
economy’s structure, dimin-
ishing the earning power of
the labor force—potentially
for years. Lack of funds will
force some prospective col-
lege students to postpone or
abandon their plans. If the
recession is long, many of
the newly unemployed may
remain jobless for many
months or even years, dur-
ing which their skills might
deteriorate and become
outdated, as happened in
the last recession. Even if
they get jobs eventually,
they may well be less valu-
able workers.
Apart from its effects
on workers’ earnings, the
pandemic may do other
lasting damage to the labor
force as well. If the unlikely
worst-case scenarios play
out and COVID-19 kills
over 100,000 Americans
plus millions more world-
wide, the simple shrinkage
of the labor force would
reduce output for years.
Even without that extreme
circumstance, the same
factors that have caused
schools to close will signifi-

cantly curtail early child-
hood education, a proven
factor in better educational
achievement later in life.
Researchers have also
uncovered an unexpected
effect of the 1918 flu pan-
demic that could potentially
recur: It reduced educa-
tional attainment by people
who hadn’t been born yet.
Americans who were born
in the months after the
pandemic, and thus were
in utero during it, were less
likely to graduate from high
school than the cohorts im-
mediately before and after
them. In any long-term eco-
nomic recovery plan Con-
gress and the White House
hammer out, policymakers
would be wise to invest in
incentives that help young
people finish school.
PLANNING FOR THE
NEXT CATASTROPHE
As businesses respond to
this grand-scale reorder-
ing of their world, some
implications are already
clear. Remote work will be-
come mainstream, if only
because so many people
will have an online meet-
ing app and know how
to use it. Companies are
slashing capital spending
as they scramble for cash,
weakening the foundation
of future economic growth
while also fueling a B2B
doom loop in the present.
They’ll diversify supply
chains beyond China when
demand returns, further
slowing that country’s
decelerating economy.
As in all recessions, com-
panies will learn to do more
with fewer people, so the
already spiking unemploy-
ment rate may well con-
HOW THE CORONAVIRUS IS RESHAPING BUSINES S — ECONOMIC S
3 KEYS TO LEADING IN A CRISIS
This crucible experience will be career-defining for many leaders. In any
crisis—especially a historic global catastrophe in which the main factor is
uncertainty—people want leaders to give them information, reassurance,
and a plan. Yet this is exactly when all of those are maddeningly difficult to
deliver. History says leaders will benefit by following a few principles:
REMEMBER THAT PEOPLE WANT TO BE LED.
We understand in our bones the simple efficiency of it, that no group accom-
plishes much if no one is in charge. In a life-threatening historic crisis, we want di-
1 rection more than ever. We also need a leader to be, in effect, a repository for our
fears, someone who has the power to do what we cannot. The leader assumes
part of our burden and helps us sleep at night. If you’re in charge—be in charge.
BE DECISIVE .
In a crisis, even people who would normally be at one another’s throats accept
that major decisions must be made quickly. These decisions will be debated—
2 but after they’re made, not before. That’s a valuable opportunity for leaders. The
difficulty is that just when decisions are most easily accepted, they’re hardest to
make. Every leadership decision is made with incomplete information; in a crisis
the problem is worse and the stakes are higher. Don’t let that fact stop you from
making firm decisions.
DEFINE REALITY AND GIVE HOPE.
People hunger for the unvarnished truth about their organization and its pros-
pects, and they can sense evasion a mile away. The news in a crisis is rarely good.
3 The leader’s art is outlining reality unflinchingly and framing it as a challenge
that can be met, not as a disaster that must be endured. Effective leaders never
make a promise that can’t be kept with 110% certainty; they do offer realistic
reasons for hope.
Even these principles will be of limited value to any leader who hasn’t built
trust and credibility. You can’t change the past, but a crisis is an excellent time to
start changing the future.
tinue to rise at least briefly nation detonates a nuclear offered to the supremely
after this recession ends. bomb; a large electrical important, terrified con-
It’s a safe bet that many grid gets hacked and shut sumer, the hero and victim
companies will compile down. You’ll never foresee of this saga? Only hope—
pandemic plans for the exactly what happens, but based on history. Forecasts
future—surely a wise move, the exercise of working out of multiplying deaths and
but if that’s all they do, the second- and third-order unprecedented eco-
they’ll be missing a crucial effects will put you miles nomic collapse come with
lesson of this experience. ahead of competitors if one percentages and decimal
A global pandemic is the of these events occurs. It’s a points. Yet human ingenu-
most predicted disaster lot of work. But remember ity, passion, and energy are
since Hurricane Katrina, the conclusion of Mohamed beyond any economist’s
yet, now as then, businesses El-Erian, CEO of bond trad- ability to predict, and those
and governments were ing firm Pimco during the are what get us through
caught flat-footed. When financial crisis: “It’s better to times of trial. It’s unsatis-
the urgency of this calam- be prepared for events that fying to say that a better
ity abates, it will be time to don’t happen than unpre- future awaits us because of
start thinking through other pared for events that do.” forces and factors that we
plausible catastrophes—a As we look ahead to days can’t exactly describe. But
major earthquake strikes that will probably remain we mustn’t forget that it’s
California; some group or challenging, what can be true.
 Content by the Buzz Business

CHANGE AGENTS

THE CHANGING
FLAVORS
OF ARABIA
No country in recent years has undergone such
a rapid food transformation as the Kingdom
of Saudi Arabia.

While flatbreads, dates, yogurt drinks, and

classic Bedouin dishes such as kabsa—chicken,
basmati rice, and spices—remain the much-
loved staples of the Saudi diet, a new breed of
restaurateur is now emerging, fusing age-old
traditions with modernity and giving contemporary
twists to local favorites like margoog (lamb
stew) and mugalgal (a celebratory meat dish
usually cooked for the festival of Eid).

Meanwhile, the busy malls of Riyadh and Jeddah

are packed with office workers discovering
new flavors from far afield. As the Kingdom
opens up to outside investment and influence,
entrepreneurs in the hospitality industry are seizing
the opportunity to provide Saudis with exotic
culinary experiences from around the world.

In a reflection of just how fast life is changing

for women in the country, many of this new
generation of restaurant owners are young female
entrepreneurs who are relishing the chance

Pastry chef and restaurateur

Mayada Badr is one of
the brightest stars of Saudi I HAVE ALWAYS LOVED FOOD AND
Arabia’s new culinary scene.
COOKING FOR OTHERS. IT IS ONE OF
Leaving behind a career
in advertising to study at
THE SIMPLEST AND OLDEST
culinary school in Paris and EXPRESSIONS OF LOVE
start her own pastry business —
in Jeddah, Mayada’s story
is an inspiration for other
MAYADA BADR
chefs and entrepreneurs
across the Kingdom.

All of Pink Camel’s macarons are made fresh
daily, completely by hand
to transform their passion for
cuisine into successful businesses.
“Women in Saudi Arabia are more
experimental and more willing to
take risks than men, who tend to
pursue more traditional careers,”
says Mayada Badr, the owner of
Pink Camel, Saudi Arabia’s most
celebrated high-end pastry boutique.
After studying at the Cordon Bleu
culinary school in Paris and gaining
experience at a Michelin-starred
restaurant near Cannes, in 2012 Mayada
opened the groundbreaking Pink Camel
in the city of Jeddah, on the Red Sea.
The pastry shop’s handcrafted
macarons and cakes have made the
Pink Camel name synonymous with
culinary creativity across Saudi Arabia,
and Mayada has become an inspiration
for entrepreneurs both male and female.
Making good use of her strong
presence on social media, Mayada
and her partners recently opened a
restaurant, Black Cardamom, that
brings seasonal local produce from
Saudi farmers straight to the plates
of diners in Jeddah, replacing imports
with food grown on nearby farms.
Content by the Buzz Business
Mayada’s passion for authentic cuisine
is inspiring other young Saudis to follow
their dreams of opening a restaurant.
“Now that Saudi Arabia is changing so
fast, I want to help a new generation
of Saudi men and women learn
culinary skills and grow their own
restaurant businesses,” she says.
Q&A with Mayada Badr
When did you decide to pursue your
dream and become a pastry chef?
I have always loved to eat. When I
discovered salted caramel macarons
in France, I decided to bring them to
Saudi Arabia. I started cooking them at
home, packaging them, and sending
them to friends. Soon I was getting calls
from people who wanted to become
customers. That is when I left my job in
advertising and went to Paris to study
at Le Cordon Bleu Culinary Academy.
How did your family react
to your decision?
At the time, chefs were not the rock
stars they are today. My parents did
not look upon my choice favourably
initially as they were keen for me to
study for a master’s degree. But it
was what I wanted to do—I wanted to
Q&A
open restaurants and discover all the
ins and outs of the culinary world.
The reaction from the men in my family
was interesting at that time. Men
believe they need to be stable, secure,
and dependable. My brother told me
he was envious of the fact that I could
pursue my dream and do what I love,
whereas he could not take that risk
because of the pressure to provide.
Since culinary school, I have met a lot
of men who are doctors, lawyers, and
dentists who look at my career path
with admiration and take inspiration.
How easy is it to be a female
entrepreneur in Saudi Arabia?
It was an advantage for me to be a
female entrepreneur as everyone wanted
to help us succeed. We are experiencing
an amazing transition. It is a cultural
revolution. Men and women are starting
to work together and share open spaces.
When my daughter was born, I thought
she would never drive. Now I am driving
and she will never even remember that
I was not allowed to drive. Women are
becoming much more independent.
I can go to a soccer match in the
stadium and take my daughter with me.
Seeing the change here and feeling the
hope and the potential is inspiring.
How is the culinary sector
changing in Saudi Arabia?
The government is supporting chefs
and is sharing our food culture
internationally. Saudi restaurants
are sourcing more locally and more
sustainably. Young chefs are using
homegrown food from Saudi farmers. A
new Saudi-fusion sector is developing
and is beginning to attract international
attention. For people looking for
more authentic food experiences,
Saudi Arabia is the place to come.

DATA R I G H T S
Privacy in a
Pandemic
How the global spread of
the coronavirus is upending
Western notions about how
our digital footprint is
protected. BY DAVID MEYER
IT WAS MERE MONTHS AGO that
data privacy was one of those
wonky policy topics that gradually
was becoming more clearly defined
in corridors of power from Brussels
to Washington to Sacramento. In
Europe, tough new rules were setting
the pace for the rest of the world.
In the United States, Congress was
slowly coalescing around national
guidelines, encouraged by
big tech companies seeking
clarity (and a say in the
legislative process).
Now, as the novel
coronavirus crisis grips the
globe, that consensus is
being replaced with a new
reality: Less data privacy,
not more, may be what’s
best for public health.
Successful efforts in
several Asian countries
already have shown that
absent a vaccine or effec-
tive treatment, the best
way to fight COVID-19 is
to aggressively “track and
trace” infected individuals.
Using tools from location
tracking to smartphone
apps, governments have
been able to monitor shift-
ing patterns of movement
to indicate how best to
impose or lift restrictions.
They’ve also been able to
alert individuals whose
infection might need to be
communicated to those
who have recently crossed
their path.
Such surveillance tech-
niques would have been
anathema to privacy advo-
cates before the crisis. Now
the question isn’t if govern-
ments and their corporate
partners should be able
to monitor the health of
individuals, but rather how
much, in what manner,
and under what regulatory
restrictions. Even digital
rights advocates who railed
against snooping tricks by
the likes of Facebook and
their clients reckon such
data collection is neces-
sary. “We need a massive
surveillance program,”
PHOTO ILLUSTRATION BY
SELMAN DESIGN

screamed the headline
of a late-March essay by
the prominent Silicon
Valley privacy evangelist
Maciej Cegłowski. “I am
a privacy activist, typing
this through gritted teeth,
but I am also a human
being like you, watching
global calamity unfold
around us.”
Some of the best hopes
for pandemic fighting
come from the same
smartphone-enabled
applications used by tech
behemoths to sell online
Less data privacy, not more,
may be what’s best for public health.
advertising. In April,
Apple and Google an-
nounced a joint effort that
will enable the Bluetooth
chips in their respec-
tive smartphones to be
used for contact tracing
in a similar way to how
retailers can already track
a user’s location within a
store. It follows the lead of
Singapore, where a state-
sanctioned app called
TraceTogether uses Blue-
tooth signals to establish
past proximity between
COVID-19 sufferers and
those around them. Only
this time it’s baked into
the operating system.
Before the crisis, regula-
tors were increasingly
clamping down on the
ad-tech industry’s ability
to closely track users. In
the U.S., a legislative effort
was beginning to pick up
speed. The California Con-
sumer Privacy Act (CCPA)
took effect in January.
The law borrows liberally
from the European Union’s
General Data Protection
Regulation (GDPR), which
gives consumers the right
to block the collection and
sharing of their personal
data. A New York State
law called the Stop Hacks
and Improve Electronic
Data Security (SHIELD)
Act began imposing new
responsibilities on compa-
nies in March.
The tech industry, hop-
ing to avoid a potentially
misaligned patchwork of
state data-protection laws,
has in recent years joined
privacy advocates in push-
ing for the development of
a federal law. Both sides in
the Senate had bills under
consideration before the
pandemic struck. Between
a presidential election and
the focus on disaster relief,
it’s unlikely legislators will
return to the topic this year.
“It’s unfortunate,” says
Cameron Kerry, formerly
general counsel of the U.S.
Commerce Department
and now a scholar of pri-
vacy and information tech-
nology with the Brookings
Institution and MIT Media
Lab. “Before things shut
down, it looked like there
could be some room in the
legislative calendar this
summer to reach agree-
ment on the content of the
bill. Now I think it is quite
likely at this point that
we’re looking at something
for next year.”
Battle lines already are
being redrawn in Wash-
ington, with industry
sensing opportunity and
some privacy advocates
worrying about overreach.
“The lack of a national
consumer privacy frame-
work and fragmented
state rules may create
uncertainty for developing
data-driven tools to help
health officials respond to
the ongoing public health
crisis,” complains Keir
Lamont, policy counsel for
the Computer & Com-
munications Industry As-
sociation, whose members
include Facebook, Google,
and Amazon. Jeff Chester,
executive director of the
privacy-focused Center for
Digital Democracy, coun-
ters that “the digital mar-
keting industry wants to
claim its failure to protect
privacy is now a benefit for
the public health.” He calls
for “guardrail policies” to
limit how these companies
can use the information
they collect as part of any
crisis response.
Once again, Europe is
leading the way. European
Union privacy regulators
maintain it is possible
to use privacy-invasive
tracking methods in the
pandemic, while still
respecting the rights set
out in the GDPR. In early
April, they began working
on guidance for how to
achieve this. Key ques-
tions include how long the
authorities will be able
FO R T U N E M AY 2 0 2 0 1 9
to hang on to personal
information, and whether
people will still be able
to demand the erasure of
their data after the crisis
ends.
In China, privacy has a
whole different meaning.
The country began devel-
oping a legal framework
for data protection about a
decade ago, but it was fo-
cused more on companies
than individuals. As data-
privacy lawyer Emmanuel
Pernot-Leplay concluded
in a recent article, there is
a striking “difference be-
tween the strengthening of
protection against private
entities and the parallel
increase of government’s
access to personal data, as
there is still no significant
privacy protection against
government intrusion.”
The COVID-19 out-
break has seen a massive
increase in state surveil-
lance in China, in partner-
ship with the private sector
(for more, see “When Red
Is Unlucky” in this issue).
Few expect Beijing to roll
back such programs when
the crisis passes. On the
contrary, the success of its
public health measures
may be seen as a power-
ful validation of Beijing’s
approach.
It’s safe to say more
surveillance, not less, will
be the new normal in a
forever changed world.
Additional reporting by
Clay Chandler
 THE BRIEF
ASIA
When Red Is Unlucky
China’s apps for tracking the outbreak are
both efficient, and worrying.
BY NAOMI XU ELEGANT & CLAY CHANDLER
THE PHYSICAL BARRIERS of the
largest lockdown in human his-
tory started coming down in Wuhan,
China, on April 8. By the time shops
opened, and some of the city’s 11 mil-
lion residents ventured out, authori-
ties had introduced a more modern
method for isolating those at risk of
infection. At checkpoints throughout
the city, police and security guards
demanded residents present a QR
code on their mobile phones that
rates the user’s coronavirus risk level.
Green codes granted unrestricted
movement. A yellow code required
seven days of quarantine. Red meant
N O E L C E L I S — A F P/ G E T T Y I M A G E S
14 days of quarantine.
Local governments created the
algorithms behind the ratings at the
behest of China’s State Council and
rolled them out in Wuhan and hun-
dreds of other cities on apps hosted
by China’s largest tech companies,
A traveler
displays his
QR code at
Wenzhou
railway station
in Zhejiang.
Alibaba, Tencent, and
Baidu. To receive a rating,
users download an app
embedded in one of the
three ubiquitous mobile
payment platforms and
register with basic infor-
mation—name, national
identity card number,
phone number, address.
Subsequent questions are
more invasive, quizzing us-
ers on health status, travel
history, and asking them to
identify any close contacts
diagnosed with the virus.
Technology’s deep
foothold in Chinese society
fast-tracked the rollout.
More than 60% of China’s
population, or 850 million
people, own smartphones
and depend on them for a
wide range of daily activi-
ties. Local governments all
but mandated app usage
by making it a prerequi-
site for moving about. By
mid-April, Alibaba was
hosting apps for more than
200 cities and Tencent had
FO R T U N E M AY 2 0 2 0 2 1
over 300. Baidu didn’t say
how many local apps it is
hosting.
Another reason the apps
garnered wide adoption
is that they seem to work.
But that efficiency comes
with tradeoffs. The apps’
opaque algorithms run on
sensitive information, and
users’ freedom of move-
ment is dictated by its
pocket-size traffic light.
Even as Chinese cities
reopen, residents unable
to show a green badge are
denied entry to businesses,
public areas, and transit
systems. The apps concern
human rights advocates,
who fear they’ll transform
smartphones into an ever
more powerful tool for
China’s authoritarian gov-
ernment to spy on its own
citizens.
“Technology can play
a role in containing the
pandemic,” says Doriane
Lau, a China researcher
at Amnesty International,
but “an increase in state
digital surveillance pow-
ers can threaten people’s
privacy and freedom of
expression, especially in
places where these rights
and freedoms are not well-
protected by law.”
In China, the apps’ color
codes have become a way
of life, one that—at the
very least—has given users
a ticket out of lockdown.
Cathy Fu, a tech worker
in Beijing, got stuck in Wu-
han’s Hubei province for
two months. She received
her first green QR code on
March 10. “I was so happy,”
Fu said. She gladly flashed
it weeks later as she finally
boarded a train back to her
home in Beijing.
2 2 FO R T U N E M AY 2 0 2 0

patients’ infected coughs

AU TO M OT I V E
Ford Shifts Gears
The automaker and its competitors are
pivoting to produce medical supplies. A
look at what it takes to go from V-8s to
ventilators. BY MARIA ASPAN
FOR MARCY FISHER, one of the
global pandemic’s biggest and
most urgent recent headaches in-
volved a small piece of elastic.
On March 20, Fisher, a Ford Mo-
tor lifer who normally oversees the
automaker’s global body exterior and
interior engineering, became one of
about 200 Ford executives and em-
ployees facing an urgent new man-
date: How could the country’s largest
automakers, their massive production
lines idled by the threat of spreading
infections, pivot into producing des-
perately needed medical supplies?
Crosstown rival General Motors
had already jumped into action,
hammering out a partnership with
ventilator specialist Ventec Life
Systems. Ford CEO Jim Hackett and
his deputies consulted with experts at
the Mayo Clinic, a medical supplier,
and the White House, which was
It’s completely innovative,
and other airborne health
hazards. Within a day she
had a viable design and
was talking to suppliers
about getting the material
to make hundreds of thou-
sands more. The plastic
part was simple enough.
But when it came to the
elastic band that secures
the shield onto someone’s
head, Ford “ran into a big
industry shortage,” Fisher
recalls.
The solution, when it
came, was gloriously banal.
At 4 a.m. on March 26, one
of Ford’s suppliers opened
up its plant and started
extruding a version of the
flexible rubber tubing, or
weather strips, that you’ll
more normally find sealing
car doors and windows.
“By 8 a.m. we had a proto-
type,” Fisher says. Within
hours, her team was drop-
ping off samples at local A worker at a Ford
hospitals for ER doctors to subsidiary plant in
Plymouth, Mich.,
vet. Within days, Ford had
assembles a face shield.
manufactured 100,000
of the final products; by
mid-April, it was making high-speed efforts to
1 million per week. And turn itself into a medical
manufacturer—includ-
ing a promise to produce
50,000 ventilators by
July 4—will be even more

and it totally works. complicated and subject to

much greater scrutiny.
Ford’s “Project Apollo,”
ERIN BRENNAN, A DETROIT EMERGENCY PHYSICIAN, OF FORD’S IMPROVISED FACE SHIELD
named for the scrappy
rescue of the Apollo 13
agitating—loudly—for the automak- the elastic substitute? “It’s astronauts, involves cross-
ers to get involved. Soon they were completely innovative, and industry partnerships
strategizing with their counterparts at it totally works,” says Erin with GE, 3M, and many
C OURTESY OF FORD MOTOR C O.

General Electric and 3M. Brennan, an emergency smaller suppliers, as well

While those more complicated
devices would take weeks or months
to produce, Fisher’s team started with
one of the most basic of supplies: the
plastic face shields that medical work-
ers use to protect themselves from
physician at a Detroit hos-
pital, who tested the face
shields. “This team has
been awesome.”
But that was the easy
part. The rest of Ford’s
as the willing participation
of more than 750 United
Auto Workers members
who will operate Ford’s
retooled factories. Besides
face shields and ventila-

tors, it will yield medical
supplies including masks,
gowns, and respirators.
Few of these devices are
simple to design, source
components for, or manu-
facture—especially under
the pandemic’s life-and-
death deadlines.
“Lives are at stake,” says
Jim Baumbick, the Ford
vice president of enterprise
product line manage-
ment, who’s overseeing
the automaker’s efforts to
make medical supplies for
COVID-19. “A lot of these
machines are incred-
ibly complex, and adding
capacity takes time. And
time is the enemy.”
That’s especially true for
the sophisticated and ur-
gently needed ventilators
that help critically ill pa-
tients breathe. Tradition-
ally made by a handful of
medical-device specialists,
ventilators require many
more components and are
much more regulated than
face shields.
In an attempt to stream-
line the process, Ford and
GE decided to focus on an
FDA-approved, relatively
simple version produced
by a small Florida com-
pany, Airon. “The key
factor is speed and getting
as many ventilators as pos-
sible to clinicians treating
COVID-19 patients,” Tom
Westrick, GE Healthcare’s
chief quality officer, says in
an emailed statement.
Even these ventilators
require about a month
of sourcing, design, and
regulatory conversations
before Ford’s factory work-
ers at the Rawsonville plant
in Ypsilanti, Mich., can
start producing them. Each
Airon machine has up to
350 parts, which Adrian
Price’s manufacturing team
spent a weekend taking
apart and 3D-scanning,
before starting to look for
ways to replicate them on
a massive scale. (One sub-
stitution: adapting a timer
valve usually used in Ford
vehicles’ powertrains.)
“When we build a car
or truck, the first thing
for us as a manufacturing
team is to figure out how
to build one, and then how
to build a few, and then
how to build them at rate,”
says Price, Ford’s director
of global manufacturing
core engineering and the
executive in charge of its
new ventilators, in early
April. “And that’s really the
process that we’ll be go-
ing through over the next
couple of weeks.”
Ford expects its internal
ventilator production to
start the week of April 20,
with a goal of making
1,500 ventilators by the
end of April; 12,000
by the end of May; and
50,000 within 100 days.
(GM will supply 6,000
by the end of May and
30,000 by the end of Au-
gust.) Still, the effort may
not be enough, as experts
are predicting the country
will need another 14,000
ventilators by mid-April.
“We’re too late to the
party,” says Marcus Scha-
backer, a physician and the
head of ECRI, a nonprofit
focused on medical devices
and patient safety. No mat-
ter how many ventilators
are actually produced in
the next few months, there
THE BRIEF
GOING TO
WAR WITH
THE VIRUS
In the 1940s, Ford
and General Motors
switched their facto-
ries over to manu-
facture tanks and
airplanes for World
War II. Now both are
invoking that compari-
son to make supplies
to fight COVID-19,
as are some of their
fellow automakers
and leaders of many
other industries. What
they’re making:
FORD is already pro-
ducing 1 million plastic
face shields a week
and has promised
50,000 Airon ventila-
tors by July. It’s also
making a version of
3M’s respirators and
is helping 3M and GE
ramp up their own pro-
duction of respirators
and ventilators.
GENERAL MOTORS
has promised the
federal government
30,000 ventilators by
the end of August, in
partnership with med-
ical-device specialist
Ventec Life Systems.
GM is also working on
surgical masks and
says it could eventually
make 50,000 a day.
XEROX is partnering
with Vortran Medical
Technology to make up
to 200,000 dispos-
able, non-ICU ventila-
tors a month by June.
DYSON has promised
the U.K. government
10,000 of a newly
designed ventilator,
and founder James
Dyson has said he will
donate another 5,000
internationally.
2 4 FO R T U N E M AY 2 0 2 0 THE BRIEF — AUTOMOTIVE

are other hurdles that no
manufacturer can solve, he
says—including an equally
dire shortage of trained
health care personnel that
can use them.
“It’s very good and
very positive that these
companies are stepping
forward,” adds Julie Let-
wat, a health care attorney
with McGuireWoods in
Chicago. “But the devil’s in
the details. Will they have
enough workers? Who’s
paying for these? How will
they be distributed?”
The UAW workers who
have volunteered to risk
the virus and manufac-
ture the ventilators will be
working at social-distance
levels, and Ford says it is
considering new, as-yet-
unspecified technology to
protect them. But that’s not
a guarantee, of course—
and the last two questions
are even trickier. Baumbick
says, “We haven’t spent
any time talking about
cost,” and adds that Ford
is working with a coalition
of hospitals and govern-
ment agencies and officials,
including FEMA, the CDC,
and the White House, to
decide where its medical
supplies will go.
The federal govern-
ment is also getting more
actively involved. On
April 8, the U.S. Depart-
ment of Health and Hu-
man Services announced
that it had given GM a
$489 million contract to
deliver 30,000 ventilators
by the end of August. By
then, Ford may be supply-
ing a vast array of medi-
cal supplies and personal
protective equipment. On
April 13 the company an-
nounced that it has started
making masks, and is turn-
ing airbag material into
reusable gowns.
Now that the face
shields are flying out of its
factories, Fisher has turned
her focus to a much more
complex device: a battery-
powered, air-purifying
respirator. Internally, Ford
calls it a “scrappy” version
of a PAPR, the hood-and-
air-hose devices that doc-
tors sometimes wear with
or in lieu of the N95 masks
that are in such short sup-
ply. “We thought it was go-
ing to be an area of unmet
need,” Fisher says. “And it
looked like something that
not everybody could do, in
an area where we have a lot
of engineering depth.”
The PAPR design, which
Ford has adapted from and
is developing with advice
from 3M, also required
regulatory conversations
and testing before Ford
could start production on
April 14. The company
says that it will assemble
100,000 or more of the
PAPRs at its Vreeland facil-
ity near Flat Rock, Mich.
“Things are very fluid
right now,” Fisher said ear-
lier in the month, echoing a
common refrain during this
coronavirus spring. “It’s just
moving so fast.”

hope of rehiring BREAKDOWN OF COVID-19 CONTRIBUTION TO

OUT OF WORK talent eventu- UNEMPLOYMENT, BY SECTOR, IN PERCENTAGE POINTS
AS THE PANDEMIC INFECTS CORPO- ally. “We’ve never
RATE BOTTOM LINES, COMPANIES ARE been through
SCALING BACK THEIR WORKFORCES— anything that
RAPIDLY. BY LANCE LAMBERT compares to this,”
said Mark Zandi,
chief econo-
We’re living of the coronavi- mist at Moody’s
through the larg- rus slowdown on Analytics.
est layoff spree in their finances by A few com-
American history. axing thousands panies such as
In a three- of jobs. Some Instacart, Ama-
week period of the biggest zon, and Walmart
through early companies to have announced
April, 16.8 million announce sizable big hiring pushes.
Americans filed job cuts include But they are the
for unemploy- hospitality com- outliers, as the
ment benefits, panies Marriott vast majority of
likely pushing the and MGM, as industries are
real unemploy- well as retailers contracting. In
ment rate to near Under Armour the graphic at
15%, the highest and Sephora. right, Goldman
level since 1940. Other corporate Sachs projects
And it’s not titans—compa- how many points
just small- and nies such as GE each of these
midsize employ- Aviation, Disney, sectors will add
ers. Fortune 500 and Macy’s—are to the growing
firms are trying to turning to fur- unemployment
limit the impact loughs, with the rate in the U.S. SOURCE: GOLDMAN SACHS
Small business is no small task.
So Progressive offers commercial auto and business
insurance that makes protecting yours no big deal.
Local Agent | ProgressiveCommercial.com
 SPONSORED CONTENT

EFFECTIVE REACH
The benefits of telemedicine are vast, says
Tropeano. In rural communities, for example,
patients who need to drive long distances to visit
a doctor can rely on video or digital messaging
services for routine or preventive care, reducing
transportation costs and freeing up medical
resources for other patients.
“If patients can utilize telemedicine to handle
more mild symptom checking and other routine
medical visits during this crucial time, it’s going
to ease the burden to the health systems and
allow clinicians to focus on higher-risk COVID-19
patients and other emergencies,” Tropeano
says. Telehealth services also improve access
by drastically lowering the cost of doctor visits:
An in-person, non-emergency appointment
averages around $176, while the same non-
emergency telehealth appointment is only $40
to $50 on average.

VIRTUAL CARE, TANGIBLE BENEFITS

Telemedicine isn’t merely cheaper and more accessible.
Receiving medical services quickly, easily, and

REAL-WORLD RESULTS inexpensively helps doctors treat mild ailments before

How telemedicine and virtual apps
are lowering costs for companies while
improving outcomes for employees.
NOW MORE THAN EVER, THE WORLD IS WAKING
up to the importance of telemedicine. In the past decade,
the use of telemedicine has exploded, with nearly 76% of
U.S. hospitals using a computerized telehealth system,
compared with just 35% in 2010, according to the American
Hospital Association. As consumer access to technology
grows, and as in-person medical resources become
exhausted because of COVID-19, telemedicine is poised to
become even more mainstream.
“With the spread of COVID-19, the weaknesses within
our health system are now front and center,” says
Jody Tropeano, content director of HLTH, the
noted conference for health innovation.
000000000000000
0000000000000000000
they turn into bigger ones. Research from the California
Telehealth Resource Center shows that patients in
intensive care who have telehealth support experience
reduced complications, spend less time in the hospital,
and have a lower mortality rate than patients who don’t.
Nevertheless, only 2% to 3% of employers include
telemedicine in their benefits packages, according to
the Society for Human Resource Management. But
that might be changing. One pilot study estimated that
for every dollar spent by employees on health care,
their employers saved six. Another study found that
most employees’ health concerns were satisfied in just
one office visit—which diverted patients from more
expensive health care settings, saving money for the
company in the long term.
“Employers, and employees with telehealth as a
current benefit, might have been shy to adopt virtual
care until this point. However, I think people will start
to feel more confident in the benefits of telemedicine
and utilize it more routinely going forward,” Tropeano
says. “COVID-19 has been the biggest test to
the telemedicine industry so far, but I
00000
think virtual care will emerge from

“One bright spot has been the this crisis as the new digital front
000000000000000000000
00000000000000000000000
00000000000000000000000
00000000000000000000000
000000000000000000000
0000000000000000000
0000000000000000
000000000

increased adoption of telemedicine.” door to health.” ■

00000
00000000000
000000000000
00000000000000
000000000000000
0000000000000000
0000000000000000
000000000000000
00000000000000
0000000000000
00000000
2 8 FO R T U N E M AY 2 0 2 0
T EC H
Focusing on Fevers
Thermal-imaging cameras are
increasingly being used to fight
pandemics. But are they the right tool
for the job? BY AARON PRESSMAN
SAMSUNG TOOK an unusual
precaution when it held a
splashy event in San Francisco dur-
ing the early days of the coronavirus
outbreak, before the city issued a
“shelter in place” order. The tech
giant hired a startup to install a
sci-fi-inspired system to scan con-
ference attendees for fevers.
Hundreds of people going to
the event had to walk past a high-
resolution thermal camera that
is supposed to detect body tem-
peratures with an accuracy of within
one-half a degree Fahrenheit. A
laptop running software interpreted
the data and alerted a technician
when anyone had an
above-average tempera-
ture, a potential symptom
of a COVID-19 infection,
so the person could be
pulled aside for additional
screening.
The company that
supplied the technology,
CrowdRx, declined to say
whether it had identified
anyone at the event with a
possible fever. But what’s
clear is that the corona-
virus epidemic has put
a spotlight on thermal-
imaging technology as a
potentially important tool
in combating pandemics
and protecting the global
economy.
Long a fixture in
airports and rail stations
in Asia, a result of the
previous SARS and H1N1
epidemics there, thermal
imaging is increasingly
being installed world-
wide. Casino giant Wynn
Resorts, Brazilian miner
Vale, and airports in New
York, Los Angeles, and
San Francisco are just a
few of the customers that
have recently started us-
ing the equipment.
“The silver lining of
this outbreak is that in
the future, more advanced
infectious screening will
be done at all mass gath-
erings,” says Matt Fried-
man, CrowdRx’s medical
director and associate
medical director at Mai-
monides Medical Center
in Brooklyn.
Demand for thermal-
imaging equipment from
FLIR Systems, a leading
manufacturer, has grown
exponentially during the
coronavirus epidemic, says
Jim Cannon, the com-
pany’s CEO. The privately
owned firm, based in
Oregon, charges $5,000
to $7,000 for entry-level
cameras that are suitable
for medical screening.
FLIR’s thermal cameras
aren’t just for medical
uses. Energy companies
install them to spot leaky
pipelines; factories use
them to detect worn
parts in machinery; and
the military uses them
to spot enemy fighters in
the dark, including from
a drone that weighs just
30 grams.
Still, Cannon is careful
when discussing what his
gear can do in terms of
the COVID-19 pandemic.
The cameras detect “el-
COURTESY OF FLIR
Thermal-imaging
cameras identify people
who have unusually high
temperatures, a possible
sign of infection.

evated body temperature,”
not necessarily fevers or
infection. “They can’t
diagnose anything,” he
explains.
And that’s a growing
concern for medical profes-
sionals tasked with slowing
the spread of COVID-19.
Even if a thermal camera
accurately determines a
person’s temperature, that
doesn’t mean it can ac-
curately detect whether he
or she is carrying the virus.
Some people have naturally
higher body temperatures,
or they may have raised
their temperature through
physical exertion. More-
over, wearing glasses can
interfere with the technolo-
gy taking accurate readings
because it needs a clear
view of a subject’s eyes.
And, far worse for the
virus fighters, a person
infected with COVID-19
can be contagious to oth-
ers for several days before
showing any symptoms.
Other infected people may
be using medication to
lower their temperature,
allowing them to slip past
thermal cameras without
being flagged.
A recent study by the
European Centre for
Disease Prevention and
Control concluded that
thermal scans of travel-
ers from China, followed
by additional screening
including questions about
symptoms like coughing
I L L U S T R AT I O N S B Y M A R T Í N L A K S M A N
and difficulty breathing,
failed to identify three-
quarters of those infected
with the coronavirus.
Even more damning, in
March, the influential U.S.
nonprofit medical research
group ECRI published an
PANDEMIC-FIGHTING TOOLS
OF THE FUTURE
A NUMBER OF FAR-OUT IDEAS ARE BEING DEVELOPED
TO COMBAT THE NEXT EPIDEMIC.
GERM-RESISTANT CLOTHING
An Israeli company is infusing fabric
with copper to trap germs and bacteria
so that it can be used in protective gear.
Meanwhile, researchers in the U.K. have
developed face masks manufactured
with a protein coating on the fabric
that they say protects against 96% of
airborne virus cells.
MAPPING MAMMALS
Researchers mapped all 55 of the
viruses found in a particular species
of bat as a “proof of concept” for a
multibillion-dollar initiative to identify
and analyze all viruses in mammals.
During the project’s first 10 years, orga-
nizers say they could map an estimated
320,000 viruses, which may give health
officials a head start in combating future
pandemics caused by viruses jumping
from animals to humans.
VIRUS-KILLING ROBOTS
Chinese and Danish companies have
developed robots that can disinfect hos-
pitals and offices by emitting concen-
trated ultraviolet light as they maneuver
around. Some countries have also tried
using drones to spray disinfectant on
potentially infected areas.
MEET-UPS IN VIRTUAL REALITY
As seen all too often, people like to
congregate even when they’ve been or-
dered not to. Better virtual reality tech-
nology that provides more realistic and
immersive experiences could provide a
safer way to socialize in the future.
A CACOPHONY OF COUGHING
The sound of people coughing and
sneezing may one day provide an early
warning about impending pandemics.
University of Massachusetts research-
ers have created a device hooked up
to microphones that monitors waiting
rooms in doctors’ offices and hospitals.
If software detects a rise in throat
clearing and wheezing, it can, in theory,
raise a red flag. In a trial in one clinic
last year, the device predicted illness
rates that matched the results from lab
tests on patients.
THE BRIEF
analysis of previous stud-
ies on the effectiveness of
using thermal screening
to fight outbreaks includ-
ing COVID-19. It found
that the technology, used
alone or in conjunction
with questionnaires, is
“ineffective for detecting
infected persons” and that
it “could provide a false
sense of safety.”
The review came
after a large U.S. health
care system asked ECRI
whether it should install
thermal cameras to screen
people entering hospitals,
explains Andrew Furman,
ECRI’s executive director.
“Even under a best-case
scenario, you’re going to
miss more than half of the
infected population,” Fur-
man says. “The evidence
is telling us that this is not
going to help.”
CrowdRx’s Friedman,
who has also served as
the lead in-house physi-
cian for Yankee Stadium,
Madison Square Garden,
and the U.S. Open tennis
tournament, agrees that
the thermal-imaging tech
is imperfect. But he cites
some other studies that
found the technology
successfully identified
fevers more than 90% of
the time. And people with
fevers are more conta-
gious than asymptomatic
carriers, he says.
“By no means does its
sensitivity approach 100%
at capturing all infected
persons,” Friedman says.
But still, he adds, when
it comes to large gather-
ings, either at workplaces
or major events, using the
technology “should be the
minimum bar.”
 THE BRIEF FO R T U N E M AY 2 0 2 0 3 1

IN V EST

What’s the Smart

Money Doing?
We asked five market veterans
how investors should approach the
selloff in stocks—and where they’re
finding opportunities now.

Catherine Wood
C E O, A R K I N V E S T

No one can accuse Catherine Wood

of being a by-the-numbers inves-
tor. Wood, whose tech-focused firm
has more than $10 billion under
management, is famous for being
the biggest Tesla bull on the Street.
Now she’s taking her focus on
“disruptive innovation,” applying a
long-term view to the coronavirus-
ravaged stock market, and betting
on some beaten-down shares.
Wood notes that high-fliers like
Netflix, a high-conviction hold-
ing for ARK, have held up well in
the market plunge. But they don’t
offer the kinds of returns she’s see-
ing from “names that have been
crushed.” That’s why
The Tesla bull is Wood is selling some
loading up on Netflix and moving
“names that have into companies that
are going to “gain
been crushed.” more traction because
[they’re] solving a
lot of problems” illuminated by the
coronavirus. One stock Wood picked
up on sale is 2U, an online educa-
tion technology company catering to
homebound students. Another is on-
line real estate marketplace Zillow,
which she believes will benefit from
“an acceleration toward online real
REED YOUNG

estate shopping.” —Anne Sraders

3 2 FO R T U N E M AY 2 0 2 0

Liz Ann Sonders Sonders is Mohamed El-Erian

C H I E F I N V E S T M E N T S T R AT E G I S T, C H A R L E S S C H WA B avoiding C H I E F E C O N O M I C A DV I S E R , A L L I A N Z
small-cap
stocks and
“The hit to the economy … is still focusing on
stalwarts.
Investors need to answer “yes” to
ahead of us.” three questions before the all-clear.
El-Erian says
The stock market as well as temporary Allianz’s chief economic adviser Mohamed

S O N D E R S : C H R I S T O P H E R G O O D N E Y— G E T T Y I M A G E S ; E L- E R I A N : S C O T T M C I N T Y R E — G E T T Y I M A G E S
we don’t yet
isn’t always the best staffing and electricity have enough El-Erian gets asked lots of questions these
bellwether of what’s to output (tracked by the information to days: Where will the market bottom? When
know if we’ve
come in the economy. New York Fed’s newly should investors put their money to work? But
turned the
Though stocks rallied launched Weekly corner. as investors keep searching for that bottom—
powerfully in early Economic Index)— and signs that the coronavirus crisis may be
April, Schwab’s Liz “stuff that really abating—El-Erian suggests, instead, they ask
Ann Sonders isn’t picks up the weak- themselves three questions:
bullish yet. “I think ness we’re seeing and “One: Do you as an individual feel that if
we’ve just scratched we’ll continue to see.” you catch the virus, you will be treated well
the surface in terms Among stocks, she’s [and with enough equipment] in a hospital
of the hit to the labor avoiding small-cap or not? Two: Can you identify with some
market,” she says. “I’m companies (with their confidence who has the disease and who
very confident that the shaky balance sheets) doesn’t, and what is the risk of that disease
hit to the economy, in favor of large-cap spreading? Third: How comfortable are you
at its maximum, is stalwarts. She also about your immunity?”
still ahead of us, not favors the health care Until investors can answer those questions,
behind us.” sector—and while that El-Erian tells Fortune, “we’re not going to be
That’s why Sonders call predates the pan- able to really have certainty that we’ve turned
is watching unemploy- demic, it’s “reinforced the corner”—and investors won’t be able to be
ment data, both initial to some degree by the optimistic in a decisive way about their
and continuing claims, virus.” —Jen Wieczner portfolios. —A.S.
 THE BRIEF — INVEST

Lori Keith Keith is Teresa Barger

P O R T F O L I O M A N AG E R , PA R N A S S U S looking for CEO AND COFOUNDER, CARTICA
companies
with wide
Find companies poised to win in competitive
moats.
Asian markets are “definitely past
the “back half of this recovery.” the worst.”
Hedge fund
When the market is investors should really manager As the manager of a $1.2 billion hedge fund
in free fall, visualizing be thinking as you Barger is investing exclusively in small- and medium-size
long-term gains look out on the back taking a companies in emerging markets, Teresa Barger
wait-and-see
can be difficult. But half of this recovery.” views the coronavirus from a specific point
approach
Lori Keith, who One name that to stocks of view. She has divided her investing world
manages Parnassus’s checks her boxes? in South into three “waves”—where the coronavirus was
$4.7 billion Mid Cap Clorox. Keith believes America. (Asia), where it is (Europe), and where it has
K EITH: REED YOUNG; BARGER: C OURTESY OF CARTICA MANAGEMENT

Fund, is applying a the disinfectant-wipe yet to really spread (Africa and Latin America).
disciplined approach maker will prosper as Accordingly, she’s taking a wait-and-see ap-
even as stocks people stay focused proach to the Southern Hemisphere where
swing wildly. She’s on sanitation and “there’s not enough data.”
“looking for those infection control. For now, Barger is “really focused on north
companies that are Another is Digital Asia, where we know what their capacity is to
going to be winners of Realty, a real estate deal with it if there is another outbreak,” she
tomorrow”—with wide investment trust says, noting the region’s relatively ample medical
competitive moats and specializing in data supplies and strong public-health infrastructure.
strong balance sheets centers. Keith sees it “I think they’re definitely past the worst.” That
that are poised to gain benefiting as more includes Korea and Taiwan, where she’s fond of
significant share from people work from tech companies whose businesses track semicon-
all the dislocation home and companies ductor demand—and which she prefers over Chi-
that’s occurring right shift systems to the nese companies, whose stock prices have already
now. “That’s where cloud. —A.S. bounced back significantly. —J.W.
3 4 FO R T U N E M AY 2 0 2 0

BY MICHAEL T. OSTERHOLM AND MARK OLSHAKER

To Battle a
Pandemic, I
Think Like
the Military IMAGINE THAT the United States en-
tered into a major land and sea war,
and that only then, after the conflict
began, did the government begin
commissioning contracts to design
and build the aircraft carriers, fighter
jets, and other weapons systems we
would need for the fight. Well, the
imagination needn’t run too far,
because in essence, that is what has
happened as we were sucked into our
war against the coronavirus. While
there is much that can be faulted in
our flat-footed response to this pan-
demic, especially at the federal level,
one clear-cut failure should be even
more obvious to anyone who has ever
run a business: We had glaring gaps
in our supply chain and no immedi-
ate plan to fill them.
Start with the basics: We did not
have anywhere near the necessary
number of N95 respirator masks,
gowns, and other equipment to
protect our frontline troops—the
medical first-responders and hospital
staff. Nor did we have enough ven-
tilators to support our most severely
stricken living casualties. Witness the
scramble of state governors outbid-
ding one another and the federal
government to procure ventilators
and personal protective equipment
(PPE). While the U.S. does have a
Strategic National Stockpile (SNS),
an emergency repository of antibiot-

ILLUSTRATION BY NICOLAS ORTEGA


ics, vaccines, chemical antidotes, and
other critical medical supplies, it has
never been sufficiently maintained.
Indeed, no administration, including
the present one, has supported fund-
ing an SNS robust enough to meet
even the first few months’ worth of
need during a severe pandemic.
So why do we have stockpile upon
stockpile of arms and matériel for
combat against human foes, but only
a paltry supply of weapons against
pathogenic enemies that could poten-
tially claim millions more casualties?
It comes down to this: We have failed
to prepare for a war against microbes
with the same urgency and resolve
as we do a conventional war. And
the difference shows in the business
models we bring to each fight.
Even in non-pandemic times,
more than 85% of the critical acute
drugs needed each day to keep
people alive are produced offshore.
Nearly all are generic, with produc-
tion concentrated in China and
India. Sedatives critical to intubate
for ventilation, such as ketamine,
propofol, and pancuronium, are
already in short supply. Despite their
vital importance to our national
health, these fragile, just-in-time
supply chains show how reliance on
foreign on-demand manufacturing
leaves our country highly vulner-
able. During a pandemic such as
COVID-19, this vulnerability can
translate into tens or perhaps hun-
dreds of thousands of lost lives.
The only route to effective pre-
paredness is to institute a military
procurement and planning model
similar to what we do for conventional
warfare. This isn’t the first serious
This won’t
be the last
serious
pandemic to
hit American
shores. We
need to plan
ahead to
acquire the
weapons
we’ll need.
pandemic to hit American shores, and
it won’t be the last. We need to plan
and budget long-term for what we
know we’ll need and steadily procure
the right armaments. This model pre-
supposes a certain amount of waste
and spending on weapons that may
never be used. But that is a price we
have long been willing to pay on the
military defense side. The infectious
disease side should be no different.
Those who believe that the free
market alone can serve our needs are
likely failing to factor in the biologi-
cal complexity of the challenge we
face. For example, we desperately
need new antimicrobial drugs to
which the many disease-causing
bacteria, viruses, and parasites have
not yet developed resistance. But it’s
nonsensical to ask a pharmaceutical
company to spend billions of dollars
developing a powerful antibiotic—
then ask that it not be used or sold
except in the most extreme cases, so
the microbes won’t become resistant.
Similarly, the Pentagon doesn’t tell
companies to develop and manufac-
THE BIG IDEA
ture a new fighter plane and then
only later decide if it wants to buy it.
We need the same strategic capacity
for PPE and ventilators as we do for
rifles and tanks. The Defense Produc-
tion Act is a critical tool in wartime.
But it cannot magically make General
Motors or Ford able to produce ven-
tilators with more than 1,500 parts
sourced from scores of countries in
response to a fast-moving crisis.
The government needs to be a
partner in developing microbial
weapons and the muscle to quickly
produce and distribute them. How
might things be different if we had
taken SARS more seriously in 2002,
or MERS in 2012, and developed a
coronavirus vaccine platform, even
with little commercial market? We
may not have had a vaccine targeted
at COVID-19, but we would have been
many months further along. And
since it is beyond dispute that another
flu pandemic like the one in 1918–20
is a matter of when, not if, an urgent
large-scale enterprise to develop a
universal influenza vaccine could be a
tremendous gift to mankind.
Pandemics have become a threat
on the scale of thermonuclear war.
We must start treating them that way,
making the investment and ensuring
a stable supply chain for the tools and
weapons we’ll need. We can see the
consequences of past inattention right
now. We must not again allow the un-
thinkable to become the inevitable.
ABOUT THE WRITERS
Michael T. Osterholm is Regents Professor and
director of the Center for Infectious Disease
Research and Policy at the University of Minnesota.
Mark Olshaker is a writer and documentary film-
maker. They are the authors of Deadliest Enemy:
Our War Against Killer Germs.
 CONTENT FROM PGA TOUR
MAJOR
IMPACT
For the PGA TOUR, community outreach
is at the heart of the game.
ANY GOLFER WORTH HIS OR HER SALT
will tell you that impact is what truly counts.
It doesn’t matter whether your swing is Adam
Scott flawless or Jim Furyk funky—the moment
when club meets ball is where the rubber meets
the road. Impact is also an essential component
of the PGA TOUR. While the fans’ focus centers
on the competition, one of the TOUR’s main
intents is community outreach—in other words,
its impact on its host communities worldwide.
The scale of the TOUR’s charitable efforts since
Our players 1938? Three billion dollars and counting.
play a big role Consider the coronavirus pandemic, which
has upended every aspect of life. In mid-March,
in driving our the PGA TOUR was in the midst of its flagship
charitable championship, THE PLAYERS, held annually at
its TPC Sawgrass headquarters in Ponte Vedra
mission and Beach, Fla., when public health safety neces-
helping to sitated calling off the tournament after Thurs-
positively day’s first round. (The TOUR soon announced the
cancellation of events through late May.) Fans’
impact diverse disappointment was understandable, but perhaps
audiences.” the more significant potential knock-on effect
centered on THE PLAYERS’ charitable support.
ANNE DAVIS
DIRECTOR, PGA TOUR Would that likewise be canceled?
TOURNAMENT BUSINESS PGA TOUR commissioner Jay Monahan made
AFFAIRS, COMMUNITY
IMPACT clear that same Friday that it would not.
“Hold us accountable,” Monahan said.
DECISIVE ACTION
The next day, Monahan led the charge to back
up his words. He and more than 30 volunteers,
including PGA TOUR and THE PLAYERS staff, TPC
Sawgrass chefs, former volunteer chairmen, and
friends and family, went to the Sulzbacher Center
for the homeless and at-risk in neighboring
downtown Jacksonville to serve lunch,
donated by TPC Sawgrass and THE
PLAYERS’ two caterers, to some 250
people in need. Another week’s worth of
lunches went into the facility’s freezers
and walk-in refrigerator. It was, in golf
terms, an inspired piece of scrambling, as
food that would have been consumed by
fans at THE PLAYERS went to good use.
And it wasn’t just PGA TOUR manage-
ment lending a hand, as the organiza-
tion’s community-minded ethos extends
to the players too. Five-time TOUR winner
and area resident Billy Horschel, along
with his wife and daughters, helped
workers load food onto a semitrailer to
be shared with the Feeding Northeast
Florida community food bank. Horschel
also donated $20,000 of the $52,500 he
earned from the canceled championship to the
food bank, distributing the rest among other
charitable causes.
Volunteers play a critical role as well. Without
the dedication of more than 2,000 volunteers
annually at THE PLAYERS, for example, the event
couldn’t possibly have produced the record $9.25
million it generated for local nonprofit charities in
2019, nor the more than $100 million it has pro-
duced since the tournament’s 1974 launch.
By the time the 2020 PLAYERS would have ended,
22 tons of food, worth $700,000, had gone to
Feeding Northeast Florida and its network of
agency partners, like the Sulzbacher Center, with
less fanfare than a tournament-winning putt but
far more import.
“Our players play a big role in driving our
charitable mission and helping to positively
impact diverse audiences,” says Anne Davis,
director, PGA TOUR Tournament Business Affairs,
Community Impact, “and our more than 100,000
volunteers are vital to our ability to improve lives,
enrich communities, and honor the game of golf
and its values.”
IMPACT OF ALL KINDS
The game of golf requires a variety of shots
to achieve mastery, each demanding a differ-
ent type of impact. The same can be said of
the TOUR’s community outreach, which seeks a
footprint both deep and wide. This holds true for
every tournament, each of which aids an array of
local endeavors.
“The PGA TOUR supports a broad range of
causes and organizations in every tournament
community—from small grassroots nonprofits to
 1 2

3 4

6 5

local chapters of major national charities, primary youth-entrepreneurship program. Boys and Girls 1. BILLY HORSCHEL AND
HIS DAUGHTERS LOAD
charitable host organizations, and fundraising Club of St. Augustine. Two charter schools, KIPP A FEEDING NORTHEAST
organizations,” Davis notes. “Every tournament is and Tiger Academy, in underserved areas. FLORIDA TRUCK. 2. PHIL
MICKELSON VISITS WITH A
different, and every tournament community has On the health care front, THE PLAYERS re- YOUNG CANCER SURVIVOR AT
different needs.” cently gave $1 million to Flagler Health+ THE PLAYERS. 3. YOUTH AT
THE PLAYERS CHAMPIONSHIP
THE PLAYERS can tell that story too. Beyond Foundation to help create a mental health pro- BOYS & GIRLS CLUB OF ST.
food security efforts, the tournament’s charitable gram in St. Johns County schools that addresses AUGUSTINE. 4. PGA TOUR
COMMISSIONER JAY
investments have benefited nonprofit organiza- the growing suicide rate among teens. Nemours,
MONAHAN SERVES MEALS
tions that promote youth education, character a nonprofit pediatric health system, received AT A CENTER FOR THE
development, health and wellness, and military a $500,000 donation to support the renova- HOMELESS AND AT-RISK.
5. THE PLAYERS AWARDED
support. And the breadth of support is impres- tion of the clinic lobby that welcomes children A $500,000 GRANT TO THE
sive: Dreams Come True, which fulfills the dreams from around the world impacted by hearing loss, MALIVAI WASHINGTON YOUTH
FOUNDATION TO SUPPORT
of children battling life-threatening illnesses. The cancer, and blood disorders. And the Northeast THE FOUNDATION’S NEW
MaliVai Washington Youth Foundation, started Florida Healthy Start Coalition received $100,000 TEEN CENTER. 6. “DREAMER”
DYLAN BROWNING POSES
by and named after the former tennis pro, which to help lower infant mortality rates. WITH RICKIE FOWLER DURING
received a $500,000 donation last year toward Professional golf certainly isn’t a matter of HIS DREAMS COME TRUE
VIP EXPERIENCE AT THE
completing a $5 million capital campaign, in life and death, but thanks to the PGA TOUR’s PLAYERS.
part for a new teen center. Junior Achievement, charitable efforts, it makes a positive impact, like
a financial literacy, workforce preparation, and a 300-yard drive straight down the fairway. ■
3 8 FO R T U N E M AY 2 0 2 0

T H E C O R O N AV I R U S EC O N O M Y

HOW AMERICA
WILL RECOVER
ON THE SURFACE, the U.S. economy might appear frozen in place.
In order to slow the spread and lessen the damage of a global pan-
demic—that as Fortune went to press had tragically taken the lives
of some 25,000 Americans and another 100,000 people around the
world—the nation has collectively pressed pause. Social distancing
has, by necessity, shuttered restaurants, suspended sports leagues,
and grounded the travel industry with shocking suddenness. But
the crisis has also sparked fast-moving innovation. In that sense, the
business world is hardly standing still—and that forward motion will
be crucial to the economy’s recovery. ¶ To get a clearer picture of how
the pandemic is reshaping business in real time, we dove into a range
of industries—from energy to pharma to retail. Read on for examples
of how companies are rapidly adapting to the new normal and pre-
paring for life after the coronavirus.

A ‘GREEN’ SILVER 86 THE A MARKET SELLOFF, AIRLINES

INSIDE
40 LINING TO AN
OIL-PATCH CLOUD
44 RESTAURANT
INDUSTRY?
46 SECTOR BY SECTOR
BY BRIAN O’KEEFE &
48 PLOT A NEW
TRAJECTORY
NICOLAS RAPP
BY JEFFREY BALL BY EMMA HINCHLIFFE BY VIVIENNE WALT
 FINTECH’S THIS TIME THE RETAIL LOOKS TO APPS WILL MEDICINE MAKERS
50 BIGGEST TEST
BY JEN WIECZNER
52 BANKS WERE READY
FOR A CRISIS
54 IN AN ANXIOUS ERA
BY PHIL WAHBA
56 COME TO THE RESCUE?
BY SY MUKHERJEE
BY SHAWN TULLY
I L L U ST R AT I O N BY N I C O L A S O R T E G A
 4 0 FO R T U N E M AY 2 0 2 0
ENERGY
A ‘GREEN’ SILVER LINING
TO AN OIL-PATCH CLOUD
Plummeting prices and consumer demand are squeezing Big Oil
like never before. But those forces are also making renewable energy
a more attractive investment for the industry’s biggest players.
BY JEFFREY BALL
I
IN MARCH, FRENCH PRESIDENT Emmanuel Macron went on
national television from the Élysée Palace and told his coun-
trymen that in the fight against the coronavirus, “We are
at war.” Three days later, Patrick Pouyanné, chief executive
of French oil giant Total, delivered to his roughly 100,000
employees a video message about the energy rout that was
no less blunt. The price of oil had collapsed, “halving our
share price,” noted the visibly pale CEO, speaking from the
Total Tower in Paris into a microphone he was clutching
in his right hand, in the style of a talk-show life coach. To
stanch the bleeding, Total for 2020 would slash its capital
spending more than 20%, nearly triple its planned cuts in
operating expenses, and suspend share buybacks.
But one thing Total would not do, Pouyanné told his
workers, was cut spending on its “new energies” division,
a unit that includes investments in solar, wind, and bat-
teries. That unit, Pouyanné declared, “will be safeguarded,
as we must prepare for the future.” The upshot: This
year, the approximately $2 billion Total will spend on its
renewable-energy and energy-storage forays will account
for about 13% of the company’s capital spending—a share
that once would have been all but in-
conceivable for a fossil-fuel producer.
Long before this spring’s epic
oil-price crash, the energy sector
was struggling with a longer-term
existential threat. Gone were the good
old days, when oil consumption grew
inexorably and the nations and corpo-
rations that controlled the most juice
minted the juiciest profits. A scary
new world had arrived, one in which STANDING TALL
oil demand was projected to peak in A wind farm
near Palm
the next couple of decades even as ex- Springs. The
ternal pressure surged—not just from ripple effects of
environmental activists and regula- the coronavirus
tors, but also from central banks and crisis have raised
hedge funds—for Big Oil to diversify the profile of
renewable-
into lower-carbon energy sources. energy projects,
That pressure already had begun both in local
to reshape the industry’s business power supplies
strategy. Today’s energy-market car- and in oil giants’
investment plans.
nage shows every sign of intensifying
that low-carbon shift.
The plummeting oil price has
changed the return-on-investment
ROBERT ALE X ANDER—GET T Y IMAGES
calculus for both oil executives and
mainstream investors. It has slashed
the profit margins of many petroleum
projects to the lower levels long typical
of renewable-energy projects. But
the greener projects, because they
typically sell their energy under much
longer-term contracts than are com-

mon in the oil industry, remain lower-
risk. And the oil majors’ long-term
clean-energy activities are relatively
unaffected by the companies’ short-
term spending cuts, because those
cuts aim to minimize the amount of
petroleum the firms bring to market
at today’s suddenly depressed prices.
Right now, the oil industry is reel-
ing from a one-two punch: a supply
surge sparked by brinkmanship
between Saudi Arabia and Russia,
and demand destruction amid a likely
recession set off by the coronavirus.
The price of Brent crude, the interna-
tional benchmark oil, cratered 52%
between March 3 and April 1, and
prices per barrel were languishing
around $30s in mid-April. Global oil
consumption, whose growth has been
slowing for several years, actually will
fall in 2020, the first full-year drop
since the global financial crisis, the
THE CORONAVIRUS ECONOMY
International Energy Agency projects.
Major oil companies have scurried to
retrench as their stock prices tanked;
Exxon Mobil announced in April
some of the deepest cuts, pledging
to ax 2020 capital spending 30%, to
$23 billion. Some smaller firms have
begun filing for bankruptcy, among
them Whiting Petroleum, a once-
high-flying producer in the North
Dakota–focused Bakken shale play.
As has happened so often before
in the oil patch, boom has turned to
bust. The industry was hoping that a
mid-April agreement to curb produc-
tion, particularly by Saudi Arabia,
would buoy prices. But the industry’s
underlying challenges remain: plenti-
ful supply and slowing growth in de-
mand. Particularly hard hit will be the
Permian Basin, a storied and prolific
oil zone spanning western Texas and
eastern New Mexico. Retrenchments
by major Permian producers Exxon
Mobil, Chevron, and Occidental
Petroleum foreshadow spending cuts
in the basin this year totaling many
billions of dollars.
Ken Winkles feels the coming
crunch from his office in Pecos, Texas,
in the Permian’s heart. Until recently in
Pecos, throngs of oilfield workers had
the bunkhouses known as “man camps”
bursting, the burger joints breaking
records, and the traffic snarled. All
that is now dissipating. In March, in
an ominous early indicator, the num-
ber of drilling-rig permits granted
in the county was down 38% from
February 2020 and 59% from March
2019. Winkles, executive director of the
Pecos Economic Development Corp.,
considers himself an optimist. But he’s
also a realist. “We’re just in the begin-
ning of the slowdown, crash, whatever
you want to call it,” he tells me.
4 2 FO R T U N E M AY 2 0 2 0
$447,612,200,000
DECLINE IN MARKET VALUE OF THE STOCKS IN THE S&P 500 ENERGY SECTOR, MARCH 2 TO MARCH 18, 2020
The bust came fast. When Chevron
held its annual investors’ meeting in
New York on March 3, amid mount-
ing concern about the coronavirus,
it forsook handshakes, prompting
executives and analysts to greet each
other with elbow bumps. Still, the
bumpers were bullish. Executives
whipped through slides outlining
investment plans that assumed Brent
would remain at $60 a barrel.
Three days later, the Saudi-Russia
fight sent oil prices through the floor.
On March 24, Chevron, scrambling
to regain its bearings, announced it
would cut its 2020 capital-spending
budget 20%, to $16 billion. The cuts
will focus on short-term production—
nearly half will come by curbing pro-
duction in the Permian Basin. They’ll
also include layoffs. This downturn is
“the most difficult one the industry has
faced,” Pierre Breber, Chevron’s chief
financial officer, tells me. “Assuming
that oil stays at $30 for two years is
certainly a stress case that we need to
have our arms around.”
But Breber says Chevron’s long-
term plan to cut its carbon intensity
is “largely intact.” Those plans include
retrofitting oil-drilling operations
to make them more energy-efficient.
Chevron is also ramping up, notably
at a massive natural-gas field off the
coast of Australia, a technology called
“carbon capture and sequestration,”
which grabs carbon-dioxide emissions
and shoots them underground—an
approach many scientists see as es-
sential to curbing climate change.
THE CORONAVIRUS ECONOMY
HE VIRUS-DRIVEN
economic slowdown,
T too, is highlighting the
competitiveness of
renewable energy—
particularly in electricity markets,
where oil companies increasingly are
deciding they must play. In many
parts of the world, power demand
has fallen. Those declines have had
the effect of increasing the percent-
age of power in those markets that’s
supplied by solar and wind, both
because their fuel is free and because
of production subsidies they get. The
global crash has “fast-forwarded
some power systems 10 years into the
future,” Fatih Birol, the IEA’s
executive director, wrote in a March
analysis, “suddenly giving them levels
of wind and solar power that they
wouldn’t have had otherwise without
another decade of investment.”
A case in point is California, long a
green-energy leader. As of mid-April,
with the state’s population under
shelter-in-place orders, weekday
electricity demand was down 5% to
8% below normal levels, according
to the state’s power-grid manager,
the California Independent System
Operator. Renewable-energy genera-
tors typically sell their power to the
grid at lower prices than fossil-fuel
generators do, because their energy,
unlike fossil fuel, is lost if they don’t
use it. So “it’s a reasonable conclu-
sion that renewables are serving a
higher percentage of the load than
they would otherwise,” Steve Berb-
SOURCE: BLOOMBERG
erich, chief executive of the opera-
tor, tells me. That has amplified the
problem that, at times of particularly
strong sunshine or wind, renewable-
energy sources generate more power
than California can use. And that
highlights the rising importance of
improving the nimbleness of power
grids—with technologies such as
energy storage—to accommodate
greater supplies from renewables.
Renewable-energy projects
aren’t immune to the global eco-
nomic shock. Overall growth in
solar-panel and wind-turbine sales
is slowing from its recently torrid
levels, as factories, shipping, and
electricity demand take a pause. At
France’s Total, executives say that
construction delays are likely for
some solar and wind farms because
coronavirus-related restrictions
are waylaying workers. In a sense,
though, that’s a sign of the prog-
ress that clean-energy technologies
have made: Once a rounding error,
they’re now significant enough as
industries that they’re as exposed
to macroeconomic forces as are the
fossil-fuel behemoths.
The headwinds for clean energy,
moreover, are relative. As oil heads
for its worst year in recent memory,
solar and wind installations remain
strong, according to Wood Macken-
zie. Global solar projects will dip a
bit in 2020 before resuming quick
growth next year, the research firm
projects, and wind installations will
post a new yearly record.
 182
100

JODI, heart attack and stroke survivor.

THIS IS WHAT HIGH BLOOD PRESSURE LOOKS LIKE.

You might not see or feel its symptoms, but the results – a heart attack or stroke – are far from invisible or silent.
If you’ve come off your treatment plan, get back on it, or talk with your doctor to create a new exercise,
diet and medication plan that works better for you.

Go to LowerYourHBP.org before it’s too late.

 4 4 FO R T U N E M AY 2 0 2 0
RESTAURANTS
86 THE RESTAURANT
INDUSTRY?
The virus has done something no other attack or downturn could:
all but shutter the food-service sector. How can a business dedicated
to bringing people together survive a disease that keeps us apart?
BY EMMA HINCHLIFFE
T
THE CORONAVIRUS RECESSION has
left no industry untouched, but the
restaurant business is arguably the
hardest hit so far. The food and
beverage sector accounted for 60%
of the jobs lost in March, the first
wave of the tsunami that has since
prompted 16.8 million Americans to
apply for unemployment. The impact
on those workers foreshadows a su-
persize blow to the economy at large.
The restaurant industry—which in-
cludes five chains large enough to ap-
pear in the Fortune 500—contributes
an estimated 4% of the U.S. GDP, or
roughly $1 trillion.
To get a sense of the ways in which
the industry has been impacted—
and how it might ultimately pick up
the pieces, Fortune spoke to three
restaurateurs, each leading a very
different type of establishment.
BRIAN NICCOL
Chairman and CEO, CHIPOTLE
NATIONAL CHAIN — 2,600 LOCATIONS
$5.6 BILLION IN ANNUAL REVENUE — 85,000 EMPLOYEES
THE IMPACT OF THE VIRUS ON CHIPOTLE and its employees
“breaks my heart,” says Brian Niccol. The crisis comes at a particu-
larly frustrating time for the new CEO, who was guiding the chain
past its earlier food safety issues by redesigning restaurants and
rolling out new menu items like carne asada—changes that helped
provide a 15% bump in revenue last year.
“We’ve kind of hit the pause button on those things,” he says. In-
stead, Chipotle, like its chain-restaurant peers, is focused on adapt-
ing to the new reality: plunging consumer demand and a workforce
increasingly concerned about its health and safety—not to men-
150
tion longer-term job security. The brand has reduced hours at 10%
$ of its stores and closed 3% of locations—mostly those in shuttered
malls or shopping centers—furloughing those employees. The rest
NIC COL: COURTESY OF CHIP OTLE
of the hourly workforce, still coming in, received a 10% pay bump
BILLION through mid-May; Chipotle employees typically get three days of
sick leave, and now those working during the crisis are eligible for
up to two weeks of sick pay, depending on their work schedules.
Estimated cash
flow required Some long-term changes to the company may be positive, Niccol
for independent says. More diners are now turning to the chain, traditionally a lunch
U.S. restaurants staple, for dinner, he notes. Digital orders—already up 90% last
to pay all current year to 18% of total sales—will, he expects, become a permanent
expenses consumer habit (although that revenue stream largely depends
 THE CORONAVIRUS ECONOMY

on the continued success of partners

like Uber Eats). Niccol also predicts that
restaurant industry employees, burned by
rapid layoffs at other companies, may start
paying closer attention to the financial
health of their employers (Chipotle has
prioritized a healthy balance sheet as it has
recovered from its 2015 E. coli outbreak):
“Employees are going to have a closer eye
on, ‘What is the health of my company?
How good of a cash position are they in in
the event of a crisis?’ ”

TOM COLICCHIO
Owner, CRAFTED HOSPITALITY
MIDSIZE RESTAURANT GROUP —
5 CRAFTED HOSPITALITY LOCATIONS
4 ’WICHCRAFT LOCATIONS — 475 EMPLOYEES

TOM COLICCHIO has high standards—

for his staff, for Top Chef contestants, and
for the nation’s lawmakers. As one of the
founders of the newly created Independent
Restaurant Coalition (IRC), the Crafted Hos-
pitality and ’Wichcraft owner has become
a spokesman for the sector’s 11 million or
so servers, chefs, kitchen staff, and hosts,
and is calling for government support.
“Without help, the restaurant industry is
going to be decimated,” he says. Colicchio
is lobbying for changes to Congress’s
CARES Act that account for the particulari-
ties of running a restaurant. For instance,
COLIC CHIO: SMALL Z & R ASKIND/BR AVO/NBCU PHOTO — GE T T Y IMAGES; TSAI: YIN CHANG
NEIGHBORHOOD
FIXTURE:
MOONLYNN TSAI, Co-owner, KOPITIAM
Kopitiam’s INDEPENDENT RESTAURANT — 1 LOCATION — 28 EMPLOYEES
Moonlynn Tsai in
New York City’s IT WAS ONLY JANUARY when Manhattan’s Chinatown, home to
Chinatown. Moonlynn Tsai’s Malaysian coffeehouse and restaurant, first felt
the sting of the coronavirus. Diners, concerned about the new
disease in China, began avoiding the area—despite an utter lack of
evidence that the virus was present in the neighborhood.
Three months later, Kopitiam—named for the Hokkien word
for coffeehouse—remains open, but it’s making less than 5% of

the legislation forgives loans for compa-
nies that keep employees on the payroll for
at least eight weeks after disbursement;
many restaurants need the money now but
suspect that it will take far longer to return
to business as usual. Colicchio opted to
close the doors of his establishments on
March 15, sending his nearly 500 employ-
ees to file for unemployment rather than
try to transfer to a takeout model as some
of his fine-dining peers have done. The
risk outweighed the pros of staying open,
he says: “I couldn’t live with myself if, for a
couple thousand dollars a night, someone
may end up on a respirator.”
The IRC is pushing for new tax rebates
and other longer-term support, but for
Colicchio, the immediate priority is
keeping the industry—and its role as
a community touchstone—alive. “Our
neighborhoods without restaurants
aren’t neighborhoods,” he says. “Our
buildings with ground floors empty—
that just feels like the city is dead.”
its usual sales. The beloved eatery, first opened in 2015, is deeply
entrenched in the community. Its staffers are a mix of local high-
schoolers and elderly residents, and Tsai and her business partner,
chef Kyo Pang, are trying their hardest to continue serving their
neighbors. The pair furloughed their staff on March 17, days after
New York City ordered restaurants to close, but paid all employees
through April 1. They’ve tried to keep some revenue coming in
with takeout orders, as well as gift cards and special offers like an
at-home kit to build the restaurant’s famous kaya jam toast. But the
challenges continue. Tsai said suppliers have gone from delivery
every day to three times a week. In just a month, Kopitiam burned
through all its savings from the past two years.
Looking ahead, Tsai fears for her fellow Chinatown establish-
ments. If her restaurant—fawned over by food critics and with a
savvy digital presence—can’t weather the storm, what will happen
to others?
As for Kopitiam, she’s not ready to think beyond the next days.
“I’ve learned to numb myself. If I start sitting still, all the emotions
are going to come,” Tsai says. “We were hoping by now we could
expand, but everything we had for that has been wiped out. If this
happens again—how do we make sure we’ll be okay?”
4 6 FO R T U N E M AY 2 0 2 0

MARKETS SECTOR PERFORMANCE P/E RATIO LEVELS

DURING RECENT
LOWEST RECORDED APR. 9, 2020
BEAR MARKETS IN PREVIOUS TWO

A SELLOFF, BEAR MARKETS* 2020 RANGE

SECTOR 0 10 20 30 40 50x

BY SECTOR DOW JONES INDUSTRIAL AVERAGE

RUSSELL 2000
INDEXES
S&P 500
THE DIVE INTO THE RED
was sudden and across- GLOBAL EQUITY (MSCI WORLD)
the-board. As the coro-
navirus crisis escalated,
U.S. stocks plunged from MEDIA & ENTERTAINMENT
an all-time high on Feb. 19 COMMUNICATION
into a bear market. To TELECOMMUNICATION SERVICES
put the historic rever-
sal in perspective, we AUTOMOBILES & COMPONENTS
crunched the numbers CONSUMER DURABLES & APPAREL
CONSUMER
for all 24 of the S&P 500 DISCRETIONARY
industry categories com- CONSUMER SERVICES
pared with the past two
RETAILING
market collapses.
FOOD & STAPLES RETAILING
CONSUMER
O FAR,this STAPLES FOOD, BEVERAGE & TOBACCO
year has
S already
featured the
HOUSEHOLD & PERS. PRODUCTS

ENERGY
worst month BANKS
for stocks (March) since FINANCIALS DIVERSIFIED FINANCIALS
October 2008 and the
best week (early April) INSURANCE
since 1974. But as chaotic HEALTH CARE EQUIPMENT & SERV.
and painful as the market HEALTH CARE
PHARM BIOTECH & LIFE SCIENCES
swoon has been, it hasn’t
yet surpassed the last CAPITAL GOODS
major meltdown. Only INDUSTRIALS COMMERCIAL PROFESSIONAL SERV.
one industry has plunged
TRANSPORTATION
further from its high than
it did during the Great SEMICONDUCTORS
Recession of 2007 to I.T. SOFTWARE & SERVICES
2009—energy, thanks to
TECHNOLOGY HARDWARE
an oil price war this spring
between Russia and Saudi MATERIALS
Arabia. Stock valuations, REAL ESTATE
as measured by price/
UTILITIES
earnings ratios, have
stayed relatively buoyant
too. Of course, it could be GOLD
early days. The bear
OIL
market that began in 2007
lasted 517 days. And it BONDS
took 929 days to start a
new bull market after the 0 10 20 30 40 50x
dotcom bubble burst. The
CHART: NICOLAS RAPP WITH SCOTT DECARLO * 2000 AND 2007 BEAR MARKETS. LOWEST P/E LEVELS
good news: In both cases, SOURCES: BLOOMBERG; YARDENI RESEARCH IN THE PERIOD 2000–04 AND 2007–11
stocks eventually soared
again. —Brian O’Keefe
 CHANGE IN PRICES: DEPARTURE FROM MARKET TOP

LOWEST BOTTOMS
+10% 0 –10 –20 –30 –40 –50 –60 –70% DURING ... DURING RECENT
BEAR MARKETS
2000 2007-

2007–09 GLOBAL FINANCIAL CRISIS

DOTCOM 2009
BUBBLE FINANCIAL

2000 DOTCOM BUBBLE BURST

FEB. 19 MARCH 2 MARCH 16 APR. 1 APR. 9 BURST** CRISIS***

2020 COVID–19 PANDEMIC

–36.7% (LOWEST LEVEL) –19.2% –34.4% –53.8%

–41.4% –26.3% –43.1% –59.4%

–33.9% –17.6% –49.1% –56.8%

–33.8% –19.0% –51.4% –59.0%

0
–30.4% –19.5% –63.8% –62.8%
–10
–23.0% –11.8% –75.0% –50.7%

–50.9% –31.7% –56.6% –84.6% –20

–46.0% –25.6% –14.7% –64.4%
–30
–47.6% –28.9% –23.2% –43.7%

–27.5% –13.2% –31.0% –56.5%

–33.9%
–40
–15.5% –5.5% –22.6% –26.1%
–50
–30.7% –11.8% –2.2% –31.0%

–21.9% –9.2% –3.1% –37.3% –60%

–56.3% –37.0% –21.7% –47.8%

–47.4% –30.0% –12.1% –86.9% BEAR MARKET

LENGTH (DAYS)
–38.5% –19.3% –39.8% –83.0%
1,000
–43.1% –24.3% –19.6% –81.2%

–35.2% –13.6% –6.2% –48.1%

800
–21.8% –4.3% –26.4% –36.2%

–43.8% –25.2% –43.9% –68.6%

600
–37.0% –22.2% –16.7% –56.8%

–37.3% –23.5% –10.9% –51.1%

400
–35.1% –18.5% –84.0% –60.4%

–31.2% –16.0% –73.0% –50.5%

200
53****

–31.0% –17.2% –85.5% –53.3%

–36.4% –14.9% –24.8% –59.7%

0
–38.0% –13.8% –25.8% –75.5%
2000 DOTCOM BUBBLE BURST
2007–09 GLOBAL FINANCIAL CRISIS
2020 COVID–19 PANDEMIC

–35.9% –12.9% –47.7% –45.9%

–8.1% 8.0% –10.5% –4.4%

–62.3% –57.3% –37.7% –57.8%
–2.6% 2.0% –1.3% –0.1%

FEB. 19, 2020 MARCH 2 MARCH 16 APR. 1 APR. 9

** LOWEST LEVEL FROM 3/24/00 *** LOWEST LEVEL FROM 10/9/07 **** AS OF 4/12/2020. 53 IS THE NUMBER OF DAYS ELAPSED SINCE THE PREVIOUS TOP AS IT IS TOO EARLY TO SAY WHETHER
TO 12/31/03 FOR EACH SECTOR TO 12/30/11 FOR EACH SECTOR THE S&P 500 HAS LEFT BEAR TERRITORY AND IS NOW IN A BULL PHASE. COUNT INCLUDES WEEKENDS AND HOLIDAYS.
4 8 FO R T U N E M AY 2 0 2 0

AIRLINES

CARRIERS
PLOT A NEW HIS PAST JANUARY, as word of a deadly

TRAJECTORY
T
new virus began filtering out of China, the
business lounge at Hamad International
Airport in Doha, Qatar, was teeming with
people, coming and going from almost

POST- every point on the planet. Facing a long

layover on a reporting trip, I poured some
tea and sank into an armchair. Nothing, it

PANDEMIC seemed, could disturb such serenity. Ten

days later, our family took a weekend trip
from Paris to Kraków, Poland. Why not? The taxi to the
airport cost more than the tickets on low-cost airline Easy-
CLOUD S: Y IU Y U HO — GE T T Y IMAGES; DERMOT C ONL AN— GE T T Y IMAGES

Jet—the ninth carrier I had flown in 12 months.

Signs point to a long, slow recovery
and a shrinking of the industry
globally—with fewer airlines and
routes for travelers to choose from.
BY VIVIENNE WALT
I L L U ST R AT I O N BY J O S U E E V I L L A
Today that seems like a lost world—and it will not be
simple to find a way back to it. The ambient-lit Doha busi-
ness lounge, with its hot showers and solicitous concierges,
is a lot quieter these days, like the rest of the world’s travel
hubs. Now the question is, What kind of airline industry
will emerge once the pandemic and the lockdowns have
finally passed?
As the outlines of the answer begin to come into focus, it
looks like a screeching halt to the past decade’s travel boom.
Last year, passenger trips on U.S. carriers hit an all-time
peak of 925 million, with occupancy also at a record high

of 84.6%. Those figures are long
gone. “You will see airlines as smaller
versions of themselves, with fewer
airplanes operating fewer routes,” says
Henry Harteveldt, president of the
Atmosphere Research Group in San
Francisco. “Perhaps where there were
10 flights a day, now there will be six
to eight flights a day,” he says.
Meanwhile, there is a growing
debate, especially in the U.S., about
why taxpayers should be on the hook
to bail out major carriers. According
to the calculations of Washington Post
columnist Allan Sloan, the four major
U.S. airlines spent about 90% of their
profits during the roaring 2010s on
stock buybacks, even while earning
billions on fees for soggy sandwiches,
seat assignments, and checked
luggage. “They have done almost
everything possible to tell the public,
‘We don’t give a damn about you,’ ”
Harteveldt says. Fewer than half of
THE CORONAVIRUS ECONOMY
consumers surveyed by Fortune in
March said airlines deserved a bailout.
Yet the $2.2 trillion U.S. coronavirus
relief fund includes $61 billion for
the shell-shocked aviation industry.
And a host of U.S. airlines, includ-
ing American, Delta, Southwest, and
United, have applied for help.
Y APRIL , the airlines
had already drastically
B cut their fleets, in moves
that will likely far
outlive COVID-19.
American is opting to retire more
than 100 of its 900 planes, and Delta
says it is considering early retirement
of older aircraft. Manufacturers are
also bracing for tough times. GE
Aviation cut 10% of its staff in March
and furloughed half the others until
May. In April, Boeing offered all
employees voluntary buyouts.
That is just the start. Leaner and
poorer, airlines will tread with ex-
treme caution in putting planes back
in service, unless they are sure passen-
gers will fill them. In interviews, most
analysts believe the industry’s recovery
could take at least until 2022. Mean-
while, travelers will feel the difference,
as routes and flights shrink. “There
have been too many airlines in the
world,” says John Grant, vice president
of aviation analytics company OAG in
Luton, England. “The industry would
broadly agree with that.”
The overcapacity is especially acute
in Europe, where about 120 compa-
nies compete for business, compared
with the U.S., which has just four ma-
jor airlines and a handful of smaller
regional carriers. European govern-
ments have rushed to rescue flagship
airlines, with Germany offering loans
to Lufthansa, and Italy’s government
taking control of Alitalia. Even the
most glittering heavy hitters will not
escape pain. “We will be permanently
affected, with questions about chang-
es in travelers’ behavior,” Air France
CEO Anne Rigail said on April 7.
Indeed, the airlines’ losses are epic.
Brian Pearce, chief economist of the
925
MILLION
NUMBER OF PASSENGER TRIPS
FLOWN ON U.S. CARRIERS IN 2019,
AN ALL-TIME HIGH, WITH A RECORD
84.6% OCCUPANCY RATE
industry group IATA, estimates the
carriers will lose about $252 billion in
revenues this year and that without
government help, several “might not
be able to last” until next year.
In fact, dozens of airlines—espe-
cially low-cost tourist carriers—face
shaky prospects for survival. Some,
like EasyJet, have enjoyed years of
profitability. But Britain’s budget
regional airline FlyBe collapsed in
March as passengers vanished. And
others could find it difficult convinc-
ing governments that their survival
is essential. “Is it essential to have
9 pound ($11) flights to Majorca, or
nine flights a day to Lisbon?” says
Daniel Röska, senior airlines analyst
at Bernstein Research in London.
The problem airlines face is that
their ability to recover will most likely
rest on two factors, both of which are
completely out of their control: how
long it might take before people feel
comfortable boarding planes and
how much corporations will cut their
travel budgets.
Start with the first challenge. Being
sealed in an aircraft with dozens of
5 0 FO R T U N E M AY 2 0 2 0
strangers, whose health status is un-
known, may still feel like a high-risk
act even months after the pandemic
wanes. “There are very few economic
activities where people experience
such crowding as air travel,” says
Joseph Schwieterman, a transporta-
tion expert and professor at DePaul
University in Chicago. People will
want to travel again, he says. But true
ease, where people again fly carefree,
will likely require much more solid
assurance. “It will take medical break-
throughs,” he says.
That will take time. And until
vaccines and drug treatments are
developed, the second factor—
corporate travel—could determine
when airlines might recover. The two
are closely linked: So long as there
is some risk to travelers, companies
might hesitate to dispatch their em-
ployees, especially while trying to cut
costs in a recession.
The 2008 financial crisis and
Europe’s debt crisis of the 2010s bear
that out. Companies cut travel spend-
ing—at first temporarily, and then
more permanently. “That never really
came back,” Röska says. “Companies
adapted to a different spending policy,
with 20% less travel a year.” The tour-
ism surge cushioned the blow.
A decade on, the impact could be
even deeper, for one reason: better
technology. Since whole countries
began locking down in March, count-
less corporate meetings, and even the
leaders of the G7 nations and OPEC,
have convened online. Such meetings
are not quite as vibrant as the real-life
ones, but neither have they been too
disappointing. “Everyone is becoming
virtual, Zooming,” says Mark Man-
duca, managing director covering
airlines at Citi in London. “This has to
be a long-term effect.”
No matter how good your Wi-Fi
may be, spending hours on Zoom
Video doesn’t quite measure up to
the easy days before COVID-19—just
a few months ago—when business
lounges were packed and low-cost
weekend getaways seemed knitted
into our lives. But for the airline
industry, the return route will be
especially long and challenging.
FINTECH
FINTECH’S
BIGGEST TEST
HOMEBOUND CONSUMERS ARE RELYING
ON FINANCIAL UPSTARTS LIKE NEVER
BEFORE—EVEN TO GET STIMULUS
MONEY. IT’S A CHANCE FOR FINTECH TO
PERMANENTLY ENTRENCH ITSELF IN THE
MAINSTREAM. BY JEN WIECZNER
N THE WAKE of the
Great Recession, as
I lawmakers passed the
Dodd-Frank legislation
to rein in an ignomini-
ous financial industry,
one paragraph of the law also
validated a rebel contingent of
reform-minded entrepreneurs. The
passage mandated that banks must
make consumers’ data available to
them “in an electronic form.” And so
was born the fintech industry.
Now, as the novel coronavirus
presents the world with its biggest
economic challenge in more than a
decade, fintech is having a moment of
truth. Companies like SoFi, Robinhood,
Chime, and others were built on prom-
ises of providing consumers and busi-
nesses with easier access to money
in all its forms—investments, credit,
person-to-person payments—via the
Internet, and often without dealing
with a brick-and-mortar bank. With
the global economy largely on pause,
millions of people abruptly out of work,
and thousands of bank branches shut-
tered, the time for fintech to deliver
on those promises has arrived. As the
U.S. government passed a $2 trillion
stimulus package in March, including
forgivable small-business loans and
$1,200 checks for Americans, Treasury
Secretary Steven Mnuchin stipulated
that “any fintech lender will be autho-
rized to make these loans”—a historic
first. In April, these platforms earned
further validation when the Internal
Revenue Service allowed eligible
recipients to elect to receive stimulus
payments electronically—through
Square’s Cash App, for instance, or
Venmo—rather than by paper check.
PayPal, Square, and other fintech
players are heeding the call to help. In
between calls with the Treasury De-
partment, Dan Schulman, PayPal’s CEO,
has been holding daily videoconfer-
ences with employees from his home
office in California. “One of the things
I’m telling them is, this is our time,”
he tells Fortune via Skype. (For more
from the interview, visit Fortune.com.)
Even before the IRS began disbursing
stimulus money, Chime, the largest so-
called challenger bank in the U.S., went
out on a $20 million limb—giving more
than 100,000 customers immediate
access to as much as $1,200 through
an interest-free payday advance. “We
felt that this could create some sort of
industry movement,” says Chris Britt,
Chime’s CEO.
Indeed, consumers holed up at
home are relying on financial apps
in record numbers. New sign-ups at
PayPal, along with its peer-to-peer pay-
ment app Venmo, have been double
the pre-pandemic norm on recent
days. They’re also using the apps in
ways they weren’t designed for, such
as to donate money to struggling
individuals or to fund needed equip-
ment for health care workers—totaling
tens of millions of dollars. When Taylor
Swift, the pop star, recently sent a
surprise $3,000 “gift” to dozens of
her fans who’d lost jobs or income as a
result of the coronavirus, she did it via
PayPal. It’s no coincidence that Venmo
payments using the medical-mask
emoji surged 375% in March, accord-
ing to the company.
The crisis has become a proof-
of-concept for fintech, one likely to
change the way people bank and
move their money even after they
can visit a teller in person again. Says
Zach Perret, CEO of Plaid, a startup
whose software powers virtually all
the major U.S. fintech apps (and which
was recently acquired by Visa): “This
shutdown time, I’ll suspect we’ll look
back and say this was one in which
digitalization really accelerated.”
 Without A, B and O,
we can’t save anybody.

Only 3 out of 100 Americans donate blood—and that’s not enough to help patients in need.

Without more donors, patients will not have the type A, B, O or AB blood they need.
<RXFDQKHOSÞOOWKH#MissingTypes this summer. Make a blood donation appointment today.

RedCrossBlood.org/MissingTypes
5 2 FO R T U N E M AY 2 0 2 0 THE CORONAVIRUS ECONOMY

WALL STREET
OR THE PAST DECADE , the big U.S. banks have

F
endured arduous annual Federal Reserve

THIS TIME, “stress tests” gauging their strength to weather

another Great Recession–like crisis. Critics
groused that forcing financial titans to build

THE BANKS gigantic war chests—modeled to withstand

a replay of double-digit joblessness and an
eight-point drop in GDP—was unneces-
sarily cautious. But, lo and behold, banks

WERE READY are suddenly confronted with a scenario even worse than
the regulators’ worst case. “The banks were kicking and
screaming while the government made them build capital

FOR A CRISIS
Thanks to a decade of scrutiny on top
of a golden era of growth, the industry’s
Big Four are well positioned to withstand
a severe downturn—and capitalize on
Washington’s stimulus plan.
BY SHAWN TULLY
$1.4
WEX
$1.3
SMALL-BUSINESS LOANS AS A % OF ALL LOANS
and liquidity,” says Mike Mayo, an analyst with Wells Fargo.
“But that’s why they’re in such good shape today.”
Indeed, the stress-test policy appears absolutely crucial
now, given the damage that the coronavirus pandemic is
unleashing on Wall Street. From the start of 2020 through
early April, the KBW banking index dropped 33.6%—20
points more than the S&P 500. JPMorgan Chase CEO
Jamie Dimon warned in his annual letter that the bank’s
earnings would “be down meaningfully” this year, con-
ceivably endangering its dividend. And both boutique
firm Wolfe Research and investment bank KBW forecast
that profits for the Big Four banks—JPMorgan, Bank of
America, Citigroup, and Wells Fargo—could crater more
than 60% if a recession extends into 2021.
The crisis has pushed the major commercial and invest-
ment banks into a new cycle of much lower earnings. But
in a reversal from 2008, their profits should remain posi-
tive even in the direst scenario. Plus, they’re entering a
sharp downturn flush with capital and liquidity. Whereas
STEARNS Wall Street was the problem in the Great Recession, today
the lenders and underwriters have the resiliency to be
part of the solution—as conduits for channeling as much
as $4 trillion in emergency funding to businesses large

and small, and continuing to extend credit to their regular

customers, from automakers to hairdressing salons.
The banks built up their finances in what has been a

EVERY CIRCLE
REPRESENTS
BANCORPSOUTH A BANK SMALL-BUSINESS LOAN EXPOSURE FOR U.S. BANKS

FIRST CITIZENS
$3.9
$6.7 TOTAL AMOUNT OF SMALL-BUSINESS LOANS OUTSTANDING

TRUIST U.S. BANK

BMO HARRIS CAPITAL ONE BANK NATIONAL
$8.1 ASSOCIATION

$8.8 CITIBANK
$17.7
$13.4
$8.1

SMALL-BUSINESS LENDING BY BANK

G R A P H I C BY N I C O L A S R A P P
near-golden period for the industry
over the past 10 years. They ben-
efited from a combination of a strong
economy and conservative manage-
ment—partly dictated by the Fed, and
partly imposed by such leaders as
Dimon and BofA CEO Brian Moyni-
han. Banks diversified into areas that
generated steady earnings, notably by
building and buying wealth manage-
ment franchises. Most of all, pushed
by the stress tests, the banks shored
up their capital. From late 2008 to
2019, equity capital as a share of the
balance sheet rose 51% at JPMorgan,
more than doubled at BofA and Wells,
and tripled at Citi. Entering 2020,
the big banks boasted their strongest
capital levels since 1940.
That staying power is crucial to
seeding a recovery. The major banks
are a giant source of funding to
small- and medium-size businesses,
or SMEs—typically enterprises
that employ up to 10,000 and issue
paychecks for over 70% of U.S. work-
ers. At year-end 2019, the Big Four
held $836 billion in “commercial and
industrial” or C&I loans to SMEs.
That was 45% of the total for all U.S.
banks. The Big Four also provide the
likes of hotel owners and develop-
ers $422 billion in financing, equal
to 28% of all commercial real estate
lending provided by America’s banks.
The economy’s shutdown is starv-
ing SMEs for cash. The stimulus
plan marshals the banks to originate
and service government-guaranteed
loans to as many as 17 million of
these enterprises. The aid designed
to flow through the lenders comes
AMERICAN EXPRESS
JPMORGAN CHASE
PARTLY DICTATED
BY THE FED,
THE BIG BANKS
ENTERED 2020
BOASTING THEIR
STRONGEST
CAPITAL LEVELS
SINCE 1940.
via two main vehicles. The first is
the $349 billion Paycheck Protection
Program (PPP). It makes loans of
up to $10 million mostly to compa-
nies with 500 or fewer employees.
And if a company’s payroll stays the
same for eight weeks after it gets a
loan, the debt is forgiven. The PPP
is a good thing for America’s banks,
including the Big Four. The lenders
take no credit risk, and, according
to interviews with bankers, the fees
paid to originate the loans make them
profitable, especially for amounts up
to $2 million.
Since most of the loans are likely
to become grants, the PPP will help
bridge their clients through to the
recovery without adding to their debt
load. Plus, fragile businesses can use
the new loans, charging 1% interest,
to pay the interest on existing, at-risk
borrowings at, say, 4% or 5%—lift-
$28.6
WELLS FARGO
$34.5
$29.4
SMALL-BUSINESS LENDING BY BANK
ing their cash flow. Put simply, the
PPP lowers the banks’ credit risk by
providing either grants or cheaper,
guaranteed financing to small busi-
nesses, and lowering the number of
bad loans going forward.
HE SECOND PROGRAM is
T
less of a slam dunk for
banks. The Main Street
Lending Program will
extend loans to
medium-size businesses employing up
to 10,000 people. For the Big Four,
that category is several times the size
of their small-business books. The Fed
is providing the cash and the Treasury
is guaranteeing 95% of the financings;
the banks will keep just 5% on their
books. Under the Fed’s plan, up to
$600 billion in Main Street loans will
be offered. But these loans are a
different species from the relief
offered by the PPP. The borrowers
have to repay the government. If they
default, the U.S. can protect taxpayers
by seizing assets or forcing them into
bankruptcy.
For the banks, the Main Street
program could pay off by support-
ing their clients through a few more
difficult months. But if a recession
stretches into late this year or beyond,
many struggling, overleveraged com-
panies might need to seek additional
emergency funding. That would cre-
ate a quandary for the banks, who will
certainly face intense pressure from
regulators to make the loans. In that
scenario, the banks will need to draw
on every bit of the financial strength
they built up over the past decade.
SOURCE: WOLFE RESEARCH
BANK OF AMERICA
$38.9
 5 4 FO R T U N E M AY 2 0 2 0
RETAIL
NEXT-GEN APPS
TO EASE NEW ANXIETIES
Even after the coronavirus crisis ends, shoppers may be reluctant
to spend time in physical stores. The retailers who are smartest
about technology will get the most out of their bricks and mortar.
BY PHIL WAHBA
I
IT MAY BE A MISNOMER to call anyone in retail a “winner”
right now, when stay-at-home and social-distancing
measures have shut down hundreds of thousands of U.S.
stores and threatened consumers’ spending for the foresee-
able future. But look at the few chains that have managed
relatively well in this chaotic time, and you’ll gather clues
about what it will take to come out ahead in the industry,
both now and long after the virus has been contained.
Walmart’s U.S. sales reportedly jumped 20% in March
as people stocked up on essentials—further boosted by a
190% increase in monthly downloads of its online grocery
app, according to data tracker App Annie. Nike kept its
China business from stalling, thanks to a fitness app that
helped homebound consumers do quarantine workouts.
And Lululemon Athletica has even reopened a few North
American stores, not to serve walk-in customers, but to use
inventory to fill online orders more quickly.
What these cases make clear is how central the full inte-
gration of stores and shopping technology has become to
big retailers’ health. “The retailers that were already doing
it successfully are the ones that are
going to recover much more quickly,”
says Kimberly Becker, senior research
director with Gartner. And in a future
when shoppers are likely to be skittish
about staying long in any store—if
they visit at all—only the tech-savvy
chains will survive.
The big-box retailers proved their
mettle during the rush on stores in
March, as Americans stripped shelves
of essentials like toilet paper and
baker’s yeast. While lengthy waits
for delivery were thwarting many
e-commerce shoppers, Target and
Walmart succeeded by offering drive-
up retrieval for online orders through
their apps. (This will become increas-
ingly important now that both chains
are limiting the number of shoppers
P H O N E : C O U R T E S Y O F A P P L E ; S H O E S : A L A N D AW S O N — A L A M Y
allowed in stores at any one time.)
And the fact that the chains now hold
much more of their e-commerce
inventory in stores than they once
did helped them avoid shortages.
“Because we’re using stores as local
fulfillment hubs, we’ve been able to
handle sustained, holiday-like online
volumes,” Target chief operating of-
ficer John Mulligan tells Fortune.
Crisis-related changes in shop-
ping habits have also accelerated a
less-is-more approach to product

selection. To keep shelves well-
stocked, retailers have worked closely
with suppliers to limit the variety of
sizes, colors, and flavors of all sorts of
goods, focusing only on those most
consistently in demand. Unilever, for
example, said last month it would
concentrate mostly on large sizes of
its products, like 30-ounce jars of its
Hellmann’s mayonnaise, to speed up
production and distribution.
Retailers like Walmart and super-
market giant Kroger have long been
shifting in this direction, opting to
devote more shelf space to bestsell-
ers rather than stocking 50 varieties
of the same detergent. “There’s been
a slow bleed of taking out the stuff
that’s just another color or another
flavor and isn’t pulling its weight,”
says Laura Kennedy, lead consumer
and retail analyst at CB Insights.
Increasingly, if you crave a company’s
seventh-bestselling sandwich cookie,
you’ll have to find it on the Internet.
61%
SHARE OF U.S. RETAIL LOCATIONS—
258,366 STORES AS OF MID-APRIL—THAT HAVE
CLOSED BECAUSE OF COVID-19 PRECAUTIONS
SOURCE: GLOBALDATA RETAIL
Technology is helping retailers
wring more revenue out of their
inventory. Lululemon has invested
heavily in RFID (radio-frequency
identification) tech, enabling it to
THE CORONAVIRUS ECONOMY
know in real time where every hoodie
or sports bra is, whether at a distribu-
tion facility or in a store. That’s mak-
ing it much more efficient in filling
online orders from physical stores, at
a time when e-commerce is its only
source of income. “The race is, How
much cash can you get out of inven-
tory that’s stuck in stores today?” says
Nikki Baird, vice president of innova-
tion at retail tech firm Aptos.
Stores that can precisely track in-
ventory are also helping their custom-
ers: The best apps can tell shoppers
which items are in stock in what store
and where in that store, an appealing
idea for customers who don’t want
to linger. (Walmart and Target have
made big strides in this arena too.)
ETAILERS’ tech successes
aren’t focused solely on
R logistics and efficiency:
They can also keep cus-
tomers interested in a
brand. After most of its 7,000 retail
locations in China were closed, Nike
made the premium version of its
workout-on-demand Nike Training
Club app—which is seamlessly inte-
grated with Nike’s e-commerce—
available for free there. As use of its
apps surged, Nike’s digital sales rose
30% in China during the country’s
six-week lockdown, and business in
stores bounced back quickly once they
reopened. Nike is using the same
playbook in North America now. “We
know that consumers need to main-
tain their mental and physical health,”
says Heidi O’Neill, Nike’s president of
consumer and marketplace.
Still, even after the crisis has
passed, no one expects shoppers
to quickly return to their old com-
fort levels in physical stores. Some
upgrades Nike has implemented,
like self-checkout and contactless
payment systems, seemed like nice-
to-haves before the coronavirus; after
stores reopen, they’ll be must-haves.
“The investments you made are going
to be ever more meaningful when
customers come back,” says O’Neill.
 5 6 FO R T U N E M AY 2 0 2 0

DRUG INDUSTRY

WILL MEDICINE MAKERS

COME TO THE RESCUE?
The pandemic may finally do for the pharmaceutical industry what
relentless TV advertising cannot: show off its power to innovate.
BY SY MUKHERJEE

N AUGUST 2019, barely half a year before the world pharma analyst Geoff Porges tells

I
changed, the pharmaceutical industry was the most Fortune the company will be under
disliked business sector in America: 58% of those tremendous pressure to put a reason-
polled by Gallup had a negative perception of the able price tag on the drug. Indeed,
industry, more than twice the share who viewed it the blanket uncertainty across the
favorably—giving drugmakers a net positive score of industry—on everything from pric-
minus 31, the worst by far of any business sector in ing to the resiliency of supply chains
the country. For comparison, airlines and the legal to the difficulty of conducting clinical
profession had net positive scores of plus 19 and plus 5, trials in an era of social distancing
respectively. Even the federal government (minus 27) and overwhelmed hospitals—has
had better ratings overall. prompted several firms, including
Enter the coronavirus. As much as the pandemic Pfizer and AstraZeneca, to issue
has devastated many industries, it has offered Big statements saying they can no longer
Pharma a chance to shine as never before, winning back the trust of offer financial guidance for the year.
a public infuriated with years of soaring drug prices. Will they seize Throw in the already fragmented
the moment? The answer depends in large part on how fast drug and nature of U.S. health care, a desper-
device makers make progress in three areas essential to beating back ate public, a fast-changing timeline
COVID-19. The first is in the realm of diagnostic tests that can identify of government priorities, and anx-
not only who has the disease but also who’s no longer infectious and ious shareholders, and the result is
therefore safe to return to work. Second are therapies to shorten the something akin to an Olympic sprint
disease course and lessen its severity—which will be important for in which dozens of runners are
reducing the burden on hospital ICUs and exhausted critical care each competing on their own tracks.
teams. And third are vaccines: Without a safe and widely disseminated Predicting who’s got the lead in such
vaccine to confer immunity on a huge swath of the population, it’s hard a race isn’t easy. But Fortune reached
to imagine life returning to something resembling “normal.” out to dozens of companies, analysts,
Success in these three areas won’t put the pricing controversies to public health organizations, academ-
bed. As they strive for novel therapies and medical tools, pharma com- ics, and other experts to assess the
panies will have to balance the need to fund innovative projects and still state of progress.
satisfy a public (and perhaps regulators) demanding low- or no-cost One bit of good news: So far, even
drugs and devices to combat this plague. Still to be determined is what longtime cynics are giving the indus-
role health insurers and governments may play in all of this. try a qualified thumbs-up. Whether
Gilead Sciences, which likely has the most advanced anti-COVID-19 that’s enough to grant drugmakers a
drug of the bunch, has consistently stated it doesn’t expect to make better grade than lawyers is another
much money off of its antiviral product, remdesivir. SVB Leerink’s lead question.
 THE CORONAVIRUS ECONOMY

TESTING, TESTING
Drive-thru swabs for
the coronavirus have
become the preferred
method, as shown here
in Málaga, Spain.

DIAGNOSTICS
FUNDAMENTAL to controlling the spread
of COVID-19 are tests that can identify
those who have been exposed to the coro-
navirus, which is easily transmitted by
infected individuals—even, the evidence
suggests, when they have no symptoms
nostics for COVID-19. As of April 10, there
were 33 FDA-authorized coronavirus tests—
though the question of which ones work
best may not be known for months, when
there’s enough data out there to compare
them, says virologist Pedro Piedra of
Houston’s Baylor College of Medicine.
Swiss drug giant Roche developed the
first commercial coronavirus diagnostic
to receive emergency authorization on
TREATMENTS
AT PRESS TIME, more than 75 coronavi-
rus drugs are currently in development,
according to research from Agency
IQ. An additional 40 medicines, already
approved for other indications, are now
being tested as well against COVID-19.
“I think the best bet is still Gilead’s
remdesivir,” says Porges, the SVB Leerink
analyst, who is eagerly awaiting data from
clinical trials that began in late February
in China and which are expected to be
published soon. Multiple other public
health experts agreed.
Remdesivir, an investigational antiviral

of illness. The standard test requires a
quick swab of the throat or nose (or both),
which grabs a tiny sample of mucus
and analyzes it through a process called
polymerase chain reaction. PCR amplifies
the genetic material of the virus, if any is
present, making it easier to identify.
PCR tests can quickly reveal who is
currently infected with the virus, even if
they’re asymptomatic. But they don’t show
who may have previously been infected,
silently or otherwise, and no longer carries
the virus—thanks to the response of their
body’s own immune system. In such cases,
those formerly infected will have telltale
antibodies in their blood. The antibod-
ies circulate in the blood for a long while,
keeping a careful vigil out for the virus
should it reappear and standing ready to
mount a counterattack if it does. That, in
short, is an immune response.
Having an immune response (that is to
Á L E X Z E A — E U R O PA P R E S S V I A G E T T Y I M A G E S
70
March 12—with Thermo Fisher Scientific,
LabCorp, Quest Diagnostics, Abbott,
Cepheid, Cellex, Becton Dickinson (BD),
Henry Schein, and others—following
quickly on its heels.
One standout is Abbott’s latest PCR
test, ID NOW, which can deliver positive
or negative results within minutes rather
than hours or days, which had been the
standard turnaround time. That’s because
it can be conducted on far more portable
machinery and uses something called “iso-
thermal” technology, explains John Frels,
VP of R&D at Abbott. Typically, molecular
virus tests need to cycle through multiple
temperatures in order to amplify a virus’s
genetic sequence in patient samples;
the Abbott test can do that amplification
process at a more consistent temperature,
speeding up the process. The test is slated
to be used in drive-thru testing facilities
set up by CVS Health in several states,

say, antibodies) to a virus doesn’t neces-
sarily mean a person has full immunity
to it on subsequent exposure. But when
it comes to returning people to work, it’s
important to know who’s got at least some
immunity and who doesn’t. Serology tests,
which look for specific antibodies in a
small sample of blood, can reveal that.
In recent weeks—and notably, after the
Centers for Disease Control and Preven-
tion botched its initial PCR test—a spate of
private and public health labs have rushed
into the breach, creating a range of diag-
which may place it in front-runner status.
On the serology front, both medical
distributor Henry Schein and Cellex, a
smaller biotech firm, have received
authorization for blood tests that screen
for antibodies to the novel coronavirus. NUMBER OF CORONAVIRUS
While U.S. regulators have said there are VACCINES NOW IN DEVELOPMENT,
scores of companies that have signed up
to create antibody tests, one major prob- ACCORDING TO THE WORLD
lem is the spectre of profiteers hawking HEALTH ORGANIZATION
fake tests, something FDA Commissioner
Stephen Hahn has said the agency will
crack down on.
 5 8 FO R T U N E M AY 2 0 2 0
“THIS IS A COMPLICATED VIRUS THAT
SEEMS PRETTY GOOD AT
AVOIDING THE IMMUNE SYSTEM.”
GEORGE SCANGOS, CEO OF VIR BIOTECHNOLOGY, A COMPANY
THAT IS WORKING ON COVID-19 TREATMENTS AND VACCINES
RACE FOR THE CURE Gilead’s antiviral remdesivir, which had previously been used for
SARS and MERS-CoV patients, is seen as a promising treatment for COVID-19.
treatment, has been in development for
years to treat various infectious diseases,
including SARS and MERS-CoV, two ill-
nesses caused by strains of coronavirus
related to the COVID-19 pathogen. In a
study of 53 seriously ill COVID-19 patients
treated with the experimental drug
through a “compassionate use” program,
its results published in the New England
Journal of Medicine in April, 38 patients
(68%) showed measurable improvement.
(In 15% of cases, the patients’ illnesses
progressed.) Though the study, experts
caution, was neither randomized nor
controlled, two standard practices that
help ensure results aren’t inadvertently
skewed, the initial findings were promis-
ing—with response rates significantly
higher, and mortality lower, than would
be expected based on current data from
hospitals today.
Antiviral medicines, which typically
interfere with a virus’s ability to replicate,
are rarely cures in the way that antibiotics
(which kill bacteria) often are. But having
a drug that can help patients breathe well
enough to stay off a ventilator could be of
enormous value in this pandemic. A single
day on a hospital ventilator can cost
$25,000, says Porges.
Gilead CEO Daniel O’Day released an
open letter saying it would expand the
number of available doses to 1.5 million,
enough for 140,000 courses of treatment.
A possible timeline could include emer-
gency authorization within a few months.
Multiple other companies—including
Takeda, Regeneron, and scores of other
firms—are working on treatments. Those
encompass antivirals, antibodies, or
therapies derived from the blood plasma
of patients who have recovered from
THE CORONAVIRUS ECONOMY
COVID-19.
“There’s an incredible sense of urgency,”
says George Scangos, CEO of Vir Bio-
technology, a company working on both
COVID-19 treatments and vaccines, in-
cluding through a major collaboration with
British drug giant GlaxoSmithKline. “The
number of companies that want to con-
tribute regardless of whether you make a
lot of money is incredible.” Hal Barron, the
R&D chief at GSK, concurs. “I meet weekly
with most of the Big Pharma company
heads,” he tells Fortune. “I’ve never seen a
magnitude of urgency like this.”
VACCINES
TESTING AND TREATMENTS can only get
you so far. With a virus as transmissible as
the novel coronavirus, a vaccine is critical
to establishing long-term public health
safety. Making sure they work—and are
safe—can take years, says Peter Hotez,
dean for the National School of Tropical
Medicine at Baylor College of Medicine.
That said, time does seem to be speed-
ing up. By mid-April, there were no fewer
than 70 coronavirus vaccines in develop-
ment, according to the World Health
Organization; with those from China’s
CanSino Biologics, Inovio, and Moderna
already in human trials.
Moderna’s candidate tweaks the virus’s
messenger RNA to elicit an immune
response in humans. In earlier clinical
stages, GlaxoSmithKline has partnered
with multiple firms, including Vir and
French drug giant Sanofi, that want to le-
verage its “adjuvant” technology—which
can make it easier to produce more doses
of a vaccine on a wide scale. Then there’s
Pfizer’s collaboration with BioNTech
in China; a partnership between Heat
Biologics and the University of Miami;
the Baylor School of Medicine with its
investigational SARS vaccine; Novavax;
and Johnson & Johnson.
But Johnson & Johnson seems to have
produced the most buzz. In late March,
J&J said its experimental vaccine might
be in clinical trials by the fall of 2020 and
on the market by early 2021. “Based upon
our early data, we feel confident that we
have got a very good candidate,” J&J CEO
U L R I C H P E R R E Y— P O O L /A F P V I A G E T T Y I M A G E S
Alex Gorsky tells Fortune, adding this was
a result of an investment in vaccine devel-
opment technology made a decade ago,
which “turned out to have much broader
application than we anticipated.”
“This is a complicated virus that seems
pretty good at avoiding the immune
system,” says Vir chief Scangos. “It could
be possible that COVID-19 vaccines are
modeled after flu vaccines, which are
somewhat effective, but would require
wide-scale annual production” as new
strains of the coronavirus emerge. “If
we’re realistic, there’s risk.”
 Social distancing is the most effective tool we have for
slowing the spread of the coronavirus. And that means
staying home, if you can.

Work from home. Play at home. Stay at home.

If you must go out, keep your social distance—six feet,
or two arm-lengths apart. Young. Elderly. In between.
It’s going to take every one of us. If home really is where
the heart is, listen to yours and do the life-saving thing.

Visit coronavirus.gov for the latest

tips and information from the CDC.

#AloneTogether

TOGETHER, WE CAN HELP SLOW THE SPREAD.

6 0 FO R T U N E M AY 2 0 2 0

SEATTLE
UNDER SIEGE
TH E C O RO N AVI RU S E C O N O M Y : S E AT TLE

WHEN THE CITY BECAME THE FIRST EPICENTER OF THE

CORONAVIRUS OUTBREAK IN THE U.S., THE COMPANIES
HEADQUARTERED THERE—AMAZON, MICROSOFT,
STARBUCKS, NORDSTROM, COSTCO, AND OTHERS—
FOUND THEMSELVES FIGHTING ON THE FRONT LINES.
BY ERIKA FRY

SILENT STREETS Influential

scientists spread the word early
here about the virus.
G R A N T H I N D S L E Y—T H E N E W Y O R K T I M E S / R E D U X
6 2 FO R T U N E M AY 2 0 2 0

CITY OF INDUSTRY
OM LYNCH hadn’t expected the THE SEATTLE AREA is home to an outsize number
world to change—or at least his of Fortune 500 companies, tech firms, and medical

T perception of it—at his Tuesday

morning leadership meeting.
organizations. Seattle is west of Lake Washington,
while suburbs such as Bellevue and Kirkland are
across the lake on the “Eastside.”
He had expected to talk about
the fiscal year 2021 budget and maybe to get
to know his team a little better. It was Feb. 25, PROVIDENCE HEALTH
D
and Lynch was just four weeks into the job as UN

SO
director of the Fred Hutchinson Cancer EVERETT

ET
Research Center, so new that as he walked the

PUG
halls of the Hutch that morning he struggled
to find the right conference room.
Lynch had also made time on the meeting’s AMAZON FRED HUTCHINSON
agenda for Trevor Bedford, an epidemiologist CANCER RESEARCH CENTER

at the prestigious Seattle-based research in-

GATES UNIVERSITY OF
stitute who had been tracking the novel coro- FOUNDATION WASHINGTON
navirus known as SARS-CoV-2 since early
January. Lynch describes Bedford as “very
humble” and “understated,” but that morn-
ing, as the quiet computational biologist laid
out his grim projections for the virus’s impact
on Seattle, he held the room. People became
incredibly quiet and just listened,” says SEATTLE KAISER PERMANENTE
Lynch. “Everyone in the room at the same EXPEDITORS
NORDSTROM INTERNATIONAL
time got that what he was talking about was OF WASHINGTON
something that was going to really change STARBUCKS
our lives.” Lynch vividly recalls that day. “You
remember where you were when you realized
what this was.”
What this was was still a completely
unfathomable proposition for most in the
global metropolis of 3.5 million. “Social
distancing” had not yet entered the lexicon.
At the time, Seattleites were still making ar-
rangements for March tech conferences and
spring fundraising galas; people were look-
ing ahead to attending Seattle Storm games
and Patti Smith concerts and the Emerald
City Comic Con, a beloved annual gathering Lynch who upended the agenda.
of 100,000 superfans slated for mid-March. “I think we should spend this entire conversation talk-
If people knew it at all, COVID-19 was a ing about COVID-19, and what’s very likely to be coming
threat that seemed at least an ocean away. down the pike here in Seattle,” Lynch said to his chair Matt
The State of Washington had reported just McIlwain, a managing director at Madrona Venture Group,
one known case, that of a 35-year-old man the Seattle-based venture capital firm. McIlwain left and
from Snohomish County outside Seattle, immediately called his VC colleagues: “We need to think
who had traveled to Wuhan and gotten sick through what our strategy is,” he said.
upon his return in mid-January. He’d been Another person looking at Bedford’s data was Christine
treated and recovered. For those keeping “Chris” Gregoire, a former Washington state governor—she
score, it was Washington–1, coronavirus–0. served from 2005 to 2013—former Fred Hutch chair, and
But on that morning in late February, Bed- now head of an organization called Challenge Seattle, which
ford framed the situation quite differently; engages 19 of the city’s largest businesses and institutions.
the virus was an urgent if not yet visible ex- Those include a striking number of name-brand Fortune 500
istential threat. Lynch got the message, and companies and organizations, including Amazon, Microsoft,
the next morning, in a breakfast meeting Starbucks, Costco, Boeing, Nordstrom, Alaska Air, and the
with Fred Hutch’s board leadership it was Bill & Melinda Gates Foundation, among others. The group

was founded to solve some of the region’s more intractable
problems surrounding education, affordable housing, and
transportation. As it happened, Challenge Seattle had one
of its meetings on the night of Feb. 25.
Challenge Seattle chair Susan Mullaney, the president
of Kaiser Permanente Washington—which has dozens of
health facilities, a leading research center, and more than
700,000 members across the state—had been follow-
ing, with increasing alarm, her own group’s COVID-19
modeling efforts. She asked Gregoire for some time on the
agenda that night; this was something she thought the
business community needed to prepare for.
Many attendees now remember the event as their
psychological turning point. Earlier in the evening, they’d
casually discussed the virus over wine; at dinner, they’d
sat—as one did, pre-pandemic—tightly bunched around
tables. Though a few were already bumping elbows, many
shook hands.
“I gave a brief update on how bad we thought it would be,”
says Mullaney. Gregoire went over Bedford’s projections. As
the group, which included Weyerhaeuser’s Devin Stockfish,
Zillow’s Rich Barton, and REI’s Eric Artz, talked through
comparisons to the 1918 flu pandemic, it was lost on no one
that the most concerned among the group were its subject-
matter experts—Mullaney and Steve Davis, the recently
retired CEO of PATH, the global health organization. Some
were struck by the assessment that the CDC was six to eight
weeks behind on the issue. “The severity of it was sinking
into all of us during that dinner,” says Michelle Seitz, CEO of
Russell Investments, the Seattle-based global asset manager.
Margaret Meister, head of Symetra Financial, an insur-
ance giant based in Bellevue, the Seattle suburb, had been
so startled she texted her leadership team that night. “We
need to up our game. This is a crisis. This is not some
small thing,” she told them.
“Quite candidly, there was absolute shock around the
table,” says Gregoire. “That was the day that everybody
saw how dire this could be if we didn’t get to work.”
What nobody imagined was how quickly things would
turn. Just three days later, public health authorities an-
nounced the state’s second confirmed case of COVID-19.
It was a stunning one: The infected individual was a local
teenager, a high school student also from Snohomish Coun-
ty but who hadn’t traveled anywhere. (His case had been
detected only because the Seattle Flu Study, an influenza
surveillance effort funded by Seattle-based Gates Ventures
and staffed by University of Washington, Seattle Children’s
Hospital, and Hutch scientists—Bedford among them—ig-
nored state and federal guidelines and tested samples.)
And then the following night, a Friday, Gregoire got a
call. The state had its first COVID-19 death, and there was
an outbreak at a local nursing home. The virus was in the
community, and it was spreading. The threat they’d all
JASON REDMOND—REUTERS
been worrying about had already arrived.
But something else had been spreading too. The net-
works that knit Seattle together—running from its research
hospitals and global businesses to world-eminent institu-
tions, community organizations, and government—were
thrumming with the exchange of information and inten-
TH E C O RO N AVI RU S E C O N O M Y : S E AT TLE
SEATTLE FREEZE Locals adopted social
distancing guidelines seriously—and early on.
tions. Gregoire immediately called Mullaney
and asked her to prepare another briefing.
HERE ARE MANY WAYS to tell
the story of America’s first
T COVID-19 outbreak—an
epidemic that, in the Greater
Seattle area, has to date
tragically killed 385 and infected 7,324 (in
King County, home to Seattle proper, the
numbers are 294 deaths and 4,428 infec-
tions). The virus has stolen the livelihoods of
hundreds of thousands more. But the story of
how Seattle came together can be a model for
any city and organization.
In some ways, it’s hard to dream up a
city better equipped to manage an outbreak
of a new and deadly pathogen. Seattle has
few worthy rivals when it comes to public
health. In the University of Washington, the
city has one of the nation’s leading virology
labs and one of its largest infectious disease
departments. It’s a town full of influential
epidemiologists and disease modelers, many
of whom have had their efforts blessed with
Gates dollars, from the Hutch’s Bedford—with
200,000 Twitter followers—to the University
of Washington’s Chris Murray, whose models
are cited by the White House. It’s no accident
that Seattle has the world’s first operational
trial site for a COVID-19 vaccine candidate, or
that it’s the first city in the country doing CO-
VID-19 surveillance with at-home testing kits.
“We have an infrastructure that is 40 years
in the making,” says Larry Corey, the man who
started UW’s virology program in 1978 (and
6 4 FO R T U N E M AY 2 0 2 0
has since been instrumental in developing
AIDS drugs, helmed the Hutch, and led the
global HIV Vaccine Trials Network). “We’ve
“THESE BIG COMPANIES BEGAN
been able to permeate our community…we’re
able to influence and be a factor.”
Seattle is also a city of staggering wealth,
home to a burgeoning tech community as
well as the world’s most valuable multina-
tional companies and the world’s two richest
men, one of whom, Bill Gates, just so hap-
pens to be the planet’s most prominent advo-
cate and funder of pandemic preparedness.
Beyond those deep pockets, these enterprises
are well connected to expertise—logistical,
technical, biomedical—that spans the globe.
It all adds up to a highly educated popula-
tion—with 62.6% of its residents holding
four-year degrees, it was dubbed “America’s
most-educated big city” in 2019—with a bias
toward data and science. (Some also credit
locals’ Scandinavian reserve—which mani-
fests as the “Seattle freeze”—for their success
at social distancing.)
Two Twitter hashtags epitomize the
city’s collective response. #AllInSeattle—a
fundraising banner under which dozens of
the city’s millionaires donated $27 million to
various nonprofits in four days—and #We-
GotThisSeattle, a hashtag that trended on
Twitter and was stitched on a flag that now
crowns the city’s iconic Space Needle.
That’s not to say the city is out of the
woods—Washington State Gov. Jay Inslee
has stressed this point repeatedly—but in
recent weeks as COVID-19 has continued its
devastating spread across the U.S., Seattle
has found a bit of a clearing, or in epide-
miologist-speak, some “curve bending.” Its
hospitals, though constrained by resources,
have not been overwhelmed like those in
New York and New Orleans. In King County,
where Seattle and many of its suburbs lie,
COVID-19 cases today are doubling once
every 15 days; that compares with every 11.5
days in New York City and every 8.5 days in
Chicago. Supplies once destined for Amer-
ica’s COVID-19 ground zero are now being
rerouted to new, hotter hot zones.
In that way, the city offers a playbook, one
that points to the importance of collabora-
tion. Seattle is a big global city, but as many
Seattleites will tell you—powerful ones, at
least—“it feels a lot like a small town.” Infor-
mation, and aid, and solutions were being
rapidly passed around Seattle’s tight-knit
business community and throughout the
ranks of government. Suddenly some of the
most cutthroat companies on the planet,
like Amazon and Microsoft, weren’t trying
ACTING IN CONCERT. I’VE HAD
A CAREER IN PUBLIC SERVICE
AND I’VE NEVER SEEN
ANYTHING LIKE THIS.”
to fight for market share, they were on the same side for
once, trying to save their city.
RAD SMITH HADN’T EXPECTED to come home
to find an outbreak in his backyard. As
B Microsoft’s president, he’d been thinking
about the virus, certainly—he’d been at a
security conference in Munich mid-February,
where he’d met a team from the White House who had
peppered him with questions: What had the company
seen in China? What would be the ripple effect of China’s
economic downturn? Smith had then gone to Rome for
an event at the Vatican; as the outbreak worsened in
northern Italy, the virus was top of mind. He had left Italy
the night of Friday, Feb. 28.
On Feb. 29, local public health authorities announced
its first COVID death, an outbreak at the Life Care Cen-
ter in Kirkland—a short drive from Microsoft’s campus.
Adding to the urgency, Hutch epidemiologist Trevor Bed-
ford shared an analysis, based on genomic-sequencing
data of the virus, that suggested SARS-CoV-2 had been
stealthily circulating in the community for weeks, likely
infecting hundreds. Smith, a history buff, did two things:
He ordered the best-regarded book on the 1918 flu pan-
demic, John Barry’s The Great Influenza, and he phoned
his friend Gregoire, who had called for an emergency
meeting of Challenge Seattle members the following
day. They discussed the need to gather leaders from both
the private and public sectors—and particularly public
health experts.
The next day Gregoire held the emergency meeting,
becoming the first in what is a now an ongoing series of
daily COVID-19 crisis calls, open to the entire business
community, sometimes with as many as 200 participants.
At the beginning though, it was a much smaller group
of leaders and King County officials trying to establish
the facts and coordinate a response in an effort to “build
public confidence,” says Gregoire.
They decided, when possible, organizations—even
fierce competitors, like Amazon and Microsoft—should
respond in the same way, whether it be on work-from-
 TH E C O RO N AVI RU S E C O N O M Y : S E AT TLE

home policies or protocols around essential employees.

Those companies also got a heads-up whenever local or
state officials were planning to announce outbreak-related
policies. “So these big companies began acting in concert,”
says Gregoire. “I’ve had a career in public service, and I’ve IKE MANY of Seattle’s tech
never seen anything like this.” leaders, François Locoh-Donou,
Within days of the group’s first call, many of the city’s
largest employers had asked all but their essential workers
L CEO of $2 billion F5 Networks,
was planning for business as
to stay home. Microsoft went on to announce it would usual as February drew to a
continue to pay its hourly workers—janitors, cafeteria close. There was an investor and analyst event
staff—while the campus was closed. Others, like Amazon in New York, then the company’s annual
and Expedia, followed suit. customer meeting in Orlando mid-March.
But the virus didn’t wait for the business community But late on Friday, Feb. 28, his HR chief
to get its bearings. It had already crossed into Seattle’s had taken him aside. There had been just
corporate sector. three confirmed COVID cases in the whole

AS COVID-19 SPREADS IN SEATTLE, CORPORATIONS JOINED THE FIGHT TO FLATTEN THE CURVE
10,000 CASES
APRIL 12
4,428 CASES IN KING COUNTY
MARCH 9 MARCH 11 MARCH 26
Seattle Foundation launches Gov. Inslee bans Seattle Mayor Jenny
COVID-19 Response Fund backed gatherings of Durkan raises 4,119
by Amazon, Microsoft, Alaska Air, 250-plus; a day #WeGotThisSeattle 3,169
the Starbucks Foundation, and later he closes flag atop Space
others; raises $9 million in 3 days. Seattle area Needle. 2,079
schools. 1,579 APRIL 5 APRIL 10
1,000 1,166 Inslee gives 400 Inslee tweets
ventilators to N.Y. State. that the state has
started to “bend
FEB. 29, 2020 693 the curve.” He
First COVID death announced MARCH 28
489 Steve Ballmer gives $10 encourages all to
in Seattle area. Fred Hutch continue to stay
epidemiologist Trevor 329 million to UW to ramp up
coronavirus testing; Jeff home. Boeing
Bedford posits virus has been delivers first
spreading stealthily for six 235 Bezos and others follow.
shipment of
weeks, infecting hundreds. reusable
MARCH 23 3D-printed face
100 117 Inslee issues shields,
stay-at-home order. manufactured at
Private citizens launch company
#AllinSeattle to respond facilities.
MARCH 13 MARCH 16 MARCH 19 to the crisis and raise
The Hutch World’s first A Seattle- $27 million before
sets up COVID-19 area official launch. City
22 MARCH 3 Zoom call vaccine trial furniture launches Seattle
Amazon and Facebook between ICU begins at Kaiser company, Coronavirus
15 report confirmed cases on and ER Permanente Kaas Assessment Network
10 11 their Seattle campuses. doctors in Washington. Tailored, using at-home
China and Microsoft begins begins COVID-19 testing kits,
WEEK OF MARCH 2 the U.S. using its producing sponsored by Gates
T-Mobile expanded its work cafeteria workers PPE. Foundation, delivered
4 with Snohomish County’s to make meals Nordstrom by Amazon. Boeing
MARCH 1 School2Home program, for students and and Alaska announces 14-day
Challenge providing 850 Wi-Fi hotspots other community Air assist in shutdown at area
Seattle begins to enable remote learning. members. its effort. facilities.
daily crisis calls.
1

FEB. 28 MARCH 1 MARCH 7 MARCH 15 MARCH 22 APRIL 1 APRIL 12

March 7 March 14
WASHINGTON 6,548 14,154 March 28 April 4
March 21
STATE WEEKLY NEW 181,975 170,063
128,962
UNEMPLOYMENT
CLAIMS
294
260
200
SEATTLE COVID-19 DEATHS 180
140 160
(KING COUNTY, CUMULATIVE COUNT) 80 100 120
40 60
1 10 20

MARCH 1 MARCH 7 MARCH 15 MARCH 22 APRIL 1 APRIL 12

SOURCES: WASHINGTON STATE EMPLOYMENT SECURITY DEPARTMENT; CASE AND DEATH DATA FROM THE NEW YORK TIMES, BASED ON WASHINGTON’S KING COUNTY
6 6 FO R T U N E M AY 2 0 2 0 TH E C O RO N AVI RU S E C O N O M Y : S E AT TLE

state of Washington then, but one of them

had been in close contact with an F5 em-
ployee. That employee—whose own COVID
test results wouldn’t be available for a few
days—had been coming to work, riding the
elevator, and occupying space in the com-
pany’s new, 48-floor office tower.
That raised all sorts of questions—familiar
now, but quite novel then. Should they close
the office tower? Should they forgo their
events? Had they themselves been exposed?
Working out of a conference room that
weekend, F5’s leadership team scrambled to
consult experts and formulate a plan. “We
had to make decisions really quickly,” says
Locoh-Donou. They closed the tower for
cleaning, a fact that more or less forced the
other decisions: “We couldn’t send 10 execu-
tives from F5 Tower to be in a room with
investors in New York City,” he says.
The decision hurt nonetheless. The em-
ployee tested negative, but the last-minute
cancellation of the investor event spooked
the market, and F5’s stock price took a beat-
ing. For a couple of days, “it looked like a bad
decision,” says Locoh-Donou. Of course, he
adds, it was the right call.
Within days the city’s other tech com-
panies were dealing with similarly urgent
decisions. Amazon emailed employees on
Tuesday, March 3, about a confirmed case
on its Seattle campus; the individual—one
of the company’s 50,000-plus based in Se-
attle—worked out of the headquarters’ Brazil
building and had last been in the office on
Feb. 25. The night before falling ill, that
employee had eaten dinner at Facebook’s
nearby Seattle campus.
Facebook, meanwhile, had its own con-
firmed case—a contractor who had last been
in the company’s local offices on Feb. 21.
Microsoft reported a case on its Redmond
ployees was relatively straightforward. The calculation was
not so simple for some of Seattle’s other large employers.
AVING CLOSED DOWN 80% of its stores in
China during the outbreak, Starbucks already
H had experience with COVID-19 when the
virus showed up in its hometown. When a
staff member in a downtown Seattle store
came down with the disease on March 6, the company
sanitized the store and resumed operations a few days later.
The company phased in other changes—like offering 14
days of catastrophe pay to COVID-impacted workers and
removing seating. But as the outbreak intensified across the
U.S., employees like Aniya Johnson of Philadelphia grew
frustrated that they were being asked to risk their health to
serve coffee. “It’s not an essential service,” Johnson told
Fortune in mid-March, days after she had, on a whim,
started an online petition calling on Starbucks to close
stores during the pandemic. The effort attracted 37,400
signatures from baristas and customers by the time
Starbucks announced it was moving primarily to a drive-
through model. (Starbucks says its decisions were informed
by the China experience and grounded by concern about
the well-being of its employees and communities, and its
desire to support governments in efforts to mitigate the
virus’s spread.) Costco—whose stores were deluged
nationwide with shoppers seeking toilet paper and canned
goods—asked employees at its headquarters, just east of
the city, to report to work. That request was dropped after
an employee in the company’s travel department died of
COVID-19 and others tested positive in mid-March.
Boeing, which employs roughly 35,000 at its largest
factory in Everett, just north of the city, and 70,000 in
the Puget Sound region, initially kept its plants run-

250K
campus, peopled by roughly 50,000 employ-
ees, on March 5.
“People wanted to know what floor they
were on or what room they were in,” says
Kathleen Hogan, Microsoft’s chief people of-
ficer, who got word of the confirmed case on
their campus over text. Microsoft benefited
from the expertise of Colleen Daly, the com-
pany’s global wellness benefits manager, who
holds a Ph.D. in public health. Daly was on
daily calls with the CDC and World Health
Organization and managed the company’s
internal contact tracing efforts.
For the city’s tech companies, many of
which are in the business of enabling the bur- NUMBER OF N95 MASKS PROCURED BY MICROSOFT TO HELP FIGHT THE
geoning work-from-home economy, issuing SE AT TLE-ARE A COVID-19 OUTBRE AK
swift and sweeping guidance for their em-
 ALL IN Workers at Kaas Tailored went from making airplane parts for Boeing to producing personal protective equipment.
ning. Deemed an essential business, its lines continued
to assemble airplanes as COVID-19 cases cropped up in
its workforce; it suspended production in the state in late
March following the death of a quality inspector named
Elton Washington.
While some Seattle employers struggled to strike the
right balance, the area’s health care providers were scram-
bling to prepare for a surge of patients amid a desperate
shortage of tests and other critical supplies. The Providence
Regional Medical Center in Everett, which had received the
nation’s first COVID-19 case in January, had tried to bulk
up on supplies for a potential pandemic that month.
“Even being a couple steps ahead in our planning, it was
really a challenge,” says Amy Compton-Phillips, chief clini-
cal officer for the system. Starting in January, Providence’s
orders from suppliers in China couldn’t be filled because
manufacturing lines there were down. Providence staffers
were overwhelmed by offers from suppliers they’d never
worked with before, and came to understand many of
them were profiteers, hawking non-medical-grade goods.
“Things got so bad that we just went out to Joann Fabrics
CHONA K ASINGER—BLOOMBERG VIA GE T T Y IMAGES
and Home Depot and bought supplies,” adds Compton-
Phillips. A local Seattle TV station did a news story, featur-
ing footage of Providence’s nurses assembling face shields
and surgical masks in a hospital conference room.
Jeff Kaas, CEO of Kaas Tailored, a local company with
200 employees that makes furniture for Nordstrom
and airplane parts for Boeing, heard about the spot on
March 18 and immediately texted a doctor friend at Provi-
dence: “You know I have a factory, right?”
The next morning at 6 a.m., Providence sent a design
and supply team to Kaas’s Mukilteo, Wash., factory. They
worked out a surgical mask prototype, and
the following day, after some collaboration
with a firm in the Netherlands, they were
making them. Kaas shared the specs on-
line, which are now being used to produce
personal protective equipment (PPE) around
the world.
His own factory, staffed by employees, vol-
unteers, his wife, and all four of his children,
has been running 16 hours a day, six days
a week since. Nordstrom has lent tailors to
the effort and placed one of its managers at
Kaas’s factory full-time. Providence’s effort
has grown into the “100 Million Mask Chal-
lenge,” managed by the American Hospital
Association.
Outdoor Research, a Seattle-based outdoor-
and military-apparel maker owned by Dan
Nordstrom—he left his family’s department
store business in 2002—has also transitioned
his operations to make PPE, an effort that
was celebrated by Gov. Inslee as the sort of
wartime manufacturing effort that’s needed.
Local institutions have also stepped up to fill
testing and health care gaps. The University
of Washington has quickly ramped up its
operations to run 2,000 tests per day. The
Gates-backed flu study has pivoted to doing
COVID-19 surveillance using at-home swab
kits that Amazon delivers.
A Seattle-based financier with connec-
tions to China reached out to Madrona’s
 6 8 FO R T U N E M AY 2 0 2 0 TH E C O RO N AVI RU S E C O N O M Y : S E AT TLE

McIlwain in mid-March, offering to

set up a video call between ICU and
ER doctors in COVID-19-impacted
Chinese cities and their counterparts
in Seattle. Two days later, with the
help of the Hutch, the information-
sharing session took place over Zoom
at 6:30 a.m. Seattle time, with 300
participants nationwide.
While Challenge Seattle initially
focused on synchronizing the ac-
tions of the business community,
the group’s efforts quickly turned to
troubleshooting and supporting the
government too.
When Kaiser Permanente’s Mul-
laney asked the group in early March,
“Can anybody help get basic supplies?,”
Costco CEO Craig Jelinek responded,
saying he could source 40,000 N95
masks from China in 24 hours. Alaska
Air CEO Brad Tilden made a broad
offer to transport supplies. “We’ve got
a fleet of airplanes that we’ll put at
your disposal,” he told Mullaney.
Later, when a representative
from Washington State mentioned
on a call that it needed to make an
advance payment to secure $10 mil-
© 2020 CDW®, CDW•G ® and PEOPLE WHO GET IT® are registered trademarks of CDW LLC.
lion worth of protective equipment
from China, Microsoft that day made
available $15 million to the govern-
ment to assist.
In another instance, a quarter-
million N95 masks Microsoft had
managed to procure for the state
were stuck at a FedEx import facility
in Memphis. Smith got wind of this
dilemma at 5 p.m. on a Saturday
in late March. He made a call to
the White House, a contact on the
National Security Council. They were
released by the next morning.
“Anything the government has
asked of these companies they have
stood up and said, ‘We can make that
happen,’ ” says Gregoire.
When Challenge Seattle asked for
help organizing the state’s medical
supply distribution center, they got
senior managers from Amazon and
Microsoft. When King County need-
ed furnishings for motels they had
turned into quarantine centers,
Gregoire says Starbucks came
through with furniture. After
Mullaney advised that the state
needed a single point person to
coordinate its hospitals during
the outbreak, her team helped
Gov. Inslee find and hire—in
roughly 72 hours—Vice Admi-
ral Raquel Bono, a trauma sur-
geon who set up field hospitals
in Desert Storm.
By early April, there were
very real signs of hope that
these types of moves had helped
Seattle had escape the worst-
case scenarios. Gov. Inslee
sent 400 ventilators Seattle no
longer needed to the East Coast.
Supplies to turn CenturyLink
Field, where the Seahawks play,
into a temporary hospital were
instead directed to other states.
In assessing the catastrophic
toll from the spread of this
deadly pathogen, in most places
COVID-19 seemed to reveal
nothing but weakness: weak-
ness in infrastructure, weakness
in supply chains, weakness in
preparedness, divisions between
government and business. In
Seattle the pandemic seems to
have revealed something else
entirely: a tensile strength that
few knew the city possessed.
Says Smith: “If you bring us all
together and coordinate the
right way, you can do so much
more together.”

The city’s dense web of

partnerships has proved vital
WE GET HOW TO STAY in stemming the initial wave of
contagion; it’s unclear if it will
PRODUCTIVE EVEN WHEN IT’S be as effective in addressing the
collateral damage COVID-19
BUSINESS AS UNUSUAL. has wrought—a devastated
economy, record-level unem-
For high performance under all ployment, and fissures of in-
conditions, you need the Intel® Core™ equality the crisis has laid bare.
vPro® processor-powered Lenovo T490 These are new realities with
no easy answers, but Seattle has
and IT Orchestration by CDW®. an advantage when everyone is
CDW.com/LenovoClient #AllIn.
 What defines leadership today?

Download and listen to

Leadership Next
wherever you get your podcasts.

Featuring
exclusive
interviews
with leaders
on the front
lines of the
COVID-19
crisis.

In Leadership Next, Fortune’s new weekly podcast

series, CEO Alan Murray sits down with stars of
business for intimate conversations about the
rules of leadership. The leaders of the world’s most
successful companies discuss the global impact
of the coronavirus as well as how accelerating
technological change and rising demands from
stakeholders are enabling them to put a new sense
of purpose at the center of their enterprises.

Powered by

Listen on

The podcast views and opinions do not reflect those of Deloitte or its personnel. Deloitte does not advocate or endorse any individuals or entities featured on the episodes.
7 0 FO R T U N E M AY 2 0 2 0

HOW ZOOM
Eric S. Yuan

ZOOMED
A QUIET HIT AMONG BUSINESS
Ryan Azus

USERS WHEN THE PANDEMIC Lynne Oldham

STRUCK, A YOUNG COMPANY
STRUGGLES TO SERVE CONSUMERS.
BY MICHAL LEV-RAM

THE CORONAVIRUS ECONOMY : ZOOM

Aparna Bawa

OST ENTREPRENEURS DREAM of having an since Yuan ordered his 2,500-person VIDEO STARS
unexpected flood of new users. For Eric Yuan, company to work from home, preced- Members

M the 50-year-old founder and CEO of Zoom,

adding 90,000 schools—and having to edu-
cate them on how to use his product—has
ing California’s statewide lockdown
by 12 days. In the weeks that followed,
of Zoom’s
management
team, half of whom
as the COVID-19 outbreak spread worked with CEO
C O U R T E S Y O F ZO O M V I D E O C O M M U N I C AT I O N S (8)

become a bit of a nightmare. “We thought their IT teams around the world, the San Jose–based Eric Yuan at Cisco,
could help, but we were wrong,” he says in an early April company’s popularity took off expo- which owns the
videoconferencing
interview over Zoom. “We are like the IT team for them.” nentially as well. To “Zoom” quickly unit Webex, before
It’s hard to feel too sorry for him. After all, he is a became a verb, the new-normal way he started the
multibillionaire several times over. He leads one of the few to convene for everyone from yoga company. Like
companies whose prospects have soared as a result of the instructors to Fortune 500 executives so many others,
they now fill their
pandemic. Still, Yuan looks drained, his face wan against suddenly forced from their workplac-
days meeting with
the backdrop of a glimmering—and fake—image of the es. Zoom’s users soared from 10 mil- one another over
Golden Gate Bridge, a standard option in his product’s lion a day in December to 200 million Zoom.
“choose virtual background” feature. in March. Its stock price is up 80% on
His frustration is understandable. A month has passed the year, giving the company a market
 BUSINESS SURVIVES A PANDEMIC : ENERGY

Janine Pelosi

Kelly Steckelberg

Harry D. Moseley Oded Gal

value of $35 billion.
But the rapid growth has exposed
challenges far greater than the CEO’s
crammed calendar. As it turns out,
the main reason Zoom was able to
zoom past the competition, its ease
of use, has proved to be a thorn in
its side. Not requiring passwords
as a default setting gave rise to yet
another new phrase in the pandemic
lexicon, Zoombombing, or the intru-
sion of uninvited and often offensive
guests to private meetings. Zoom also
has proved a target for hackers, forc-
ing the company to patch software
that could have allowed remote users
to control the cameras of unwitting
users, among other nefarious tricks.
The explosion of attention caught
Zoom off guard. After all, for a
decade it had been focusing on
business users, not the masses. Yuan
has embarked on an apology tour,
penning a contrite blog post and
granting numerous media interviews.
“I’m ashamed,” he says of the security
flubs. “I blame myself.” He’s adding
more defensive features, such as
mandatory password protection of
meetings, while acknowledging that
such moves will make Zoom less
click-button simple to use. “For sure,
it will have some impact,” says Yuan.
“But we have to win back trust.”
Winning trust isn’t Zoom’s only
hurdle. Counterintuitively, the surge
in usage isn’t necessarily a boon to
its business, because so many of its
new users aren’t, and may never be,
paying customers. That challenge, at
least from an investment perspective,
may be an even bigger concern than
security slipups. “I don’t think it’s
sustainable to give your product away
for free for too long,” says Alex Zukin,
an analyst with RBC Capital Markets.
In other words, Zoom may have
become a beloved household name
7 2 FO R T U N E M AY 2 0 2 0
ZOOM STOCK PERFORMANCE
even as it faces unexpected scrutiny for its
less-than-perfect security. But its success
SINCE IPO
when the world returns to normal is any- 150%
thing but assured.
ZOOM STOCK PRICE

OOM FLEW under the radar RINGCENTRAL

right through its successful 100 100.8%

Z initial public stock offering in

April 2019. It raised $357 mil-
lion at $36 per share, and the
stock quickly charged over $100, making 50

it a bright spot in Silicon Valley after the

disappointing debuts of buzzier startups like
Uber and Lyft. Its early users were typically
universities and other smaller technology
companies. And it wasn’t like videoconferenc-
ing was a particularly new idea. “For a long
time, everyone thought that it was a crowded
market, and that there’s nothing going on
there,” says Dan Scheinman, a former head of
corporate development at Cisco and Zoom’s
first investor.
For Cisco, Zoom is in many ways the one
that got away. In 2007 the networking equip-
ment giant bought Webex, a business-focused
videoconferencing company, where Yuan was
the vice president of engineering. He stayed
on at Cisco for four years and then left to
build his own version of Webex, taking 40
engineers along with him. “To be able to scale
video is a hard problem to solve,” says Oded
Gal, Zoom’s chief product officer and one of
the Webex refugees. “The engineers who fol-
lowed Eric had built the best screen-sharing
technology out there, and there are not a lot
of people who can do that in the world.”
The entrepreneurs didn’t simply try to re-
create Webex. Yuan believed a more modern
take on the industrial-grade product the
Cisco unit offered should be easily acces-
sible from phones and laptops while on the
go. It also needed to work on spotty Internet
connections and cellular networks and to do
it better than existing videoconferencing sys-
tems, which sucked up huge bandwidth and
still didn’t do a particularly good job of repli-
NASDAQ
INDEX
0 1.9%
CISCO
–50
APR. 18, 2019 JAN. 1, 2020 APR. 9
SOURCE: S&P GLOBAL
cating a phone call. “Eric spent two years building Zoom’s
core architecture,” says Santi Subotovsky, a general partner
with Emergence Capital, another early investor in Zoom.
“He did the hard work, and he didn’t take any shortcuts.”
Yuan’s goal was to make Zoom scalable and reliable.
He also wanted to make it much easier to use than exist-
ing videoconferencing software, which typically led users
through a series of clicks (and downloads) before any video
started streaming. Because there were plenty of simple
alternatives in the marketplace, from Google’s Hangouts
to Microsoft’s Skype to Apple’s FaceTime, Zoom would
have to stand out to succeed. “We were in a market full of
gorillas,” says Janine Pelosi, Zoom’s chief marketing officer
and another former colleague of Yuan’s. (Half of Zoom’s
12-member management team worked with him at Cisco.)
Zoom’s embrace of “freemium” pricing—free to most us-
ers, upsells for added features—made the company popular
with business users. The free version the world has become
familiar with allows calls of up to 40 minutes for as many
as 100 people and unlimited one-on-one exchanges. Zoom’s
paid accounts start at $15 a month per user, enabling
longer-duration calls and various administrative controls.

200,000,000
NUMBER OF ZOOM’S
DAILY MEETING
PARTICIPANTS IN
MARCH. IN DECEMBER,
BEFORE LOCKED-DOWN
CHINESE USERS
FLOCKED TO ZOOM,
THE NUMBER WAS A
MERE 10 MILLION.
 THE CORONAVIRUS ECONOMY : ZOOM

Versions targeting big and small businesses

offer even more capacity and additional bells
and whistles.
True to its business-focused roots, Zoom
already was earning a modest profit by the That alone might not make a dent in
time it went public. For the year ended NOT QUITE Zoom’s current growth trajectory. The com-
Jan. 31, 2019, it made nearly $8 million on
sales of $330 million. Sales nearly doubled
OVERNIGHT pany’s chief financial officer, Kelly Steckel-
berg, says that revenue from customers like
to $623 million a year later, and profits RingCentral represents less than 10% of
nearly tripled to $22 million, handily beat- Zoom’s overall sales. What’s more, it’s not
ing Wall Street estimates. “They’ve been For many, Zoom clear whether the current scrutiny of Zoom’s
seems to have
executing wonderfully,” says Zukin, the RBC appeared out of security issues will end up eating away at its
analyst. “Even pre-COVID, the stock had nowhere. In fact, new growth at all. Consumers can be forgiv-
been on a significant tear.” it was a private ing of security flaws in an overwhelmingly
Indeed, Zoom was producing some of the startup for eight useful product. Just ask Facebook.
fastest revenue growth rates in the soft- years as it became But there’s another question looming
popular for its ease
ware industry well before the effects of the of use among busi- over Zoom’s newfound role as the public’s
pandemic began to be felt in China, where ness customers. favorite videoconferencing tool: Just how
Zoom had proved popular. The company many of its new users will become paying
removed time-limit restrictions for Chinese 2011 users? Unlike Slack, another collaboration-
Zoom incorporates
users as the country began locking down. under the name
tool software maker, Zoom doesn’t break
When workers in the U.S. began to follow Saasbee Inc. out the percentage of its account holders
suit in March, Zoom transitioned in a span who pay. It also doesn’t say how successful
of weeks from Silicon Valley success story to 2012 it is in converting nonpaying users to pay-
Changes name
global phenomenon. And that’s when things ing subscribers. The company warned that
to Zoom Video
got out of control. Communications usage growth would erode margins, but it
hasn’t quantified the risk.
HILE YUAN is publicly apologiz- 2013 Investors, who have watched Zoom’s
ing and reevaluating Zoom’s First public release market value equal that of auto giant General
W features, his larger, deep-
pocketed competitors are
of Zoom Meetings,
which supported
200 million annual
Motors, are concerned. “We have reservations
about Zoom’s long-term ability to monetize,”
seizing the moment. Webex, his meeting minutes by Morgan Stanley analyst Meta Marshall wrote
former employer, is also seeing huge upticks year-end in a report. Credit Suisse’s Brad Zelnick, who
in usage—more than tripling its volume of downgraded Zoom’s stock April 6 to “under-
2014
average meeting minutes per month in the Launched Zoom Chat, perform,” was more direct. “We expect much
U.S. in March. And it is actively marketing Zoom Video Webinar, of the recent surge will prove ephemeral, and/
what it says is an emphasis on privacy and and Zoom Rooms or comes from free users or education, which
security to customers, both old and new. are difficult to monetize,” he told clients.
2015
“That differentiation helps at this time,” says 100th employee hired
As for Zoom’s Yuan, he sounds as though
Sri Srinivasan, head of Cisco’s collaboration he rues the day his company became a con-
unit, which includes Webex. Microsoft Teams, 2016 sumer hit at all. He’s focused right now on
a business-focused product that includes Reached 6 billion putting customers at ease, not wowing them.
annual meeting
videoconferencing and complements the Already he has paused the development of
minutes
company’s consumer-oriented Skype service, all new features—that Snapchat-like makeup
also has been gaining. Microsoft says 2017 filter you’ve been pining for will simply have
500,000 organizations use Teams, which it Launched Zoom’s to wait—opting to devote his team’s time
bundles with subscriptions to its Office 365 developer platform to fixing security loopholes. “We will review
and hosted first
productivity software. user conference,
everything,” says the CEO. “Anything that
Even smaller players, like Internet tele- Zoomtopia might have negative impact to security and
phone provider RingCentral, are trying to privacy, we will turn it off.”
make their move while Zoom is in the hot 2018 In the process, Yuan needs to make sure
Announced Zoom
seat. In early April, RingCentral announced he doesn’t turn off users who think his prod-
Phone and a
it was launching its own video product after marketplace for uct has made getting through a global crisis
seven years of relying on Zoom to provide third-party apps just a little bit easier. After all, like Yuan,
“white label” videoconferencing tools to its most of us plan to someday return to our
customers. “We get to control our destiny,” 2019 office. When we do, he needs to make sure
Exceeded 5 billion
says Vlad Shmunis, founder and CEO of monthly meeting
we still want to Zoom.
RingCentral, referring to ending his com- minutes. Oh yeah,
pany’s reliance on Zoom’s video tool. and went public.
 74 FO R T U N E M AY 2 0 2 0
THE CORONAVIRUS ECONOMY : OCADO
THE GROCERY ROBOTS ON THE
OCADO BUILT A BUZZY BUSINESS
AROUND HELPING SUPERMARKETS
SURVIVE ONLINE. THE COVID-19 CRISIS
HAS BECOME ITS TRIAL BY FIRE.
BY JEREMY KAHN
THE ROBOTS ARE MESMERIZING.
Inside a warehouse in Erith, on
O the outskirts of East London,
more than a thousand of them
COURTESY OF OCADO GROUP
glide across a vast steel and
aluminum grid. Each is the size and shape of
an office copy machine, topped with stubby
antennae and a shining neon-green LED.
Following individual routes, they whiz off,
accelerating at rates rivaling those of a Ferrari.
PANDEMIC FRONT LINES
They stop on a dime, reverse, shoot left or
right, or momentarily pause to allow fellow
robots to pass—a meticulously choreo-
graphed electric ballet.
The robots’ grid is actually the top of a
giant three-dimensional lattice—a modular
cage packed with groceries. Each time a ro-
bot stops, it drops a clawlike attachment into
the bowels of the lattice (“the hive,” as human
workers call it), descending as many as three
stories. The claw grabs the sides of a white
plastic crate containing fruit, vegetables,
HIVE MIND
At Ocado
warehouses,
cereal—any of 55,000 different items—and thousands of
retracts it up into the robot’s belly. The robot robots roll atop a
then carries the crate to another grid square metal grid known
and lowers it into the “pick tunnel,” which as “the hive,”
sits beneath the hive on the warehouse’s filling orders with
minimal human
ground floor. There, workers pick items out involvement.
of the crates to fill customers’ orders, placing
the groceries into red plastic bins, which are
7 6 FO R T U N E M AY 2 0 2 0
then loaded onto trucks for delivery.
This warehouse, or customer fulfillment
center (CFC), as logistics pros call it, is one
of the most sophisticated and automated on
the planet, one that can handle many tens
of thousands of orders a week. It belongs to
Ocado, a pioneering British online grocer
that is positioning itself as a white knight for
the beleaguered grocery sector—and possibly
other industries too—offering to help super-
market chains compete in an automated age.
Ocado’s robot-powered warehouses thrum
with activity on ordinary days; since the coro-
navirus crisis erupted, they’ve been in roaring
overdrive. The pandemic has given the com-
pany a chance to prove it can keep an online
grocery business humming, even when its
human workforce faces unprecedented strain.
Yet at the same time, the crisis’s upending
of daily life has threatened to knock Ocado
off its growth trajectory, just when it seemed
tantalizingly close to becoming a global force.
Like most grocers, Ocado has faced sky-
rocketing demand fueled by social distanc-
ing measures and panic buying. Its U.K.
grocery sales in March leaped more than
20% year over year. At one point, visits
to its website were 100 times the nor-
mal rate—a level so high, it triggered the
company’s cybersecurity systems to believe
the website was under attack. “This is the
peakiest peak we’ve ever had in the history
of the business,” says David Shriver, Ocado’s
group director of communications.
Ocado is hardly alone in this. Consultants
McKinsey & Co., in a note to grocery clients
on March 19, reported that online grocers
worldwide were struggling to meet demand
spikes as high as 700%. There’s a good
chance the pandemic will have a lasting im-
pact on consumer behavior, converting many
more customers to online grocery shopping
long after the crisis recedes.
Still, like its peers, Ocado has sometimes
AT ONE POINT, VISITS TO OCADO’S WEBSITE
WERE 100 TIMES THE NORMAL RATE,
TRIGGERING ITS CYBERSECURITY SYSTEMS TO
BELIEVE THE SITE WAS UNDER ATTACK.
THE CORONAVIRUS ECONOMY : OCADO
stumbled as it races to keep up. To try to slow the over-
whelming order volume, Ocado shut down its mobile app
and implemented a queuing system on its website. But de-
mand was simply too great, and with all its delivery slots
booked for a week out, Ocado was forced to temporarily
shut down its website in mid-March. When it came back
online, almost a week later, the company restricted orders to
existing customers; even so, delivery slots remain difficult to
find. Ocado is now preparing for other worst-case scenarios;
it has held rehearsals for what will happen if its employees
begin to fall ill and entire teams need to self-isolate. (One
possible solution: drafting furloughed workers from other
industries to staff warehouses and drive trucks. The com-
pany has already reached out to recruit idled Uber drivers.)
Even before the coronavirus hit, grocers were under
tremendous pressure, squeezed by rising costs and race-
to-the-bottom price competition. Net profit margins for
U.S. grocery chains, for example, average just 1% to 2%,
according to consulting firm Mercator Advisory Group.
On top of these dismal trends, executives in the sector fear
the twin Death Stars of retail—Amazon and Walmart—
both of which have made clear their intentions to domi-
nate the grocery business. Walmart is already by far the
largest seller of groceries in the U.S., with a 21.3% market
share, according to UBS, more than twice the share of its
nearest competitor, supermarket chain Kroger.
Some industry insiders argue that the only way “legacy”
grocers can compete with the titans is by matching their
state-of-the-art technology and logistics infrastructure.
That automation could also help them trim labor costs: A
recent McKinsey report estimated that by implementing
existing technologies, a grocer could run a store with 55%
to 65% fewer labor-hours.
Ocado’s pitch to grocers stresses those benefits and
adds a compelling twist: Ocado can build the automa-
tion infrastructure for them, sparing them the pains and
costs of developing their own.
For many years, Ocado’s talk of becoming a tech plat-
form seemed to be just that: talk. Equity analysts were
skeptical, and the stock became a perennial favorite among
 1800+
NUMBER OF SOFTWARE ENGINEERS EMPLOYED BY OCADO
short-sellers. But Ocado’s logistics prowess
has gradually won converts. Beginning in
2017, the company announced a series of
licensing deals with grocery chains on four
continents—including a huge partnership
with Kroger. Since then, Ocado’s market
capitalization has quadrupled to north of
$10 billion, while revenue has grown steadily,
to $2.2 billion last year. (See the “Price of
Growth” box in this story.)
Investors seem confident that Ocado can
capitalize on the current moment; its shares
have risen 28% since Feb. 28, even as global
markets plummeted. The future, however,
looks murkier. Ocado’s licensing deals
require it to spend heavily upfront to build
dozens of CFCs. Those obligations have left
some analysts wondering if the company,
which currently carries more than $750 mil-
lion in debt, has taken on too much risk. And,
even once the pandemic passes, an exis-
tential question looms: whether any grocer,
even with Ocado’s robotic helping hand, can
withstand the onslaught of the Everything
Store and the Behemoth of Bentonville.
CADO’S ROOTS stretch back to
the dotcom boom, when three
O twentysomething Brits
working as traders at Goldman
Sachs—Tim Steiner, Jonathan
Faiman, and Jason Gissing—got bitten by
the startup bug. The trio founded Ocado in
April 2000. (The name is an invented word,
chosen because it could work across
languages and because the founders liked
N I C K P O T T S — PA I M A G E S / G E T T Y I M A G E S
how it looked as a logo.) Steiner, Ocado’s
CEO, is the only founder still involved with
the company. Compact and trim, with
close-cropped gray hair and pale blue eyes,
he exudes a pugilistic intensity as he walks
through Ocado’s history at a rapid-fire clip.
When Ocado made its debut, established
British grocery chains such as Tesco, Sains-
bury’s, and Walmart-owned Asda already
ESSENTIAL had e-commerce operations. Those chains
An Ocado driver were using their stores to fulfill online orders,
delivers groceries
in Ironbridge,
with store clerks gathering the goods and
England. Ocado’s loading them onto delivery trucks. This pro-
order volume cess, known as “store pick,” is the way most
surged in March as retailers have grafted e-commerce onto their
social distancing
existing operations. Store pick requires little
measures took hold.
additional capital or labor investment, but it
has disadvantages. Many stores’ stockrooms
are too cramped to accommodate a sizable
picking operation, which means employ-
ees may have to fill online orders from the
supermarket floor, putting them in competi-
tion with in-store customers. With smaller
inventories, there’s also a greater chance that
items won’t be available—a leading driver of
customer dissatisfaction.
Ocado, which had no stores, took a
different approach. It built an automated
central distribution center in Hatfield, on
London’s northern edge, and delivered all its
orders from there—a strategy that helped it
minimize inventory shortfalls. The business
quickly became popular, consistently top-
ping consumer surveys.
The problem: The technology at Hat-
field left a lot to be desired. The equipment
Ocado was using—giant conveyor belts
and sorting machines—was designed for
the manufacturing sector, where factories
churn out mass volumes of identical items.
It was ill-suited for the grocery business,
where the assortment of items is huge, and
each customer’s order is unique. Constant
spending on improvements, meanwhile, was
eating up cash. “I used to joke about the law
of material-handling equipment, which was,
Five plus five equals seven,” Steiner says.
7 8 FO R T U N E M AY 2 0 2 0
Around this time, Paul Clarke, a software
consultant with experience running tech
startups, received a call from an Ocado
recruiter. “I said, ‘Look, I’m really sorry, but
I don’t want to work in retail,’ ” recalls Clarke,
a lanky 60-year-old with the professorial
demeanor of the Oxford physics don he once
considered becoming. But when he toured
Ocado’s warehouse, Clarke was impressed
by its scale and complexity. Hatfield was a
giant automation puzzle—exactly the sort of
engineering problem he enjoyed cracking. “I
fell in love,” he says.
Clarke signed on for a one-year gig, tasked
with improving the system that controlled
the flow of goods along Hatfield’s fast-
moving conveyor belts. Ocado’s operation
was so complex, Clarke says, that the only
way to reengineer it was to build a series of
digital “twins”—in essence, real-time software
simulations of the operation. This allowed
Clarke and his team to experiment with im-
proved configurations before implementing
them in the real warehouse, avoiding costly
trial and error. Before long, Steiner says, the
twins helped wring new efficiencies from
equipment—making five plus five equal 12.
In the summer of 2010, Ocado went public
on the London Stock Exchange, in a list-
ing that valued the company at 937 million
pounds ($1.4 billion at the time). That was
more than many analysts thought the money-
losing grocer was worth, and its shares fell
10% on their first day of trading. That skepti-
cism would continue to haunt Ocado: Over
the next decade, its shares would frequently
have the dubious distinction of the being
among the market’s most shorted.
Over the following year, though, Ocado
eked out its first small operating profit.
Around the same time, grocery consultants,
investment banks, and, eventually, huge
packaged goods companies—Procter &
Gamble, Unilever, Nestlé, and Coca-Cola—
began quietly asking to tour the company’s
fulfillment centers. Steiner’s instinct was to
refuse. “We were quite secretive,” he recalls.
But he soon realized that while other com-
panies might glean a few tips by touring the
CFCs, they couldn’t replicate the integrated
system of software, hardware, warehouse
workers, and delivery drivers Ocado had
built over a decade. In its 2012 annual report,
Ocado for the first time made monetizing its
intellectual property a strategic plank.
Among those who visited Ocado was the U.K. grocer
Morrisons, which had revenues far exceeding Ocado’s
but didn’t have an online offering. The two companies
reached a deal that sold half the capacity of Ocado’s new-
est CFC to Morrisons, with Ocado agreeing to manage the
facility and a delivery fleet on Morrisons’ behalf. When
Morrisons.com launched in January 2014, it was the first
evidence that Ocado could put its platform to work for
other grocers.
Clarke, who by then had been promoted to chief technol-
ogy officer, had an even more ambitious version of that
platform in mind. By mid-2015, Ocado had begun develop-
ing the army of robots that would eventually staff its “hives.”
The robots, designed by Ocado in conjunction with U.K.
robotics company Tharsus, are controlled by an internal
4G network with more base stations packed into less
space than pretty much anywhere else on the planet. The
network enables each robot to communicate with the soft-
ware controlling it 10 times per second. At Erith, the hive
generates four terabytes of data every day, all of which is
fed back into a digital twin to refine the system.
The robots allow Ocado’s newest fulfillment centers to
pick 200 items per hour of labor time—and mean they
can move a typical order from inbound supply truck into
the hive, and then have it picked, packed, and loaded on
a van for delivery in 15 minutes or less. Meanwhile, the
modular design of the hive itself means it can easily be
replicated and sized to fit new locations. Complementing
the hardware is new software—lots of it, from cloud-based
mobile apps to artificial intelligence. This integrated pack-
age, along with the engineering support to maintain and
upgrade it, is what Ocado now offers to the world’s grocers.
THE PRICE OF GROWTH
OCADO’S GROCERY SERVICE has been a hit with British
shoppers. Its automated logistics and software business
aims to be an equally big hit with supermarket chains—
but spending on the tech has hurt Ocado’s bottom line.
ANNUAL REVENUES PRETAX INCOME
$2.2 B.
$2.0 billion $0
–50
1.5
–100
1.0 –150
–200
0.5
–250
–$273 M.
0 –300 million
FY 2011 2015 2019 FY 2011 2015 2019
SOURCE: BLOOMBERG

EVENTUALLY, SAYS OCADO’S
PAUL CLARKE, “THE GOAL
IS TO MOVE TO AN
ENTIRELY DARK FACILITY”—
THAT IS, A FACILITY WITH
ALMOST NO PEOPLE.
MA ZON AND WALMART are no strangers to
robotics. Amazon uses flat, Roomba-like
A robots to move stacks of pallets around its
fulfillment centers; last year, it acquired
Canvas, a startup whose computer-vision
systems allow warehouse robots to work in crowded
conditions alongside people. Walmart, meanwhile, has
deployed thousands of robots to track inventory and has
created a fully automated pilot warehouse in New
Hampshire to serve its grocery e-commerce business.
Pure-play supermarkets have been far slower to auto-
mate. But in June 2017, a major move by Amazon gave
Ocado’s modernization sales pitch a Saturn V–size boost.
That was when the Everything Store spent $13.7 billion
to buy upscale grocer Whole Foods, which had 500 stores
worldwide. The deal stoked grocers’ fears that Amazon
would decimate them as it had so many retailers in other
categories—and the trickle of interest in Ocado’s technol-
ogy became a torrent.
In November 2017, Ocado announced a deal with French
retailer Groupe Casino to supply the technology for its
e-commerce in France. Two months later, it partnered
with Sobeys, which operates 1,500 stores under a variety
of brand names across Canada. “It’s the only profitable
e-commerce model at scale that I’ve seen,” Sarah Joyce,
Sobeys senior vice president for e-commerce, says of Ocado.
Several other deals followed, including with ICA, a
Swedish company that operates 1,300 groceries; with Coles,
in Australia; and with Aeon, Asia’s largest supermarket
chain, in Japan. But the biggest of them all was the strategic
partnership Ocado reached in May 2018 with Kroger. The
American giant took a 5% share in Ocado and gained exclu-
sive U.S. rights to its technology; Ocado committed to build-
ing about 20 CFCs for Kroger. The British company’s shares
soared 44% on the day the partnership became public.
Rodney McMullen, Kroger’s CEO, says he had been
watching Ocado for a decade, meeting periodically with
its top executives. Kroger implemented a store pick–based
THE CORONAVIRUS ECONOMY : OCADO
e-commerce operation after a 2013 merger,
but McMullen says it became unwieldy as it
grew. The struggle to keep both online and
in-store customers happy was driving Kroger
toward the automation model. “We didn’t see
a path where we could accelerate to where
Ocado is in a year or two,” McMullen says.
It’s a common refrain among Ocado’s cus-
tomers: They lack the resources to replicate
Ocado’s technology. “We are a big company,
but we are not a technology company,” says
Anders Svensson, the CEO of ICA Sweden.
Ocado, in contrast, employs more than
1,800 software engineers and 600 hardware
specialists. That’s far less than Amazon or
Google, but it’s a lot for a grocer.
HE SLEW OF LICENSING DEALS
pushed many investors to
T abandon their skepticism: It’s
been a long time since Ocado
was a heavily shorted stock.
Still, those deals aren’t adding much to the
bottom line—because Ocado receives money
only after the automated CFCs are built.
Ocado currently operates six CFCs to sup-
port its U.K. grocery operation; it aims to run
at least 50 worldwide within the decade. Its
first CFC outside Britain, built for France’s
Groupe Casino, went live on March 26.
Another, for Sobeys, outside Toronto, should
open by June. And its first center for Kroger
is scheduled to come online in Monroe, Ohio,
in the first half of 2021.
Ocado’s partners are responsible for
acquiring land, building external structures,
providing a delivery fleet, and hiring workers.
But Ocado has to build the hives, supply the
robots and software, and provide training and
on-site engineering support. It costs Ocado
$40 million to $45 million in “peak cash
outflow” for each average-size CFC, Steiner
says. Only after construction does Ocado col-
lect a fee based on the warehouses’ available
capacity. In its most recent fiscal year, just 6%
of Ocado’s revenue came from licensing.
Sherri Malek, an equity analyst at RBC
Capital Markets, says Ocado won’t see posi-
tive free cash flow from its licensing until
at least 2022. Meanwhile, Ocado’s heavy
investment has led to ballooning losses—
worsened by a catastrophic fire that gutted
one of its CFCs in early 2019.
One looming question is whether the
coronavirus could thwart Ocado’s expansion.

A HUMAN TOUCH
Ocado is experimenting with humanoid robots
that can handle delicate groceries and do repairs.
When the pandemic first struck, Ocado en-
countered trouble obtaining a key part for its
robots, because it was made in Wuhan, China,
the epicenter of the outbreak. (The company
has since found an alternate supplier.) Ocado
mostly hires local engineering teams, so
travel bans have had little impact on its plans.
And grocery and construction workers have
been classified as essential in most places,
enabling work to continue. Still, Duncan
Tatton-Brown, Ocado’s CFO, acknowledged
to reporters in March that if restrictions on
movement stayed in place for many months,
the construction timeline would suffer.
At the same time, Ocado doesn’t expect all
of its pandemic-driven revenue boost to last.
Much of its sales bump came from customers
buying dry goods and other nonperishables;
the company predicts that demand for many
of these items will fall below normal levels
in the second half of the year, as customers
work through their stockpiles.
Even before the coronavirus, some observ-
ers were doubtful that Ocado’s grocer partner-
ships would pay off. Christopher Mandeville,
a food retail and distribution analyst at
research firm Jefferies, has criticized the
Kroger deal in particular. Other than in a few
major cities, he says, population density in
THE CORONAVIRUS ECONOMY : OCADO
the U.S. isn’t high enough to support Ocado’s CFC model.
If anything, the pandemic has shown that “store pick” may
be a more resilient business model: Stores can staff up to
fulfill online orders if a crisis prompts a surge in demand,
whereas automated CFCs, designed to operate close to
capacity most of the time, aren’t as flexible.
Such doubts haven’t stopped Ocado from raising capital.
It issued a $187 million share offering in 2018. In February
2019, it sold 50% of its British e-commerce operation to
U.K. retailer Marks & Spencer. The sale simplified Ocado’s
proposition to investors, positioning it as more of a pure-
play tech platform, while raising $982 million. Ocado also
sold $655 million of convertible bonds in December.
The frequency of Ocado’s fundraising has made some
analysts uneasy. But Steiner, the CEO, says the efforts are
a sign of strength, not weakness. “The only reason to do a
capital raise is because you think you are going to do more
[business],” he says. And in February, the world’s most
prominent investor offered an indirect vote of confidence
in Ocado’s strategy: Warren Buffett’s Berkshire Hathaway
disclosed in government filings that it had spent almost
$550 million to buy a 2.3% stake in Kroger.
HILE OCADO BREAKS GROUND on CFCs
around the world, Clarke, the chief technol-
W ogy officer, is peering around the next
technological bend. He has experimented
with new robots, including models with
human-like appendages that enable them to handle
delicate groceries and carry out repairs. Eventually, Clarke
says, “the goal is to move to an entirely dark facility”—that
is, a CFC with almost no people.
Robots aren’t the only topic on Clarke’s mind. Ocado has
made multiple investments in “vertical” farming—indoor
experiments in sustainable agriculture. Another invest-
ment is Karakuri, a British startup creating automated
kitchens that can prepare restaurant-style meals for deliv-
ery. Clarke says Ocado envisions building an “integrated
food machine.” By combining vertical farming, food prep,
and delivery in one facility, he explains, “you might be able
to go from plant to kitchen table in two hours or less.”
Steiner and Clarke have also begun looking beyond food
altogether in search of profitable business lines. Ocado’s
expertise in logistics, A.I., robotics, and simulation could be
deployed to tackle automated parking lots, parcel sorting,
rail freight, container ports, and more. Ocado has already
created simulations of a car-parking system, Clarke says,
and has begun exploring scaled-up versions of its robots for
handling freight far heavier than a crate of bananas.
COURTESY OF OCADO GROUP
It all may sound like a stretch for a company whose
core grocery business is still fighting to prove its staying
power. But for those who wonder why Ocado would want
to expand into parking or port operations, Steiner has
a ready answer: What if Amazon had simply stopped
with books?
GOLDEN GATE BRIDGE

The Golden Gate Bridge was financed with municipal bonds.

ALSO KEPT TAXES AT BAY

Dubbed one of the ‘Wonders of the Modern World’, the Golden Gate Bridge opened to the public on
May 27, 1937. At the time, it was both the longest and the tallest suspension bridge in the world, with
a main span of 4,200 feet and a total height of 746 feet. It is still the tallest bridge in the United States,
transporting 110,000 vehicles every day. To help raise the $35 million it cost to build, the authorities in
California issued tax-free municipal bonds.
Still Going Strong About Hennion & Walsh
And, just like that iconic structure, Since 1990 Hennion & Walsh has
municipal bonds are still going strong today specialized in investment-grade tax-
as a way for investors to invest in civic free municipal bonds. The company
projects, while earning income that’s free supervises over $3 billion in assets
of federal taxes and potentially state taxes. in over 16,000 accounts, providing
individual investors with institutional
Many US investors use municipal
quality service and personal attention.
bonds as part of their retirement
planning. Here’s why: Our FREE Gift To You
Tax-Free Income In case you want to know more about
Income from municipal bonds is not subject the benefits of tax-free Municipal Bonds,
to federal income tax and, depending on our specialists have created a helpful
where you live, may also be exempt from Bond Guide for investors. It’s free and
state and local taxes. Tax-free income can comes with no obligation whatsoever.
be a big attraction for many investors.

FREE Bond Guide

Without cost
or obligation
Call (800) 316-2804

© 2020 Hennion & Walsh Inc. Securities offered through Hennion & Walsh Inc. Member of FINRA, SIPC. Investing in bonds involves
risk including possible loss of principal. Income may be subject to state, local or federal alternative minimum tax. When interest rates
rise, bond prices fall, and when interest rates fall, bond prices rise. Past performance is not a guarantee of future results.
TH E C O RO N AVI RU S E C O N O M Y : WO R LD ’S 2 5 G R E ATE S T LE A D E R S

WORLD’S 25 GREATEST LEADERS

HEROES
OF THE
PANDEMIC
No disease in living memory has posed as great a
threat to global health and livelihoods as the novel
coronavirus. But since its earliest days, the battle
against SARS-CoV-2 has also spurred countless people
to tremendous acts of resourcefulness, courage, and
compassion. We’re devoting our seventh annual
leaders’ list to those who have rallied the world behind
them in this decisive moment, including inspirational
figures from the medical community—some of whom 1
led by example even at the cost of their lives.
LI
WRITERS: MARIA ASPAN, EAMON BARRETT, KRISTEN BELLSTROM, SCOTT DECARLO,
NAOMI XU ELEGANT, ERIKA FRY, MATT HEIMER, RACHEL KING, ELLEN MCGIRT,
WENLIANG
OPHTHALMOLOGIST, WUHAN
GRADY MCGREGOR, DAVID MEYER, JOHN PATRICK PULLEN, CLAIRE ZILLMAN CENTRAL HOSPITAL, CHINA
 2 4
CHRIS GREGOIRE THE GOVERNORS
CEO Jay Inslee,
Challenge Seattle Washington;
Gretchen Whitmer,
Gregoire, a former Michigan;
Washington governor, Mike DeWine, Ohio
brought hard-hit
Seattle’s business From Washington’s
community together Inslee, who had to
early in the city’s invent the playbook
outbreak. She insisted for fighting the disease
on a science-based on U.S. soil when his
response, and the state was the first
group, which includes hit, to Whitmer, who
some of the world’s refused to back down
most competitive when attacked by
corporate rivals, fol- President Trump over
lowed her lead—act- her demand that the
ing early, aggressively, federal government
and in unison—to step up to help, to
help slow the virus’s DeWine, who has
spread. (For more, see held the line on his
“Seattle Under Siege” stay-at-home order,
in this issue.) despite pressure from
protesters and his
own party, seeing U.S.
3 governors rise to the
moment has been a
JACK MA bright light in a bleak
Cofounder time.
Alibaba, China

A strong advocate of 5
U.S.-Chinese coopera-
tion during his time ANTHONY FAUCI
running Alibaba, Ma Director, National In-
cut through geopoliti- stitute of Allergy and
cal tensions to donate Infectious Diseases
thousands of testing
kits and a million face In 36 years as
masks to the CDC, director of NIAID,
while facilitating the Fauci has guided
shipment of 1,000 the U.S. response to
ventilators to New outbreaks from AIDS
York State. He has to Zika. After mixed
also been quick to signals and inaction
help other undersup- initially handicapped
plied nations, particu- the federal reaction
larly in Latin America to the coronavirus,
and Africa. As of Fauci emerged as the
mid-April, Ma had do- administration’s most
nated nearly 18 million trusted authority fig-
masks, 3 million test ure. He has assuaged
kits, and thousands of the public by speaking
ventilators—reaching plainly, frequently, and
over 100 countries. honestly in briefings.
And his candor about
mistakes—“It’s a fail-
ing, let’s admit it,” he
told Congress of the
government’s testing
efforts—has helped
prompt the White
House to course-
correct.
IF THE PANDEMIC HAS A FACE , it’s the mask-clad visage of Dr. Li. After becoming one of the
WENLIANG: XINHUA NEWS AGENCY—REUTERS

first to sound the alarm about a new virus emerging in his city, Li was detained by local Chinese 6
authorities and forced to recant his warning. Within days of his release, the 34-year-old doctor
RACHAEL BEDARD
returned to treating patients, only to become infected by the all-too-real disease, and then, on Geriatrician
Feb. 7, to succumb to it. Dr. Li’s bravery—both in the face of the coronavirus and the state— Rikers Island
inspired China and ultimately the world. (In April, the Chinese government honored Li as a Bedard, who cares for
“martyr.”) Dr. Li’s final post on social media site Weibo has become a living memorial, where the oldest and sickest
users flock to post messages and celebrate his life. This digital Wailing Wall, as some have called in New York City’s cor-
rectional system, has
it, has more than 850,000 posts and stands in rebuke to anyone who does not believe that the refused to allow the
voice of one can be the difference between the life or death of thousands. risk to her incarcer-
8 4 FO R T U N E M AY 2 0 2 0 THE CORONAVIRUS ECONOMY : HEROES OF THE PANDEMIC

ated patients to be Andrés’s latest feat: same approach that 10 12 13

overlooked. She’s turning the Washing- helped Regeneron
used Twitter to call ton Nationals’ baseball deliver an Ebola drug BILL GATES LEE HSIEN LOONG JANE MOSBACHER
for a mass release of stadium into a massive last year—to treat the Cofounder, Bill & LEO YEE-SIN MORRIS
detainees, reminding community kitchen to disease and serve as a & Melinda Gates Prime Minister, Founder and CEO
anyone who will listen serve D.C. residents. prophylaxis for medi- Foundation Singapore & Executive To the Market
that jail is “a perfect cal workers. Director, National
setup” for a deadly Five years ago, with Center for Infectious Morris’s organization
outbreak. 8 spooky precision, Diseases, Singapore matches big buyers—
9 Gates warned us we’d like Target and Mas-
GEORGE be where we are now if Singapore was one of tercard—with a global
7 YANCOPOULOS MARY BARRA we didn’t prepare for a the first countries out- network of nontradi-
Chief Scientific CEO, General Motors pandemic. (We didn’t side China to confirm tional manufacturers,
JOSÉ ANDRÉS Officer, cofounder, prepare.) Luckily, Gates a coronavirus case; mostly women-owned
Founder, World Regeneron GM was the first big did—putting his money nearly three months on, and based in vulnerable
Central Kitchen American automaker in 2017 behind CEPI, its COVID-19-related communities. In March,
Regeneron and Yan- to commit its idle an organization that deaths remained in dozens of TTM makers
The chef and restau- copoulos are racing to assembly lines to the has already ushered the single digits. Leo’s retooled their opera-
rateur has thrown fight COVID-19 on two fight against COVID-19. eight COVID-19 vac- center developed a test tions to produce masks,
himself into nourishing fronts. The company’s Barra stood fast in the cine candidates into before the city-state gowns, and scrubs.
those affected by the rheumatoid arthritis face of criticism from development. In Febru- confirmed its first case. Barely 30 days later,
crisis, forklifting food drug sped into clinical the President and ary, Gates deployed It now has one of the the personal protective
onto quarantined trials in March after reaped the benefits: funding to ready highest per capita test- equipment (PPE) began
cruise ships and serv- evidence emerged On April 8, the U.S. critical public health ing rates in the world. rolling in. Morris has
ing nearly 100,000 from China that it may Department of Health infrastructure in Africa Swift border controls, orders for over 1.2 mil-
meals a day to health help the most severely and Human Services and South Asia for the methodical contact lion units in the U.S. and
care workers and ill patients. Since awarded GM a virus’s onslaught. tracing, and transpar- hopes to eventually dis-
others in hotspots— January, Yancopou- $489 million contract ent communication tribute in Kenya, Ghana,
all while providing los’s team has also to deliver 30,000 with the public also and India too.
much-needed jobs for been developing an ventilators by the end serve as how-tos for
restaurant employees. antibody cocktail—the of August. other virus hotspots.
14

L I G H T F O O T: K A M I L K R Z A C Z Y N S K I /A F P — G E T T Y I M A G E S ; D U R K A N : E L A I N E T H O M P S O N — A P P H O T O ; B R E E D : J U S T I N S U L L I VA N — G E T T Y I M A G E S
AMADOU SALL
v Director, Institut
Pasteur, Senegal

Testing resources for

COVID-19 have been
particularly scarce in
Africa, where a couple
of months ago the
continent had just two
labs—one of which is
Sall’s institute—that
could do the job. The
virologist has been
focused on spreading
that capacity and creat-
ing a more practical way
to test. Working with
U.K.-based diagnostic
company Mologic, Sall’s
team is developing a
point-of-care device
LORI LIGHTFOOT Mayor of Chicago JENNY DURKAN Mayor of Seattle LONDON BREED Mayor of San Francisco
that will offer results in
10 minutes. Tests will
cost less than $1 and
AS THE FEDERAL GOVERNMENT DRAGGED ITS FEET, America’s mayors—par-
be manufactured
ticularly those leading our biggest and therefore most vulnerable cities—sprang in Senegal.
11 into action to protect their citizens. In Seattle, the earliest U.S. hotspot, Jenny
Durkan established the country’s first drive-up testing site for first responders,
15
created a $5 million grocery voucher program, and shared her city’s hard-won
KIOUS KELLY
THE lessons with her fellow mayors. Durkan’s counterparts in the Bay Area—includ-
ing San Francisco’s London Breed and Oakland’s Libby Schaaf—seem to have
ER Nurse, Mount Sinai
West

MAYORS heeded her warnings. The region was the first in the nation to issue shelter-in-
place orders, a farsighted step that likely saved thousands of lives. In Chicago, One of the countless
health care profession-
Lori Lightfoot showed that urban leadership extends beyond the West Coast, als putting their lives
closing the city’s parks to enforce social distancing—and playing into the loving on the line—and too
often losing them—
memes that sprang up depicting her as a stern quarantine enforcer. “Your jump Kelly is believed to be
shot is always gonna be weak,” quipped Lightfoot. “Stay out of the parks.” the first New York City
 nurse to have died from Iranians shared a photo
the virus. His death of the doctor hard at
spurred colleagues to work while hooked to
defy orders and speak an IV drip, praising her
out about the danger- persistence and brav-
ous PPE shortages at ery in the face of Iran’s
city hospitals, motivat- massive outbreak.
ing policymakers and
philanthropists to step
up to help. 19
WANG CHUANFU
16 Chairman, BYD

RIHANNA Wang was among the

Founder, Clara Lionel first corporate leaders
Foundation/Fenty to implement a major
Beauty pivot to meet virus-
driven demand. In
Rihanna’s nonprofit late January, when the
pledged $5 million to COVID-19 crisis was
address the needs of accelerating in China,
families impacted by Wang created a task
the pandemic, making force to design and
her one of the first ce- build new production
lebrities to throw their
financial weight into
the crisis. So far, her
lines to manufacture
face masks and hand
sanitizer—goods now
25
commitments include in demand worldwide.
$2 million partnerships Today, the Shenzhen-
with Jay-Z’s Shawn based electric-vehicle
Carter Foundation and
Jack Dorsey, and an
maker claims to be the
world’s largest manu-
JACK DORSEY
CEO, TWITTER/SQUARE
effort to get tests and facturer of surgical
supplies to ICUs in Haiti masks, churning out
and Malawi. 5 million a day. DORSEY SEIZED THE PANDEMIC MOMENT to make his first major foray into
philanthropy, announcing that he would devote $1 billion of his equity in pay-
ment startup Square—or about 28% of his wealth—to a COVID-19 relief fund.
17 20 He’s disbursing the money transparently, going so far as to tweet out a public
NEIL FERGUSON ANGELA MERKEL Google spreadsheet tracking the process. About $5.2 million had been doled out
Professor, Imperial Chancellor, Germany
College London, U.K.
as of mid-April; one of the first recipients was the joint $4.2 million grant he and
Hardly a lame duck, Rihanna (No. 16) set up to benefit victims of domestic violence affected by L.A.’s
In early March, the U.K. Germany’s outgoing stay-at-home order. Dorsey is also thinking beyond the epidemic, earmarking any
was pursuing a coro- chancellor has won
navirus strategy that global praise for her leftover money to support girls’ education and universal basic income, which he
accepted an almost calm, immediate, and calls “the best long-term solutions to the existential problems facing the world.”
unchecked infection effective response to
rate in a bid to create the pandemic. Merkel,
widespread immunity. a trained scientist, v
Modeling provided by imposed strict social
epidemiologist Fer- distancing measures
guson and his team and modeled them
helped change the herself, self-quaran-
government’s mind. tining after her doctor pioneers in setting the situation with As the virus 24
Without a lockdown, tested positive for up special shopping aplomb, canceling pummeled Italy,
the scientists warned, COVID-19. Those poli- hours and delivery Saint Patrick’s Day Fracassi and BRETT CROZIER
over 500,000 people cies and Germany’s for the vulnerable festivities and closing Romaioli heard a Former commander
could die in the U.K. early, widespread and elderly. In North schools, pubs, and hospital in Brescia U.S.S. Roosevelt
The White House also testing have helped America, Texas-based other establishments was short on
took note of the model, keep its death toll H-E-B and Canada’s without hesitation. essential valves As the coronavirus
which predicted a U.S. far lower than that of Sobeys increased But what has really for its ventilators. spread quickly
death toll as high as many of its European workers’ pay and medi- impressed is his will- The pair visited through his aircraft
2.2 million, and stepped neighbors. cal leave—acts that ingness to put himself the hospital and carrier, Crozier urged
up isolation rules. helped nudge giants on the front lines: A studied the valves, his superior to help
Target and Walmart to doctor by training, which needed to be him evacuate stricken
21 follow suit. Varadkar is now work- replaced after each crew—and then wrote
18 ing half a day per week use. They tinkered a plea to other brass
THE GROCERS assessing patients for with prototypes on after relief was slow
SHIRIN ROUHANI the virus. Isinnova’s 3D printers in coming. When the
D O R S E Y: T O B Y M E LV I L L E — R E U T E R S

Waitrose, U.K.; H-E-B, 22

Physician, Shohada U.S.; Sobeys, Canada until they figured letter was leaked to
Hospital, Iran LEO VARADKAR out how to create the press, it prompted
Grocers have emerged Prime Minister 23 the parts—and then Crozier’s removal—but
Facing a severe short- as vital lifelines for pan- Ireland provided them to not before drawing the
age of medical staff, icked populations, even CRISTIAN the hospital for free. nation’s attention to
Rouhani continued as their staff became Closing out his term FRACASSI & Fracassi told local the threat posed to our
to treat patients even “essential” frontline in the midst of the ALESSANDRO media: “There were troops, a reality driven
after she herself was workers at risk of expo- crisis—his party lost in ROMAIOLI people with their home on April 13 when
infected by COVID-19. sure. European chains February’s election— CEO & Engineer lives in danger, and a sailor from the ship
After her death, many like Waitrose were Varadkar has tackled Isinnova, Italy we acted. Period.” died from the virus.
AMD CEO LISA SU,
an engineer with a
Ph.D. from MIT,
has transformed
the company by
doubling down
on cutting-edge
technology.
 FO R T U N E M AY 2 0 2 0 8 7

The
Conversation
LISA SU
Chipmaker Advanced Micro Devices was an industry also-ran when Lisa Su took
over as CEO. Six years later, the company has made a name for itself as the engine
powering high-performance tech like A.I. and gaming. In this in-depth interview,
the AMD chief talks supercomputing, executing a turnaround, and running a
global company in the midst of a pandemic. INTERVIEW BY AARON PRESSMAN

T H I S E D I T E D Q & A H A S B E E N C O N D E N S E D F O R S PAC E A N D C L A R I T Y.

ENGINEERING A NEW AMD the next big thing.

Now the expectations are high. It’s
When you took the reins in October interesting, because life, as well as

“It’s amazing 2014, AMD’s revenue was down

almost 40%; your market share
product road maps, is all about mak-
ing choices. And the choices don’t

to see a had been cut in half—your stock

even dropped below $2. But your
actually get easier as you do better.
The choices are exactly the same, if

company of strategy for revamping the business

by focusing on higher-performance
not harder, frankly.

more than chips has been a success. Your

stock is up, 1 and reviewers have
Your product road map over the
past five years included whole new

10,000 people gone crazy over your latest Ryzen

chip lineup; this year 100 new
designs for CPUs and GPUs. 2 GPUs
used to be just for video gaming,

transition laptops are coming to market with

AMD chips. You once described the
but now they’re also being used in
data centers to help compute big-

to work turnaround process to me as “fight-

ing your set of wars.” How does it
data analysis. What comes next?
We’re making large investments

from home feel to have won some battles?

SU: It’s been very exciting, reward-
in graphics and what we’re doing
around optimizing graphics for both

on a dime.” ing—all of those things. The past

couple of years have certainly
helped build that confidence that,
hey, when we set out to do some-
thing, we can actually get it done.
And when we began, there was a lot
of convincing to do. But there’s a
lot more to do, and in our world it’s
PHOTOGRAPH BY DREW ANTHONY SMITH always about what’s next and what’s
gaming as well as computing. That’s
a new vector where we’re putting a
lot of emphasis.
If you think about what differenti-
ates AMD, it’s the idea that we can
put the best processors together for
each of the workloads. This idea of
bringing CPUs and GPUs together
in different combinations and with
8 8 FO R T U N E M AY 2 0 2 0
different interconnections really goes
toward where accelerated computing
is going in the future.
It’s kind of funny that the same kinds
of GPU chips that video gamers
needed also turned out to be the
thing that’s running A.I. and machine-
learning apps in cloud data centers at
Google and Amazon. Why are those
kinds of GPU chips, which can run
lots of simple tasks very quickly, so in
demand in data centers?
It’s the idea that computers can get
smarter and smarter. And the way
they get smarter is they get better
at recognizing patterns and match-
ing patterns and then using that
information to become a little bit
smarter in the future. And that’s the
whole concept of machine-learning
and artificial intelligence and high-
performance computing.
This part of computing is actually
moving faster than anything else
because we have this tremendous
amount of data that we’re generating,
which we don’t really know what to
do with. Each of us is generating so
much information. Our companies
are generating a ton of information.
The Internet is generating a ton of
information, and we need to figure
out what to do with it all. 3
How do you bend the performance
curve? In technology, if you plot the
performance gains made by our in-
dustry over a five- or 10-year period,
it often looks like a straight line. You
can draw a straight line through it,
and our goal in life is to change that
line. We want to be above the line,
bending the curve.
ALL ABOUT THE EXAFL OP
AMD just won two government bids
to build some of the fastest super-
computers ever. 4 How is your tech-
nology being used in that context?
If you think about the problems that
you’re solving in science at the Oak
Ridge National Laboratory, which
does medical science and weather
BET WEEN
science, or Lawrence Livermore,
THE LINES which does more of the national
security–type things around simu-
(1) AMD STOCK lating our nuclear stockpile, all of
PERFORMANCE
them do better when you can take
APR. 9, 2020 larger data sets and do many more
$48.38 calculations.
That’s what we’re doing in build-
ing these large supercomputers. But
we’re going above what normal scal-
ing would allow you to do by adding
this combination of CPUs and GPUs
OCT. 8, and high-performance interconnect.
2014
$3.28 And that’s kind of fun because you
can see that, yes, it’s the same tech-
nology that goes into game consoles—
albeit much, much, much bigger. But
it’s used in a different way, and it’s
SOURCE: BLOOMBERG
used in really tough applications that
will change the world going forward.
(2) Know your
chips: The CPU, or
The supercomputers you’re build-
central processing ing will reach exaflop speeds, 5 five
unit, is commonly times as fast as the fastest current
used as the main supercomputer. How can you make
computing chip in such a huge leap forward?
PCs and servers.
The GPU, or graph- It’s not any one thing in particular,
ics processing unit, Aaron. I think it’s a combination of
started out helping things. But the most important is
speed up video the idea that these components are
games but is also
used for A.I. and big-
smarter because they have smart in-
data apps now too. terconnects that allow them to share
data and share operations much
more efficiently than what has been
done in the past.
4.1 BILLION
(3) GLOBAL
INTERNET
USERS
My new laptop isn’t five times as
SOURCE: ITU
fast as my old laptop, not even close.
Do you envision that consumer
devices are going to see huge leaps
like that again?
495 MILLION
The technology that we’re putting
into supercomputers today will
absolutely show up in consumer
devices. It might take five more years
for that to be the case, but it’s always
been the case that you use these big
applications to drive the barriers of
2001 2019 innovation.
% OF TOTAL
8% POPULATION 54% Let’s solve the big problems, then,
over the next five to 10 years, you
trickle that to consumers once the
cost point gets there and once the
manufacturing technology gets there.
 TH E C O NVE R SATI O N

Your typical word processor prob-

ably doesn’t need a much faster CPU.
(4) Super deals:
In March, the DOE’s Part of your strategy for
But there are some applications that
I do think are going to hit consum-
Lawrence Livermore
National Labora- reviving the company
ers. A lot of this machine-learning
tory picked AMD to
supply processors was to get into the
technology, for example, is really use-
ful in things like speech recognition,
for El Capitan, its
$600 million super-
business of making
right? And if you think about your
computer. In 2019,
AMD won a similar
custom chips for gaming
speech-to-type conversion right now,
it’s okay, but it’s still not that good.
deal to supply a new
supercomputer
consoles. Now I’m seeing
called Frontier for
the DOE’s Oak Ridge
all kinds of cloud gaming
THE NEW NORMAL
National Laboratory. services everywhere, no
The world is now facing a crisis
(5) Big, big
special device needed.
from the coronavirus pandemic.
On March 5, you told analysts that
numbers:
An exaflop requires
Is console gaming still a
the outbreak was having a modest computing 1 quintil-
lion floating point
good business?
impact on your financials so far.
But given your global supply chain,
calculations per Gaming is a great business. I think
second—or a 1
what are your longer-term worries? followed by 18 zeros.
the last number, there were over
The COVID-19 crisis is truly unprec- Apple says the A13 2 billion gamers if you look at from
edented and touches all of us. Our processor in the
iPhone 11 can reach
mobile to PC to console to cloud. 6
priority is protecting the health and
one teraflop, so it This is a big year for gaming, with
safety of our employees, partners,
and communities. It’s amazing to see
would take 1 million
iPhones to equal an
both Microsoft and Sony launching
a company of more than 10,000 peo- exaflop. their next-generation consoles. They
ple transition to work from home on are some of the most anticipated
a dime. We’ve also figured out how to (6) Play on, consumer products of 2020. And
players:
do some things differently, including
An estimated again, we like gaming because it uses
some very sophisticated engineer- 2.5 billion people technology very, very well. And we’re
ing work remotely. At the same time, played video games
we’re supporting our customers as last year, spend-
able to reach a lot of households, and
their priorities change. We have a ing $152 billion, it will continue to be an important
complex supply chain where our says research firm
Newzoo. About 45%
part of our portfolio. I do think cloud
products go through multiple coun- of the spending is gaming has opportunities, but it’s
tries to get manufactured. Although on mobile games,
about one-third on
still many years out.
there were some early disruptions,
we’ve been able to navigate it. consoles, and the
rest on PC gaming.

Does that mean having more redun- women leaders in tech?

(7) Still a long
dancy geographically? way to go:
One piece is about just the pipeline
That’s exactly right. It’s having redun- Women held 24% and having enough people start
dancy in your supply chain. It’s having of all jobs and 18% in the field. And then the other
redundancy in your engineering of engineering jobs piece is making sure that women
at AMD in 2018, ac-
teams. It’s building the notion of, hey, have good opportunities. Give good
cording to the most
you have your contingency plans as recent data avail- people good opportunities—they
things change. And, in some sense, it’s able. For context: will shine.
building a company that can with- Women held 26% We are definitely very focused on
stand lots of different things related of computer and ensuring that as we look at leader-
math-related jobs
to the environment we’re operating in. nationwide last year.
ship, particularly in the technical
ranks. 7 That being said, these roles
You’re one of just 35 female CEOs are very competitive, and at the end
in the Fortune 500 right now. of the day it’s always about, Let’s get
What do we need to do to have more the best person in the job.
 TIME WELL SPENT

PASSIONS

WATCHES
COURTESY OF HODINKEE (5)

Buying Time
A new generation of watch lovers are selling the most analog of collectibles online. BY DANIEL BENTLEY

AST JULY, Ben
L Clymer sold 100
watches for just
shy of $1 million in under
10 minutes. The time-
pieces—a version of
Blancpain’s Fifty Fathoms
diver’s watch—were
scooped up by collectors,
and a few speculators, all
fervently refreshing a web
page at 10 a.m. on a
Wednesday to drop
$9,900 on a limited-
edition watch. Those in
the know need fast fingers
to score such a rarity from
Clymer’s company,
Hodinkee, and its
collaborations with some
of the world’s top watch
brands, including TAG
Heuer, Vacheron Con-
Hodinkee is a tastemaker,
creating, or at least codifying,
a new breed of vintage
watch collector; one who
might rock a 1940s Longines
with a pair of Nikes.
1 tor, and appear in videos
3
stantin, and Omega,
among others.
But Hodinkee isn’t a
jewelry store, nor is it the
type of watch retailer you’re
used to. It’s the flag bearer
for a revival of interest in
mechanical watches—new
and old—and has spawned
a small but vibrant ecosys-
tem of businesses bringing
vintage watches to new
buyers.
FO R T U N E M AY 2 0 2 0 9 1
master chronograph gifted
to him by his maternal
grandfather. (The name
of his blog—and later,
company—comes from the
Czech word for wrist-
watch: hodinky.) The blog
soon caught on and won
over watch enthusiasts in-
cluding, notably, musician
John Mayer, who would
go on to write for the site,
become an angel inves-
showing off his collection
of heavy-hitter timepieces.
Eleven years later,
Hodinkee is more than
one man’s musings.
It’s the world’s fore-
most news source for
Hodinkee all things watches and
founder and watch culture, with 13
2 CEO Benjamin editors between its North
Clymer (opposite
American and Japanese
page). [1] Omega
Speedmaster websites publishing
Hodinkee Limited articles, reviews, videos,
Edition, inspired and podcasts on all things
by Clymer’s horological.
grandfather’s
watch, $6,500. [2] It’s a tastemaker—in-
Swatch Sistem51 variably increasing the
x Hodinkee value of vintage watches
Generation 1986,
$170. [3] Fifty
it blesses and creating, or
at least codifying, a new
Fathoms Blancpain
for Hodinkee diving breed of vintage watch
watch, $9,900. collector, one who might
[4] TAG Heuer rock a 1940s Longines
Carrera Skipper for with a pair of Nikes.
4 Hodinkee, $5,900.
That influence extends to
bringing forgotten brands
back to the fore. “[Ben]
The New York City– single-handedly ignited
based company began life interest in Universal
as a Tumblr blog in 2009 Genève watches, effec-
while Clymer was working tively a defunct brand,”
as a consultant at UBS. says Florida-based vintage
“It was after the financial watch dealer Eric Wind.
crisis, and I was effec- “The strength in prices for
tively told to look busy in those watches can really
my cubicle,” says Clymer. be credited to him.”
And so he began filling Hodinkee is a maga-
those idle hours by writing zine publisher as well: Its
about watches, starting biannual coffee-table tome
with an Omega Speed- is just as likely to feature
9 2 FO R T U N E M AY 2 0 2 0

a story on vintage Alfa

Romeo sports cars as it is
one about Patek Philippe
perpetual calendars.
But it’s making its big-
gest splash as a retailer,
selling new and vintage
watches, watch straps,
accessories, and the
various trappings that
might appeal to a well-
heeled collector, such as
Leica cameras and $1,600
cigarette lighters by
S.T. Dupont.
That retail operation
began with Clymer and
early employees packing
watch straps in Clymer’s
West Village apartment. It
is now headed up by chief
commercial officer Russell
Kelly, whom Clymer lured
away from his position
as U.S. brand manager of HOW TO BUY THE SELLER It has become commonplace for unscrupulous
dealers to misrepresent the watches they are selling, especially
Rolex sister brand Tudor. BU Y A online. Buy from one who points out a watch’s flaws and will take
(“You don’t just leave Ro- the purchase back if you’re not satisfied.
lex,” one industry insider
WATCH
tells Fortune, speaking to ONLINE BUY THE BEST QUALITY You’ll pay a premium for the best vintage
watches—but they’ll also hold their value. There’s a false economy
the significance of that in trying to save a few thousand dollars buying a beat-up version.
hire.) In 2019, the compa-
ny’s revenue increased by BUY SOMETHING YOU LIKE Watch collecting is about having fun
85% to north of $20 mil- and expressing your own personal taste. Don’t buy something
purely as an investment. Despite record auction prices in recent
lion, and the number of years, the watch market can be fickle. It’s better to have something
brands it sells has grown you’ll enjoy on your wrist when the market takes a dip.
from 10 to 18, adding
huge names like Omega,
Blancpain, Breitling, and
soon Apple Watch.
The limited editions,
released a handful of times
C O U R T E S Y O F J O N AT H A N M C W H O R T E R / C R O W N & C A L I B E R

a year, are what really set
Hodinkee apart from the
average watch retailer. The
company’s in-house design
team works with the
brands to create unique
timepieces or reissue be-
loved watches from their
archives. “We have data on
what our readers and cus-
tomers have in their col-
lections,” says Clymer. “We
know the kinds of things
they’re into.” One example:
A re-creation of a yacht-
ing chronograph from the
archives of TAG Heuer,
known as the “Skipper,”
currently resells for more
than double its original
retail price of $5,990.
After testing the waters
with a number of pop-up
shops, the company is set
to open its first brick-and-
mortar store later this year,
in premises left vacant by
the Supreme streetwear
brand in New York’s SoHo.
Don’t expect the white
gloves and starched collars
you’ll find in the boutiques
of Madison Avenue. The
space has been specced
with slouchy leather
couches, a podcast studio,
and a watchmaker’s bench.
“We wanted to give it a
clubhouse feel,” says Kelly.
One of the more innova-
tive businesses to emerge
from the wave of atten-
tion Hodinkee brought
to vintage watches is
Manhattan-based Analog/
Shift, founded by long-
time watch enthusiast
James Lamdin in 2012.
In contrast to the buyer-
beware shopping experi-
ence at a pawnshop or
diamond district store-
 PA S S I O N S — WATC H E S

Instagram and Hodinkee, line marketplace that uses

front, Lamdin’s approach
is one of transparency and
education. Every nick and
scratch, every blemish of
its pieces is photographed
in high contrast—“often
to our detriment,” says
C OURTESY OF ANALOG/SHIF T
Crown & watch collectors on the data analysis of the watch
Caliber Internet were nerds on market so collectors can
Inside the reseller’s forums. Instagram made buy and sell their watches
watch shop, where it cool for people to share at a fair price.
employees inspect
their collections.” Analog/ Someone looking to
and refurbish
preowned Shift uses Instagram as sell a neglected watch, or
timepieces. both a marketing tool and looking to fund their next
as a way to observe what watch purchase, can go to
Analog/ the larger community of Crown & Caliber’s website,
Shift collectors is buying. enter details on the piece
A Rolex GMT Buying watches on the and receive an instant of-
Master, circa
1968, from the
Internet is one part of the fer for the watch based on
company’s equation—but what about market trends. The seller
inventory. selling them? A collector then sends the watch in
a prepaid shipping box
to the company’s Atlanta
headquarters, where it’s
verified by a team of ex-
perts, serviced and cleaned
if necessary, and offered
up for sale with a one-year
warranty backed by the
company. Retailers like
Neiman Marcus, and even
watch brand Breitling,
use Crown & Caliber to
facilitate their trade-in
programs.
“Every year $5 bil-
lion worth of watches
are sold in the U.S., and
we estimate $100 billion
worth are on people’s
wrists or sitting in drawers
and closets,” says Powell,
“We’ve done more than
70,000 transactions and
have been growing 60%
every year. We think
there’s a huge unaddressed
really enjoy storytelling,” could turn to eBay or a market.”
says Lamdin. “I want to watch forum, but they’re Technology has always
share our knowledge with not without risks. And you disrupted the way we keep
our customers and anyone know you’re probably not time. Sundials replaced
who comes across our site going to get the best deal standing stones. The
or Instagram.” at your local watch dealer wristwatch replaced the
Instagram, which or pawnbroker. pocket watch. But in an

Lamdin. And accompa-
nying each beautifully
shot timepiece is a short
story, practically an essay,
explaining what the watch
is, and why it’s cool. “I
launched the year after
Hodinkee, has had a mas-
sive impact on the world
of watch collecting and
his business in particu-
lar, says Lamdin: “Before
Georgia-native Hamil-
ton Powell thought there
was a better way. Using
his experience in private
equity, Powell created
Crown & Caliber: an on-
age when few of us need
to wear a mechanical
watch, it’s the commu-
nity of enthusiasts on the
Internet that is keeping
them alive.
NAVIGATE
THE
NEW
NORMAL.
 As a print subscriber, you can gain access to all
of FORTUNE’s digital offerings, including the
latest news and key insights surrounding COVID-19
and its effects on business. Plus, you can now unlock
our online archive, proprietary research, quarterly
investment guides, videos on demand, and much more.

Activate your account at FORTUNE.COM/PREMIUM

IT PAYS TO KNOW
* Applies only to existing print subscribers as of March 4, 2020.
Offer valid through 2020. Need to activate by June 30, 2020.
© 2020 Fortune Media IP Limited.
9 6 FO R T U N E M AY 2 0 2 0 THE CARTOGRAPHER

MEXICO CANADA U.K. GERMANY TURKEY

–46.5% –42.8% –42.3% –39.1% –38.4%

U.S. ICELAND GREECE SAUDI ARABIA

–33.9% –34.3% –49.5% –29.8%

ARGENTINA BRAZIL
–51.4% –57.8%

PANAMA AUSTRIA
–8.3% –51.0%

COLOMBIA SPAIN
–58.3% –38.4%

CHILE
–49.1%
ITALY
SOUTH KOREA –40.3%
–40.6%
CHINA
–18.4%
NIGERIA
–34.6%
RUSSIA
–50.8%

U.A.E.
–36.6%

JAPAN
–31.4%
TANZANIA
–18.9%
HONG KONG
–25.3%
THAILAND SOUTH AFRICA EGYPT
–40.9% –46.3% –37.9%

MALAYSIA
INDIA –29.8%
–42.5% CHANGE IN INDEX VALUE,
FROM HIGHEST TO LOWEST
IN 2020

INDONESIA AUSTRALIA –60% –50% –40% –30% –20% –10% 0%

–48.0% –45.9%

A SHOCK WAVE AROUND THE WORLD

NO COUNTRY’S STOCK MARKET HAS BEEN IMMUNE to the global selloff spurred by the coronavirus pandemic. To get a snapshot of
where investors have been hit hardest, we examined 100 of the largest and most heavily traded markets tracked by Bloomberg. The
graphic above shows how far primary stock indexes in each have fallen this year—from their peak to their lowest point. Thus far, stocks
in the world’s biggest economies have fared relatively well. The U.S., despite the most cases and deaths from the virus of any country,
didn’t plunge nearly as far as, for example, energy-dependent Russia. And though the pandemic originated in China, Beijing’s success
in managing the health crisis has translated to the market. Chinese stocks have yet to hit bear territory. —BRIAN O’KEEFE

INFOGRAPHIC BY NICOLAS RAPP WITH SCOTT DECARLO SOURCE: BLOOMBERG; JAN. 1 TO APR. 9, 2020. CALCULATED FROM INDEX PRICES IN U.S. DOLLARS
Businesses that take
care of their people
have people who take
care of business.

How you treat people

changes everything.

Explore our "People First" HR solutions at

UltimateSoftware.com