The Good

Business Issue
● Restaurants with a cause 40
● Why ESG is for real 46
December 28, 2020 ● SPECIAL DOUBLE ISSUE ● Chobani’s secret ingredient 50

Miracle

On Ice
So much went terribly wrong this
year, and then the most loathed industry
gave us vaccines—and hope 34
 No matter what school looks like, we’re
connecting students and teachers to learning.
For over a decade, AT&T has connected more than
200 million students to brighter futures.

att.com/remotelearning

© AT&T 2020. All rights reserved.

 December 28, 2020

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

1
PHOTOGRAPH BY CHRYSTOFER DAVIS FOR BLOOMBERG BUSINESSWEEK

SPECIAL ISSUE 34 Good Business

34 The world’s most loathed industry gave us a vaccine in record time
40 Hunger-conquering World Central Kitchen’s recipe for pandemic relief
46 ESG is on the rise, but the idea that profit isn’t everything is getting pushback
50 How Hamdi Ulukaya made Chobani a household name and stayed a good guy
 ◼ CONTENTS Bloomberg Businessweek December 28, 2020

◼ IN BRIEF 6 A gaming blockbuster bust ● Kilauea ● Musk loves Bitcoin ◼ COVER TRAIL
◼ OPINION 7 Covid relief: Better than nothing, but more must be done How the cover
gets made

◼ REMARKS 8 You’re vulnerable to hackers in ways you can’t control ①

“So this week we’re
doing our annual Good
BUSINESS 12 The cancellation of Ant’s IPO shocked investors, but Business Issue.”
1 Jack Ma’s comeuppance was years in the making “Good what? Have you
even lived this year?”

TECHNOLOGY 18 ▼ Opendoor: How to be a hit startup and lose a fortune “It was pretty crap.
2 But—silver lining alert!”

“Oh, God.”

“Thanks to the
cooperative ingenuity of
business, government,
and science, multiple
companies came up
with a vaccine in just a
few months!”

“OK. So, like, one good

thing in 12 months.”

“Plus, I do love me
some dry ice. Think we
could do a shoot?”

“If there’s a block of dry

ice between here and
Miami, I’ll find it.”

19 Biden and China have very different visions of the internet

21 A miserable year, but not for tech
“Wow, beautiful.
FINANCE 22 Forget the present; for Wall Street the future is now That’s dry ice?”
3 24 The rising star helping call the M&A shots at JPMorgan “Well, no, actually.
But the smoke is from
dry ice. Looks pretty
ECONOMICS 26 It’s a V-shaped recovery. No, K-shaped. No … sick, right?”
4 27 The stimulus deal is too little, too late for many renters “It’s like a miracle … on—”
29 Just how much power should the Fed have in a crisis? “Spare me, please.”

“Where’s your Good

POLITICS 30 Job One for climate czar Kerry: Regain the world’s trust
5 32 How Trump could (still) manipulate census data
Business spirit?”

33 Immigrants remain targets in struggling South Africa TECHNOLOGY: PHOTOGRAPH BY PHILIP CHEUNG FOR BLOOMBERG BUSINESSWEEK

◼ PURSUITS 55 Instant coffee, matcha, and meals that actually taste good
58 Little carpets can be big room-brighteners
60 Thanks to Phillip Sarofim, dune buggies are hot again
62 Multiplexes, never fear! Wonder Woman’s here
63 Homebodies can wriggle their feet into these beauties

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

How to Contact Bloomberg Businessweek

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bloombergbusinessweek/ ▶TWITTER @BW ▶ INSTAGRAM @businessweek stylist: David Probasco

 IN BRIEF
○ There have been more
than 77.7 million coronavirus
cases worldwide, and
1.7m
people have died. A
mutation that may make
the virus more infectious
emerged in the U.K., forcing
London into a full lockdown
on Dec. 19 and leading
governments to suspend
travel to the country.
○ Pakistan was granted
$2.55b
in debt payment relief on
Dec. 22 from creditors
including the Group
of 20 nations. It’s a
6 welcome respite for Prime
Minister Imran Khan and
should aid his efforts to
shore up the country’s
reserves.
○ “I believe
we have
failed.”
King Carl XVI Gustaf took the unusual step of openly criticizing Sweden’s lax
coronavirus rules. Experts blame the government’s aversion to lockdowns for the
country’s higher-than-average death rate, particularly among the elderly.
Bloomberg Businessweek
○ The U.S.
Congress passed
a $900 billion
pandemic relief
bill on Dec. 21.
The package includes help for small
businesses and the jobless and a
$600 one-time payment to most
Americans. It also provides funds for
vaccine distribution, food assistance,
education, and child care.
○ The U.S.
blamed
Moscow for
a massive
cyberattack.
The hack targeted at least 200 U.S.
government agencies, companies
worldwide, and other organizations.
Moscow denies the accusation.
President Trump undercut
his administration’s finding by
downplaying the intrusion’s severity
and suggesting instead that China
might be behind it.  8
By Benedikt Kammel
○ The Kilauea volcano erupted on Dec. 20 for the first time in more than two
years, placing Hawaii’s Big Island on high alert.
○ Sony removed one of
the year’s most keenly
○ The U.S.
awaited gaming titles, Department
Cyberpunk 2077, from of Commerce
its PlayStation Store blacklisted more
on Dec. 18, a little more
than a week after its than 60 Chinese
blockbuster debut. The companies.
reversal followed customer
complaints about bugs
and poor performance.
It says the companies—including
drone maker SZ DJI Technology
and Semiconductor Manufacturing
International—threaten U.S. national
security.
○ The six biggest U.S. ○ Elon Musk fueled the
banks will be allowed to
buy back as much as
Bitcoin hype in a series
of tweets on Dec. 20.
The Tesla CEO mused
$11b whether it would be
of their own shares in
the first quarter, after the
Federal Reserve gave
possible to buy Bitcoin in
“large transactions” so his
company could convert its
U.S. dollar reserves into
lenders the green light to the digital currency, which
resume purchases. has more than tripled in
a ue this
value s year.
yea

○ Peloton Interactive plans
to buy fitness-equipment
company Precor for
$420m
The deal is the largest yet
for the maker of pricey
bikes and treadmills, whose
sales have soared during
the pandemic.
○ Private equity
firm Thoma Bravo
agreed to buy
out RealPage, a
maker of U.S. real
estate software,
in a deal valued at
$9.6 billion.
KILAUEA: J.WEI/NPS PHOTO. CYBERPUNK: CD PROJEKT RED. MUSK: LIESA JOHANNSSEN-KOPPITZ/BLOOMBERG.
○ The USS Georgia, a
nuclear submarine carrying
as many as 154 Tomahawk
cruise missiles, entered
the Persian Gulf on Dec. 21,
in the latest deterrence
PELOTON: PELOTON. STATUARY HALL: CHERISS MAY/GETTY IMAGES
mission against Iran. The
U.S. Navy said it was the
first “overt” transit by a
nuclear sub since 2012.
 BLOOMBERG OPINION December 28, 2020
○ Tropical
cyclone Yasa
The Covid Bill
lashed Fiji on Is Welcome, But More
Dec. 17, causing
widespread
Help Will Be Needed
destruction and
forcing more than The pandemic relief bill passed by Congress on Dec. 21 will
provide vital support for the economy and for millions of
23,000 people Americans struggling to cope with the public-health emer-
to seek shelter gency. At several points in recent weeks, after months of
in evacuation needless delay, lawmakers seemed ready to settle for doing
nothing at all. In view of the stress that many households are
centers. under, that would’ve been unconscionable. Certainly this
long-overdue agreement is welcome.
That said, it’s only a stopgap. Congress and President-elect
Joe Biden’s administration will need to come forward as
○ Fearing a coal shortage, quickly as possible with another package—ideally one that
China has begun rationing remedies the defects of this deal.
electricity use across The $900  billion plan was initially put together by a
the country. The move bipartisan group of senators acting at the last moment before
affects more than a Congress begins its yearend break. It provides new one-off
dozen major cities, payments of $600 for Americans making as much as $75,000 a
including Shenzhen and year ($150,000 for married couples). It boosts unemployment
the industrial centers assistance by $300 a week until mid-March. Related programs 7
Dongguan, Zhongshan, for gig workers and the long-term unemployed will stay in
and Zhuhai. place for the time being. Almost $300 billion will be spent on
forgivable loans for small businesses. There will be more aid
for schools, vaccine distribution, testing and tracing, trans-
portation, and other needs.
The plan’s biggest defect is that it fails to provide the help
for state and local governments that Democrats have long
sought. Their budgets are under enormous pressure, thanks
to heavy pandemic-related costs and the squeeze on tax rev-
enue because of falling incomes. And these levels of govern-
ment face much stricter budget restraints than Washington
does. Republican resistance to such help seems grounded less
in fiscal responsibility than in the indefensible view that the
aid would go mostly to places that have elected Democrats.
It bears noting that, judged as legislative process, the bill
is a mess—and not just because of all the delays. It’s bundled
with a bigger government-funding measure and a bushel of
other add-ons dealing with tax, energy, and national security
matters, to name but a few. The text released by the House of
Representatives runs to more than 5,000 pages, and this mon-
strous document appeared just hours before the intended
vote. From start to finish, this effort has followed every rubric
of how not to run a government.
The deal, however, is a lot better than nothing. It will do
○ A statue of Confederate leader for now. But Congress really ought to conduct its affairs with
Robert E. Lee was removed from
Statuary Hall in the U.S. Capitol
some small semblance of competence. And, at the earliest
on Dec. 21, where for the past opportunity, the Biden administration needs to look afresh at
century it had illustrated the state of
Virginia’s history alongside a figure
further pandemic relief measures.  For more commentary,
of George Washington. go to bloomberg.com/opinion
 ◼ REMARKS
That Hack Is the
8
Sound of Inevitability
● A massive data breach is a reminder
that in all corners of cyberspace, the
advantage is with the attackers
● By Joshua Brustein
The world has a way of reminding us of our own helplessness.
The year 2020 has had more than its share of examples to
choose from, but for those who prefer to direct their existen-
tial dread toward the inability of anyone to protect their dig-
ital data, the recent revelation of one of the most significant
cybersecurity attacks in history is an excellent place to start.
This past spring hackers managed to insert malicious code
into a software product from an IT provider called SolarWinds
Corp. whose client list includes 300,000 institutions. About
18,000 of them were exposed when they downloaded a legit-
imate update from SolarWinds—which of course is the exact
thing you’re supposed to do to keep your defenses fresh. The
attackers spent months running free through their victims’
networks before anyone noticed, harvesting secrets, and could
also have been inserting other vulnerabilities and doing God
knows what else. The U.S. government and independent
cybersecurity experts have tied the attack to hackers affili-
ated with the Russian government, and its victims include the
U.S. departments of Commerce, State, and Treasury, Microsoft
Corp., and cybersecurity firm FireEye Inc.
But sure, go ahead and mix a few special characters into
the password on your email account if it makes you feel better.
In a sense, the SolarWinds attack is far removed from the
security concerns of individual users, who are more vul-
nerable to things like having their computers locked until
PHOTO ILLUSTRATION BY 731; PHOTOS: GETTY IMAGES (2)
they cough up a ransom denominated in Bitcoin. It’s not
worth thinking too much about hardening yourself against
state-sponsored hackers, in the same way you wouldn’t
choose a deadbolt for your front door based on how well it
would stand up to an intercontinental ballistic missile.
The options a government may consider to respond to
cybersecurity threats are also not really available to individ-
uals. Much of the discussion in the wake of the SolarWinds
hack centers on how the U.S. can increase deterrence, which
comes with the implicit assumption that there’s no purely
◼ REMARKS Bloomberg Businessweek
technical fix to cybersecurity at the nation-state level.
In that respect, the breach has highlighted a weakness
shared by large institutions and individuals. The digital land-
scape is far too complex for those who rely on it—you know,
all of us—to monitor all the ways we’re exposed. Major fac-
tors determining whether your data will be used against you
are completely out of your control.
The SolarWinds incident is a kind of intrusion called a
supply chain attack, where attackers sneak into a system by
compromising a product on which it relies. Individuals have
their own supply chains over which they have some but not
total control. At times they inadvertently open themselves up
to infiltration by choosing to use certain products, as in the
2017 attack on CCleaner, in which hackers altered the code
of a product designed to erase web cookies and otherwise
bolster users’ privacy protections. Just as in the SolarWinds
attack, victims were then compromised when they availed
themselves of the official update. At the time of that hack,
CCleaner had been downloaded about 2 billion times.
In other cases, people are exposed when the digital sup-
ply chain of an institution they do business with is compro-
mised, as with the 2013 hack of Target Corp. In that case,
perpetrators made off with more than 100 million credit card
numbers, addresses, phone numbers, and other pieces of
personal data after compromising the company responsi-
ble for the retail chain’s HVAC system. There’s evidence that
Target missed obvious warning signs, but it’s hard to say what
the people whose credit scores were damaged as a result of
the breach could have done differently.
The year before the hack, Target became a prominent
example of another kind of personal data vulnerability, when
the New York Times detailed how the retail chain analyzed
shopping patterns to determine which of its customers were
probably pregnant. It then sent them ads for relevant prod-
ucts, in one case outing a 15-year-old girl who hadn’t told her
father about her pregnancy.
A cyberattack and a violation of privacy aren’t the same
thing, but both illustrate the consequences of individuals losing
control of what others know about them and how those parties
use it, says Dennis Hirsch, a professor at Ohio State University’s
law school. Hoping to solve endemic weaknesses related to
either security or privacy by relying on personal vigilance is
like hoping to slow down climate change by persuading enough
people to turn down their home thermostats. “The individual
control model doesn’t work,” says Hirsch, who believes the
debate over privacy policy has focused too much on giving
individuals more choice about how they share personal infor-
mation. “I can’t know enough to choose which credit card com-
pany is likely to spill my data because of its cybersecurity, and I
can’t know which company is going to analyze my data to infer
my mental health status and determine my creditworthiness.”
Chris Pierson, founder and chief executive officer
of BlackCloak Inc., a company that provides personal
cybersecurity for corporate executives and celebrities, is sim-
ilarly pessimistic about anyone reclaiming control over all the
December 28, 2020
information available online. “It’s something that honestly is
worrisome, but you can’t mitigate it,” he says. He’s primar-
ily concerned with the lengths people can go to reduce what
he calls their privacy attack surface. “Can you remove your
information from data broker websites so you’re a harder tar-
get? The answer is yes, absolutely doable,” Pierson says. “Will
it actually decrease scams and all the rest? Yeah, it’ll make it
much harder.”
BlackCloak offers a combination of securing passwords
(using password vaults and setting up two-factor authenti-
cation on critical accounts), protecting physical devices (put
that phone in a Faraday bag when traveling abroad), and con-
stantly probing clients’ systems for weaknesses.
Weaknesses aren’t hard to find. Pierson says about 40%
of clients come to BlackCloak unaware that they’ve already
been hacked, which can mean anything from having malware
installed on a personal device to having a security camera in
their home livestreaming to a public website. For about 70%
of new clients, the company finds a password to at least one
of their accounts in the black market on the dark web.
Other services offer to give customers control over their
data by maintaining physical control over it. One such com-
pany, Helm, sells physical servers that individuals can use as
an alternative to email providers, photo-storage systems, and
other services that store data on corporate servers. A per-
son can allow new devices or accounts to access Helm’s data 9
only after demonstrating that she has had physical access to
the server itself.
Doing this eliminates one way that attackers—or
marketers—gain access to personal data. But it also intro-
duces other risks, such as having to be the physical custo-
dian of your digital life, and headaches. As Giri Sreenivas,
Helm’s CEO, says “it’s about how much friction you’re will-
ing to accept.” And it becomes complicated, if not impossi-
ble, to opt out entirely. There are entire industries based on
gathering such data without bothering to check with you first.
The last decade or so of building a global technology indus-
try that seeks to maximize consumer convenience has led
some privacy experts to bemoan a rising data nihilism. An
often-repeated dynamic is the tendency of U.S. internet users
to say they value privacy while demonstrating an unwilling-
ness to do anything about it. It would be understandable just
to give up, given the numbing procession of examples demon-
strating how difficult it is to protect against privacy intrusions
or cyberattacks.
But people do keep trying, says Lorrie Cranor, director of
the CyLab Usable Privacy and Security Laboratory at Carnegie
Mellon University. The lab studies the approaches to privacy
and security by nonexperts, who Cranor says tend to see
those as a single issue. People are trying to reduce risks even
if they know it won’t stop them from feeling exposed. After
all, what else are they going to do? “There definitely is a sense
of resignation,” she says. “They say, ‘I have no privacy.’ But
they’re still closing their blinds and locking their doors, both
literally and digitally.” <BW>
Helping job seekers
start new careers in
high-growth fields

Find tools and resources to grow

your career at google.com/grow
Working nights kept Daniel Anderson
from spending time with his family,
so when a friend encouraged him
to check out the Google IT Support
Professional Certificate, he jumped at
the opportunity to advance his career.

Daniel enrolled, earning his certificate

in just five months. Now, he has a job
he loves as an IT Support Specialist—
and has more free time at home with
his loved ones.
 Bloomberg Businessweek December 28, 2020

B The Very Public

Humbling of Jack Ma
U
S
I
N
12
E
S
S
Ma, a co-founder of e-commerce giant Alibaba
○ He was set to raise
Group Holding Ltd., China’s largest company, told
$35 billion from Ant’s IPO. Then the audience that day at the Bund Summit that
China showed him who’s boss
PHOTO ILLUSTRATION BY 731; PHOTOS: BLOOMBERG (1); GETTY IMAGES (1)

he was torn about speaking, but felt this was a

When Jack Ma took to a Shanghai conference stage
in October, China’s most famous entrepreneur
was on the brink of pulling off an unprecedented
$35 billion initial public offering for the finance
juggernaut he co-founded two decades earlier.
Ant Group Co.’s listing would value the company
at more than $300 billion and swell Ma’s own
fortune beyond its already blistering $61  bil-
Edited by
lion, cementing his position as the nation’s
James E. Ellis richest man.
“most critical” moment in the development of
finance. What followed was a 20-minute roast-
ing of anachronistic government regulation that
would suffocate innovation in China. It was a vin-
tage performance by the famously outspoken
executive, known for his confident swagger and
soaring rhetoric. But this time, like Icarus after
he flew too close to the sun, Ma has found him-
self quickly brought back to earth.
Since September, China’s government has
launched a coordinated regulatory crackdown,
which in November scuttled the Ant public
◼ BUSINESS
offering and, together with tough new antitrust
rules, triggered about a $140 billion, or 17%,
decline in the market value of Ma’s Alibaba.
Meanwhile, the flamboyant Ma has all but van-
ished from public view. As of early December, with
his empire under regulatory scrutiny, the man most
closely identified with the meteoric rise of China Inc.
was advised by the government to stay in the coun-
try, according to a person familiar with the matter.
While his wealth and influence are being curbed,
Ma isn’t on the verge of a personal downfall, say
those familiar with the situation, who requested
anonymity to discuss sensitive matters, as did other
officials and executives with whom Bloomberg News
spoke for this story. Instead, his public rebuke is a
warning that Beijing has lost patience with the out-
size power of its technology moguls, increasingly
perceived as a threat to the political and financial
stability President Xi Jinping prizes most.
Once hailed as drivers of economic prosperity
and symbols of the country’s technological
prowess, the empires built by Ma, Tencent Holdings
Ltd.’s chairman, “Pony” Ma Huateng, and other
tycoons are now suspect after amassing hundreds of
millions of users and gaining influence over almost
every aspect of daily life in China. “The [Communist]
Party is trying to make it clear that Ma is not bigger
than the party,” says Rana Mitter, a professor special-
izing in Chinese politics at Oxford University. “But
they also want to show that China is a good place to
do business, and that means that the party needs to
show that entrepreneurs can succeed.”
It’s a precarious balancing act that Ma had
seemed to master over his two decades at the helm
of China’s biggest e-commerce and financial technol-
ogy companies. He was well aware of an approach-
ing avalanche of rules when he infamously called
out “pawn shop” Chinese lenders, regulators who
don’t understand the internet, and the “old men” of
the global banking community during the speech in
Shanghai. Seen as an attempt to deflect the impend-
ing regulatory onslaught, the speech set in motion
an unprecedented series of events.
First came the suspension of the world’s largest
IPO, a late-night announcement on Nov.  3 that
stunned financiers from New York to Shanghai. A
week later the antitrust authority issued 22 pages of
proposed anti-monopoly rules, which many read as
a veiled warning to Ma and fellow entrepreneurs to
tone down the swagger. There are also new guide-
lines to grapple with for some large conglomerates
like Ant that are involved in finance, as well as online
lenders and insurers.
As the attacks mounted, China’s Politburo, the
top decision-making body of the Communist Party,
Bloomberg Businessweek December 28, 2020
in December emphasized the need for stronger
antitrust oversight and to prevent the “disorderly
expansion of capital”—a signal that private
enterprises can expect stricter controls.
Ma’s empire is in crisis mode. His top
executives are part of a task force that has almost
daily interactions with watchdogs. Meanwhile,
regulators, including the China Banking and
Insurance Regulatory Commission, are weighing
which businesses Ant should give up control of to
contain the risks it poses to the economy, according
to officials with knowledge of the matter. They hav-
en’t settled on whether to carve up its different
lines of operation, split its online and offline
services, or pursue a different path altogether.
In his first public address since the IPO was
suspended, Ant Chairman Eric Jing was contrite.
The company, he said on Dec. 15, was listening care-
fully to criticisms and conducting a “comprehensive
self-review.” Ant declined to comment for this story.
China’s banking regulator didn’t reply to a request
for comment.
At Alibaba, executives are dealing with the
antitrust legislation, which analysts say targets
cutthroat competitive tactics in e-commerce. The
company isn’t shielded from the Ant fallout either: 13
Ant’s payments platform is used for most of Alibaba’s
online transactions, and its lending services drive
consumption on its sites.
Ma’s spectacular fall from grace has been years
in the making. The former schoolteacher, who built
Asia’s largest digital corporations, embodies a gen-
eration of self-made entrepreneurs, from Tencent’s
Pony Ma to younger ones including ByteDance
Ltd. founder Zhang Yiming and Meituan’s Wang
Xing. They’ve balanced the sometimes conflicting “He has
demands of Beijing and powerful foreign investors limitations.
to build hugely profitable private empires in com- That is
munist China. President
“Sometimes it’s hard to see clearly and under- Xi. He is not
stand where your limitations are,” says Eric Schiffer, going to win
chief executive officer of Los Angeles-based private that war”
equity firm Patriarch Organization, referring to Ma’s
influence. “He has limitations. That is President Xi.
He is not going to win that war.”
Ma has long cultivated his image as a rebel
fighting the system, knocking down walls protecting
state-owned enterprises. Time and time again, he
emerged from the scuffles stronger.
Ma first rose to prominence as the online retail-
ing genius behind Alibaba, which took on and
dispatched one of the U.S.’s foremost corporations,
EBay Inc., en route to becoming China’s biggest com-
pany. But it’s his second mammoth creation that’s
landed him in hot water.
 ◼ BUSINESS
Ant was born 17 years ago under perilous
circumstances, when China hadn’t yet granted
private companies permission to operate in finance.
With Silicon Valley-based PayPal Holdings Inc. as
his model, Ma created the now ubiquitous Alipay
service, used to pay for everything from loans to
travel to McDonald’s deliveries. In the early days he
emboldened staffers with promises like “If some-
one has to go to jail, I’ll go,” which he recalled at the
World Economic Forum two years ago.
Alipay thrived. Its 2013 Quick Pay feature was
a hit. The service, which effectively created a pay-
ments ledger connecting 200 Chinese banks, sim-
plified the online payment procedure, boosting the
success rate for online purchases by a third, to 90%,
and cementing Ant’s dominance in digital payments.
Its success rankled local banks. “We are not
necessarily interested in buying a bank to change
it. But because we have been chasing them around,
they reformed,” Ma said in a 2017 Bloomberg
Television interview. “When a tiger follows you, you
can run much faster than you thought.”
He next envisioned a business line that would
“stir things up” in China’s heavily regulated state
bank sector. Ant created the money-market fund
14 Yu’ebao—or “leftover treasure”—requiring balances
of only 1 yuan (15¢) and allowing withdrawals any-
time. Rolled out in 2013, it was part of his goal of
creating a more transparent financial system that
would disrupt banks, which for years had been
sucking in cheap deposits and earning handsome
net interest margins. The gamble paid off. In less
than a year, assets under management grew to
100 billion yuan ($15.3 billion), with 30 million
users signing up. Yu’ebao would go on to amass
$270 billion, at one point becoming the world’s
largest money-market fund.
Ma again drew the ire of banks, and Niu Wenxin,
a prominent commentator for China Central
Television, attacked Ant on his blog, labeling it a
“vampire” and “financial parasite.” Soon regulators,
concerned that state-backed banks would be crip-
pled by an exodus of deposits and by the huge
amount of money sloshing around outside the
central bank’s purview, rushed in to curb inflows.
Ma blasted out a pithy public statement
accusing banks of tampering with people’s free-
dom on where to put their deposits. But he under-
estimated the power of China’s state-owned
enterprises, whose entreaties to regulators
resulted in rules restraining Ant’s activities.
Former People’s Bank of China Governor Zhou
Xiaochuan acknowledged in 2016 that Ant as a
shadow lender was subject to lighter capital require-
ments than traditional banks. “So you know it gives
Bloomberg Businessweek December 28, 2020
signals for many others to follow. Sooner or later,
I think we are going to study on this issue, to set
up a more equal footing competition,” he said in
an interview with Christine Lagarde, who was then
chair of the International Monetary Fund.
Ma’s lieutenant Lucy Peng, when she served as
Ant’s CEO, persuaded the company to embrace reg-
ulators. Ant shifted its focus to playing matchmaker
between financial institutions and its hundreds of
millions of payment clients. The platform now sells
mutual funds for more than 20 asset managers and
has partnered with about 200 banks on loans.
About the time Yu’ebao was creating waves at
home, Alibaba was making news in New York, where
in 2014 it pulled off what was then the world’s largest
IPO. Its stock soared 38% on the first day. In a CBS
News interview aired shortly after the IPO, Ma said
his method of dealing with authorities was to “never
ever do business with government. Be in love with
them, don’t marry them.”
By January 2015, Ma’s already chilly relationship
with Chinese authorities hit a new low. The State
Administration for Industry and Commerce
released a report accusing Alibaba of hosting shady
merchants, carrying counterfeit products, and even ▼ Alibaba’s
investments, by sector
taking bribes and false advertising, saying the com-
pany had a “credibility crisis.” Internet
The scathing report came on the heels of an $30.7b
appearance by Ma at the World Economic Forum in
Davos, Switzerland, where he said he’d never share
user data with Beijing unless it was investigating
terrorism or other crimes. And it came a day after
a letter to the agency appeared on one of Alibaba’s
official Weibo accounts complaining that govern-
ment inspectors applied standards inconsistently
and didn’t give merchants enough time to respond
to accusations. The increasingly acrid dispute rattled
investors, sending Alibaba’s share price tumbling.
To limit the crisis, Ma paid at least three visits to Retail
regulators, including making a speech at an internal 18.0
meeting of the China Securities Regulatory
Commission. In it, he acknowledged the need to
tighten supervision and beseeched regulators with
the argument that Alibaba wasn’t “too big to fail.”
The Industry and Commerce watchdog
relented, issuing a letter later that month saying Software
the views of certain officials weren’t shared by the 11.0
administration, bringing the conflict to an end.
The episode bolstered investor confidence in Ma’s
ability to navigate regulatory waters. For a period,
Transport
it seemed he’d found the right balance when it 5.1
came to picking battles with watchdogs.
DATA: BLOOMBERG
Media and advertising
“When you enter new fields without clear 4.3
regulations, it is always a painful thing. They say,
‘Hey, my job is to regulate, not innovate. That’s Other 2.4
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 ◼ BUSINESS
your job,’ ” Ma told Bloomberg TV in 2017. “We
have had terrible experiences, but we’ve learned
how to work with regulators.”
The peace was broken in September of this year
in the lead-up to Ant’s IPO. Heavyweight investors
lined up for a piece of the financial-services
powerhouse at a time when China’s banks were
sacrificing profits to support an economy ravaged
by the coronavirus pandemic.
As plans for the offering gathered steam—
valuing the company at $315 billion—regulators
pushed out a series of coordinated policies to
curtail it, with Beijing blessing the abrupt halt
to an IPO that was to trumpet China’s indepen-
dence from U.S. capital markets. “It is not new
that the party regulates everything, including pri-
vate businesses and especially private financial
businesses, as this had been … explicitly stated in
China’s constitution,” says Zhiwu Chen, a finance
professor and director of the Asia Global Institute
at the University of Hong Kong. “But many pri-
vate businessmen did not take this seriously. The
recent Ant episode was a wake-up call.”
On Nov. 2, days before Ant’s scheduled IPO, Ma
and his top executives were summoned before the
16 nation’s main financial regulators in Beijing for a
warning. The listing was halted the following day.
A joint task force has been set up to oversee Ant,
led by the Financial Stability and Development
Committee, a financial system regulator, along
with various departments of the central bank and
other regulators. The group is in frequent contact
with Ant to collect data and other material, study its
restructuring, and draft more rules for the industry.
While Ant hasn’t been given specific guidance
on an overhaul, the overriding message is for the
company to rethink its business, comply with
new rules, and toe the line on increased scrutiny
outlined for conglomerates operating in more than
one financial sector.
In the process, Ant will need billions in additional
capital and will likely lose one of two licenses that
allow it to run its microlending platforms: Huabei
(or “Just Spend”) and Jiebei (“Just Lend”). Its most
lucrative business—extending about 1.7 trillion yuan
in consumer credit as of June—will find less will-
ing partners in banks and others as regulators criti-
cize the relationships for leaving traditional lenders
holding all the risk.
Institutions have been told to report on their
co-lending with Ant, with some already seeking to
shrink that exposure. Ant has said it retained only
about 2% of loans on its own balance sheet as of June,
with the rest funded by third parties or packaged as
securities and sold off. “Fintech is a ‘winner takes
Bloomberg Businessweek December 28, 2020
all’ industry,” Guo Shuqing, China’s top banking ▲ A Hong Kong subway
ticket machine that
regulator, said at a December conference. “With accepts Ant’s Alipay
the advantage of data monopoly, big tech firms tend
to hinder fair competition and seek excess profits.”
Guo also promised to “encourage innovation while
enhancing risk control.”
Ant’s own task force dealing with regulators,
including Jing, its chairman, and CEO Simon Hu,
has been providing almost daily updates to officials
to buttress lines of communication. Executives await
final guidelines for online lending and are bracing for
further oversight in sectors such as insurance and
wealth management.
The expected changes have narrowed the
chances of Ant reviving its IPO before 2022, people
familiar with the regulatory thinking said. Company
executives remain optimistic that they’ll once again
be able to appease the watchdogs and carry on,
people familiar with the company said.
Ma’s humbling has driven home the inconvenient
truth that one of the richest businessmen in China
will always be at the mercy of the ruling Communist
Party. “The current clampdown is just the next
batch of businesspeople being reminded by the gov-
ernment: ‘You can be rich. You can have a power-
ful company. But you’ve got to play by our rules,’ ”
says Andrew Polk, co-founder and head of economic
research at Trivium China, a Beijing-based consulting
firm. “For me, it’s less of a surprise that Jack is get-
ting his comeuppance and more of a surprise that it
took this long.” �Lulu Yilun Chen and Coco Liu, with
CHAN LONG HEI/BLOOMBERG
Zheping Huang, Colum Murphy, Heng Xie, Zheng Li,
Jun Luo, John Liu, and Dingmin Zhang
THE BOTTOM LINE As Ma rose to become one of China’s richest
men, he was known for a willingness to criticize the government. But
a crackdown by authorities has silenced the billionaire.
 Bloomberg Businessweek December 28, 2020

T
E
C
H
N
O Opendoor’s Costly
L
18

Path to Success
O As it goes public, the real estate startup is still

G
feeling around for a way to stop bleeding money

The startup Opendoor raised billions of dollars hours and, if the owner accepts, buys the home,

Y by convincing investors it would reshape the U.S.

housing market to work better for consumers. Sure
enough, its method of high-volume house flipping
has proved popular with home sellers and inspired
copycats throughout the industry, paving the way
for it to go public through a merger with a special
purpose acquisition company. But before it can
declare success, it needs to stop bleeding cash.
Opendoor, whose shares increased 5.9% on its
first day of trading on Dec. 21, is built around the
premise that many people who want to sell their
homes will be willing to accept a smaller profit
if offered a quick transaction that allows them to
avoid hiring a broker, opening their houses to and
haggling with strangers, and waiting weeks for their
Edited by
buyer’s mortgage to be approved. The company
Joshua Brustein uses algorithms to come up with an offer within
makes light repairs, and puts it back on the market.
Unlike traditional flippers, Opendoor isn’t trying to
buy low and sell high but seeks to profit by charging
sellers a fee—usually a 6% to 9% commission—for
simplifying the process.
None of that is easy. From the minute the aver-
age couple buys a home they’re constantly calcu-
lating how much they’ll make when they eventually
sell it, and most won’t settle for much less once that
day comes. Opendoor has to estimate both how
much a home will be worth in a few months and
how long the resale process will take. The second
part is crucial, because interest payments, property
taxes, and insurance premiums accrue as long as it
holds on to a property.
Opendoor’s profit margin was less than 1% on
homes sold in 2019, a figure that includes interest
 ◼ TECHNOLOGY
expense but not the salaries of the people who
build the price algorithms or the cost of the ad
campaigns it uses to woo sellers. The company has
completed 80,000 transactions over the past six
years and lost $989 million over the same period.
“The narrative that Opendoor is pitching is this
digital utopia for buying and selling houses,” says
Mike DelPrete, a real estate tech strategist who’s
studied the company. “They’re pretty good at what
they do, and they’re losing a lot of money.”
The most obvious risk is that home prices will
drop while Opendoor is holding a bunch of houses.
This looked set to happen in the early days of the
coronavirus pandemic, and the company fired
600 employees, about a third of its staff, and con-
sidered converting some of its inventory to rental
properties. Then a hot housing market emerged,
fueled by cooped-up Americans seeking larger
abodes they could also use as offices.
Frothy demand for technology stocks has
also made profitability a secondary concern. In
September, Opendoor struck a deal to go public
through a merger with a special purpose acquisi-
tion company led by venture capitalist Chamath
Palihapitiya. The deal provided Opendoor with
$1 billion, which it says will fuel an expansion
that will allow it to sell more than 37,000 homes
in 2023, the same year it believes it will achieve
adjusted profit before interest, taxes, deprecia-
tion, and amortization. By that point, it will be
selling more homes a year than all but the two
largest U.S. homebuilders.
Opendoor Chief Executive Officer Eric Wu,
whose first foray into real estate came when he
used college scholarship money as a down pay-
ment on a rental investment, is also betting the
company can expand into more profitable busi-
ness lines. It now originates mortgages and
employs agents to broker sales the traditional way,
two businesses that should bring in higher mar-
gins than the algorithm-fueled sales.
The company is also experimenting with front-
ing homebuyers cash to make no-contingency
offers in competitive housing markets and consid-
PHOTOGRAPH BY PHILIP CHEUNG FOR BLOOMBERG BUSINESSWEEK
ering homeowners insurance, home warranties,
and other services. It attached title and escrow
services to 83% of its transactions in the third
quarter, according to a filing. And revenue growth
will help improve margins, allowing Opendoor to
negotiate better rates on everything from interest
rates on the credit facilities it uses to buy property
to supplies such as the 300,000 gallons of paint it
bought last year.
Wu’s unifying theory is that customers will
want to deal with Opendoor for many things once
Bloomberg Businessweek December 28, 2020
it’s earned their trust. “What is the consumer ◀ Wu wants to expand
into more profitable
going to want to experience?” he says. “It’s not business lines
having a bunch of companies handling different
parts of the transaction. If we’re able to deliver
on our vision, to make it possible to buy and sell
a home in a few clicks, we should be able to mon-
etize the entire ecosystem.”
But building out successful businesses in mort-
gages or insurance will be a long climb. Real estate
brokerages have been trying to sell ancillary ser-
vices for years, without much success. Breaking
into home loans and insurance products means
working in new regulatory frameworks and taking
on established companies, not to mention break-
ing the inertia of the status quo.
Still, Opendoor has gotten further than many
expected. Clelia Warburg Peters, a venture partner
at Bain Capital Ventures who’s also president of a
Manhattan real estate brokerage, is one early skep-
tic who’s been convinced. “What they’ve accom-
plished so far isn’t enough,” she says. “But the
mountains ahead of them are smaller than the ones
they’ve already climbed.” �Patrick Clark
THE BOTTOM LINE Opendoor’s algorithmic model is popular
among house sellers, but the company has lost almost $1 billion
over the last six years. 19
Biden Faces a Battle to Hold
The Internet T o g e t h e r
● The U.S. and China pitch the rest of the world
very different visions of the web
Almost a decade ago as vice president, Joe Biden
believed that the internet was at an inflection point.
In a 2011 speech he warned other countries that
they wouldn’t be able to reap the internet’s eco-
nomic benefits if they undermined its openness by
imposing national-level censorship rules and other
technical roadblocks. “There isn’t a separate eco-
nomic internet, political internet, and social inter-
net,” he said. “They are all one.” 
When Biden becomes president in January,
he’ll confront the reality that some key nations
haven’t heeded his warning. National policies in
various countries have reduced the range of glob-
ally shared websites and platforms while adding
obstacles to online communication and commerce.
Officials who served with Biden in the Obama
 ◼ TECHNOLOGY
administration expect that he will push the vision
he laid out then, but some experts who track the
internet believe it may already be too late.
“The idea of an open, borderless internet is
gone, and it’s not likely to come back,” says Darrell
West, a senior technology fellow at the Brookings
Institution. “It’s just not possible anymore.”
Many of the policies balkanizing the internet are
undercutting its users’ rights. Internet freedom has
steadily declined for a decade, according to a report
by the democracy watchdog Freedom House. The
U.S. isn’t immune to this: Freedom House found that
the country lost ground every year of the Trump
administration. But the group says the main offender
by far has been China, which has long made clear it
won’t embrace America’s vision of cyberspace.
The Chinese government has increasingly walled
off its own online population while stepping up its
leadership on the international bodies that set tech-
nology standards to push its own national policy
objectives, according to a 2020 report by the U.S.-
China Economic and Security Review Commission,
which was created by Congress. China has pushed
the idea of sovereign internets, where countries
manage their own networks and decide where and
20 how they connect to those of other nations, instead
of agreeing to a global set of technical standards.
The Trump administration took various
approaches to internet governance. Tom Bossert,
who served as homeland security adviser for the
first year of the administration and now leads
the security company Trinity Cyber Inc., says he
believed that a single, worldwide internet had
become unrealistic. He argued the internet had
already split between autocratic and free coun-
tries, and he urged the U.S. to accept this reality
and attempt to lead the Western version of the web.  internet-fueled political polarization. It’s harder for
John Bolton, who asked Bossert to resign
when he became U.S. national security adviser in
April 2018, was convinced that China’s attempt to
insulate itself from the rest of the world would fail.
“A national internet that is completely separate
from the internet as we know it, to me, is a self-
defeating proposition,” Bolton says.   Trump administration didn’t prioritize, experts say.
Bolton did want to keep China from dominating
international standard-setting bodies, even as he
argued for limiting those bodies’ power, because
he believed that they served as “a gift to China and
other authoritarian societies.” His goal was to hold
the line in the short term while weakening those
international organizations over time.
Biden is expected to pursue active collabora-
tion with U.S. allies and partners who share interest
in fighting the spread of the authoritarian inter-
net. The landscape has changed significantly since
Bloomberg Businessweek December 28, 2020
Biden’s 2011 speech. Christopher Painter, the for-
mer top cybersecurity diplomat who served in the
State Department under Barack Obama and Trump,
believes China has made progress in promoting its
view of the internet in recent years. “China has been ▼ Biggest declines in
strategic about getting countries on its side,” he says. internet freedom 2011-
20, 100-point scale
One of the most promising options open to
the Biden administration could be a concerted Venezuela
effort to pressure other countries to embrace the -26
Western approach, former U.S. officials say. Aside Egypt
from using diplomatic tools, the administration -20
should counter arguments that internet censor- Turkey
ship and other policies are needed to control local -20
populations by highlighting the economic bene- Pakistan
fits of an open system, they say. But Biden’s team -19
of diplomats will make this case amid an explo- Russia
sion of concern globally about disinformation and -18
Azerbaijan
the U.S. to argue its model is working when it’s pub- -14
licly grappling with a domestic crisis over the role Kazakhstan
the internet plays in its own politics. -13
The Biden administration may also emphasize India
internet freedom in its broader negotiations with -13
China, Russia, and other countries, something the Rwanda
-11
In that regard, Biden takes office at a critical time. U.S.
ILLUSTRATION BY DEREK ABELLA. DATA: FREEDOM HOUSE
Elsa Kania, a technology and national security fel- -11
low at the Center for a New American Security in
Washington, believes that “today’s rivalries over
standards” will have long-term effects. They “will
shape the future of emerging industries and tech-
nologies, including enabling competitive advan-
tage,” she says. �Alyza Sebenius
THE BOTTOM LINE The Biden administration is expected to
push the idea that the internet should work the same way across
borders. China and Russia have thoughts about that.
 Review The Year in Tech
At the beginning of 2020, the verb “to zoom” had nothing to do ▼ Change from
Q3 ’19 to Q3 ’20

with video chatting. Then the pandemic upended everything,

in ways that often benefited tech. Streaming and gaming 485%
Zoom customers
boomed, of course, as did businesses involved in delivering with more than
10 employees
something—anything!—to your house.
310%
Online grocery

Jobs went online Streaming and gaming spending increased sales in the U.S.*

Daily average users

of Microsoft Teams
Disney online video
paid subscribers
U.S. video game spending, year-over-year change 237%
DoorDash orders
120m 30%

123%
Shipments of
Chromebooks
60
121m
86%
*CHANGE FROM 8/2019 TO 8/2020. DATA: COMPANY REPORTS, U.S. CENSUS, BRICK MEETS CLICK, CANALYS, NPD GROUP, STREAMLABS, STREAM HATCHET, BERNSTEIN RESEARCH, COMPILED BY BLOOMBERG

0
32m Hours of video
watched by users of
the game streaming
0 -10
site Twitch
7/2019 10/2020 Q4 ’19 Q4 ’20 11/2019 11/2020

79%
Walmart U.S. 21
Shares of big U.S. technology companies soared e-commerce sales

Weekly change in S&P 500

since Dec. 27, 2019
Top and bottom performers in the S&P 500 Information
Technology Index by total return, 12/27/19 to 12/19/20 39%
Amazon North
40% Nvidia 125% America retail
PayPal revenue
Info tech
Advanced Micro Devices

37%
subindex
ServiceNow
0 Cadence Design Systems Monthly active
FLIR Systems users, Pinterest

Intel

Full index
-40
Hewlett Packard Enterprise
Xerox
23%
Netflix memberships
-36% DXC Technology
12/27/19 12/18/20

15%
Monthly active
Amazon trucks were everywhere The populace could be less users, Facebook
housebound by the middle of 2021, family of apps

so we may learn whether huge

-35%
U.S. e-commerce retail sales, U.S. e-commerce retail sales
seasonally adjusted as a percent of total sales increases in online grocery orders
$200b 16% and remote working are here to Uber trips
stay. Things still look bright for

100 13
the chip companies that were
the biggest winners in the stock -44%
Lyft active riders
market. And for online travel

-68%
agents and ride-hailing platforms,
0 10 the return of public life can’t come
Value of gross
Q3 ’19 Q3 ’20 Q3 ’19 Q3 ’20
soon enough. bookings, Expedia
 berg Businessweek December 28, 2020

3 Wish I could
celebrate how
ce
aw
wesome my
F stocks did
s
this year...
I
N
A
N
22
C
E
At the same time, the number of small businesses
○ 2020 was a great year for
operating in the U.S. has plunged 25%, according
stocks but a “bear market to a Harvard tracker.
for humans” Tesla Inc. Chief Executive Officer Elon Musk’s
wealth has increased by an estimated $140 billion
this year thanks to the stock market, while a com-
The stock market was on fire in 2020, with the bined $100 billion was added to the fortunes of
Dow Jones Industrial Average poised to end the Amazon.com Inc.’s Jeff Bezos and Facebook Inc.’s
year above 30,000 for the first time. Meanwhile, Mark Zuckerberg. Meanwhile, the estimated num-
30,000 people in the U.S. died of the coronavirus ber of American adults who don’t have enough to
in just the past two weeks. eat has risen to about 27 million.
Shares of smaller public companies have “The stock market is not the economy” is a
caught up to the blue chips lately, with the common refrain on Wall Street when it comes to
Russell 2000 Index up almost 17% so far this year. explaining away apparent disconnects. Rarely, if

Speculation Investors are enjoying some of the most favorable

financial conditions in U.S. history, according to a
Companies are rushing to go public, and investors
are snapping up their shares.

Everywhere Goldman Sachs index that measures interest rates,

credit availability, stock prices, and the dollar.
Goldman Sachs U.S. financial conditions index Average first-day returns for U.S. IPOs
Animal spirits
are running  Tighter 103 70%

wild across As of
Dec. 11
Wall Street
100 35

 Easier 97 0
Edited by
Pat Regnier 1/1990 11/2020 1990 2020
◼ FINANCE
ever, has the axiom been trotted out as much as it
was in 2020, amid the unsettling contrast between
superlatives of prosperity and hardship. As casu-
alties of the virus started ticking into the thou-
sands, then tens of thousands, then hundreds of
thousands of souls, U.S. politics grew even more
divided. In the summer, cities were gripped by
protests in response to police violence. Since the
election, the outgoing president has raged daily,
calling American democracy, without evidence, a
rigged and corrupt game.
And the mood on Wall Street? Well, somehow
the theme of the year became ignoring all of the
chaos and suffering of this dystopian present and
skipping right ahead to a utopian future.
There were some good reasons to do so. For
those of us lucky enough to hold on to jobs in 2020,
many outlets for discretionary spending were shut
down, so savings swelled. Much of that spare cash
likely flowed into the stock market, whether via
Robinhood traders chasing story stocks or more
conservative investors seeking diversification.
Investors poured $29.4 billion into U.S. equity
funds in the week through Dec. 15, the fifth-biggest
weekly inflow ever, according to researcher EPFR
Global. Exchange-traded funds tracking equities
have pulled in $46 billion so far in December, after
luring in $81 billion the month before. The rest of
those savings, the thinking goes, will stream back
into the economy with gusto via consumer spend-
ing when the threat of the virus recedes.
The events of the year highlight the awesome
power—and heartbreaking limitations—of cen-
tral bank monetary policy. The Federal Reserve’s
efforts to keep interest rates as low as possible to
bolster the economy squashed the returns avail-
able in fixed-income markets, pushing investors
into equities. In essence, the central bank incen-
tivized risk-taking in finance at a time when risk
aversion was advised—no, required—for everyday
Credit is getting easier. Investors are paying more for
bonds, driving down yields and interest rates.
Global corporate bond yields
8%
4 150
0 50
9/2000 11/2020
Bloomberg Businessweek December 28, 2020
activities like simply going out to dinner. Fed Chair
Jerome Powell made it clear on Dec. 16 that he
doesn’t think the market’s euphoric embrace of
risk has gotten extreme enough for him to worry
about a hard economic landing.
Maintaining a warm environment in the capi-
tal markets is helping keep businesses alive, and
that ought to help recoup the lost jobs that have
yet to return in 2020—about 10 million—when the
pandemic recedes. So one way of explaining inves-
tors’ behavior is that they’ve been looking beyond
a crisis the Fed is determined will be temporary.
But the stock market is a cruel and calculating
beast, and helping people get jobs isn’t high on its
list of priorities. Investors also seemed to be bet-
ting on a permanent shift in the structure of work
and the economy. The market has always cheered
companies that are able to reduce labor costs, but
the phenomenon was turbocharged in the pan-
demic year. “I would summarize 2020 as the bear
market for humans,” Vincent Deluard, director of
global macro strategy at brokerage StoneX Group
Inc., told Bloomberg in August. “Like many things,
Covid is just accelerating social transformation,
concentration of wealth in a few hands, massive
inequalities, competition issues, and all that.” 23
An analysis Deluard did then showed that stocks
of companies that rely least on their employees
were surging ahead of labor-intensive ones. The
trend is hard to miss when looking at the winners
and losers of 2020. The bad-boy protagonist of the
PHOTO ILLUSTRATION BY 731; PHOTOS: ALAMY (4), SHUTTERSTOCK (1), APPLE (1). DATA: JAY RITTER, UNIVERSITY OF FLORIDA WARRINGTON
market story this year was Musk’s Tesla, whose
shares rose almost 700% to bloat its price-sales
ratio to 22, from 3. It’s a valuation that screams
“bubble” to many but is much more reasonable to
those who envision a world where Tesla is first to
market with a global fleet of driverless taxis.
The future isn’t all robots: After all, the next-
best-performing stock in the S&P 500 this year
was Etsy Inc., which could be a nice sign for the
Traders who bet against stocks are in pain as share And then there’s the new bellwether for speculative
prices of the most-shorted companies keep rising. sentiment: Bitcoin...
Index of most shorted stocks Bitcoin price
COLLEGE OF BUSINESS, COMPILED BY BLOOMBERG
250 $20k
10
0
1/1/20 12/21/20 1/1/20 12/21/20
 ◼ FINANCE
legions of crafters, knitters, potters, and painters
selling their wares on the site. Still, knitting at home
is a tough way to pay for health insurance.
Investors’ can’t-stop-thinking-about-tomorrow
mentality is also on display in the market for ini-
tial public offerings, where a doubling in price
has become commonplace for this year’s fresh-
man class of would-be disrupters. Just check out
the charts of artificial intelligence software com-
pany C3.ai, food delivery service DoorDash, and
home-rental company Airbnb.
You can insert your own comparison to the dot-
com bubble here—and take a side in the “this time
it’s different” vs. “no, it’s not” debate as well. But
you don’t need to go back 20 years for an exam-
ple of Wall Street getting ahead of itself. The
S&P 500 surged 19% in 2017 amid excitement about
President Trump’s plans to cut corporate taxes.
Investors predicted the future correctly: The bill
was signed in late December of that year and went
into effect in 2018. But they arguably overshot. The
index’s performance in 2018? It dropped 6.2%.
They say hindsight is 20/20, but when it comes
to the stock market, the year 2020 has been
all about foresight. That is, of course, a much
24 blurrier field of view. �Michael P. Regan, with
Sarah Ponczek
THE BOTTOM LINE The bull market of 2020 showed the power of
central bank policy to focus investors’ minds on a better future. But
the future isn’t bright for everyone in the economy.
A Dealmaker Rises
At JPMorgan
● Anu Aiyengar became co-head of global M&A
just before the lockdown changed everything
As JPMorgan Chase & Co. searches for its first major
acquisition in more than a decade, Anu Aiyengar
will have a hand in shaping the giant bank’s
future. She’s the co-head of its global mergers-and-
acquisitions business, as well as the only person
of color and only woman to hold that position on
Wall Street. It’s been a remarkable trajectory for an
Indian immigrant who moved to the U.S. as a teen-
ager to study at Smith College, shivering through the
bitter Massachusetts winter in a $5 coat.
“M&A was traditionally a male bastion—often
cigar-smoking men in suspenders—and now she
Bloomberg Businessweek December 28, 2020
is at the top of the field, because she is simply
outstanding at what she does,” says her boss,
JPMorgan Chief Executive Officer Jamie Dimon.
Advising companies on M&A is one of the
prestige roles in investment banking, generating
both huge fees and headlines when a deal comes
together. Aiyengar was promoted to her current
position in February, almost 20 years after ignor-
ing one Wall Street interviewer who told her she
couldn’t be hired for M&A because she was of the
wrong color, gender, and country of origin. Her
year began with a bang when JPMorgan advised
ETrade on its $13 billion sale to Morgan Stanley, a
deal that earned the bank $81 million in fees.
That same deal has put JPMorgan and other
big banks under some pressure. In the years since
the 2008 financial crisis subsided, there have
been hardly any major acquisitions by top Wall
Street firms. Morgan Stanley’s buying spree—it
also snapped up a fund company JPMorgan had
approached—may have signaled the start of a wave
of takeovers. At a conference in December, Dimon
joked that bankers at other firms with good ideas
for acquisitions should give him a call. If JPMorgan
does find a tempting target, Aiyengar will be among
the key executives helping to negotiate a deal.
At the same time, Aiyengar is guiding JPMorgan’s
M&A shop through an unprecedented disruption.
Soon after she took over, the global pandemic
and lockdowns dragged deal activity in April and
May to its lowest level for any two-month period
in 22 years, while companies were forced to focus
on survival. After traveling every week for two
decades to meet clients across the U.S. and some-
● Value of transactions
by JPMorgan’s global
times overseas, Aiyengar found herself grounded. M&A team this year
She didn’t leave her Midtown Manhattan apartment
for 66 days, running her team over Zoom and devis- $575b
ing new ways of thinking about dealmaking amid
what she calls a “seismic shift.”
“The future of work and the future of how things
happen in all industries is forever changed,” she
says. The pandemic has shown how technology-
driven almost every successful business is, blur-
ring the lines between traditional sectors. “So M&A
bankers need to have the ability to cross-pollinate
among different industries,” she says.
It’s something she’s done before. Jeffrey
Sprecher, CEO of Intercontinental Exchange
Inc., owner of the New York Stock Exchange,
says Aiyengar has been helpful as they consid-
ered unique ideas, including the company’s foiled
attempt at a tieup with a different kind of electronic
market: online auction site EBay Inc. “We had doz-
ens and dozens of conversations over a period of
years thinking about EBay and what parts might

fit with ICE and whether other partners could
be involved and who those partners should be,”
Sprecher says. “My shareholders didn’t like the
idea, but part of my job is thinking about growing
the company, and internally we were very proud of
it. She was very blunt and thoughtful about think-
ing through things.”
Sprecher’s deal wasn’t to be, but Aiyengar and
her co-head, Dirk Albersmeier, have notched more
than $575 billion of transactions this year, according
to data compiled by Bloomberg. The list includes
LVMH’s $16 billion purchase of Tiffany—the biggest-
ever deal in the luxury industry—and last month’s
$8.7 billion merger of Home Depot Inc. and HD
Supply Holdings Inc.
In the rankings of top M&A advisers, JPMorgan
slipped one spot in 2020 to third place. But Carlos
Hernandez, executive chair of investment and cor-
porate banking at JPMorgan, isn’t worried about
that. He says Aiyengar had already helped take
the bank “from good to great” during her stint as
co-head of its North American M&A team, noting
that one of her major achievements was to negotiate
PHOTOGRAPH BY RICHARD BEAVEN FOR BLOOMBERG BUSINESSWEEK
higher fees for the bank’s services. “She is definitely
part of the next generation who will be running this
place for the next 20, 30 years, and this job is going
to get her ready for that,” Hernandez says.
Hernandez, part of the JPMorgan team that
hired Aiyengar in 1999, says he was immediately
impressed with both her drive and her principles.
“I am from El Salvador myself, and I came to this
country to go to school the way she did, and in
some ways you have to go through some adver-
sity along the way,” he says. “What you learn from
that is invaluable.”
December 28, 2020
◀ Aiyengar
Aiyengar grew up in the southern Indian state
of Kerala. Her father worked for the government;
her mother didn’t work but went back to school
and later became a teacher. Aiyengar says she
struggled in her early days at the bank—not with
the work but with the culture. “I didn’t know basic 25
things like how you behave and how you talk and
how you present and how you dress in a profes-
sional environment,” she says.
She tried to change her Indian accent to sound
more American and fretted about how to do her
hair and makeup. She asked the assistant of the only
senior female on her floor for advice on where to
shop for clothes, but the prices at the boutique her “She is
colleague recommended shocked her. She turned definitely part
instead to Dress for Success, a charity that provides of the next
professional attire for women. “They assume you generation
don’t know what to do, and they say ‘let me help who will
you’—very different from some retail stores, who be running
look at you like you don’t belong,” she says. Aiyengar this place”
was honored last year for her work with the charity.
Women at JPMorgan threw Aiyengar a party
when she was promoted to co-head of North
American M&A in 2015. Dimon says he was a rare
male invitee to the celebration. It was an import-
ant moment for Aiyengar, whose mother became
enthralled by Dimon after his discussion of cor-
porate social responsibility on a trip to India. “If
you go to Google on her iPad, the thing that pops
up is ‘JPMorgan, Jamie Dimon,’” Aiyengar says.
“She doesn’t follow me, she only follows Jamie.”
�Nabila Ahmed
THE BOTTOM LINE Aiyengar sees technology blurring the
lines between industries and urges her bankers to look for
surprising connections.
 Bloomberg Businessweek December 28, 2020

E It’s a V. It’s a Baa.

It’s a Swoosh
C ● From the prosaic to the the widespread closure of businesses and schools.

O poetic, economists vie to define

the shape of the recovery
Countries with relatively healthy economies
going into the pandemic seemed best poised for
the so-called V-shaped recovery. Some had their
own spin on the V, such as former U.S. Treasury

N
Economists have run through the alphabet this year.
They’ve turned to letters and shapes in an effort
to illustrate the unprecedented economic upheaval
Secretary Larry Summers, who compared it to
“Cape Cod in winter,” whereupon a tourism-fueled
local economy shuts down in the frigid months to
rebound when beach weather returns.

O caused by the pandemic. The 2008-09 financial cri-

sis had Ben Bernanke’s “green shoots” and angst
about a “double-dip” recession. In 2020 we’ve
heard about not only a V-, U-, L-, and K-shaped
But as the virus proved more and more difficult
to control, with many nations enduring successive
waves of infection, economists scrambled to revise
their forecasts. Descriptions of the shape of the com-

M recovery, but also a Nike Swoosh and Cape Cod in

winter. The econospeak has even cracked into the
mainstream, showing up in presidential debates
and in major media.
ing recovery became more fanciful. There was the
Nike Swoosh (aka the recumbent J). Also, the square
root sign or what France’s central bank governor
called “the bird’s wing”—that is, a big contraction

I
26
At the onset of the pandemic, many econo-
mists predicted a quick bounce back to normal
activity following a sharp downturn triggered by
followed by a quick turn up and then a plateau.
In the U.S., one Federal Reserve official pre-
dicted virus resurgences would create a pattern

C
S
ILLUSTRATION BY HEADEXPLODIE. DATA: BUREAU OF LABOR STATISTICS, POVERTYMEASUREMENT.ORG

Edited by
Cristina Lindblad
◼ ECONOMICS
of ups and downs in economic activity that would
resemble a W with “a wiggly tail.”
The Latin alphabet might not be the best choice
to depict the longer periods of sluggish growth we
may be in for. Analysts at Robeco Institutional Asset
Management offered up the Arabic letter Baa, argu-
ing that its long horizontal sweep is better suited to
illustrate our economic reality.
At least the economy is past what Joachim
Fels, global chief economic adviser at Pacific
Investment Management Co., described back in
March as the I-shaped phase of the cycle, where
growth drops off precipitously with no clear pros-
pect of a bounce back.
Another theory is that the pandemic has
inflicted long-lasting economic damage, setting
the stage for a very slow recovery or outright
stagnation: the dreaded L shape. Although such a
scenario looks unlikely, the fear that many work-
ers may be locked out of the job market for years,
or even forever, has been palpable among some
European Central Bank policymakers. Japan’s
experience in the 1990s, known as the lost decade,
is a worrying precedent.
Math and shape arguments aside, one let-
ter has captured the stark reality of what many
are seeing in 2020: the K. The pandemic hasn’t
affected everyone equally and has widened many
existing inequalities. The two diverging strokes
of the K illustrate this: Those who weren’t in
the best economic position before the crisis—for
instance, low-income workers in tourism, enter-
tainment, hospitality, and other industries dev-
astated by the virus—are more likely to have lost
jobs this year. The top of the K represents peo-
ple in better circumstances, including those who
can work from home and may have seen their
stock portfolios soar.
The arrival of vaccines is giving economists
hope. Some say we could still see a V-shaped
bounce back if sufficient numbers of people are
inoculated. Others, taking into account the pro-
longed period of low growth we’ve had in the past
year, say a strong rebound would make this period
resemble a U or J.
Complicating the debate around the recovery’s
trajectory, some analysts have taken to applying a
V shape to certain segments of the economy, or to
particular countries. But a V shape can be mislead-
ing: A 5% rebound from a 5% drop doesn’t bring
an economy back to its prior health. �Catarina
Saraiva, Michelle Jamrisko, and Piotr Skolimowski
THE BOTTOM LINE The arrival of vaccines has rekindled hopes
that a V-shaped bounce back is still possible for some countries,
but many economists expect the recovery to be drawn out.
Bloomberg Businessweek December 28, 2020
Evictions Climb,
Despite Bans
● A patchwork of prohibitions doesn’t stop
landlords from pushing people out
Mari Finkley has already been homeless once
during the pandemic. For two weeks in October,
she lived out of her Dodge Journey sport utility
vehicle with her dog and 11-year-old godson. The
29-year-old found a new place, and fresh hope. But
she’s behind on her rent again.
Finkley was pushed out of her Gainesville, Fla.,
home by her previous landlord after she stopped
driving for Uber and fell behind on rent. She suffers ▼ Conflicting signs
from severe asthma, and her doctor warned that Unemployment rate
the job put her at high risk for exposure to Covid-19. Poverty rate
“Are you going to risk potentially dying just to pay
a bill?” Finkley says. “But if you don’t pay the bill, 15%
you’re going to be homeless. You have to literally
decide what’s worse.”
Finkley is a member of a burgeoning class 27
of long-term underemployed and unemployed 9
Americans who have slipped into poverty during
the pandemic. Many are renters teetering on the
verge of homelessness, even as large swaths of the
U.S. economy have rebounded and coronavirus 3
vaccines raise hopes for a brighter 2021. 1/2020 11/2020
The looming rental crisis, the result of a lop-
sided recovery that’s largely spared white-collar
workers while pushing many hourly and gig work-
ers to the brink, is among the most urgent that
President-elect Joe Biden will face.
Even as unemployment has declined by more
than half from its pandemic peak in April, the pov-
erty rate shot up 2.4 percentage points from June,
the fastest pace in records that date to the 1960s. It
hit 11.7% in November, with 7.8 million Americans
added to the ranks of the poor since midyear,
according to povertymeasurement.org, a monthly
Covid poverty tracker devised by two economists.
Many landlords are also struggling to keep up
with their bills, especially small property owners
renting to the low-wage workers who’ve borne the
brunt of Covid layoffs.
Democrats and Republicans broke a monthslong
stalemate to pass a $900 billion stimulus package on
Dec. 21, the first major pandemic relief legislation
since the Coronavirus Aid, Relief and Economic
Security Act was enacted in March. Yet even that,
which extends the federal eviction ban through
 ◼ ECONOMICS
January and earmarks $25 billion for renters, is
dwarfed by the magnitude of the need.
Tenants owe landlords more than $70 billion in
back rent, utilities, and additional fees, according
to an estimate by Mark Zandi, chief economist
at Moody’s Analytics. The long-predicted flood
of evictions has been slowed by government aid
and a patchwork of short-term tenant protec-
tions. Congress extended the Centers for Disease
Control and Prevention’s eviction ban, which was
set to expire at the end of December, through
January, but the two parties have yet to agree on a
long-term solution.
“Congress should enact this compromise
legislation immediately, then get back to work
in January on comprehensive solutions,” says
Diane Yentel, president and chief executive
officer of the National Low Income Housing
Coalition. “Extending the CDC’s eviction mora-
torium through January provides time for emer-
gency rental assistance to be distributed, and
for President-elect Biden to improve and further
extend the moratorium immediately after being
sworn into office.”
Despite the various bans in place, the pace
28 of eviction filings is already accelerating across
the country. In New York City, where a state law
protects people facing Covid hardships as long
as the pandemic lasts, landlords filed more than
7,300 evictions in November, nearly quadru-
ple the number in July, according to data from
Princeton University’s Eviction Lab. And property
owners filed more than 2,600 cases in November
in both Phoenix and Houston, where there are
fewer safeguards.
Tenants, who rarely can afford legal repre-
sentation, often move out before their case ever
reaches a judge, to avoid the trauma of being
ejected and the black mark of eviction that will
make it harder to find a willing landlord again.
Many then enter a precarious existence of sleep-
ing on friends’ couches, in cars, and in homeless
shelters, which is contributing to the spread of
the coronavirus.
“Our collective health depends on our ability to
stay safe at home, so we all have a stake in ensuring
that tens of millions don’t lose theirs,” Yentel says.
In Gainesville, a college town where Finkley
says students often go maskless, she started fer-
rying food instead of passengers to stay safe. Her
goal was to earn at least $100 a day. But Uber Eats
now has so many drivers that on a recent week
she made just $184, despite sometimes staying out
until 2 a.m.
She gave her landlord half of the $725 in rent
Bloomberg Businessweek December 28, 2020
she owes for December. The rest will be cov-
ered by a federal grant that she was approved for
but that won’t arrive until the end of the month.
Finkley tried to get help before. She was supposed
to receive $1,200 in Cares Act money to cover rent
for July and August at her last apartment. But she
says the landlord was slow filling out the neces-
sary paperwork and then posted a late-rent notice
on her door. Next, she says, she tried to get pro-
tection from the CDC eviction ban, declaring as
required that she had lost income because of
Covid and would be homeless without help.
But the federal ban applies only to tenants ▲ Finkley
being kicked out for nonpayment. Finkley says
Great Jones, a New York-based property manage-
ment company with units in nine states, said her
lease would not be renewed.
Great Jones said it can’t comment on individual
cases. In a statement, the company said that since
the start of the pandemic it’s “worked with over
PHOTOGRAPH BY CHARLOTTE KESL FOR BLOOMBERG BUSINESSWEEK; TOOMEY: US SENATE
200 residents and property owners to enable pay-
ment plans that have allowed residents to stay in
their homes.”
Finkley then moved into the three-row Dodge
SUV that doubles as her source of income and set
up a GoFundMe page. She raised enough to secure
her current apartment and now hopes her new
landlord will be patient. She says her last landlord
notified her that she still owes more than $2,000
in back rent. “I’ve been homeless, and I can’t do
that again,” she said. “It’s a constant feeling that
you’re drowning, all the time.” �Prashant Gopal
and Patrick Clark
THE BOTTOM LINE Legislation approved on Dec. 21 sets aside
$25 billion for renters, but that’s well short of the $70 billion in
accumulated back rent.
 ECONOMICS
State of Emergency
○ Political wrangling over the Fed’s latitude in responding to crises may set the stage for a future showdown
A last-minute compromise that helped break a
monthslong congressional impasse on Covid-19
relief may set up a political clash over how the
Federal Reserve can respond to future crises.
The disagreement between Democrats and
Republicans centered on a bit of central bank-
ing arcana known as Section 13(3) of the Federal
Reserve Act. It allows the Fed to create emergency
lending programs during “unusual and exigent
circumstances,” with approval from the Treasury
Department. The provision was invoked by Fed
Chair Jerome Powell and his colleagues in the
spring to launch a barrage of programs to shore
up markets for everything from U.S. government
bonds to the debt of corporations and strapped
municipalities. Some of them relied on funds
appropriated by Congress in the Cares Act to func-
tion as a cushion against potential losses.
It is generally acknowledged that the Fed’s rapid
response helped stem panic among investors that
threatened to freeze financial markets as the pan-
demic took hold. Still, many Republicans have been
vocal about their desire to place stricter limits on
the Fed’s exercise of its emergency powers.
Senator Pat Toomey, a Republican from
Pennsylvania, insisted on tacking a provision onto
the $900 billion stimulus that would prohibit the
Fed from restarting programs supporting corporate
bonds, small and midsize companies, and munici-
palities. These are set to expire on Dec. 31.
Democrats resisted, but they relented once lan-
guage from Toomey’s proposal that also banned
“similar” programs from ever being launched
without congressional approval was excised. In
a Dec. 20 conference call with reporters, Toomey
said he felt confident the compromise wording
would still ban “clone” programs without fresh
approval from Congress.
Democrats interpreted the compromise lan-
guage differently. A Democratic congressional aide,
who asked not to be named because they were
not authorized to speak publicly about the pend-
ing legislation, said the new language imposes no
meaningful limits on the Fed’s ability to create new
facilities for state and local governments and small
businesses. The apparent gap in interpretation
Bloomberg Businessweek December 28, 2020
sets up a possible clash if financial markets were
to plunge back into chaos and the Fed felt it neces-
sary to act quickly with similar facilities.
Former Fed Chairman Ben Bernanke issued a
rare public warning on Dec. 19 urging that the cen-
tral bank’s ability to respond to future crises be left
“fully intact.” Powell and his colleagues have made
plain their opposition to any measures that limit
their emergency lending powers. They have repeat-
edly and publicly stressed that all these facilities
played an important role in supporting the econ-
omy during the pandemic. Fed spokeswoman
Michelle Smith declined to comment.
In his comments to journalists, Toomey reiter-
ated that his goal was not to limit the incoming Biden
administration’s ability to deal with economic chal-
lenges, as some Democrats have suggested. Still, 29
some are concerned that Toomey, by putting the Fed
at the center of a public political fight, something the
institution’s leaders have strenuously avoided, may
have discouraged Powell and future Fed chairs from
jumping in the next time there’s a crisis.
“Big picture, I am concerned that the Fed’s
emergency lending powers keep coming under fire
by Congress,” says Jeremy Kress, an assistant pro-
fessor of business law at the University of Michigan
and a former Fed attorney. He notes that legislators
moved to curtail some of the Fed’s authority in the
aftermath of the financial crisis via the Dodd-Frank
Act of 2010. “The fact that here we are 10 years later
arguing over the Fed’s emergency lending is prob-
lematic, because even if Toomey doesn’t succeed in
enacting long-lasting legal prohibitions on Federal
Reserve emergency powers, this political debate
could have the effect of chilling the Fed’s willing-
ness to step in when needed in the future.”
Roberto Perli, a partner at research firm
Cornerstone Macro, expresses a similar view. “I ○ Toomey
think it would have been a lot better if this stuff
hadn’t happened,” he says. “This whole episode,
I think, highlighted the fact that Section 13(3) has
become politicized.” —Christopher Condon, Laura
Davison, and Matt Boesler
THE BOTTOM LINE A compromise that broke the stimulus
logjam laid bare the divergent views of Democrats and
Republicans on the scope of the Fed’s emergency powers.
 Bloomberg Businessweek December 28, 2020

P
O
Yeah, I’m a CZAR
L C - Caring about
I
T Z - Zero carbon
I A - Advances and
R - Renewable energy
30

C
S ○ John Kerry will be the most
senior U.S. climate official ever.
It won’t be an easy job
To show the world that the U.S. will be an
environmental leader once again, President-elect
Joe Biden is turning to the driving force behind
the climate agreement President Trump has spent
four years undermining.
John Kerry, who was secretary of state under
President Barack Obama and helped craft the 2016
In 2017, Trump announced America’s intent
to withdraw from the 189-party Paris Agreement,
which seeks to limit global temperature increases
to 2C through steep reductions in greenhouse gas
emissions. Scientists have warned that severe
impacts from climate change could arrive as soon
as 2040 and that quick action to curb emissions is
critical. The U.S. formally withdrew from Paris in
November; in the meantime, the Trump adminis-
tration has rolled back dozens of environmental
rules and regulations.
For Kerry to bring skeptical countries along on
future climate negotiations, the U.S. will first need
PHOTO ILLUSTRATION BY 731; PHOTO: ANDREW HARNIK/AP PHOTO

Paris climate accord, will assume a newly created
role in the Biden administration: special presiden-
tial envoy on climate change. Kerry’s appointment
marks the first time an official dedicated to climate
change will have a seat on the National Security
Council, putting the environment, in principle, at
the center of every foreign policy decision. The
role could prove challenging to navigate polit-
ically, because its powers are so far vague, and
Edited by
Kerry will have to coordinate with multiple agen-
Amanda Kolson Hurley cies across the administration.
to show it’s serious in reversing the damage wrought
over the past four years, diplomats and experts say.
“We are at a point in history when we have to do
something dramatic,” says Andrew Steer, president
and chief executive officer of the World Resources
Institute. “Kerry’s reputation globally is deeply
impressive and speaks very well to U.S. leadership.
But the U.S. itself will have to come up with its own
plans to deal with climate change first.”
Kerry has worked with most of Biden’s national
security appointments, from Anthony Blinken,
◼ POLITICS
chosen for the secretary of state job, to Jake
Sullivan, picked to head the National Security
Council. Blinken was once Kerry’s deputy at the
State Department, and the two will have to grap-
ple with constant overlap between their jobs. A
person on the transition team says details on the
personnel and size of Kerry’s staff haven’t been
hashed out.
Because of Kerry’s high profile and deep expe-
rience, “he will get his calls answered, both
domestically and internationally. He comes to it
with built-in relationships,” says Jared Leopold,
co-founder of the Evergreen Action group and
a former adviser on Washington Governor Jay
Inslee’s presidential campaign.
With Republicans set to hold at least 50 seats in
the Senate, Biden may have to lean heavily on reg-
ulations and executive orders to achieve his goals
to decarbonize the electric grid, advance renew-
able energy, and curb fossil fuel development on
federal lands. The administration will issue sev-
eral executive orders in Biden’s first days in office
to roll back Trump-era actions seen as destructive,
according to the person involved in the transition.
The U.S. is planning to hold a climate summit soon
after the inauguration, the person says.
The Biden administration should commit to cut-
ting emissions by 50% over the next decade with the
goal of reaching a net-zero target by 2050, a move
that’ll still leave it behind some countries but would
be seen as a “good offer,” Steer says. The U.S., with
only 4% of the world’s population, is responsible for
about 15% of its carbon dioxide emissions.
In addition to Kerry, Biden has begun to assem-
ble the team that will drive his clean energy and
climate agenda. Gina McCarthy, who ran the
Environmental Protection Agency under Obama,
is his choice to head a new White House office
on climate change. She’ll work closely with Kerry.
North Carolina environmental regulator Michael
Regan is the nominee to lead the EPA, and Jennifer
Granholm, the former governor of Michigan, was
chosen to helm the Department of Energy.
The incoming administration is looking at new
regulations that could have a big impact on cli-
mate emissions, such as standards for pollution
from cars and power plants. “Biden recognizes
that we made a down payment in the Obama
administration but also recognizes we need to
go much further—as fast as we possibly can,” says
Heather Zichal, a former environmental aide to
Obama who previously worked as Kerry’s legis-
lative director.
A critical question for Kerry will be how
to bring along developing countries where
Bloomberg Businessweek December 28, 2020
Bending the Temperature Curve
Baseline projection Countries’ current policies Countries’ pledges and targets
Global greenhouse emissions, Warming
estimated gigatons of CO2 projected by
2100
150
4.1C-4.8C
75
2.7C-3.1C
2.3C-2.6C
0
2015 2100
DATA: CLIMATE ACTION TRACKER
deforestation is rampant, from Indonesia to
Brazil. One consequence of Trump’s withdrawal
from the Paris Agreement is that it gave leaders
such as Brazil’s Jair Bolsonaro political cover to
ignore their own pledges.
Kerry will also have to work closely with China
as trust between the world’s two superpowers is
waning. President Xi Jinping surprised the world
in September with a pledge to make China carbon 31
neutral by 2060. While Biden isn’t likely to let up
on confronting Beijing on issues such as human
rights and intellectual property theft, Kerry may
have to play the good cop with China, because any
serious action on climate will require collabora-
tion between the two nations.
Placing a senior climate official on the National
Security Council recognizes what experts and
America’s own military have long warned about:
From powerful storms that can hit coastal mili-
tary installations to shortages of water and food
that can stoke conflict, a changing climate poses a
threat to U.S. interests at home and abroad.
Kerry can use U.S. technological and economic
resources, along with diplomatic muscle, to get
countries that have been less bold with their cli-
mate goals, such as India, to move faster. A mem-
ber of the transition team says the U.S. plans to
deploy climate finance and technical expertise to
partner with countries that are on the fence. Still,
bringing them around won’t be easy, Zichal says.
“How do you possibly go to a global leader
and say, ‘I know we’ve been AWOL for the last
fours years, but we’re back now, baby?’” she asks.
“I think there is going to be a credibility issue.”
�David Wainer and Ari Natter
THE BOTTOM LINE John Kerry’s new role signals the elevation of
climate change as a priority under Biden. But the U.S. will have to
tackle emissions at home to win the trust of other nations.
 ◼ POLITICS
Messing With the Census
● Trump could still manage to subtract millions of people—but his time is running out
The count for the 2020 census is done. Despite the
dangers of the pandemic and seismic shifts in the
political landscape, the U.S. Census Bureau ful-
filled its constitutional duty. Against the wishes of
32 President Trump, the census questionnaire didn’t
include a citizenship question.
But the task before the Census Bureau isn’t
quite finished. Before it can ship the numbers
off to federal and state governments, its statisti-
cians must complete a monumental task of data
processing—a standard yet exacting array of impu-
tations, de-duplications, and other refinements. The
Trump administration is leaning on the bureau to
produce statistics that census experts worry could
be used for highly partisan purposes. If Trump gets
his way, the census count could give a boost to the
GOP in the apportionment of districts for the House
of Representatives, removing seats from urban areas
in immigrant-rich states and reassigning them to
rural parts of Whiter states.
The U.S. Supreme Court cleared the decks for
the president on Dec. 18. It threw out a challenge to
a July order in which Trump told the Census Bureau
to send him two sets of numbers: the “whole num-
ber” of people in each state and a number minus
undocumented immigrants, to be used for House
apportionment. The high court didn’t decide the
merits of the case, which was brought by 23 states
and various immigrant rights groups. Instead, it
declared in a 6–3 judgment that it wasn’t clear yet
what the Trump administration planned to do.
That deferral gives the White House a narrow
window to keep trying. If it gets two sets of num-
bers from the bureau, it could make both available
Bloomberg Businessweek December 28, 2020
to states and let them decide which to use, or it
could just decide that the lower numbers are the
official ones.
Last year, after the high court blocked the cit-
izenship question, the White House took up the
Census Bureau on an earlier offer to estimate the
number of noncitizen residents using administra-
tive records. One source the bureau might tap, the
Citizens of Voting Age special tabulation, allows
resolution down to the block group level. That’s
census-ese for a dataset that looks at groupings of
roughly 8 to 10 city blocks. But the White House
may ask for datasets that count down to the indi-
vidual block level, which would yield a much more
detailed picture of ethnic and racial dividing lines
(yet less accurate counts for redistricting).
It’s unclear that sufficient administrative data
exist to capture the number of unauthorized immi-
grants living in the U.S. Assuming the White House
gets the data before Trump leaves office, “you can be “Taking up
sure there will be a subtraction” from the total pop- guesstimates …
ulation count, says Thomas Louis, professor emeri- that’s going to
tus for biostatistics at the Johns Hopkins Bloomberg lead to lots of
School of Public Health. (The school has received litigation”
significant funding from Michael Bloomberg, the
majority owner of Bloomberg Businessweek’s parent
company.) “Most people who know what kind of
data are available to use for that subtraction think it’s
not possible to do a very good job” at it, Louis says.
The odds are against the president. The Census
Bureau has already stated that it can’t complete its
report to the White House before Dec. 31. Even if
the Trump administration does get the adjusted ILLUSTRATION BY WREN MCDONALD. SOUTH AFRICA: MICHELE SPATARI/AFP/GETTY IMAGES
data in time, lawsuits are certain to follow. “If
adjustments are made to the whole person count
that the Census Bureau submits, like taking up
guesstimates—it’s favorable to call them ‘guessti-
mates’—that’s going to lead to lots of litigation,” says
Robert Santos, vice president and chief methodol-
ogist for the Urban Institute and president-elect of
the American Statistical Association.
The House could even direct the clerk to delay
the certification of the count. Dec. 31 is only the
deadline for House apportionment; counts for state
redistricting aren’t due until March 31.
Census chaos may still serve the GOP in
the long run. Populations considered hard to
◼ POLITICS
count only got harder to count in 2020, namely
immigrants, American Indians, and people of
color. Contagion fears, economic lockdowns, col-
lege campus closures: All of the ways the pan-
demic upended daily life served as strikes against
the census. �Kriston Capps
THE BOTTOM LINE Although a citizenship question was blocked,
other ways to strip noncitizens from census counts remain a
fleeting possibility.
Xenophobia Flares
In South Africa
● With the economy reeling from the pandemic,
sentiment hardens against immigrants
As Covid-19 has slammed the South African economy
and pushed unemployment to a 17-year high, it’s
stoking a recurrent social ill: xenophobia.
Anti-immigrant groups have staged demonstra-
tions in recent months in Johannesburg, the coun-
try’s biggest city, and Pretoria, the capital, calling
for the mass deportation of foreigners. The provin-
cial government of Gauteng, the nation’s economic
hub, wants to pass a law in 2021 to limit ownership
of businesses in low-income areas, or townships, to
citizens and foreigners who are fully legalized.
“Every foreign national that came to our coun-
try since 1994 must be deported,” said Victoria
Mamogobo, the 34-year-old chair of the South
African First party, as she demonstrated on Nov. 27
in Johannesburg. “You’ve got people all the way
from Nigeria who are here to sell tomatoes on our
streets. How is that helping us grow our economy?”
The Gauteng bill threatens to upend an industry
of more than 100,000 foreigner-run convenience
stores across the country, with annual revenue of
100 billion rand ($6.83 billion), according to GG
Alcock, a consultant on township marketing.
South African First and the Put South Africans
First movement are demanding other govern-
ment actions including an end to the issuing of
nonessential work permits. The African Diaspora
Forum, which campaigns for migrant rights, says it
will challenge the township bill in court if it’s passed.
The government of Gauteng denies that the bill
unfairly targets foreigners. “Which part is xeno-
phobic? Because what that bill is saying is that you
must be a South African, you must be in South
Bloomberg Businessweek December 28, 2020
Africa legally,” says Vuyo Mhaga, spokesperson for
Gauteng Premier David Makhura.
Since the apartheid system of racial discrimina-
tion ended in 1994, Africa’s most developed econ-
omy has been a magnet for migrants from across
the continent and as far afield as Bangladesh. This
increased migration has sparked bouts of violence
every few years—and today, social media helps
whip up the hatred. Xenowatch, which gathers
information on xenophobic attacks in South Africa,
says that from January 2019 to November 2020,
1,376 shops were looted and 37 people were killed.
Many of the migrants are refugees, who are in
the country legally and allowed to work. Others
are economic migrants, either undocumented or
holders of work permits. Although it’s unclear how
many migrants are in South Africa, estimates of the
number of Zimbabweans alone exceed 2 million.
Immigrants, many from Ethiopia and Somalia,
dominate the running of township shops because
they’re better able to compete against formal super-
market chains, Alcock says. Whereas South African
store owners tend to operate independently,
Somalians and Ethiopians band together and buy
in bulk, allowing them to offer lower prices. South
Africans still own the properties and, according 33
to Alcock’s estimates, immigrants pay 20 billion
rand in rent in townships annually. “The assump-
tion is that if they stop illegal immigrants from trad-
ing, then immediately those jobs will be taken up,
◀ A march against
xenophobic attacks in
Johannesburg in 2019
or those small businesses will be taken up by South
Africans,” he says. “That’s not true.”
As he listens to Nigerian gospel music and eats
bread dipped in tea in downtown Johannesburg,
Ekechukwu Nnadi points to a street corner where
he was beaten by anti-immigrant rioters three
years ago. The incident hasn’t stopped him from
coming back: “This is where I make my ends meet
to pay my rent and take care of my family,” he
says. �Gemma Gatticchi and Lwazi Maseko, with
Karl Maier
THE BOTTOM LINE Immigrant convenience-store owners and
other foreigners in South Africa are prime targets for resentment—
and for politicians vowing to get tough on illegal immigration.
 Bloomberg Businessweek December 28, 2020

Business
at Its
34

Best
With a big hand from the government, pharmaceutical
companies delivered the vaccine that the world
desperately needed. Here’s how something in 2020 went
right for a change

By
DREW ARMSTRONG Photograph By
IAN LORING SHIVER
 PROP STYLIST: DAVID PROBASCO

THE
GOOD BUSINESS
ISSUE
35
Bloomberg Businessweek
An All-Hands-on-
Deck Effort
Just a few in the army
of scientists and leaders
who made the record-fast
development of a Covid-19
vaccine happen
A T THE END OF 2019,
before the corona-
virus pandemic started, the
two best-known faces of the
pharmaceutical business
were the imprisoned Martin
Shkreli and the lawsuit-laden
opioid makers at Purdue
Pharma LP. The rest of the
industry was perhaps best
known for the skyrocket-
ing prices of its medicines.
In a Gallup Poll of the pub-
lic’s view of various business
sectors, pharma was ranked
at the bottom, behind
the oil industry, advertis-
ing and public relations,
and lawyers.
Who’d have guessed that
a year later pharma would
be getting credit for saving
the world? From cruise lines
to meatpackers, business will
have plenty to answer for in
its handling of the pandemic,
but this part of it worked.
The Covid-19 vaccines devel-
oped by the drug industry,
in partnership with govern-
ments, will almost certainly
prevent hundreds of thou-
sands of American deaths
and millions more around
the world. They will revive
trillions of dollars in eco-
nomic activity, let grand-
parents see grandchildren,
and finally bring an end to a
year that has—sing it together
one last time as the ball
drops over an empty Times
Square—really sucked. In a
time where almost every-
thing else went wrong, the
THE
KIZZMEKIA CORBETT
Viral immunologist, National Institute
of Allergy and Infectious Diseases
vaccine effort was something
that went (mostly) right.
The quest started in early
January, before most peo-
ple in the U.S. and Europe
were even thinking about a
pandemic. The biotechnol-
ogy company Moderna Inc.
had downloaded the genetic
code for the novel corona-
virus from researchers in
China. Within a few days,
scientists there had devel-
oped a vaccine with the U.S.
National Institute of Allergy
and Infectious Diseases,
the research agency led
by Anthony Fauci. By
mid-March, they’d started
a clinical trial.
Pfizer Inc. announced
its own plans around the
same time. A year and a half
before, it had signed a deal
with a German biotech com-
pany, BioNTech SE, that has
similar messenger RNA tech-
nology to Moderna’s that
could, in theory, rapidly
assemble and test vaccines.
Like Moderna, the compa-
nies thought the technology
could make it possible to
quickly turn around a proto-
type. “The world hasn’t
seen an emergency like this
in 100 years,” says Steven
Joffe, the interim chairman
of the department of medi-
cal ethics and health policy
at the Perelman School of
Medicine at the University of
Pennsylvania. “We are lucky
in the sense that the science
was there.”
GOOD BUSINESS
STEPHEN HAHN
Commissioner, U.S. Food and
Drug Administration
Other crucial pieces fell
into place behind the scenes.
For years the research chiefs
of the top pharmaceutical
companies have had an
annual gathering to talk
about ways to speed up
their work. As the Covid cri-
sis got worse, about 20 drug
companies started a work-
ing group with the National
Institutes of Health and
other government agencies,
meeting every other week
to look at potential thera-
pies and coordinate clini-
cal trials, says Paul Stoffels,
the chief scientific officer at
Johnson & Johnson, which
has a large-scale Covid vac-
cine trial expected to pro-
duce results in January.
Those efforts would even-
tually be folded into what’s
now known as the Trump
administration’s Operation
Warp Speed program. Warp
Speed was revealed at the
end of April, when the pan-
demic had killed close to
60,000 Americans. The goal
was to develop and pro-
duce enough shots to inocu-
late 300 million Americans
before the new year. Some
companies, including
Moderna and J&J, would
get direct funding for their
efforts. Pfizer got an agree-
ment from the govern-
ment to buy the vaccine it
produced if it worked.
Crucially, the govern-
ment was shouldering
some risk, financing the
December 28, 2020
SARAH GILBERT
Professor of vaccinology,
University of Oxford
advance production of the
experimental vaccines while
clinical trials were still going
on. “The most risk-averse
people on Earth in the
riskiest business on Earth” is
how U.S. Health and Human
Services Secretary Alex Azar
describes the drug indus-
try. “Probably the most com-
mon words said in a pharma
company are, ‘How do you
de-risk this?’ ” Azar, whose
department helped over-
see Warp Speed, says he
understood how tricky a
bet on vaccines can be for
a business. “These com-
panies are looking at mak-
ing the multibillion-dollar
investments in R&D and
manufacturing capacity,”
he says. “And they had just
been through Zika, SARS,
they’ve been through
MERS”—viruses for which
the pharmaceutical indus-
try investigated vaccines
that never saw the outside of
a clinical trial before those
outbreaks dissipated or
were squashed.
The government’s back-
ing let smaller players get in
the game and take some risk-
ier technologies forward.
Smaller companies such as
Moderna “don’t have the
resources to do this on their
own,” Joffe says of large-
scale clinical trials. Pfizer,
despite its corporate repu-
tation as a rival-consuming
shark, said it would offer up
any excess manufacturing
ISSUE
 Bloomberg Businessweek
HAMILTON BENNETT
Senior director of vaccine access
and partnerships, Moderna
capacity it might have—
potentially producing
competitors’ vaccines.
But even a company
of J&J’s size—it reported
$15.1 billion in profits last
year—needs incentives to
rapidly start up a costly
vaccine development and
testing effort, Stoffels says.
Pharma companies could
reasonably predict that
Covid would be bad and
that a vaccine would have
a market. “But to mobilize
a billion, maybe $2 billion
to start manufacturing and
do the R&D” is daunting, he
says. “While we are big com-
panies, nobody can free up
$2 billion in their [profit-and-
loss statement] overnight.”
CORBETT: TIMOTHY NWACHUKWU/NEW YORK TIMES/REDUX. HAHN: FDA. GILBERT: CHRISTIAN SINIBALDI/GUARDIAN/EYEVINE/REDUX.
Moderna, AstraZeneca
Plc, and other vaccine devel-
opers who joined Warp
Speed agreed to use similar
BENNETT: KAYANA SZYMCZAK. TURECI: BIONTECH. AZAR: U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES
structures for their clinical
trials, so they could easily be
compared with one another
and so it would be easier to
see clear winners. The gov-
ernment also put together a
single safety board to over-
see them, which Penn’s Joffe
sits on. It was an unusual
approach, but it let the safety
monitors look for worrying
side effects or problems that
could show up in more than
one trial. In usual circum-
stances, drugmakers might
design their experiments to
show advantages over com-
petitors’ or dodge a potential
head-to-head analysis.
THE
ALEX AZAR
Secretary, U.S. Health and
Human Services
Big Pfizer and tiny
Moderna both got their
vaccines across the fin-
ish line. The shots cleared
in December, have been
shipped out to states, and
are now going into people’s
arms. Barring surprises, by
spring, tens of millions of
Americans will have got-
ten them. By summer, hun-
dreds of millions more will
have. It’s an achievement
worth celebrating—a shining
example of people under-
standing what their job really
is, then doing it. And it’s not
a story with a single hero. It’s
one about government sci-
entists and private-sector
researchers, the trial volun-
teers who put their bodies
on the line, the doctors run-
ning the trials, the FedEx
and UPS workers making
sure the vaccine is delivered
during a pandemic winter,
the nurses donning PPE to
administer the shots, down
to the first person being
vaccinated after the FDA’s
authorization. Go through
the chain, and that’s who
made this happen.
B UT IT’S ALSO A STORY
that highlights just
how badly the U.S. screwed
up almost everything else
to do with controlling the
pandemic. The nation had
every asset needed to curb
the virus: The world’s best
scientists, the biggest col-
lection of biotechnology
GOOD BUSINESS
OZLEM TURECI
Chief medical officer,
BioNTech
and pharma companies, a
powerful government, and
well-established public-
health institutions. The U.S.
even had unlimited financ-
ing. (Perhaps the one other
thing policymakers got right
is that they pumped enough
money into the system to
keep the economy alive,
but even then Congress was
slow to strike a second relief
deal.) And Americans still
ended up with a badly con-
tained, deadly outbreak.
Schools have gone remote.
Lots of restaurants will never
reopen. Chances are, you
know somebody who was
sick enough to be hospital-
ized or to have died.
Michael Mina, an assis-
tant professor of epidemiol-
ogy at the Harvard T.H. Chan
School of Public Health,
believes that cheap, plen-
tiful, rapid tests long ago
could have done more to
stop the pandemic than
just about anything else
we’ve done over the past
few months while watch-
ing cases and deaths stack
up and hoping for a vaccine.
“The only way to deal with a
virus like this appropriately
is to try and identify people
who are infectious,” he says.
He’s helped develop an inex-
pensive, mostly accurate
test with rapid results that
can be done on a strip of
paper. It’s not as accurate
as the diagnostic tests you
have to wait hours in line for
December 28, 2020
and often days to get a result
back from, but it costs pretty
much nothing and is easy to
make. “We make more bags
of Doritos than I’m asking
for,” he says of the number
of tests needed. “These are
paper strips that get cut from
one big piece of paper.”
His idea is that if you
test like crazy, you can find
enough cases to tell peo-
ple who are infectious not to
be out and about, and you
halt a huge amount of trans-
mission. “There are people
who aren’t wearing a mask
because of politics or what-
ever,” Mina says. “But they
may still not want to get their
80-year-old mom sick at
Sunday dinner.” He’s pushed
the idea to anyone who will
listen, but it would need reg-
ulators to sign off and has
never gotten off the ground. 37
So where was the Warp
Speed for testing? Fauci,
who’s been the face of
the U.S. response to the
outbreak—or at least the face
of what it could have looked
like—said at a Dec. 9 event at
Harvard’s school of public
health that it’s not as if a pro-
gram of mass, cheap testing
would have been impossible
to achieve. “We have done
things infinitely more com-
plicated than that,” he said.
“We have the technology.
We can do it.”
Which, when you think
about it, brings up more
questions. Where was the
Warp Speed for contact trac-
ing? For public-health mea-
sures? For data? For making
sure health-care workers had
protective gear? Where was
the Warp Speed for keeping
open businesses, churches,
and schools? For everything
that went wrong, where
was that combination of
ISSUE
 Bloomberg Businessweek
“We are
lucky in the
sense that
the science
was there”
leadership and industry
and money that could have
made it go right? While
we’ve been marveling,
rightly, at the science that’s
made a vaccine possible,
most of that other stuff never
got going at the same level.
HHS Secretary Azar says
there was a national strat­
egy for much of this—it just
wasn’t as visible as Warp
Speed. But we’re still facing a
tough winter even with large­
38 scale vaccination efforts on
the horizon. Tests are more
common now but hardly
plentiful, at least not in the
volume you’d need to truly
use them for broad, con­
stant public­health surveil­
lance, the kind that would
allow people en masse to go
to school or work, travel on
airplanes, or attend concerts
or sporting events. In the
New York City suburb where
I live, my wife and I spent
days trying to book a just­to­
be­sure Covid test before we
headed south to visit rela­
tives for Christmas. As I’m fil­
ing this to my editor, we’re
barreling down the interstate
with plans to eat food out of
a cooler, pee on the side of
the road, and brave 14 hours
in a midsize SUV with two
small children—one of whom
is disastrously vomit­prone—
all to preserve the little bub­
ble of isolation we’ve kept up
ahead of the trip.
Even the uncomplicated
THE
things have been hard for
much of the country. Not
wearing a mask is seen as
a political act by a signifi­
cant portion of the popula­
tion, unhelped by a mixed
message from government
leaders, some of whom
have suggested that, basi­
cally, masks are for losers.
“We love to inject ourselves
with stuff, but when it comes
to simple messaging about
health, doing something
that would help people,
we hate it,” Mina says. “We
are very willing to mop up
messes, but we have no will­
ingness to stop them before
they occur.”
There is one more
opportunity to get a big
thing right. The U.S. gets
credit for having pushed
the development of the vac­
cines. Now it has to make
sure people take them.
First, the government
has to guarantee there’s
enough vaccine. That was
a key part of the goal of
Warp Speed. Since the pro­
gram started, the U.S. has
signed deals for enough
shots to cover 505 million
people, with the option
to buy more. But it has
only enough from Pfizer,
so far, for 50 million. And
from Moderna for 100 mil­
lion. Other vaccines it’s
made deals for, such as
AstraZeneca’s and J&J’s, are
still in development.
There are growing con­
cerns that the U.S., after
leading development of vac­
cines, may not get them as
fast as it had hoped. Instead
of 300 million covered by
the end of 2020, the U.S.
is now aiming to supply
vaccine for 20 million peo­
ple by the end of December
and getting to a total of
GOOD BUSINESS
100 million by the end of
February. Vaccinating all of
America now looks more
like an end­of­2021 goal.
Even if there is enough
vaccine, of course, people
have to be willing to take it.
“If we have a 95% effective
vaccine and only 40% to
50% of the people in society
get vaccinated, it’s going to
take quite a while to get to
that blanket of herd immu­
nity that’s going to pro­
tect us,” Fauci said at the
Harvard event.
E ARLY ON IN THE
development of the
vaccines, there was debate
about whether to run what
are known as challenge tri­
als. In these, healthy volun­
teers get an experimental
vaccine and are deliber­
ately exposed. It’s an ethi­
cal razor’s edge. Is it moral
to give somebody a virus
you know kills a small per­
centage of patients, with
their best defense being a
vaccine that isn’t known
to work? Because there
weren’t Covid therapies
that could cure an infected
patient, researchers passed
on the idea. It wasn’t worth
the chance that someone
could die.
Instead, the vaccine tri­
als signed up tens of thou­
sands of volunteers, split
into those who got the real
shot and those who got a
placebo. To find out if the
vaccine was effective, they
had to go back out into the
real world and bump into
the virus on their own. The
idea with these large trials—
the gold standard for test­
ing a vaccine’s efficacy and
safety—is that if the vaccine
works, Covid cases rapidly
accumulate in the group
December 28, 2020
that got the placebo but not
in those who got the real
thing. Get enough cases,
and you can perform a sta­
tistical analysis of exactly
how effective the vaccine
is. But if there isn’t enough
virus circulating, few in
the trial get infected, and
results take longer.
Over the summer,
Pfizer’s and Moderna’s tri­
als went into lulls as the
pandemic waned. Then in
the fall, cases exploded—
millions of infections were
tallied around the coun­
try and thousands of peo­
ple died—and the results
started pouring in on the
trials. J&J said in December
it would shrink the size
of its 60,000­person trial
because the cases were
coming in so fast. The U.S.,
because of its failure to con­
trol the pandemic, had
essentially created one big
challenge trial.
“There is an irony
and a situation that we
all hoped wouldn’t have
occurred,” U.S. Food
and Drug Administration
Commissioner Stephen
Hahn says. “The number of
cases did help expedite the
performance of clinical tri­
als, both here and abroad.
That did help us get to this
point. But I think none of us
would have wanted it to be
that way.”
That’s the contradiction
of the U.S.’s vaccine suc­
cess. The government
and scientists all work­
ing together came up with
a shot to save the world—
and then they were able
to prove so quickly that it
worked only because those
same institutions couldn’t
save us from ourselves. <BW>
�With Robert Langreth
ISSUE
The finance, HR, and
planning system that
helps you adapt to change.
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remotely, or devising new supplier strategies, your ability to respond
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 Feeding
Bloomberg Businessweek

40

World Central Kitchen, founded by chef José Andrés,

has helped millions of people through disasters. The
pandemic brought a new challenge

By
ROBB MANDELBAUM Photographs by
CHRYSTOFER DAVIS
 December 28, 2020

41

nzy
� Carole Dubois (above) and workers

THE GOOD BUSINESS ISSUE

 Bloomberg Businessweek
T HE RUSH BEGAN
early in the kitchen of
Blueprint Cafe Lounge, a
fusion restaurant in the
East Ward of Newark,
N.J. On a Thursday morn-
ing in December, Isabel
Melo, a chef, arrived at
5:30, well before sunrise.
First she retrieved trays of
zucchini-carrot salad, pre-
pared the night before,
from the cooler, then filled
a couple of large stockpots
with water to boil penne—
20 pounds of it. As the
pasta cooked, she finished
off a cream sauce simmer-
ing in a large saucepan with
curry. By 9 a.m., assistant
Antonio Flores had begun
grilling trays of chicken that
had marinated overnight in
a savory mix of basil, cinna-
mon, and garlic.
42 It was a lot of food for
a restaurant in a city that
was once again on the brink
of lockdown. And that was
only half the morning’s
order—the chefs also pre-
pared a banquet’s worth of
fried fish with potato casse-
role and roasted vegetables.
But none of these meals
were meant for Blueprint’s
regular clientele. At about
10:40, the restaurant’s
“He’s
become a
guy that
I learn
every day
from. He’s
like a Jedi,
this guy”
THE
manager, Charles Steiner,
loaded up his Audi with a
hundred freshly boxed fish
meals bound for a com-
munity service organiza-
tion a few miles away in
Newark’s North End. Then
he came back for a hun-
dred chicken meals to
take to the Metropolitan
Baptist Church.
The meals were arranged
and paid for by World
Central Kitchen, the relief
organization founded by
Spanish-born chef and
restaurateur José Andrés.
World Central Kitchen
became something of a
household name in the
U.S. after Hurricane Maria
made landfall in Puerto
Rico in September 2017.
Andrés, working mostly
with volunteers recruited
on the spot or pulled from
his restaurant empire,
ThinkFoodGroup, did
what no other relief
organization—not the
Federal Emergency
Management Agency nor
the Red Cross—managed to
do: serve millions of fresh,
often hot, meals to people
who would otherwise have
gone hungry.
In the three years since
Maria, WCK has responded
to wildfires, erupting volca-
noes, and more hurricanes
with makeshift kitch-
ens in shuttered schools,
catering halls, and other
institutions. It’s sourced
ingredients from local sup-
pliers and pulled together
networks of chefs, kitchen
workers, food trucks,
and volunteers—in other
words, from existing food
infrastructure—to cook and
distribute meals. In the pro-
cess, it’s rewritten the play-
book for disaster relief
GOOD BUSINESS
strategies that long relied
on shipping in precooked,
heavily processed meals.
(Andrés has participated
in events organized by
Bloomberg Philanthropies;
the organization also
has donated to World
Central Kitchen.)
The arrival early this
year of the novel corona-
virus in so many places at
once, and the subsequent
economic shutdowns meant
to contain it, required
an even more ambitious
rethink. “We have an ethos
as an organization that
you can’t do what’s always
been done,” says Nate
Mook, WCK’s chief execu-
tive officer. “If you end up
operating the same way as
everyone else, then you’re
going to have the same
issues that they have at the
end of the day.”
In early March, WCK
began talking to restaurants
in a half-dozen cities on the
coasts, the first in a nation-
wide initiative that it calls
Restaurants for the People.
By July the program was
serving more than 200,000
meals a day to the hungry,
made by 2,400 restaurants,
caterers, and food trucks
in almost every major U.S.
metro area and dozens of
smaller cities and towns.
WCK provides nutrition and
other guidance to restau-
rants, sets their cooking
schedules, and determines
where the meals go.
Right now, about 1 in
5 households can’t be
sure where its next meal
will come from, accord-
ing to Elaine Waxman, a
senior fellow at the Urban
Institute who studies food
insecurity. It’s worse for
families with kids, with
December 28, 2020
1 in 4 food-insecure. The
situation is so dire that “just
adapting the tools we have
is not sufficient,” she says.
It’s about “thinking outside
the system.”
With Restaurants for
the People, WCK has trans-
formed itself from a merely
effective relief organiza-
tion into something more
resembling an upstart tech
company—it’s developed a
fairly radical, scalable pro-
gram not just for getting hot
food to people who need
it but also for keeping the
money spent on food aid in
the affected communities
by using their small busi-
nesses. Paying a restaurant
to make an individual meal
typically costs about $10,
about two to three times
more than having volun-
teers cook it in bulk in an
arena commissary, but the
extra money keeps restau-
rant workers employed,
and when they spend their
paychecks they keep other
people at work.
At Blueprint, co-owner
Carole Dubois has kept her
nine-person staff together,
but she and her partner
have dipped into their
pockets to do it. “They
would come in, but there
was nothing that was being
sold,” she says. Dubois
opened Blueprint Cafe
three years ago in a brick
building that used to be a
Breyers Ice Cream factory.
She worked hard to make
it a destination for din-
ers in an otherwise indus-
trial neighborhood. As last
spring approached, so did
the break-even point for the
business. “Then the pan-
demic struck,” she says.
“We dipped about 80%.”
When WCK entered the
ISSUE
 Bloomberg Businessweek
picture, she says, “it’s like
you’re drowning, and they
throw a floater at you.”
The organization orig-
inally committed $10 mil-
lion to the program, but
it quickly struck a chord.
Buoyed by a surge of dona-
tions, much of it in small
contributions, it’s spent
about $150 million. Of
that, $135 million has gone
to restaurants. Although
Restaurants for the People
largely wound down in the
fall as its funding commit-
ments ran dry, it contin-
ues to operate in Newark
and a handful of other cit-
ies, where companies and
philanthropists support it.
With Covid-19 cases rising
sharply across the coun-
try, relaunching the pro-
gram nationally would be a
monumental effort. Andrés
believes only one donor is
capable of sustaining it: the
federal government.
U NTIL 2017, ANDRÉS
was best known as
a TV-friendly chef who
hosted a show about
Spanish cooking on PBS
and beat Bobby Flay on
Iron Chef. From the early
1990s in Washington, D.C.,
Andrés had built an empire
of fancy-casual eateries,
mostly serving variations
on Mediterranean and Latin
PHOTOGRAPH BY GABRIELLA DEMCZUK FOR BLOOMBERG BUSINESSWEEK
cooking. But he rocketed
to fame on the strength of
a handful of avant-garde
restaurants that most peo-
ple will only ever know
by reputation. (One of his
first restaurant jobs, as a
teenager, was at El Bulli,
Ferran Adrià’s seminal
modernist restaurant out-
side Barcelona.)
Andrés used his own
money to open a six-seat
THE
restaurant called Minibar in
2003, on the second floor
of one of his D.C. restau-
rants; it won two Michelin
stars in 2016. By the late
2000s, as he opened spots
around the country, he’d
taken to adding “by José
Andrés” as a suffix to the
establishments’ names. Yet
Mook at WCK’s operations center
though he was catering to
an increasingly rarefied cli-
entele, Andrés has often
said he longed to “feed the
many.” Soon after he first
moved to D.C. in 1993, to
open the tapas bar Jaleo,
he’d begun volunteering,
first at Share Our Strength,
then at DC Central Kitchen,
a local organization that
trains unemployed people
GOOD BUSINESS
to work in the restaurant
industry and serves food
to at-risk populations. “I’m
an immigrant. I like being
part of the community,”
Andrés says. He found
the experience of cooking
next to homeless people
and ex-convicts humbling.
“I began growing up as
a young man,” he says,
“but more importantly, I
began growing up as an
American.”
When a devastating
earthquake struck Haiti
in January 2010, Andrés
went there to cook. World
Central Kitchen came out of
that trip. The early work of
the group, which until three
years ago was really just an
December 28, 2020
employee or three, focused
on long-term development,
such as bringing clean-
burning stoves to Haitian
homes. But as Andrés vis-
ited more disaster zones,
he took note of what helped
and what didn’t.
When he boarded
a flight to San Juan in
September 2017, five days
after Maria, Andrés had lit-
tle but the phone num-
bers of some contacts in the
local restaurant industry.
And in the seat beside him,
he had Mook.
Mook, 39, left college
before his sophomore year
to start a network of web-
sites and spent the next
decade creating and run-
ning a series of small,
modestly successful tech
ventures. Eventually,
he started a TEDx chap- 43
ter, producing local TED
Talk-style events in the
Washington area. Soon,
Mook found the extracur-
ricular work more compel-
ling than his workday. In
2011 he moved to Doha to
organize a TEDx summit
there and fell in with a band
of filmmakers.
Mook got to know Andrés
in Doha, when the chef vis-
ited to scout restaurant
locations. The restaurateur
talked so passionately about
WCK and Haiti that Mook
invited him back to the con-
ference the next spring to
speak about the effort. A few
months later, Mook offered
to travel to Haiti with his
friends and film Andrés
at work. Within days, the
two were reunited in Port-
au-Prince. Ultimately they
made a documentary about
Haiti for PBS.
When Hurricane Maria
hit, Andrés called Mook
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 Bloomberg Businessweek
looking for a satellite
phone. He got, instead, a
colleague. In December,
just after returning from
Puerto Rico, Mook trav-
eled to Ventura County,
northwest of Los Angeles,
as wildfires raged and orga-
nized another feeding mis-
sion, for firefighters and
evacuees. “A lot of people
attributed José’s work in
Puerto Rico to a flash in the
pan—they said Puerto Rico
was a unique situation,”
Mook says. But now the
pair realized they could do
this work almost anywhere.
A month later, Andrés
asked Mook to build WCK
into a rapid-response relief
organization.
“He’s become a guy that
I learn every day from,”
says Andrés. “He’s like a
44 Jedi, this guy.”
T HE IDEA THAT
restaurants could
serve as meal production
sources for disaster ref-
ugees first occurred to
Andrés in Puerto Rico.
But in the kinds of disas-
ters World Central Kitchen
began responding to, rely-
ing on restaurants usually
wasn’t practical: Either the
premises were damaged,
or their supplies were dis-
rupted, or their staff had
evacuated with the rest of
the community.
Covid was different. The
restaurants were standing,
the food was available—
suppliers, in fact, were des-
perate for customers—and
employees were waiting for
work. But in the early days
of the pandemic, when the
virus was more of a rumor
than a fact on the ground in
most of the U.S., it wasn’t
clear how or whether food
THE
could even be distributed
safely. When WCK went to
Japan to feed the passengers
marooned on the Diamond
Princess cruise ship, it had
to find special oven trucks
to reheat meals before they
were hoisted up from the
dock to the ship’s deck.
Flexibility is the hall-
Andrés in Puerto Rico in 2017
mark of a WCK operation.
Andrés is famously averse
to meetings, at both his
day job and his aid group.
“Everybody kept saying
we needed to have a plan,
but we never organized,”
he wrote in a memoir of
Maria. “How many days are
you going to organize when
people are going hungry?”
Even as WCK has grown,
GOOD BUSINESS
Mook has resisted adding
much structure.
“A lot of times, it’s
impossible to know what
is really needed until
you’re there,” Mook says.
“The first rule of what we
do is adaptation—get on
the ground, figure out the
needs, and adapt to the
circumstances. You create
the framework, and people
understand the framework,
knowing that the details are
going to change.”
When Mook sent a team
to reconnoiter the Navajo
Nation, which lies in a vast
and remote expanse of des-
ert in northern Arizona and
New Mexico yet had one of
the highest rates of infection
December 28, 2020
this spring, WCK discovered
that restaurants were too
few and too far from many
small communities to sup-
ply hot food. So the orga-
nization made fresh food
boxes for recipients to cook
at home. Ultimately, WCK
deployed a variety of strate-
gies, including institutional
kitchens and food trucks.
But restaurants are still
the biggest arrow in its
quiver. WCK isn’t alone in
appreciating the double
benefit of tapping restau-
rants as agents of disas-
ter response. Groups in
Boston, New Orleans, and
San Francisco all more or
less simultaneously hatched
independent crowdfunding
campaigns that would go
to pay restaurants to cook
meals for front-line work-
ers. The Boston and San
Francisco organizations
quickly joined forces with
WCK. In Newark, Audible,
Amazon.com Inc.’s pod-
casting subsidiary, which
has long subsidized weekly
lunches for its employ-
ees in the city’s down-
town restaurants, started
its own effort to fund meals
for the needy prepared by
those restaurants. It also
wound up joining WCK:
Audible has funded the
project—$4 million of its
own money, plus $8 million
in corporate and individual
donations—while WCK man-
ages the work.
As word spread about
the program, more restau-
rants than WCK could pos-
ERIC ROJAS/THE NEW YORK TIMES/REDUX
sibly support wanted in.
Mook says the organiza-
tion considered both geog-
raphy and who needed the
work most. It often came
down to being in the right
network. In Newark, WCK
ISSUE
Bloomberg Businessweek
made a deliberate effort to
expand beyond the Central
Ward and to work with
more minority-owned, and
particularly Black-owned,
businesses, says Emma
Haberman, who man-
ages the Newark opera-
tion. Haberman normally
oversees the organiza-
tion’s events, but when
Covid struck, “it was kind
of all hands on deck,”
she says. “Nothing is not
your job at World Central
Kitchen.” In most cases,
she took recommenda-
tions from Audible employ-
ees or the mayor’s office.
But not always: Andros
Diner joined the ranks to
serve Metropolitan Baptist
Church at the behest of
New Jersey Senator Cory
Booker, who asked Andrés
directly. The diner is one
of the senator’s favorite
restaurants, and he’s a
member of the church.
Because where WCK
lands—and whom it helps
once there, on either end—
is often a matter of happen-
stance and connections,
there have been nota-
ble omissions. The orga-
nization had almost no
presence in Phoenix, the
“The first
rule of what
we do is
adaptation—
get on the
ground,
figure out
the needs”
THE
country’s 10th-largest
metro area, or in the whole
of Alabama or Mississippi,
all of which had become
red zones by June.
Still, for the restau-
rants in the program and
for recipients, it’s almost
impossible to overstate
WCK’s value. Since March,
Newark restaurants have
prepared almost 650,000
meals for hungry resi-
dents and collected close
to $6.5 million in reve-
nue. For Blueprint, the
payments were essen-
tial. Business returned
as deliveries and pickups
ordered through such apps
as DoorDash, but “those
third parties are taking 30%
of your revenues,” says
Dubois. At the program’s
peak, when Blueprint was
making a thousand meals
a week, she says, it was
like having five really good
pre-pandemic days.
Meanwhile, a handful of
local governments around
the country have followed
WCK’s lead and set up their
own restaurant feeding
programs. City officials in
New Orleans, inspired by
WCK’s early work there,
deployed $18 million to
feed residents who live in
a household with some-
one who has Covid. At its
peak, the program served
about 12,000 people two
meals a day; now, about
5,800 people are enrolled.
The program is scheduled
to run through the end of
the month. In California,
31 cities and counties are
using restaurants to deliver
meals to senior citizens.
Currently, some 54,000
seniors are enrolled in
Great Plates Delivered,
as the program is called;
GOOD BUSINESS
since April, when Governor
Gavin Newsom announced
it, it’s served almost
20 million meals.
Both of these initia-
tives are funded largely
with reimbursements
from FEMA; and they
appear to be the first time
that local jurisdictions
have used FEMA disas-
ter money to provide food
relief through their restau-
rants. WCK, for its part,
would like others to follow.
Even as it began rolling
out Restaurants for the
People, Andrés started dial-
ing up friends on Capitol
Hill. In May, Representative
Mike Thompson and fel-
low California Democrat
Senator Kamala Harris,
along with co-sponsors
from both parties,
introduced the FEMA
Empowering Essential
Deliveries (FEED) Act,
which invites the federal
government to approve
local plans to contract out
disaster meal services to
small and mid-size restau-
rants and nonprofits for the
duration of the pandemic.
The FEED Act doesn’t
really remove most of the
obstacles that discour-
age local governments
from getting federal help
on costs, such as FEMA’s
exceedingly slow timeta-
ble for paying up. But the
bill does make one cru-
cial change: The federal
government would pay
the full tab for these pro-
grams during the pan-
demic. Under existing law,
the state must cover 25%
of the cost of aid, a share
that’s put meal assistance
beyond the reach of many
communities. California,
for example, requires local
December 28, 2020
governments to pay 6% (the
state pays 19%), and even
that’s too much for most
jurisdictions.
It’s unclear whether the
FEED Act will become law—
the Democratic House has
passed it, but it’s stalled
in the Senate. The Biden
administration could decide
on its own to raise the fed-
eral government’s share of
disaster costs to 100%.
Already, WCK and
other like-minded groups,
including Audible in
Newark, are starting to
think about life after Covid
and whether restaurants
can become an endur-
ing tool for addressing
endemic food insecurity
in their communities. It
will be a difficult discus-
sion. Over the long term,
says the Urban Institute’s 45
Waxman, that’s a better
job for government. And
Andrés, for his part, would
prefer to see WCK stay
lean, agile, and focused.
But he also thinks govern-
ment has failed at provid-
ing this basic need. “This
should be a moment of no
compromises,” he says.
S TEINER, BLUEPRINT’S
manager, pulled into the
parking lot of Metropolitan
Baptist’s community cen-
ter at around noon. The
church’s twice-weekly meal
program takes 750 meals
from six restaurants. As
Steiner left, an Audible van
pulled in with its own deliv-
ery. Volunteers packed two
lunches into a bag with a
bottle of water and a gra-
nola bar as people began
lining up on the sidewalk
outside. The doors opened
at 1 p.m. By 2:15 the meals
were gone. <BW>
ISSUE
 Bloomberg Businessweek December 28, 2020

Is It About
All

46

Money?
Big shareholders are pushing companies to
think about society and the environment.
But there’s a new legal backlash
By
PETER COY
 Bloomberg Businessweek
T HE LEGAL PRINCIPLE
that corporate boards
must focus exclusively on
maximizing value for share-
holders wasn’t always taken
for granted. It was enshrined
in a 1919 court decision
involving Henry Ford and two
of his car company’s share-
holders, the Dodge brothers.
As chairman and majority
owner of Ford Motor Co.,
he had repeatedly raised his
workers’ pay, cut the price of
the Model T, and reinvested
profits in expansion. If Ford
were around today his stance
might be applauded by the
environmental, social, and
governance (ESG) movement
on Wall Street. “My ambition
is to employ still more men,
to spread the benefits of
this industrial system to the
greatest possible number, to
help them build up their lives
and their homes,” he said in a
speech introduced at trial.
Ford lost, though not
entirely. Minority share-
holders John Francis Dodge
and Horace Elgin Dodge,
who were scraping together
money to launch a rival auto-
maker, sued him to stop frit-
tering away profits and to
raise dividends. In Dodge v.
Ford Motor Co., the Michigan
Supreme Court ordered Ford
to pay an extra dividend. But
it simultaneously undercut
the principle of shareholder
primacy by affirming what’s
now known as the business
PHOTO ILLUSTRATION BY 731; PHOTOS: GETTY IMAGES (4); NASA (1)
judgment rule, which gives
boards of directors wide
latitude to decide what’s
in the best interest of the
corporation.
That ambiguity has
never been resolved. For a
century there’s been a strug-
gle between advocates of
shareholder primacy and
those who say corporations
THE
should take into account
other priorities, particularly
environmental, social, and
governance issues. As ESG
has gained prominence it’s
generated a quiet backlash. In
the waning days of the Trump
administration, three federal
agencies are promulgating
rules to narrow the scope for
considering ESG factors in
business and investing deci-
sions, even as lawyers predict
the Biden administration will
go in the other direction.
Which side is right? Well,
that’s where it gets interest-
ing. The latter-day Henry
Fords are correct that com-
panies can and should aspire
to more than just pushing
up their stock prices, while
today’s Dodge brothers are
right that managers and
boards shouldn’t have free
rein to do whatever they wish
with a company’s money.
Managing conflict over
the purpose of the corpo-
ration is difficult, but some
see it as part of the art of
running a company. Barnali
Choudhury, a law professor
at the UCL Faculty of Laws
in London, compares corpo-
rate directors to the resource-
ful main character Truffaldino
in The Servant of Two Masters,
an Italian comedy written in
1746. “Like Truffaldino, cor-
porate managers should also
be able to serve both the
financial interests of share-
holders and the interests of
non-shareholder corporate
constituents through use of
the ambiguity of the corpo-
rate purpose,” she wrote in a
2009 article for the University
of Pennsylvania Journal of
Business Law when she was at
Charleston School of Law.
The Trump administra-
tion has taken a very different
approach, arguing that there
GOOD BUSINESS
should be little ambiguity
when it comes to the fiduciary
responsibilities of the board of
a corporation or the trustees
of a pension fund. On Sept. 4,
the Department of Labor cited
the legal principle of “eye
single” in justifying a proposed
rule in the Federal Register: In
other words, fiduciaries of a
pension fund must promote
the welfare of participants and
beneficiaries to the exclusion
of all other concerns. The eye
single formulation, which has
a long legal history, may trace
back to none other than Jesus,
who said in the Sermon on
the Mount (Matthew 6:22, King
James Version): “The light of
the body is the eye: if therefore
thine eye be single, thy whole
body shall be full of light.”
These, then, are the battle
lines. The century-long debate
has intensified lately because
the ESG movement has gotten
stronger. According to the
Deloitte consulting firm, 26%
of professionally managed
assets in the U.S. had ESG
mandates in 2018, up from 11%
in 2012. The trend has been
bolstered by the concentra-
tion of assets in the hands of
a few giant money managers.
BlackRock, Vanguard, and
State Street together own 25%
of the shares in S&P 500 com-
panies. Those asset manag-
ers are increasingly likely to
support shareholder resolu-
tions by ESG activists. A small
shareholder who disapproves
of what a company is doing
can simply sell, but BlackRock
and peers that run index funds
have to own shares in every-
thing. So voting for change is
their only option.
But the power of big
holders and the proxy advi-
sory firms that help them
decide how to vote their
shares rubs some people the
December 28, 2020
wrong way. “A small number
of unelected agents, oper-
ating largely behind closed
doors, are increasingly
important to the lives of mil-
lions who barely know of
the existence much less the
identity or inclinations of
those agents,” Harvard Law
School professor John Coates
wrote in a 2018 paper. Jamie
Dimon, chief executive officer
of JPMorgan Chase & Co.,
complained in 2015 about
“lazy” shareholders who
just follow the recommen-
dations of proxy advisers
on votes. (Advisers had rec-
ommended voting against
his pay package, which was
nevertheless approved.)
Bloomberg has reported that
Dimon pushed the Business
Roundtable, a Washington
trade group he chaired at
the time, to lobby the U.S. 47
Securities and Exchange
Commission and lawmakers
on proxy-voting rules.
The Labor Department,
headed by Eugene Scalia,
son of the late conserva-
tive Supreme Court Justice
Antonin Scalia, this year final-
ized a rule stating that retire-
ment plan fiduciaries must
base investment decisions
solely on pecuniary factors.
Nonmonetary considerations
can be taken into account
only as a tiebreaker in the
“rare” case where two invest-
ments are otherwise equal.
Critics of the pension rule
consider it a victory that the
final version deletes most ref-
erences to ESG by name. It
takes effect on Jan. 12, just
before Trump leaves office,
but it may not last long. “It
seems very likely it will be
reopened and undone by
the next administration,”
says Michael Kreps, a former
U.S. Senate staffer who’s a
ISSUE
 Bloomberg Businessweek
lawyer at Groom Law Group
in Washington.
The SEC has gone easier on
ESG than Labor has, because
the fiduciary standard in the
law for corporate boards is
more relaxed than the one for
retirement plan trustees. But
in July the SEC approved a rule
effectively making proxy advi-
sory firms run their recom-
mendations past companies
at the same time they release
them to investor clients.
Institutional Shareholder
Services Inc., the biggest proxy
advisory firm, sued the SEC
and Chairman Jay Clayton over
the rule, which is also consid-
ered vulnerable to elimination
under Biden.
Perhaps the most direct
assault on ESG, albeit not one
involving directors’ duties
to shareholders, is being
48 mounted by the Office of the
Comptroller of the Currency,
which is proposing to penal-
ize big banks that base lending
decisions on anything other
than financial consider-
ations. It was instigated by
Alaska’s congressional delega-
tion, which complained that
banks had stopped lending
for new oil and gas projects
in the Arctic. Gunmakers and
private prison owners have
also complained of losing
financing. The OCC may pro-
mulgate the rule before Trump
leaves office—public comments
are due on Jan. 4. If it does, it
won’t be easy for the Biden
administration to reverse
because many Democrats, as
well as Republicans, are leery
of blacklisting entire sectors of
the economy.
The Trump administra-
tion does have a point that
there’s a potential conflict
between ESG and a board’s
fiduciary duties. Some ESG
advocates try to elide the
THE
conflict by arguing that doing maximization proponents
good for the environment, have warned, vastly
society, and governance broadening the discretion
increases corporate profit- of corporate managers can
ability in the long run. That’s leave management with so
true in some cases, but ESG much discretion that neither
isn’t simply a $100 bill on the shareholder, employee,
sidewalk. The profitable parts nor consumer wealth is
of it are already being done maximized, but instead only
willingly, or at least could be their own,” Choudhury wrote
done soon. The resistance, in her law journal article.
political and otherwise, is to Luigi Zingales is more of a
the unprofitable parts. “You proponent of ESG than Fama,
can’t get away from the idea his colleague at Chicago’s
that ESG takes away from Booth School, but says its
profitability,” says Wayne critics should be taken seri-
Winegarden, a senior fellow ously. He co-organized a
in business and econom- conference in September
ics at the free-market Pacific to mark the 50th anniver-
Research Institute. “In that sary of Milton Friedman’s
type of environment you’re landmark essay “The Social
talking about political issues, Responsibility of Business Is
not economic issues.” to Increase Its Profits.” Says
Shouldn’t shareholders be Zingales: “As usual, the guy
able to push companies to do was very smart, and what he
whatever they want, even if it said was very coherent.”
seems political? In theory, yes, There are three strong
says Eugene Fama, a Nobel lines of attack on the share-
laureate economist at the holder primacy argument,
University of Chicago Booth Zingales says. One is that
School of Business. But in shareholders may choose to
practice it’s impossible to coor- go beyond what the govern-
dinate their efforts, so profit ment requires because the
maximization is the next best government doesn’t always
goal, Fama wrote in October in do what’s right. A second is
an essay for the Harvard Law that “corporations were born
School Forum on Corporate as public institutions with
Governance. Using “E” and special privileges granted
“S” to refer to environmental by the state,” and with those
and social, Fama wrote, “For privileges come responsibil-
some investors with tastes for ities. A third is the argument
E&S actions, 50 percent may from absurdity: “In princi-
be too much, and for others it ple, if you take Friedman to
is too little. There is also likely an extreme, I should sue a
to be disagreement on how CEO who doesn’t buy off all
the 50 percent is split among the members of Congress.”
different E and different Almost nobody believes that.
S actions.” Even if it’s only about
A cynical take on ESG is money, diversified inves-
that it’s a way for CEOs and tors care about maximizing
boards to avoid accountability. their overall returns, so they
If profits come in below have a financial incentive to,
expectations, they can say, push one company to
point to some wind farm as reduce greenhouse gas emis-
an explanation. “As profit sions if it would benefit other
GOOD BUSINESS
December 28, 2020
companies whose shares
they own that are harmed by
climate change. Big money
managers such as BlackRock
are in a good position to coor-
dinate that sort of thing.
It’s not economic theory
or corporate law or any lofty
principle that stops CEOs and
directors from pursuing ESG
goals, says Judy Samuelson,
founder and executive direc-
tor of the Aspen Institute’s
Business and Society Program.
The real obstacle, she says,
is far more prosaic: the way
CEOs’ bonuses are based on
short-term financial perfor-
mance. In a book on ESG to be
published in January, The Six
New Rules of Business: Creating
Real Value in a Changing World,
Samuelson names companies
that she says have done it right:
CVS Pharmacy, which stopped
selling tobacco; Royal Dutch
Shell, which dropped out of
the U.S. oil lobby; and Merck,
which makes a drug to prevent
river blindness that will never
be a moneymaker.
Tesla Inc. co-founder
Elon Musk, who’s become
the world’s second-richest
person while doing what-
ever he wants, is living proof
that shareholders don’t have
to come first. When it comes
to laughing them off, Musk is
Henry Ford reincarnate. In
a conference call with inves-
tors in July, he said, “We need
to, you know, not go bank-
rupt, obviously, that’s import-
ant. … But we’re not trying to
be super profitable, either.”
He added, “I think just we
want to be, like, slightly prof-
itable and maximize growth
and make the cars as afford-
able as possible.” Building
cheap, zero-emission vehicles
is totally ESG. It may not please
the shareholder primacy theo-
rists. But it works. <BW>
ISSUE
“First Republic cares about us like family —
we truly value the relationship.”
C H R I S TO P H E R W I L L I A M S , Chairman and CEO, The Williams Capital Group
JA N I C E S AVI N W I L L I A M S , Co-Founder and Senior Principal, The Williams Capital Group

(855) 886-4824 | firstrepublic.com | New York Stock Exchange symbol: FRC

MEMBER FDIC AND EQUAL HOUSING LENDER
50
◼ DEBRIEF December 28, 2020

Hamdi “The men and

Ulukaya women we
work with are
CEO, Chobani LLC

the reason
we exist”
Fifteen years ago, the Chobani founder bought a shuttered dairy factory and
began making Greek-style yogurt. His privately held company now earns more
than $1.5 billion in annual revenue—all while distinguishing itself as a champion 51

of Good Business. Here, Ulukaya explains his magic formula to Bloomberg

Businessweek Editor Joel Weber.

Photograph by
GUARIONEX RODRIGUEZ JR.

JOEL WEBER: Hamdi, you’re a Turkish
Kurd who came to the U.S. and became
a billionaire selling Greek yogurt to
Americans. What other food could have
taken you on such a journey?
HAMDI ULUKAYA: I cannot imagine
anything that could replace the magic
of yogurt, which transcends cultures
and lands. Tea, maybe?
And what is it about yogurt?
I go back to my childhood in Turkey.
That’s where this journey started. It
didn’t matter if you were poor or rich,
you couldn’t imagine a table with-
out yogurt. It’s something that rep-
resents equality, nature, nutrition.
I always missed it when I got here—
living in upstate New York, I always
thought, “Where is that yogurt? It can’t
be so hard to make.” And I was also sad
that such a simple food was absent on
THE
kitchen tables here in the U.S.
This has been such a challenging year.
What lessons have guided you?
That life is fragile. That we could
make long-term plans but, you know,
life brings surprises—some good and
some not so good. That human fun-
damentals are what matter most, and
sometimes we don’t talk about it. We
don’t acknowledge it—it’s just there.
And I think this pandemic brought a
consciousness to those fundamentals.
In business, fundamentals are, for us,
the culture. And you don’t build cul-
tures for defensive reasons. You do
it because that’s the way you want to
live. But it turns out, the most power-
ful engines during this time are these
unspoken rules. This motion just takes
over, and everything operates.
Chobani got its start with a loan from the
GOOD BUSINESS
Small Business Administration. What
more should the U.S. be doing right now
to support small businesses?
I think every effort. Whether you
believe in government help or not,
[we need to] do everything to keep
these places open and help them
through this pandemic. We shouldn’t
be shy about it—we should be all for
it. Small businesses are the engine for
the economy: They become tomor-
row’s large companies and innova-
tors. And they are devastated. We
as consumers, we have to be con-
scious of that and act accordingly. Buy
locally, buy locally online, and show
up—go to your local stores.
In the past decade, America has lost thou-
sands of small dairy farms. The econom-
ics are just awful; the suicides of dairy
farmers have been especially troubling.
ISSUE
 Bloomberg Businessweek
How can we help the industry and these
vulnerable farmers?
I grew up on a farm, and I worked
on a farm when I arrived here. Seeing
that small farmers, many of them mul-
tigenerational, are going through this—
it’s heartbreaking and alarming. So
what happens? They close down. And
then what happens? Some of the farm-
ers, they get larger.
A lot of farmers do this work
not because it’s profitable; they do
it because they love it. They do it
because that’s what they learned from
their fathers, their grandmothers. It’s
a tradition they hold and advance, and
they exist in these places where hard
work is essential and respected.
At Chobani, we know we also have
to make conditions on the farms
align with today’s and tomorrow’s
consumers. We started Milk Matters
about a year ago, drafting a coali-
tion with farms, universities, and fair
trade where tomorrow’s farms and
52 farm conditions can be designed.
Otherwise, we are moving forward
with these really tough conditions,
and that would be bad for society.
Between upstate New York, where
Chobani started, and Idaho, where
you’ve expanded, you have intimate rela-
tionships with rural America. What do
you want others to know about these
communities they might be missing?
Whatever success we have expe-
rienced, I give all the credit to these
communities. That’s where the magic
happens. My story started with a
closed factory in a small upstate
town. The men and women I work
with at Chobani have a human spirit
that is something I cannot put a value
on. And I’ve always said: Close your
eyes. Put your finger on a map. Pick
a town where you haven’t been, and
go there—start whatever you want to
start. I guarantee you will be blown
away with your journey.
In a TED Talk you gave last year, you
talked about the anti-CEO, a noble
leader who puts his employees before
anything else. How has that idea
evolved since?
The pandemic has just made it very
THE
“Food should remind
you to be good to
yourself ”
clear. The men and women we work
with are the reason we exist. Looking
back at the year, Chobani broke all
the records we had in the past, even
though the conditions are completely
different. The pandemic showed us
that investing in our people, in their
families, that thinking of them in the
whole picture, is not an expense.
How soon do you think we’ll see a
$15-an-hour minimum wage at the
federal level?
I don’t know about the federal
level. There are states who will lead
this and shape this. To me, we as com-
panies have responsibilities to do
these things; we cannot let the gov-
ernment decide. There were times we
needed that, but it’s now our responsi-
bility. The numbers are very clear. It’s
impossible to make a living, even with
$15. So no matter what happens on the
federal or state level, we have to do
what’s right, which is to bring the min-
imum wage to at least $15.
Something like 30% of Chobani’s
employees are immigrants and refugees.
What do you hope to see from the
incoming Biden administration on the
immigration front?
I’m an immigrant. I came here
25 years ago. And this is what we know
America’s all about. It’s this place
where you can come and be part of
the dream. I think what America has
is a magic. That whoever you are and
whatever your background, if you have
the right intentions and an imagina-
tion, and you obey the law, you can
reach your dream and be accepted as
who you are. This is what America’s
all about. If we care about society as a
whole and this country as a whole, we
should preserve what this country’s
GOOD BUSINESS
December 28, 2020
been about for all its existence.
If you could persuade hundreds of
business leaders to make one change,
what would it be?
Hire refugees. We have created
a coalition of 140 large organiza-
tions around the globe, all of us try-
ing to help this vulnerable human
population—millions of people who are
just looking for an opportunity to be
part of something. And this isn’t char-
ity, it’s a business practice. We ask
companies to be part of social issues:
Your responsibility is not only to make
money for your shareholders, but to
all stakeholders. Where we are going
the role of business is very clear. I
think the question is how. How do I get
involved with this new kind of operat-
ing the business? Simple. Just make the
first step. We can make an impact in
society really fast.
Millions of Americans have become
food-insecure this year. What can we do?
We’ve always partnered with food
banks, which are amazing, as are their
volunteers. But today, you’re look-
ing at the cars that are driving to these
food banks and the type of people
that are coming into the food banks,
and it’s like, “Whoa, we have a major
issue on our hands.” You know, keep-
ing schools open—don’t forget: A lot of
kids, that’s where they get their only
meals of the day. So access to good,
nutritional food is an essential topic
here. We’ve tried to do our part during
the pandemic by sending a truckload
of yogurt every single day to a food
bank around the country. No one in
this country should go hungry. We
need to remove this from our society
once and for all, and especially for our
children. I think this is a topic where
ISSUE
Bloomberg Businessweek
we all can get together, whether you’re
a Republican or Democrat.
I want to go back to 2005, when you
bought a dairy factory but didn’t yet
know you were going to start Chobani,
or even make yogurt. What do you know
now that you wish you’d known then?
Not knowing much at the time actu-
ally worked for me. Sometimes we
crowd our minds with too much infor-
mation. And at the time, I had a gut
feeling. Our experience and resources
were so limited. But we had a big
dream, and that dream was mixed
with passion, love, and—I’ll be honest—
anger. Why was this place being aban-
doned by business?
When I look back, I always try
to see if I am too distanced from
that person who started that place,
who got on the factory floor to work
shoulder to shoulder every day. Not
to make so much money, but to bring
the dream alive—to fix this place so we
can fix ourselves.
When you look at yogurt, there’s
Before Chobani and After Chobani.
Consumption, especially of Greek
yogurt, has increased dramatically.
And it shows that any category can be
upended quickly. What advice do you
have for Davids fighting Goliaths?
One thing people don’t realize in
food is it’s not the product idea that’s
important. It’s in the fundamentals
of operation. I personally believe, at
Chobani, we are all factory workers.
I am a factory worker before I’m any-
thing else. Our plants are the core of
what we do. People don’t see that,
they think it’s just cute-looking ads and
cups. But the retailers are going to ask
you, “Can you deliver?” In a way, we
are an operations company.
My advice to food people is, No. 1,
product—you have to have a product,
or at least a vision of a product. And
No. 2, pay attention to the fundamen-
tals, operations, and food safety.
I started Chobani Incubator to
bring food startups and entrepre-
neurs a similar mindset, to show them
that this is not a big deal. What’s most
important is what’s in you—how you
see the world and how big you dream.
THE
And if I was talking to myself in the
beginning, this is what I would have
loved someone to tell me: Pay atten-
tion to your people, your product, and
food safety. And have a good finan-
cial partner in place aligned with your
view of the world.
Unfortunately, a lot of amazing
startups and good food companies
who could make a massive impact on
the food system end up being in the
hands of large corporations. So what
I say to entrepreneurs is pick partners
aligned with your views. Either make
money and move on, or go for some-
thing more long-term. Chobani has
gone through maybe three, four, five
stages already. Where we are today is
more like an established corporation
without being too big or too slow, yet
with resources and capabilities, so we
can innovate and move forward and
produce and deliver.
Chobani’s portfolio has grown recently—
nondairy products as well as a big push
with probiotics. What’s the most chal-
lenging aspect of expansion?
I think the challenge is know-how.
Do you know about this? Do you know
what you want to do? What about the
market? And there’s new competition.
What is the biggest challenge to
companies like Chobani is having dis-
cipline around why you innovate.
Because ideas come from all over the
place. And there’s this stigma: If your
brand is loud, then you can put your
brand on anything and it will sell. And
that’s the worst thing you can do.
You need to be connected to why
you innovate. What kind of solution
are you going to offer? And why is that
aligned with what you believe and
what you want to do? What we want
to do is go from category to category
and say: Is this a good category? Is
this good for people? And how can I
make it better? Food should make you
feel good. Food should remind you to
be good to yourself.
How big of an opportunity is probiotics?
I don’t know. But every cup of
yogurt we’ve ever produced had hun-
dreds of billions of probiotic counts.
We never talked about it; we just
GOOD BUSINESS
December 28, 2020
made sure the yogurt had it. And we
got better and better at it, and now
we know more. Personally, I believe
that taking care of the gut can pre-
vent illnesses and conditions. It’s food
as medicine, and I think probiotics
plays a massive role. The science is
catching up.
How were you able to innovate in
a pandemic?
It’s been crazy. I’m very close to
the product. We connect over Zoom,
we send samples to each other. I think
that’s what makes us very unique, that
we are really all about the product.
And we are very lean. We don’t have a
lot of hierarchy.
I’m pretty amazed how on innova-
tion, production, sales, distribution,
and also doing good in the community,
how well the team has performed. It’s
amazing. And on top of it, my responsi-
bilities have never been this few, ever.
So the team has actually taken over
and does these things by themselves.
You have some side businesses— 53
Euphrates feta cheese, which predates
Chobani, and La Colombe Coffee
Roasters. How involved are you?
I have a very emotional connec-
tion to Euphrates, because that’s
where I started everything. They do a
lot better than what I did back then.
It’s making what it’s making, and they
do a great job. I love La Colombe,
and I see myself more like an inves-
tor, or a partner to the founders, Todd
[Carmichael] and J.P. [Iberti]. I’ve
always loved what they do and how
they do it. I think it holds a seed that
could [reshape] the category in a very
dramatic way. They just take their
time, because there’s no rush. They
just want to make things right. But I
don’t get involved too much.
If you weren’t in the food business, what
would you be doing?
First, I would have loved to be a
soccer player. I was good at it. And
I love the game. Otherwise I think
I would have been associated with
farms somehow, something close
to nature. <BW>
Edited for space and clarity.
ISSUE
 The global

standard

for
business

reporting.

Follow it all.

bloomberg.com/subscriptions
Instant green
goodness from
Cuzen Matcha

55

58
A small way to make a
huge difference at home

60
The original dune
buggy gets a lifeline

62
Wonder Woman,
harbinger of doom

63
There’s no shame in
these house shoes

Pandemic-exhausted consumers are turning to

a new class of easy-to-make matcha, coffee,
December 28, 2020
cocktails—and, yes, even TV dinners. By Kat Odell
Edited by
Photograph by Hannah Whitaker James Gaddy

Businessweek.com
 FOOD & DRINKS Bloomberg Pursuits December 28, 2020

E
ileen Rinaldi was visiting Brazil a decade ago to buy
coffee beans when a traveling companion opened
a pack of Via, Starbucks Corp.’s instant coffee, for
a quick morning fix. Despite her own desperation
for a cup, the founder of San Francisco’s third-
wave shop Ritual Coffee Roasters couldn’t bring herself to
drink what she calls “that swill.”
But that moment—on the road and craving caffeine—nudged
Rinaldi to consider how she might produce an instant cof-
fee that could rival the brews she’d gone to South America
to experience.
She joined forces with Sudden Coffee, a startup acclaimed
for its proprietary method of freeze-drying, which helps
preserve flavor in instant form. In 2019, after four years of
research and development, they released co-branded packets
using beans sourced from notable regions. Pleased with the
results, Rinaldi introduced Ritual’s first single-origin instant
coffee in September. It’s made from Ethiopian beans with a
celebrated floral flavor.
Rinaldi’s foresight—that consumers would pay for a quick
cup of joe that still tastes like something special—has paid off.
During the coronavirus pandemic her instant coffee sales
almost tripled last year’s, an indication that consumers are
brewing more coffee themselves with a keen eye for a pre-
mium product that’s quick and easy to make.
56 Ritual is one of the many food and beverage brands tak-
ing note of changing consumer behavior during the pan-
demic. Others include Steep’t Cocktail Co., which promises
an Old-Fashioned that takes only two minutes to prepare,
and Balmuda, which makes a smart oven that uses steam
technology to quickly heat frozen foods.
The corporate giants are taking notice, too. In October,
Nestlé SA acquired Freshly Inc., a subscription-based outfit
delivering prepacked healthy meals that heat up in three min-
utes or less. The $950 million bet assumes—despite trending
Google searches last spring for time-consuming recipes for
sourdough bread and yogurt—that Americans still want every-
thing, like, now.
As economics and safety concerns force cafes and restau-
rants to close, consumers have become both barista and chef.
The difference today, as opposed to the era of the microwav-
able TV dinner, is that companies are finally prioritizing the
quality of the ingredients. “I have seen more focus on better-
for-you products” that are “convenient at the same time,” says
Kenshiro Uki, president of Honolulu-based Sun Noodle North
America, a specialty noodle manufacturer that supplies David
Chang’s Momofuku outlets, Masaharu Morimoto’s namesake
modern Japanese empire, and other top restaurants.
Uki has offered packaged ramens for 18 years, but it was
only after seeing sales spike early in the pandemic—at grocery
stores and online—that it occurred to him to introduce an even
more special specialty product. In August he teamed up with
six of the New York area’s most respected ramen chefs to start
selling frozen versions of their signature bowls.
New technology is driving some of this interest. Smart
kitchen gadgets don’t always work out (remember the
Juicero?), but some companies are capitalizing on the moment.
Sales of the June oven—which comes with advanced settings

THE MICROWAVE THE MATCHA MAKER

ALTERNATIVE
The Tovala cloud-connected
smart oven is engineered to
cook its own line of composed
dishes—plus some from Trader
Joe’s and other brands—in
as little as 20 minutes. Users
just scan the bar code on the
package, then control the oven
remotely through the app. In
my test it fared well, whether
toasting bread or baking
spanakopita, the classic Greek
spinach and feta pie. $299;
tovala.com
In October, Japanese
entrepreneur Eijiro Tsukada
unveiled Cuzen Matcha, a
machine that aims to accomplish
for green tea what Nespresso
does for coffee. Press a button,
and the compact, minimalist
device grinds whole tencha
leaves into a fine powder.
Then a mechanical whisk
whirls into action, turning out
an almost-ideal frothy quaff in
a mere 30 seconds. $369;
cuzenmatcha.com
 FOOD & DRINKS Bloomberg Pursuits December 28, 2020

technology and innovation can lower barriers so more people

“OUR LIVES ARE
BUSIER THAN EVER,
EVEN IN QUARANTINE”
to dehydrate, air fry, and slow cook—have been so robust, it’s
been sold out for months. An updated iteration going on sale
in late December can grill, proof, and prepare pizza.
Chicago-based Tovala also makes a smart oven that con-
nects to Wi-Fi and can steam, bake, and broil all in one cook
cycle. The brand also has its own refrigerated line of prepared
foods, including lavender-glazed salmon and beet quinoa, that
are easy to pop in the machine and forget about until it’s time
to eat. Founder David Rabie says the company added more cus-
tomers in November than during its entire first two years on
the market. Balmuda says its Japanese toaster and steam oven,
introduced in April, has also exceeded sales expectations.
“ ‘Instant’ doesn’t mean low-quality,” says Christoph
Bertsch, who introduced his mini, pod-based electric blender,
Vejo, a year ago. The Santa Monica, Calif.-based company
offers strawberry-lime-flavored Collagen Glow smoothies and
a green juice from freeze-dried, powdered fruits and vegeta-
bles that can be prepared in less than a minute.
Matcha expert Eijiro Tsukada sees I-want-it-now poten-
tial in the trendy green tea, too. “I’m very excited about how
can experience higher-quality foods,” he says. He unveiled the
world’s first instant matcha maker, Cuzen Matcha, in October.
Steep’t co-founder Alison Nathanson says that even
before the pandemic, the booze industry’s ready-to-
drink category was exploding. She and friend Chloe
Aucoin met at Harvard Business School and, frustrated
with how difficult they felt it was to make cocktails at
home, had a soft opening for their infused libation line
in May. The process to make one of their drinks is fairly
idiot-proof: Steep a teabag that’s been filled with dehydrated
and powdered fruits and herbs in cold water for two minutes,
then add a spirit and ice.
“Our lives are busier than ever, even in quarantine,” says
Ilana Kruger, founder of Stumptown Coffee’s Dripkit, another
fresh take on quick coffee, in Portland, Ore. The specialty
brand introduced instant pour-over kits a year ago and has
since seen “exponential” growth in the at-home brewing mar-
ket, according to company spokesperson Samantha Chulick.
There are compromises, of course. “Am I going to tell you
that it’s as delicious as a cup of coffee from one of my cafes?”
Rinaldi asks, laughing. “No, I’m not.” But Ritual’s instant cof-
fee isn’t looking to compete with a perfectly timed pour-
over or a precisely pulled espresso from a shiny La Marzocco
machine. It’s offering a better-tasting solution for occasions
when a proper cup of coffee is unattainable or time is limited. 57
Even when cafes and offices open again after the pandemic,
Rinaldi says, we’ll no longer need to choose “between conve-
nience and quality.” <BW>

THE EFFORTLESS THE TEA STRIPS

MIXOLOGIST
PHOTOGRAPHS COURTESY COMPANIES

Orders from Steep’t Cocktail
come as tea bags filled with
dehydrated fruits, herbs, and
a bit of sugar. Submerge in
cold water for two minutes,
then follow with your favorite
tequila for a spicy margarita
or bourbon whiskey for
a classic Old-Fashioned.
They’re surprisingly delicious
libations even though there
are no fresh ingredients. $30
for a pack of 10 tea bags;
steeptcocktails.com
Olyxir creates its instantly
dissolving, caffeine-free “tea”
strips from biodynamically
grown olive leaves. They come
either unflavored or with
ingredients such as ginger
and peach or lemon and rose.
The company says its energy-
boosting strips have no sugar
or soy and are loaded with
antioxidants. When I slipped
them into hot water, the result
was a delicately floral-tasting
drink. From $12; olyxir.com
 DESIGN Bloomberg Pursuits December 28, 2020


③ BLOOM
Orley Shabahang

Magic Carpets
makes rugs with
high-end, organically
dyed Iranian
wool that employ
traditional Persian
handweaving
A vibrant 2-by-3-foot rug is the easiest way to add techniques. It’s one
a jolt of personality to your home. By Monica Khemsurov of the few luxury
carpet brands to
Photographs by Sarah Anne Ward offer this small-yet-
versatile size. $1,240;
orleyshabahang.com

④ FRAMES
① This rug was inspired
by paintings of ruins
and architecture that
Minna founder Sara
Berks made after her
first trip to Peru. The
series is ethically
woven by a local
cooperative. $280;
minna-goods.com

58 ④

① KULFI ROSE ② METRONOME

Named after the The geometric ②
rich, unchurned motif of Block Shop’s
Indian ice cream rug is inspired by
known as kulfi, the midcentury
Tantuvi’s abstract, buildings of Italian
candy-colored architect Carlo
design will pop in Scarpa—especially
a room despite its his showroom for
size. Handwoven typewriter maker
using 30% more Olivetti in Venice.
cotton than typical This lightweight
flatweaves, it offers dhurrie—a
extra durability no handwoven, thin
matter which of the carpet—is almost
five patterns you indestructible.
choose. From $216; $130; blockshop
tantuvistudio.com textiles.com
③

⑤ MATILDA
⑤ Illustrator Alex
Proba’s newest rugs
were designed by
children—in this 59
particular case, a
7-year-old named
Matilda—during a
Matisse-inspired
collage class Proba
taught. Handmade
from high-pile New
Zealand wool and
bamboo silk, they
will also appeal
to more adult
tastes. From $425;
studioproba.com

⑥ MARGAUX
⑥ This Leah Singh
rug is made from
eco-friendly,
quick-drying, and
easy-to-clean jute,
an ideal fiber for
mudrooms or other
high-traffic areas.
She designed
it during the
pandemic’s first
wave this spring,
hoping its neutral
colors and basic
shapes would have
a calming effect.
$260; leahsingh.com
 OFF ROAD Bloomberg Pursuits
Faye Dunaway and
Steve McQueen in
The Thomas Crown
Affair (1968)
60
Back on the Scene
A new owner aims to return Meyers Manx, the original dune buggy,
to relevance. By Hannah Elliott
The centerpiece of Phillip Sarofim’s Los Angeles home is his
garage. The immaculate space holds two of the most collectible
cars in the world: his Ruf CTR Yellowbird and Lancia Stratos
Zero, a wedge-on-four-wheels in burnt caramelized orange.
It’s fair to say the venture capitalist, oil scion, and former
Avril Lavigne paramour has access to pretty much whatever
his heart desires. But his recent acquisition of Meyers Manx
LLC runs slightly counter to the image of that blue-chip garage.
Sure, the fiberglass-tubed Manx dune buggies gained global
attention when Steve McQueen drove one in 1968’s The Thomas
Crown Affair. An edition from that year sold for $55,200 at
an RM Sotheby’s auction in 2019. But at 1,200 pounds, just
90 horsepower on its four-cylinder engine, and not even the
courtesy of a radio, the open-top rambler with knobby wheels
is better suited to cruising deserted beaches than the Monaco
promenades where you’d find that Lancia.
Its humble pedigree has no bearing on just how fun the
Manx is to drive, Sarofim says: “It’s a very pure sensation.”
December 28, 2020
The 34-year-old is the son of Fayez Sarofim, the billionaire
part owner of the NFL’s Houston Texans and one of the larg-
est shareholders of pipeline company Kinder Morgan Inc.
Trousdale Ventures LLC, based in Los Angeles and Austin,
which the younger Sarofim founded, completed the acquisi-
tion of Meyers Manx on Nov. 9.
The buggies come with seating for two or four, a gleam-
FROM LEFT: MICHAEL OCHS ARCHIVES/GETTY IMAGES. EVAN KLEIN
ing metal roll bar, and happy, round headlights that sit high
on the short hood. Designer and company founder Bruce
Meyers started building them in the 1960s while he was hang-
ing out with surfers and abalone divers around California’s
Pismo Beach.
A prolific artist and musician, Meyers also built some of Cal
Yachts’ first mass-produced fiberglass sailboats. For his dune
buggies, he cobbled components together from Volkswagen
Beetles, Chevrolet Corvairs, and whatever else he could get
his hands on. The DIY aesthetic captures “the essence of that
1960s period of freedom and love,” Sarofim says.
 OFF ROAD Bloomberg Pursuits
Old Red, the first
Meyers Manx
dune buggy
He bought the brand from Meyers, now 94, and his wife,
Winnie, on the recommendation of a mutual friend, the auto
designer Freeman Thomas. Sarofim declined to disclose the
price, though previous reports note most Trousdale Ventures
deals have been valued at $1 million to $5 million.
“The Manx is all about the ’60s love and rebellion,” says
Thomas, who’s credited with designing Volkswagen’s New
Beetle and will lead the Manx team. “We want to capture
that.” He’s known the Meyers since the 1990s, but the acquisi-
tion still took two years to complete. “Bruce had a lot of peo-
ple trying to pursue the brand,” he says, “and everybody just
really didn’t understand what it meant.”
Manx is the latest in a spate of fresh funds reigniting aging
automotive brands—similar to the way investment firms have
been tapping nostalgia through acquisitions of heritage fash-
ion brands such as Halston and Borsalino hats.
In 2009 former Fiat executive Gian Mario Rossignolo
purchased De Tomaso, famous for its 1970s Pantera super-
car, which spawned the band of the same name. But in
February 2019, Rossignolo was sentenced to five years in prison
for misappropriating government funds. Hong Kong invest-
ment fund Ideal Team Ventures acquired the branding rights
in 2015, and this October it announced the company headquar-
ters would relocate from Italy to Detroit in 2021.
In November, Rezam Mohammad Al-Roumi announced
he had added Bizzarrini, aka the “thinking-man’s Ferrari,” to
his Pegasus Brands, which owns a 50% share in Aston Martin
Works. Neither has produced a modern road-going model yet.
December 28, 2020
61
Consumers tend to grant prolonged honeymoon periods
for such storied names, though. Cars from the heritage
brands “are spectacular, and there is a lot of appeal to that,”
says David Gooding, president of the Gooding & Co. auction
house. “The Manx in particular is such a time-transcendent
object that it makes a lot of sense, too. It’s a great product.
With the new life and enthusiasm that Phillip will bring to it,
it’s got a lot of potential.”
Sarofim comes by his love for the Manx honestly. He’s
owned them for nearly two decades, including his current
stash of a yellow 1964 model nicknamed “Sunshine” and a
1967 version in emerald green. “They put such a smile on my
face, and others’,” Sarofim says. “It’s the only car I own that
my 5-year-old daughter even cares about going for rides in.
She is just crazy over it.”
The first objectives for the brand new LLC include
overhauling the archaic website and building an online config-
urator; the primary focus for new products will be an electric
version. “There is no fun EV on the market, so we intend to
change that,” Sarofim says. (True, the Moke is an open-top EV,
but it’s more similar to an urban golf cart for riding around
St. Barts than a rugged dune buggy.) Eventually, he plans to
add powerful, street-legal models that can carve Mulholland
Drive, as well as off-road versions suitable for desert racing.
Pricing will remain as accessible as when the Manx made
its debut—a base model then cost about $600. New ones start
at $2,400. But you’d better be good with a wrench: They’ll
ship in parts, so full assembly is required. <BW>
 CRITIC Bloomberg Pursuits
A Superhuman
Resilience
62
Ignore the melodrama: The
big screen isn’t going anywhere
By Kelly Gilblom
The last time Wonder Woman blazed the silver screen, she
was saving the world from her half-brother, the god Ares—plus
some poison-gas-wielding Germans during World War I—on the
cusp of the 1918 influenza pandemic.
It’s almost ironic that she’s back again with another pan-
demic on our hands. Had this been any other year, the critically
acclaimed Wonder Woman 1984, directed by Patty Jenkins and
starring Gal Gadot, would be a certified blockbuster. Her latest
adventures in the Reagan era against superhuman villainess
Cheetah took in only $38.5 million overseas its first weekend.
But while Wonder Woman is saving the world on screen,
she’s become an unintentional harbinger of doom off it. The
film was expected to open in the U.S. and Canada on Christmas
Day in about a third as many theaters as its 2017 franchise starter
did—and simultaneously in more than 12 million living rooms
(the current number of subscribers to HBO Max). Warner Bros.,
a unit of AT&T Inc., plans to release all its 2021 movies this way.
Multiplex owners have feared the shattering of the “theatri-
cal window,” a roughly 90-day period for the exclusive rights to
show new films. If audiences can see highly anticipated movies
at home, the logic goes, why spend the extra money to pack in
shoulder to shoulder with the heavy-breathing masses?
Studios argue that they don’t have a choice but to upend
norms as hundreds of millions of dollars’ worth of films collect
December 28, 2020
dust. Behind the scenes, however, they’re happy to leverage
the crisis to expand their own streaming services.
The disruption this year has led some pundits and inves-
tors to embrace the melodrama and pronounce the death
of the movie theater, but that’s just silly. Despite AMC
Entertainment Holdings Inc.’s warning of bankruptcy, many
theaters are well-capitalized enough to survive not only
this year but next year as well. In the century-plus since
nickel-a-pictures arrived in Los Angeles, there’s never been
a crisis like this, but it’s making real evolution possible—and
necessary. The ad nauseam cycle of upgrading seats, expand-
ing refreshments, and raising prices won’t suffice.
For one, the theatrical window will probably be hashed
out on a case-by-case basis, says Mark Zoradi, chief execu-
tive officer of Cinemark Holdings Inc. A blockbuster such as
Paramount Pictures’ Top Gun: Maverick will still be able to
enjoy an exclusive theatrical run and dominate the 40,000 U.S.
screens on its opening weekend. Further into the future,
dynamic pricing, with fanboys facing higher ticket prices, or
even seat auctions on opening night, is possible.
For midbudget fare, the adult dramas and romantic com-
edies of the world, some may make their debut on the big
screen, while others may be distributed in theaters and the
home at once. Presumably this solves a dispute with Netflix
Inc., whose films have been boycotted by large theater chains.
Subscriptions like MoviePass, the popular but ultimately failed
startup, may also be a linchpin of recovery. In addition to the
usual fare, Tiger King marathons and Taylor Swift concerts
could lure concessions-buying viewers through the door.
Streaming services are devaluing movies as appointment
viewing, but there’s already evidence that theaters can succeed
by making the experience more, well, special. Late in 2019,
Austin-based Alamo Drafthouse offered extremely popular
“rowdy” showings of the panned Cats, encouraging audiences
to shout and laugh at the terrifying, gyrating computer-
generated felines on screen. It also delivers restaurant-quality
food and dozens of craft beers straight to patrons’ seats.
Alamo Drafthouse has also discovered that customers
want to privately rent entire theaters during the pandemic,
a service that makes up 50% of its top-line revenue today.
(Cinemark says it has sold more than 100,000 private watch
parties, generating at least $10 million in revenue.) That ser-
vice may also be easier to book in the future. “I’ve never con-
sidered at-home streaming our competitor,” says Tim League,
founder of Alamo Drafthouse. “We are an out-of-home experi-
ence. We’re competing against restaurants, bars, and clubs.”
Despite their newfound devotion to the small screen, stu-
dios still want cinemas to succeed. An industry-funded Ernst
& Young study earlier this year found that the longer mov-
ies stayed exclusively in theaters the more money they made
outside of them.
ILLUSTRATION BY TOMI UM
The economics and the times may be changing, but the
sofa is still no match for the giant subwoofers, the ultracrisp
picture, the butter-laden trance of crunching popcorn, and
the energy of a crowd. <BW>
THE ONE
House shoes can be comfortable and cool
Photograph by Ted + Chelsea Cavanaugh
When fashion designer
Jonathan Anderson sent these
nubby, backless slippers down
the catwalk in 2019, he couldn’t have
known that by the time they were
available to buy, we’d all be homebodies
in dire need of house shoes with
pizzazz. A witty update to the rustic
Birkenstock clog, his unisex $420
felt mules are made of a pleasingly
tactile material that’s topped with a
handsome leather buckle. They come
in colors including a respectable gray
(pictured), a preppy pink, and an
optimistic shade of orange.
Bloomberg Pursuits
Happy Feet
THE COMPETITION
• John Lobb’s suede Knightons ($665)
boil the traditional slipper down to its most
elegant essence. A pillowy sole gives a
cushioned, cocooning feel.
• Furry, flashy, and fabulous, Fendi’s $850
shearling slippers are patterned with the
brand’s “FF” logo over a smooth lambskin
interior. The folding backs mean they’ll pass
for traditional shoes if you have to step out.
• The $205 Zavo-Mab suede mules from
Suicoke sport a Velcro strap, sheepskin
lining, and a treaded Vibram sole—perfect
for the streetwear enthusiast who still wants
to peacock from the couch.
December 28, 2020
63
THE CASE
Unlike most slippers, these offer some
support thanks to a malleable cork-and-
leather footbed and a grippy rubber
sole. They’re also a master class in being
distinctively, unexpectedly cool—their
rounded shape and woolly texture make
for a shoe that’s wearable and just a little
waggish. (More formal leather and suede
versions are available for $590.) Anderson
says he designed the slipper with “escapism
and fantasy” in mind, but he offers a
more straightforward assessment of their
present-day appeal: “They are simple and
comfortable.” $420; jwanderson.com
 ◼ LAST THING
Streaming Isn’t a Threat
To Live Theater
By Alex Webb
If theatergoers have learned one thing
64 this year, it’s that watching live produc-
tions online isn’t a substitute for seeing
the performances in person. That’s also
why theaters shouldn’t see streaming
as a threat. It’s an opportunity.
Stage writers and directors have
been wary of broadcasting their pro-
ductions. There are the artistic consid-
erations: The show was developed with
a theatrical audience in mind, so watch-
ing it on a 32-inch screen compromises
the experience. And there are other
worries: that audiences won’t buy $90 tickets if they’ve
already seen it on the box and that subsequent rights for
a TV or film adaptation might become harder to sell.
This year audience-deprived playhouses have had to
find creative ways to plug the revenue gap. Many have
looked online, either broadcasting shows they’ve already
recorded or adapting them specifically for a web audience.
London has been at the forefront. Two weeks after the
National Theatre shut down in March, it started broadcast-
ing a play a week for free on YouTube. It had a head start,
of course: As part of its public-service remit, the National
already records and broadcasts productions to cinemas, so
ILLUSTRATION BY GEORGE WYLESOL
it used that library. The 16 shows it posted on YouTube for a
week at a time—including the Tony Award-winning One Man,
Two Guvnors with James Corden, Frankenstein with Benedict
Cumberbatch, and A Streetcar Named Desire with Gillian
Anderson—attracted 15 million views, more than Broadway’s
cumulative attendance in the 12 months through May 2019.
With Bloomberg Opinion
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In other words, the National was
luring new audiences. The Old Vic the-
ater had a similar experience. Its live-
streaming of Lungs, with Claire Foy and
Matt Smith, attracted 25,000 paying
viewers in 69 countries during a week
of performances.
Research shows the phenomenon
isn’t just a product of lockdowns. A 2016
U.K. study found that viewing live-to-
digital performances didn’t reduce
the frequency with which audiences
attended live cultural performances.
Among theatergoers, people who watched streamed per-
formances went to the theater more than those who didn’t.
There are hurdles. It can cost several hundred
thousand dollars to shoot a play well. But it looks like a
cost worth bearing given the seemingly insatiable appe-
tite for online content. Hamilton led to a huge spike in
sign-ups for Disney+, even if many customers didn’t retain
the subscription. “Producers have become more sophisti-
cated in their approach and better understand the mod-
els, that a screen version can drive the appetite,” says
Neil Adleman, a lawyer who specializes in theater work
at Harbottle & Lewis in London.
The National Theatre has launched its own paid sub-
scription streaming offering. It’s a way of reaching audi-
ences who might not otherwise get to attend, while also
serving as a tidy little earner. Broadway should take
heed. <BW> �Webb is the European technology columnist for
Bloomberg Opinion