● OpenAI’s secret weapon 14

● Inside the Battle for the Bird 32

● China’s economy is a problem 22

February 12, 2024

As a small business owner, you can’t escape your to-do list.
That’s why Progressive makes it easy to save with a commercial
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 February 12, 2024

◀ No detail in the
design and construction
of the Clippers’ new
arena is too small
to escape Steve
Ballmer’s attention

1
PHOTOGRAPH BY PHILIP CHEUNG FOR BLOOMBERG BUSINESSWEEK

FEATURES 26 A Herculean Task for AI

Can machine learning unravel the secrets of ancient Rome?

32 The $44 Billion Battle for the Bird

A book looks at Jack Dorsey’s failed plan to get Elon Musk to save Twitter

38 Basketball! Basketball! Basketball!

Steve Ballmer pours his passion for the LA Clippers into a $2 billion arena

46 AeroVanti’s Tailspin
Clients of the private jet startup accuse its CEO of flying off with their cash
 ◼ CONTENTS Bloomberg Businessweek February 12, 2024

◼ IN BRIEF 4 Trump’s not immune ● WeWork déjà vu? ● Dengue hits Rio ◼ COVER TRAIL
◼ OPINION 5 The US needs more Americans studying in China How the cover
◼ AGENDA 5 Black History Month ● UK jobs and GDP data gets made

①
“So this week’s story
◼ REMARKS 6 Will the economy fuel a Reagan-like turnaround for Biden? is about the latest AI
breakthrough—reading
ancient scrolls!”
BUSINESS 8 Falling birthrates are making diaper companies fussy
1 11 Las Vegas is finally a big league sports town “Wow! What made them
so hard to read in the
first place?”
TECHNOLOGY 14 COO Brad Lightcap quietly leads OpenAI’s charm offensive “Let’s just say they were
2 16 Job cuts show that tech has joined the regular economy victims of a volcano.”

“Interesting. Have any

photos I can see?”
FINANCE 18 Money transfers: Big banks and fintech upstarts square off
3 20 A bear looks at bond maturities—and starts shorting “I do!”

ECONOMICS 22 ▼ China faces old and new problems in the Lunar New Year
4

“We’re sure this isn’t

petrified poop?”

“It’s definitely not poop.

In fact, it might be the
long-lost work of one of
Rome’s great thinkers.”
2
“When is this long-lost
text going to drop?
I’m looking for some new
reading material.”

“Hard to say. So far

they’ve deciphered the
word ‘purple’ and some
stuff about food. AI is
so cool, right?!”

“Just think—thousands
of years from now, after
the apocalypse, when AI
will be the only thing left,
it will still be able to read
this Cover Trail from
a rolled-up, fossilized
Businessweek.”

“Print—it’s future-proof!”

24 The political minefield gets trickier for Fed Chair Powell

◼ PURSUITS 56 Could this be the best fly-fishing rod ever made?

58 Fashionable footwear for ugly, slushy weather
60 Turning a swampy Florida county into a golf oasis
62 Demand from Gen Z spurs a fine fragrance revival
63 Piaget turns the clock back to bold, gold 1980s chic
ECONOMICS: RAUL ARIANO/BLOOMBERG

◼ LAST THING 64 News flash: The Fourth Estate is in a state of upheaval

How to Contact Bloomberg Businessweek

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Cover:
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Stay in touch with
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Android Auto. Update to get the latest live radio, podcasts
and audio articles, anywhere.

Context changes everything.

 ◼ IN BRIEF
● An appeals
court rejected
Donald Trump’s
claim that
presidents are
always immune in
criminal cases.
The unanimous decision on Feb. 6
by a three-judge panel moves the
former president closer to trial before
November’s election. The judges
wrote they couldn’t sanction Trump’s
“contention that the Executive has
carte blanche to violate the rights of
individual citizens to vote and to have
their votes count.”
● Adam Neumann
is exploring
an offer to buy
WeWork out of
4
bankruptcy.
The co-working company’s
co-founder has been
formulating a bid with Dan
Loeb’s Third Point and other
investors since December, according to
a letter sent to WeWork’s lawyers seen
by Bloomberg News. The letter didn’t
include details of how much Neumann
was ready to offer for the business. He
stepped down as CEO in 2019 amid a
botched IPO.
● “All indications are this bill
won’t even move forward to
the Senate floor. Why?
A simple reason.
Donald Trump.”
President Joe Biden, at the White
House on Feb. 6, acknowledged
that a package to beef up security
at the US southern border and
to get funding to Ukraine and
Israel was dead. Trump had
rallied Republican legislators
to oppose the bill—which
they helped write—rather
than give Biden a win.
Bloomberg Businessweek
● War in the
Middle East
▶ In the wake of Joe Biden’s decision
on Feb. 1 to sanction several Jewish
settlers involved in violence against
Palestinians in the West Bank, Israeli
Minister for National Security Itamar
Ben Gvir said the US president was
hindering the offensive against Hamas
and focusing too much on aiding Gazan
civilians. Finance Minister Bezalel
Smotrich went further, calling the
sanctions an “antisemitic campaign.”
▶ US forces struck two Houthi sea
drones in Yemen on Feb. 5, as the Iran-
backed group’s attacks in the Red Sea
continue to disrupt global shipping. The
Houthis, a militant group that controls
much of Yemen, say their assaults are
in support of Hamas as its war against
Israel in Gaza continues.
● The EU issued its most
ambitious climate target
yet, despite mounting anger
from farmers and increasing
alarm from industrial
interests at the high cost
of the green transition. On
Feb. 6, Wopke Hoekstra, the
EU climate commissioner,
pitched a
90%
net reduction in emissions
by 2040 as the best way
for Europe to reach climate
neutrality by 2050.
By Mark Leydorf, with Bloomberg News
● A man flees a forest fire in Vina del Mar, Chile, on Feb. 3. The fires ravaged the
Valparaiso region for several days, killing at least 131 people, with hundreds more
still missing. Officials say they believe some of the blazes were set intentionally.
● Media entrepreneur
● Dengue strikes
Byron Allen said on Feb. 5
Rio on the eve of that he’s begun talks
Carnival. with Paramount on a
CHILE: ESTEBAN FELIX/AP PHOTO. NEUMANN: SHAHAR AZRAN/GETTY IMAGES. MOSQUITO: GETTY IMAGES. BIDEN: ANNABEGLE GORDON/BLOOMBERG. DATA: US BUREAU OF ECONOMIC ANALYSIS
$14.3b
proposal to acquire the
film and TV giant. Allen is
With case numbers of the mosquito-
borne viral disease spiking, the city up against David Ellison,
declared a public-health emergency who’s proposed merging his
on Feb. 5. Officials said the outbreak
wasn’t expected to derail Carnival, Skydance Media with the
which runs through Feb. 14, but it has
company.
prompted a slew of special measures.
City Hall is opening care centers,
allocating more hospital beds
for patients and deploying
insecticide-diffusing “smoke
cars” to neighborhoods
with lots of cases.
● The American Gaming ● The US trade deficit shrank in 2023
Association estimates that
by the most since 2009. The deficit
with China fell sharply, to $279.4 billion,
68 million Americans will while its shortfall with Mexico widened,
bet a record total of
to a record $152.4 billion.
$23.1b
Annual US trade balance
$0t
on Super Bowl LVIII, an
increase of 35% from last
year. The AGA says about
42.7 million American adults
will place a sports wager -0.5
online, while 36.5 million will
bet casually with friends or
as part of a pool. ▷ 11
-1.0
2008 2023
 ◼ BLOOMBERG OPINION February 12, 2024

US-government-funded educational exchange, which former

To Deal With China, President Donald Trump suspended in 2020 after the
Communist Party’s crackdown in Hong Kong.
The US Needs More The Biden administration should press its Chinese counter-
parts to speed up student-visa processing and look for ways to
China Experts ease restrictions that block students from some Chinese uni-
versities from coming to the US, provided they’re not deemed
as a threat to national security. The US should also make clear
One sign of the erosion of US-China relations has been a steep that any hostile action against students or instructors will
drop in Americans studying in China. Although it hasn’t result in a forceful response, such as curbing tourist visas,
grabbed headlines, this trend could prove detrimental to US expelling researchers or canceling scientific cooperation.
interests, shrinking the pool of future business leaders and The US needs to remain vigilant about China’s ambitions
national-security experts with knowledge of Mandarin and while continuing to seek opportunities for engagement—all of
firsthand experience in China. To strengthen the US’s ability which requires experts familiar with China’s language and its
to both compete and cooperate with China, Joe Biden’s admin- people. Opening more paths for Americans to travel to and
istration should reinvigorate efforts to send students there. study in China would be a wise investment in US security. <BW>
Only 211 Americans studied in China during the 2021-22 For more commentary, go to bloomberg.com/opinion
academic year. That’s down from almost 15,000 a decade ear-
lier, when China was the second-most-popular destination for
US students after Europe. By comparison, more than 289,000 ◼ AGENDA
Chinese attended US colleges and universities last year, the
biggest cohort of international students in the country.
Pandemic-era travel restrictions have contributed to the
absence of American students in China, but they’re not
the sole cause. As friction between China and the West has
increased, so have reports of heightened scrutiny, surveil- 5
lance and harassment of foreigners by Chinese authorities.
In response to the risk of arbitrary detention, several US uni-
versities have closed their China-based study programs or
moved them to Taiwan. Meanwhile, funding restrictions that
Congress has imposed have led to the shuttering of almost
all government-funded Confucius Institutes on US campuses,
reducing the availability of courses in Chinese language, cul-
ture and history. Since 2016 the number of US college stu-
dents learning Mandarin has fallen 20%.
Over time, this trend will weaken the US’s ability to deal
with its chief rival. The Department of State has set a goal of
▶ Black History Month
recruiting additional diplomats as well as “military strate- The National Museum of African American History
gists, economists, technologists, political theorists” and other and Culture in DC is hosting special events throughout
experts “well-versed” in Chinese language and history. CIA February exploring this year’s theme: African Americans
Director William Burns has said that the agency needs to dou- and the Arts.
ble its Mandarin-speaking employees. Those ambitions are
unachievable without a surge of educational exchanges. ▶ The US releases its ▶ The UK reports ▶ The Reserve Bank
most recent inflation unemployment on of Australia publishes
There’s also some reason to believe that greater engage- data on Feb. 13; the UK, Feb. 13 and GDP the minutes of its last
ment would help to lessen the risks of conflict. One recent on Feb. 14; Canada, on growth on Feb. 15. meeting on Feb. 19. The
Feb. 20; and Japan, on Prime Minister Rishi US Fed follows suit on
study found that, even though opinions of the US were largely Feb. 26. Central bankers Sunak, who must call an Feb. 21. Both banks left
negative among Chinese, those with “close contacts or expe- worldwide will be keen to election before yearend, interest rates unchanged
see how they’re doing. will be watching. at their last meetings.
riences” with Americans through work or study were more
likely to report confidence in US political leaders.
It’s encouraging that China’s leaders appear open to ▶ Coca-Cola, Shopify ▶ The US Census ▶ The next Republican
ILLUSTRATION BY REYA AHMED

and Airbnb report Bureau publishes its presidential primaries,

expanding such contacts. During his visit to San Francisco earnings on Feb. 13; January estimate for pitting former President
in November, President Xi Jinping said China would wel- Cisco and Sony, building permits on Donald Trump against
on Feb. 14; Applied Feb. 16. Housing starts his first UN ambassador,
come as many as 50,000 US students over the next five Materials, Deere and continue to climb across Nikki Haley, are in South
years. Biden should test Xi’s sincerity. The first step should Stellantis, on Feb. 15. the country, except in Carolina (Feb. 24) and
the West. Michigan (Feb. 27).
be to reinstate the Fulbright China program, the biggest
 ◼ REMARKS
Is It Morning in
Joe Biden’s America?
● Forty years ago, a strong economy
lifted Ronald Reagan to a second term
● By Joshua Green
Right now, nobody would mistake Joe Biden for a popular
president. His approval rating hovers in the high 30s. People
are angry about the US’s recent economic turmoil, particularly
the painful bout with inflation. As Biden’s campaign gears up
for the reelection race, his opponents have also seized on his
advanced age as an electoral liability. Plenty of White House
officials privately agree.
But for all that’s gone wrong, Biden has one big thing that’s
suddenly going right. “Let’s be honest,” Federal Reserve Chair
Jerome Powell said on Jan. 31. “This is a good economy.”
The blockbuster jobs report on Feb. 2 showing that US com-
panies boosted payrolls by 353,000 the previous month was
just the latest confirmation of a positive trend. Consumer sen-
timent surged by the most in almost 20 years. Real wages are
growing. Inflation is steadily falling. “And that sting is going
to become less painful with each passing month as inflation
drops and income stays strong,” says Mark Zandi, chief econ-
omist of Moody’s Analytics.
Gas prices have come down, too. The Standard &
Poor’s 500 has hit a series of new highs. And though Powell
and the Fed seem likely to push back a March rate cut, Biden
can still look forward to an incumbent president’s dream
scenario of running for reelection with a growing economy
and an accommodative central bank. A Goldman Sachs
Group Inc. note from Jan. 31 forecast five quarter-point rate
 ◼ REMARKS Bloomberg Businessweek
cuts in 2024, with four of them coming before Election Day.
Forty years ago, another incumbent president was wres-
tling with lousy poll ratings, a recent recession and serious
doubts about his age and electoral viability. Ronald Reagan
wound up winning the 1984 election in a landslide, carrying
49 of 50 states and trouncing Walter Mondale. But midway
through his first term, he looked anything like the colossus
history now remembers him as.
Reagan took office in 1981 amid staggering inflation and then
had to endure Fed Chair Paul Volcker’s brutal campaign of rate
hikes to bring it under control. This plunged the US economy
into a deep recession that reached its nadir in December 1982,
with unemployment hitting 10.8%, its highest level since the
Great Depression. Reagan’s political standing suffered along
with the economy: In 1983 his popular support bottomed out
at 35% in a Gallup poll (a level Biden hasn’t yet reached). At
the time, Washington was buzzing with conviction that Reagan
was likely to be a one-term president. In polls with potential
Democratic opponents, he lost to both Mondale and Ohio
Senator John Glenn.
But as the economy recovered, so did Reagan’s standing.
Once unemployment began to fall in February 1983, his popu-
larity started to climb and did so steadily through the following
year’s election. Reagan was no passive observer, either, but a
skilled pitchman expert at shaping public sentiment and cheer-
ing along the nascent recovery. Biden could draw a lesson. In
the depths of the recession in January 1983, Reagan announced
to Congress without qualification that “the long nightmare of
runaway inflation is now behind us.”
Reagan also had the good fortune to have had a helping
hand from the Fed heading into election season (though many
of his top aides loathed and distrusted Volcker, and some even
plotted to engineer his ouster). Those critics quieted down
when the economy turned around and consumer sentiment
soared. By the fall, Reagan’s campaign captured the improving
national mood in its iconic ad: “It’s Morning Again in America.”
History tends to attribute the turnaround to Reagan’s sunny
disposition and optimistic, can-do spirit. No doubt that helped
him. But at the time, many didn’t regard him as the heroic fig-
ure in the recovery. A Gallup survey of major corporate exec-
utives found that they ranked Volcker much more highly than
they did Reagan, with 51% expressing “great confidence” in
PHOTO ILLUSTRATIONS BY 731; PHOTOS: BLOOMBERG (1); GETTY IMAGES (1)
the Fed chair, versus only 27% for the president. Indeed, as
the journalist William Greider noted in Secrets of the Temple,
his magisterial history of the Reagan-era Fed, a month before
the 1984 election, one Merrill Lynch analyst joked in a client
note, “They should call it the Federal Open Market Committee
to Re-elect Reagan.” But Reagan got plenty of credit where it
mattered—at the ballot box. He even managed to carry 33% of
Democratic voters.
Can Biden, too, despite his political struggles, hope that a
strong election year economy will deliver him a second term?
He has his believers. A new Moody’s Analytics elec-
tion model has him narrowly edging out Donald Trump in
November, propelled by economic tailwinds. “Once you
February 12, 2024
Partisan Economics
US adults who say economic conditions in the country are excellent or good
Republican or leaning Republican Democrat or leaning Democrat
80%
40
0
11/8/2016 11/17/2020 1/21/2024
DATA: PEW RESEARCH CENTER
control for the political factors,” Zandi says, “it’s the economy
and how people feel about their own financial well-being that
matters to independents and people on the political margin.”
Biden can’t hope to match the scale of Reagan’s turnaround.
Political polarization has intensified to such a degree in the
decades since that opinions about the president have become
much more rigid. “We’re in a different era now when it comes
to presidential approval,” says Jeffrey Jones, senior editor at
Gallup Inc. People’s views on the economy have also become
more anchored to their political outlook—Biden won’t be win- 7
ning 33% of Republican voters. “Democrats are certainly a lot
more positive about the economy right now,” Jones says. “The
key this year is whether the other groups will come along.”
They certainly aren’t yet. In a Feb. 4 NBC News poll, Trump
holds a commanding 22-point lead over Biden on the ques-
tion of who would do a better job handling the economy. That
mirrors Trump’s 18-point lead in a recent Bloomberg News-
Morning Consult poll of swing-state voters.
But with economic confidence trending upward, it wouldn’t
be surprising if independents and Republicans started warm-
ing to Biden, at least a bit. A booming economy can have a clari-
fying effect that overrides—to a degree—partisan instincts. “The
more ambiguity there is in the economy, the more it allows
people’s partisanship to affect their perceptions,” says John
Sides, a political scientist at Vanderbilt University.
The prospect of a strong economy galvanizing voters to
believe that it’s morning again in America, after the bleak years
of the Covid-19 crash and spiking inflation, hasn’t materialized
yet. But Trump perceives enough of a threat that he’s begun
predicting a crash and criticizing Powell for allegedly trying to
aid his opponent. “I think he’s going to do something to prob-
ably help the Democrats,” the former president told Fox News
on Feb. 2. “It looks to me like he’s trying to lower interest rates
for the sake of maybe getting people elected.”
Modern politics precludes election blowouts, but luckily for
Biden, even a narrow win will suffice. With voters expressing
persistent concerns about his age and ability, a booming elec-
tion year economy may be less a magic bullet than a necessary
precondition for any hope of a second term. <BW>
 Bloomberg Businessweek February 12, 2024

1
Disposable diapers came to be in the US around
the same time that large numbers of women joined

B the workforce during World War II and no longer

had time to wash the cloth versions. These tiny
work savers soon became a staple and for decades
were a reliable source of growth for some of the

U
biggest consumer products companies. No lon-
ger. The US birthrate has stagnated in recent years,
damping the prospects of a business that takes in
$5.9 billion a year and had long been considered

S almost an annuity.
America’s nascent baby bust is a never-seen-

Demand for before problem for the diaper duopoly of

Procter & Gamble Co., which makes Pampers and

I Luvs, and Huggies maker Kimberly-Clark Corp. To

Diapers make matters worse, outsize inflation for baby-care

items since the pandemic—data from consumer
researcher Circana say the retail price of a pack of

N Is Drying Up diapers rose 35% from 2019 to 2023—is forcing some

parents to cut back diaper purchases. They’re man-
aging this by switching to reusable options, potty
training earlier and even changing kids’ diapers

E less. These changes are prompting companies to try

The stagnating US birthrate
all sorts of tactics to boost sales, including develop-
could be a warning sign ing diapers for older kids and persuading parents
8 for consumer businesses that to keep their children in overnight pants for longer.

S “I don’t think we’ve ever seen a situation

depend on more children
where birthrates are declining and we’ve seen
this same level of inflation,” says Nik Modi, an
analyst with RBC Capital Markets. Price increases

S have been “so significant that we’re kind of in

uncharted territory.”
To understand why child-focused businesses
have good reason to worry, one need only look at
America’s declining fertility rate, which is the num-
ber of births in a year per 1,000 women age 15-44.
It last peaked in the 1950s, during the Baby Boom,
at about 120. By 2020 it had fallen to less than 60.
For years, consumer businesses could still count
on Americans of color or immigrant moms to
account for a disproportionate amount of demand.
But recently those groups have seen their fertility
rates plummet, too. In 1990 foreign-born Hispanic
women, for example, had a fertility rate of almost
150—about double the national rate then. By 2019
BABY: GETTY IMAGEES. ILLUSTRATION BY CHRIS PHILPOT

their fertility rate had fallen to roughly 85, accord-

ing to a US Census Bureau analysis.
It’s not only America’s declining birthrate that’s
giving makers of diapers and other children’s
products pause. Women in the US are also having
babies later. Of course, society considers one facet
of that trend as particularly beneficial: The fertil-
ity rate for teen girls (age 15-19) plunged 73% from
Edited by
1990 to 2019. But the fertility rate of American
James E. Ellis women age 20-24 fell 43% during the same period,
◼ BUSINESS Bloomberg Businessweek February 12, 2024

while those age 40-44 saw their rate soar by 132%. Avoiding a Bum Wrap
That shift toward later childbearing could Diaper makers are continually adding features to keep babies
comfy—and parents spending more
be problematic for companies that traditionally
counted on parents to generate multiple rounds of ⑦
demand for products like diapers, infant formula, 1. BLOWOUT BARRIER ①
An inverted pocket at the
toys and sneakers as they had additional children, waist stops poop from
which many families today are choosing to forgo. running up a child’s back—
every parent’s nightmare
“I wouldn’t count on the birthrates suddenly
changing direction,” says Pricie Hanna, managing 2. INNER LEG CUFF
These flaps keep
partner at Price Hanna Consultants, which advises moisture inside a
businesses about hygiene and nonwoven products. diaper. But placing ④
them improperly
“It’s really a cultural fact.” can result in leaks
②
This cultural shift has implications far beyond
3. ELASTIC LEG
diapers, says Gary Stibel, chief executive officer of OPENING ③
New England Consulting Group. The recent years Correct sizing is key to ⑤
keeping these just tight
of declining US fertility portend increased com- enough to hold moisture
petition for makers of all sorts of child-centered and waste inside
⑥
goods, he says. 4. UMBILICAL CORD
“When Americans are having more children, CUTOUT 7. FASTENER STRIPS
This notch avoids irritating Some brands are adding
there’s plenty there for everybody,” Stibel says, newborns’ skin stronger, wider or stretchier
referring to dollars spent by parents on kid goods. closure areas to provide better
5. DESIGNS sealing against leaks
“When the market starts to decline, it becomes Colorful patterns are in. ⑧
a market share war, and the only way to benefit Pampers says it uses 8. ABSORPTION LAYERS
pigments rather than dyes The diaper body can include
is to take share from someone else. The implica- to avoid skin allergies a top sheet next to skin; layers
tions are huge. What used to be a land grab now that absorb, distribute and
6. WETNESS INDICATOR store moisture; superabsorbent
becomes a share war.” This pH strip indicates when gel to hold liquid; and a 9
Other categories will be affected by the demo- it’s time for a change back sheet

graphic shift, Stibel predicts. “The most obvious is

infant formula, but right around the corner are chil-
dren’s clothing, infant clothing,” he says. “If there’s
less children, there is less need for child care.”
Diaper retail unit sales dropped 1% last year,
marking the fourth straight year of declines amid
inflated price tags, according to Circana.
“The industry has clearly a situation with the
declining birthrate that has caught the atten-
tion of everyone,” says Jim Robinson, principal of
Absorbent Hygiene Insights and consultant to the
diaper industry. “It will impact future growth.”
That’s a troubling prospect for P&G and Kimberly-
Clark, which together claim more than half of the
US diaper market. P&G’s yearly sales for Pampers
alone are more than $7 billion globally, almost 9% of
company sales. But the volume of baby-care prod-
ucts sold declined in the fourth quarter amid higher
prices. The category is also large for Kimberly-Clark,
which gets more than a third of its revenue, or about
$7 billion, from baby- and child-care items.
P&G is adding new diaper features that it says
even penny-pinching parents might value. The
company says it’s been able to expand North
America sales of its extra-soft Pampers Swaddlers
line from $700 million five years ago to more than
$1 billion now, in part thanks to creating diapers
with innovations such as an umbilical cord notch to
protect a newborn’s belly button and what it’s call-
ing a blowout barrier—an inverted pocket on the
diaper waistband designed to prevent messy poop
nightmares—which was introduced last year.
The consumer products giant is also pro-
ducing diapers for larger kids. In the past year,
Pampers introduced a size 8, for children weigh-
ing 46 pounds or more. “The diaper makers have
been finding ways of extending the lifetime of their
customer—overnight pants for toddlers, overnight
pants for even older kids,” Hanna says. “So that’s ● Share of US
households with young
helped a bit.” kids that said they
Adult diapers are also a brighter spot for don’t have enough
money for diapers
the industry as the boomer population ages.
Incontinence items for grown-ups are set to remain
among the fastest-growing personal-hygiene cate-
47%
gories in coming years, according to Bloomberg
Intelligence analyst Diana Gomes.
But even though adult incontinence retail sales
volumes have grown for the past three years,
they’re still less than half the size of the baby dia-
per market, Circana data show. So companies have
focused heavily on new products for kids.
P&G, for instance, is trying to sell more training
pants with bed-wetting underwear for youngsters
as old as age 12, says P&G Chief Financial Officer
Andre Schulten. “When you think about bed
 ◼ BUSINESS
wetters—that’s young children who have trouble
staying dry at night—we’re addressing a consumer
need that has not yet been met,” he says.
Schulten says getting caregivers to use more
wipes is another way for the company to boost
its baby business. P&G, which now sells multi-use
wipes for not only bottoms but dirty faces and
kitchen counters, is trying to build a “regimen”
with parents, he says. “With every diaper change
is not only the diaper, but is [also] the wipes.”
Meanwhile, rival Kimberly-Clark is betting that
its new moisturizing baby wipes and its multi-
ple lines of fragrance-free diapers will win over
parents who worry about protecting their tot’s
sensitive skin.
“The diaper of the future is relentlessly focused
on better and better meeting consumer needs,”
says Matt Barresi, general manager of Kimberly-
Clark’s diaper business. Shoppers are increas-
ingly demanding fragrance-free products, he says:
“We’re really seeing consumers resonate with that.”
And the company says its new calming and nour-
ishing wipes—which promise to clean, hydrate and
soothe delicate baby skin—are meeting internal
expectations, thanks to repeat purchases by par-
10 ents despite their higher cost.
Still, new products with advanced features don’t
always succeed. P&G’s Pampers Lumi system, intro-
duced four years ago, included a video camera plus
a sensor that attached to diapers to notify care-
givers via a mobile app when a diaper was dirty.
The $349 Connected Care System didn’t catch on
and was discontinued.
The big price hikes for diapers, as well as
other food and household product items, over
the past couple of years occurred largely because
shoppers were stocking up during Covid-19 lock-
downs, just when there were shortages of raw
materials and workers to keep up with the surge
in demand. Besides offsetting the supply chain cost
and wage increases, manufacturers have tried to
recover and maintain profitability they lost during
the pandemic.
“Companies were feeling pressure from all
angles,” says Edward Jones analyst Brittany
Quatrochi. “It wasn’t just a lack of labor, it was
higher commodities costs, it was higher gas costs.
Sometimes they had to pay up for those materi-
als before anyone else could buy them. A lot of
those prices have been pretty sticky, and that’s
when you’ve seen the prices being pushed on to
the consumer.”
Although manufacturers are promoting expen-
sive, feature-laden diapers to keep up profits,
affordability is a growing problem across America.
Bloomberg Businessweek February 12, 2024
Almost half, or 47%, of US households with young ▼ Annual US births
kids said they don’t have enough money for the
diapers needed to keep their children clean, dry 4.0m
and healthy, according to a study by the National
Diaper Bank Network, comprising local banks and
sponsors such as Huggies that help needy families
obtain diapers. As recently as 2017, the need was 3.8
much less, at about one-third of families.
“Inflation is making it very, very difficult for fam-
ilies to meet their basic needs,” says Joanne Samuel
Goldblum, NDBN’s CEO. People may use the same 3.6
diaper for too long or “use things that aren’t meant 2010 2022
to be diapers as diapers—T-shirts or other absorbent
materials,” she says. ▼ US retail price
per package of
In Chicago, families that can’t afford necessi- disposable diapers
ties often add paper towels to diapers to stretch
them longer, says Rikki Ray, founder of the Diaper $20
Bank of Chicago, which in 2023 received more than
double the requests for diapers than it had in the
prior year. “We’ve heard that people are trying to
potty-train, that they’re waiting longer to change 10
the diaper,” she adds.
Parents definitely feel the financial pinch.
Richard Dixson, a 62-year-old in Kansas City,
Missouri, who, with his wife, is raising four of 0
their grandchildren, says brands like Pampers 2018 2023
and Huggies are out of reach. A package of mid-
tier training pants for his twin 5-year-old grandsons
costs him about $30. A few years back, it used to be
more like $24, he says.
That sticker shock likely won’t fade anytime
soon. Inflation in other parts of the economy is
starting to moderate, but diaper makers haven’t
gotten much relief. Kimberly-Clark said last year
that resin prices, which influence the cost of poly-
propylene materials used for several parts of dia-
pers, were moving up. And consultant Hanna says
that fluff pulp prices are set to increase as one of
ETHAN MILLER/GETTY IMAGES. DATA: CDC NATIONAL CENTER FOR HEALTH STATISTICS, CIRCANA
the largest producers, International Paper Co.,
permanently stops production at two of its pulp
machines in Florida and North Carolina. “We have
particular materials important to these products
that are still troublesome,” she says.
In the longer term, however, material costs
may be the least of the challenges for diaper mak-
ers and other US businesses as they are forced
to adapt to a changing demographic outlook
that could slowly sap demand for their prod-
ucts. “This has a huge ripple effect,” says New
England Consulting Group’s Stibel. “It’s a dom-
ino effect over multiple categories and over time.”
�Leslie Patton, with Alex Tanzi
THE BOTTOM LINE The number of diapers sold at retail in the US
has fallen for four years. This decline could be a worrisome omen
for consumer businesses that depend on birth-rate gains.
◼ BUSINESS
Sports Leagues Bet on Las Vegas
● A booming population and the legalization of sports betting have drawn teams to the Super Bowl host city
When Las Vegas hosts its first Super Bowl on Feb. 11,
it will mark a kickoff party that few saw coming.
For decades, the major US sports leagues shunned
Nevada’s most populous city, despite its status as
a tourism epicenter. Gambling was taboo, espe-
cially after a basketball referee betting scandal in
the mid-2000s. And no place on earth has embod-
ied that unsavoriness more than Sin City.
“You go back 10 years, and we couldn’t say the
words ‘Super Bowl,’ ” says Sean McBurney, regional
president at Caesars Entertainment Inc., which
owns eight resorts on the Strip. “How sports has
embraced Las Vegas has changed dramatically.”
The players and fans traveling to see the San
Francisco 49ers square off against the Kansas City
Chiefs for pro football’s biggest prize will converge
on a city that over the past eight years has been busy
collecting sports franchises. The National Hockey
League’s Golden Knights arrived in 2017, just as the
National Football League finalized the relocation
of the Oakland Raiders. The Aces of the Women’s
National Basketball Association showed up next,
coming over from San Antonio a year later. And
in November 2023, Major League Baseball’s own-
ers unanimously approved the Oakland Athletics’
move to the Las Vegas valley. “We’re trying to build
Bloomberg Businessweek February 12, 2024
a world-class city in Las Vegas, and sports are now
an integral part of that,” says Las Vegas Mayor
Carolyn Goodman. Investors have committed
almost $7 billion, turning Vegas into a global sports
capital, pumping money into venues and negotiat-
ing deals with both the NFL and MLB among other
leagues—calling to mind the mass migration of fran-
chises to Southern California in the 1950s and ’60s.
Some of Vegas’ biggest advocates are the celeb-
rities and athletes who live and party in the city.
Former Patriots quarterback Tom Brady purchased
a stake in the Aces and is looking to own a portion
of the Raiders; retired baseball star José Bautista
bought a minor league soccer team, the Las Vegas “We’re trying
Lights; and NBA superstar LeBron James, an equity to build a world-
partner in Boston Red Sox owner Fenway Sports class city in
Group, has been vocal about owning an NBA expan- Las Vegas, and
sion team in the city. “They have everything here,” sports are 11
he said in December, after the league’s inaugural now an integral
In-Season Tournament in Las Vegas. part of that”
But for some Las Vegas locals, living in a sports
boomtown has been a mixed bag. The Strip and
its surroundings have been covered in construc-
tion sites, tangling roadways and annoying resi-
dents and visitors alike. In only a few years, the city
added more than 100,000 seats at new venues,
◀ Ready for the
big game outside
Caesars Palace
 ◼ BUSINESS
and more are on the way. The classic Tropicana
hotel, for instance, will close in April to make
room for a more wholesome emblem of the new
Las Vegas: a $1.5 billion baseball stadium, which
will likely prolong the area’s construction hassles.
“Let’s not talk about traffic,” Mayor Goodman
says. “It is a total nightmare.”
Sin City’s latest reinvention would have been
impossible if America hadn’t suddenly become
cool with sports gambling. The floodgates opened
in 2018 when the US Supreme Court struck down a
federal ban on commercial sports betting. Online
sportsbooks—which allow people to bet on games
right on their phones—proliferated, and the
leagues wanted in on the action. Americans have
legally bet more than $220 billion on sports since
the court’s decision, according to the American
Gaming Association.
For decades, Las Vegas was mostly a fight town.
Casinos began funding boxing bouts in the 1950s.
Marvin Hagler rocked Thomas Hearns at Caesars
Palace in 1985, and Floyd Mayweather Jr. out-
maneuvered Manny Pacquiao over 12 rounds at
the MGM Grand in 2015.
Vegas made a natural home for the Ultimate
12 Fighting Championship, and the city has hosted
a third of the UFC’s events since 2001. “We
would never have come as far as we have with-
out the platform Las Vegas has provided us,” says
Lawrence Epstein, chief operating officer of the
mixed martial arts company. “If we were based in
Omaha—I love Omaha, but we wouldn’t have the
platform that we have here in Vegas.”
With the state’s population swelling over the
past three decades, the major leagues were des-
tined to look Nevada’s way. Las Vegas’ Clark County
grew from 1.4 million residents in 2000 to 2.3 mil-
lion at the end of 2023. In 2016 the NHL awarded
an expansion team to the billionaire chairman of
Fidelity National Financial, Bill Foley, who paid
a $500 million fee for the Golden Knights. The
team’s home, the 20,000-seat T-Mobile Arena, was
funded entirely by MGM Resorts International and
Anschutz Entertainment Group.
The arrival of the NFL signaled an escalation
of the city’s sporting ambitions. Originally, Las
Vegas wasn’t on the list of potential new homes
for the Oakland Raiders. But local officials gave
owner Mark Davis a lucrative deal: The team
spent $1.2 billion to build the 65,000-seat Allegiant
Stadium, and Clark County chipped in the remain-
ing $750 million via hotel room taxes.
Stanford University economist Roger Noll
called that arrangement the worst deal for a city
he’d ever seen. (The record-large subsidy has since
Bloomberg Businessweek February 12, 2024
been eclipsed by the Tennessee Titans, who are ▲ A massive three-story
sportsbook will greet
collecting $1.26 billion in taxpayer funds.) But game-day bettors at the
local boosters say this first Super Bowl will bring Circa Resort & Casino in
downtown Las Vegas
$500 million in economic activity to the area.
The big game also cements Las Vegas’ entry
into the fierce global competition for golf tour- ▼ Major sports teams
in Las Vegas
naments, Formula One races and other sporting
Team announced
mega-events. Las Vegas hosted its Grand Prix in or approved
November 2023, the city’s biggest sporting event ● Season played
to date, with more than 300,000 people attending ● Conference title
over four days. The sight of F1 cars howling down ● Championship
the Strip at 200 mph made for a quintessentially
Vegas kind of spectacle, but it brought plenty of
traffic headaches, too. 2016
Despite the challenges, race executives and
tourism officials said the effort paid off with an
economic impact of $1.2 billion. The city’s hos-
pitality industry sponsored hundreds of events, 2018
even building its own temporary grandstands
for the race. “That was something that really
appealed to local stakeholders,” says Las Vegas
Grand Prix CEO Renee Wilm. 2020
So far, the casinos couldn’t be happier about
the town’s makeover. “Sports and the business
that sports brings has been wildly successful for
BRIDGET BENNETT/BLOOMBERG. DATA: SPORTS LEAGUES, NEWS REPORTS
us,” says MGM CEO Bill Hornbuckle. 2022
With the Las Vegas Super Bowl Host Committee
estimating that 450,000 tourists will head to town,
Raiders owner Davis says it’s quite a turnabout
from eight years ago, when the NFL was so anti- 2024
Vegas that the league canceled a fantasy football
Golden Knights (NHL)
Aces (WNBA)
Raiders (NFL)
Desert Dogs (NLL)
Athletics (MLB)
convention here. “They’re talking about the NBA
and MLB coming,” Davis says. “What I’ll say about
Nevada is, the first word out of people’s mouths
is not ‘no.’ ” �Kim Bhasin and Randall Williams
THE BOTTOM LINE Super Bowl LVIII will be a coming-out party
for Las Vegas as a sporting hub. And new $1.9 billion football and
$1.5 billion baseball stadiums will only boost its sports cred.
MAKE SURE CUTIE
PIE IS IN THE
RIGHT SEAT.
NHTSA.gov/TheRightSeat
 Bloomberg Businessweek February 12, 2024

T The Man Behind

E The Machine
C It’s OpenAI COO Brad Lightcap’s job to turn the
startup into Silicon Valley’s next tech giant

H
N
14
O
L
O
G
Y PHOTOGRAPH BY JESSICA CHOU FOR BLOOMBERG BUSINESSWEEK

Edited by
Joshua Brustein
◼ TECHNOLOGY
In late 2022, just a few months after OpenAI released
ChatGPT, the company received an inquiry from
Axel Springer SE, the German media conglomerate
that owns Politico and Business Insider. It was inter-
ested in talking about how the chatbot would affect
the future of news, and whether the two companies
could find a way to work together.
The tension caused by OpenAI’s practice of
ingesting material on the internet to build the large
language model powering ChatGPT was already
evident. It was facing a lawsuit alleging that GitHub
Copilot, which uses OpenAI’s tech to write com-
puter code, violated copyright by using existing code
repositories as training data, a claim that OpenAI
disputed. Visual artists were suing other artificial
intelligence companies such as Midjourney and
Stability AI Ltd. for copyright infringement, which
the companies also contested. It wasn’t hard to fore-
see similar legal action coming from media compa-
nies, whose businesses had already been disrupted
by the internet, and which were concerned that AI
chatbots built in part on their own content could
siphon away readership without compensation.
Working with Axel Springer presented a major
opportunity for OpenAI to get started on a new
class of partnerships that could make allies out of
media companies rather than alienate them from
the start. It seemed like an obvious assignment for
OpenAI Chief Executive Officer Sam Altman, the
38-year-old who was earning a reputation as the
spokesperson-in-chief for the entire AI industry.
Instead, Altman asked Brad Lightcap, the compa-
ny’s chief operating officer, to handle the negotia-
tions, giving him full control over the talks. “When I
delegate, I really delegate,” Altman says.
At 33, Lightcap makes even Altman seem kind
of old. He started his career in finance before mov-
ing to San Francisco to work for Dropbox Inc. in
2013. Lightcap worked for Altman as an investor
at the startup incubator Y Combinator, then fol-
lowed him to OpenAI in 2018, when it was a small
nonprofit research lab without a business plan or a
working product. Lightcap—who over the years has
become one of Altman’s most trusted lieutenants—
is now tasked with transforming the most intriguing
tech startup in recent memory into a commercial
powerhouse that can compete with Alphabet Inc.’s
Google and Meta Platforms Inc.
People who work with Lightcap describe him as a
good listener who’s fixated on the needs of OpenAI’s
customers—he spent three hours on Christmas Eve
having brunch with a prospective client—and who’s
helped create structure within a rapidly changing
organization. “He doesn’t say a lot, but he says very
incisive things when he does talk,” says Altman.
Bloomberg Businessweek February 12, 2024
After months of discussions with Axel Springer’s
point person on the deal, Chief Information Officer
Samir Fadlallah, Lightcap invited a handful of its
executives to visit OpenAI’s headquarters in May.
He says he was “admittedly a little intimidated”
about designing media deals. “I was thinking, ‘This
isn’t a world I know super well,’ ” he says. “I don’t
come from it. I don’t have deep contacts or a net-
work here.”
People in media often see the tech industry as
arrogant and unappreciative of the importance
of so-called legacy companies, but Lightcap’s
guests were pleased by his humility. Fadlallah says
Lightcap told him that OpenAI “cares about journal-
ism” and that it’s “important to foster democracy.”
Lightcap “was really listening to our perspective
and listening to our fears,” says Fadlallah, adding
that “the fear was that they are providing a con-
tent creation machine that is really threatening our
business model.”
In December the two companies reached a
broad agreement whose terms, Bloomberg News
reported, include OpenAI paying Axel Springer
tens of millions of dollars over three years to
license content that it can use to train its AI mod-
els. OpenAI will also feature the summaries of Axel 15
Springer’s news articles directly in ChatGPT, along
with attribution and links to full articles.
The deal provides a road map for additional
media deals. OpenAI says it’s in talks with dozens
of other publishers; Bloomberg reported that those
include CNN, Fox and Time. OpenAI also says it will
change the user interface of its current ChatGPT
app to show more summaries and links to news
from Axel Springer and other media partners.
Lightcap hasn’t convinced everyone that the
deals OpenAI is offering are good ones. The New
York Times had been engaging with OpenAI in what
the startup had called “productive” conversations
last year, but on Dec. 27 the newspaper sued OpenAI
and Microsoft Corp., OpenAI’s largest investor, say-
ing that their copyright infringement was causing
billions of dollars in statutory and actual damages.
OpenAI is contesting the claim; Lightcap describes
the Times dispute as an anomaly and says the rest of
the company’s talks with publishers are going well.
Media deals and copyright litigation will likely
remain among the central challenges in building
OpenAI’s business, but they’re not the only ones.
Altman has described the company as “the most
capital-intensive startup in Silicon Valley history.”
The computer hardware costs to keep ChatGPT run-
ning could exceed $500 million annually, accord-
ing to an estimate by Dylan Patel, chief analyst at
consulting firm SemiAnalysis. He estimates that
 ◼ TECHNOLOGY
OpenAI’s annual costs to train its next model
are in the “lower billions.” OpenAI has an esti-
mated annual revenue of $1.6 billion, according to
a December report from the Information. The com-
pany declined to comment on its revenue and costs.
Patel says that as OpenAI seeks to build bigger
models with even more data, its computing costs
are only increasing. “If their mission wasn’t liter-
ally to make the machine God, to make artificial
superintelligence that’s smarter than humans,
then I think they could be profitable sooner,” he
says. “But because they want to make something
smarter than humans in every way possible and
then deploy that rapidly in every way possible, that
takes so much money.”
OpenAI’s business plan centers on charging
customers for special versions of its products. In
the past six months, Lightcap has helped oversee
the expansion of new lines of revenue, including
a business version of its consumer app, ChatGPT
Enterprise, which now has more than 260 pay-
ing customers and 100,000 registered users. It’s
also built an online store—akin to Apple Inc.’s
App Store—through which developers can dis-
tribute customized apps, or “GPTs,” that use
16 OpenAI’s software.
But competition is stiff and likely to get even
more so. Google, for instance, has its own large lan-
guage model, a cloud computing network to sup-
port it and a large team with years of experience
in enterprise sales. Lightcap says OpenAI’s main
advantage is its ability to get products to market
and incorporate feedback quickly.
Like many startups, OpenAI says developing its
technology takes priority over short-term revenue.
But the outcome of the AI arms race also hinges
on how the company and its competitors develop
the businesses around their technologies. Lightcap
acknowledges that he hasn’t figured it all out.
“There’s a lot of areas where there’s huge opportu-
nity, but we still don’t quite know what the imple-
mentation model looks like,” he says. “Nothing is
super predictable for us at this point. And I suspect
that’ll be true for a while.”
Lightcap’s ability to endure uncertainty was on
display in November, when OpenAI’s board briefly
ousted Altman, a period some at the company now
refer to as “the blip.” While working with other
executives to soothe employee anxiety, he also
attempted to reassure customers by personally call-
ing about 40 of them over the course of two days.
“I didn’t want time to pass between the things
that people were reading in the news and when
they heard from us,” Lightcap says. “Our priority
was making sure people know we’re here, we’re
Bloomberg Businessweek February 12, 2024
on top of it—that our services are stable and the
company is in good shape.” He says the business
didn’t lose a single customer. “I really saw the best
of Brad through that,” Altman says.
One of OpenAI’s newer areas of focus is semicon-
ductors. Bloomberg reported that Altman has trav-
eled to South Korea to tour manufacturing plants as “If their
the company considers expanding its partnerships mission wasn’t
in the chips business, including potentially setting literally to
up a network of factories to manufacture semi- make the
conductors. This could take years and is arguably machine
an even more complicated challenge for Lightcap God … then
than his recent endeavors into the media industry. I think they
Lightcap declines to comment on OpenAI’s could be
hardware plans, saying they’re trade secrets. But profitable
juggling so many projects in an industry that his sooner”
company is essentially willing into existence is “the
fun of the job,” he says.
“Some of those things are things that we have to
do today. Some of those things are one-year things,
some of them six- or five-year things,” Lightcap says.
“And I’d like to think I’m good at being able to trans-
late that into concrete action.” �Shirin Ghaffary
THE BOTTOM LINE To become a real business, OpenAI has to
sort out media partnerships, earn enough to offset its massive
costs and maybe even get involved in making semiconductors.
Tech Acquires a
Taste for Layoffs
● Significant job cuts this year show how
an industry taboo has fallen
For Sydney Russakov, it’s been a year of
transitions. In March 2023 she lost her job at a
startup called Universe, which offers “no-code”
software design tools, when it cut her product
manager role. She took a new position at Nextdoor
Holdings Inc., the hyperlocal neighborhood social
networking service, in June, but was let go again
ILLUSTRATION BY YANN BASTARD. DATA: LAYOFFS.FYI
in November, when Nextdoor conducted its own
round of layoffs.
Losing a job is an experience Russakov, 31, is
learning to live with. There was “an element of
discomfort and surprise that first time,” she says.
“The second time around, I think I was in a better
place to deal with it.”
The tech industry is also getting used to job cuts.
Starting in late 2022, technology companies began
◼ TECHNOLOGY
conducting rounds of layoffs that were deeper and
broader than anything in recent memory. So far
this year, more than 32,000 tech workers have lost
their jobs, according to Layoffs.fyi, a startup that’s
been tracking the metric in the industry since the
pandemic. Alphabet, Amazon.com, Microsoft,
Salesforce, Snap and Zoom have all announced
head count reductions in recent weeks.
The cuts have caused a sense of unease through-
out tech, which has long been one part of the
economy where work has been easy to come
by, well-paid and safe. The situation is far from
dire. Unemployment is below 4%, the economy
continues to add jobs, and the latest government
data show that “layoffs and discharges” are at the
same low levels where they spent much of 2023.
The tech industry ended January with 18,000 more
employees than the month before, according to
CompTIA, which tracks tech industry trends. Still,
the latest round of cuts does suggest something has
changed. The long-standing taboo around layoffs in
Silicon Valley, where companies compete intensely
for talent, has been broken. “The shine of tech jobs
is wearing off a bit with these layoffs,” Jeff Shulman,
professor at the University of Washington Foster
School of Business, wrote in an email.
Some industry leaders have characterized the
shift as a return to a purer kind of tech enterprise.
Bloomberg Businessweek February 12, 2024
▼ Tech companies
laying off employees
17
As Mark Zuckerberg, Meta Platforms Inc.’s chief
executive officer, said in an internal Q&A quoted 250
by the newsletter Command Line, he doesn’t want
to have “managers managing managers, manag-
ing managers, managing managers, managing the
people who are doing the work.” 125
However, there’s another interpretation: The
industry is becoming more like the rest of the
economy. Tim Herbert, chief research officer
at CompTIA, says that tech has regularly gone 0
through “periodic pendulum swings between 8/2022 1/2024
‘all in’ on innovation to ‘all in’ on business fun-
damentals.” During the pandemic, tech seemed ▼ Tech employees
laid off
to inhabit its own reality. Profits were fat, and
companies hired furiously. The job cuts are a sign
that things are swinging the other way. Growth 80k
at tech companies has slowed, and higher inter-
est rates have choked off much of the money that
for years fed startups, even as the broader econ-
omy continues to expand at a healthy clip. And so 40
Silicon Valley is settling into a pattern familiar in
many industries: Companies hire when times are
good, let people go when they’re not—and some-
times let people go even when they’re not so bad. 0
�Antonia Mufarech and Drake Bennett 8/2022 1/2024
THE BOTTOM LINE Tech companies that once mostly avoided
layoffs have begun to hire in good times and fire in lean times, just
like their peers in many other industries.
 Bloomberg Businessweek February 12, 2024

3
Big Banks
F Take On
I The FX
N Upstarts
● Wise and other fintechs
A slashed fees on money
transfers. Now HSBC and
others are striking back
N In the early 2010s, a pack of financial technology

C startups hit the market with an offer that many con-

sumers found hard to refuse: international money
transfers for a fraction of what banks charge. For
18 decades, banks had used their grip on interna-

E tional transactions to impose fees as high as 3%

to 4% for sending cash abroad. The newcomers—
Wise, Revolut, WorldRemit—did the same thing for
practically nothing, instead making money from
the sheer volume of transfers.
Now the banks are fighting back. In January,
HSBC Holdings Plc introduced in the UK a service
it calls Zing, which promises to match what the fin-
techs are offering but with the backing of one of the
world’s largest financial institutions. HSBC hopes to
use its pitch of greater stability to win back wealthy,
internationally mobile customers.
HSBC’s attack on foreign exchange fintechs
began about 18 months ago, when it asked James HSBC’s plan is to begin the worldwide rollout of
Allan, head of FX and payment systems in the Zing within months, with launches in other major
bank’s wealth and personal banking arm, to spear- European countries, as well as in Asian and Middle
ILLUSTRATION BY MARCO QUADRI. DATA: BCG GLOBAL PAYMENTS MODEL

head the Zing project, which it code-named Marco
Polo. Allan’s small team built the new service
in-house under strict secrecy, buying off-the-shelf
technology from other fintechs where necessary,
according to HSBC executives who asked not to be
named discussing internal matters. HSBC hasn’t
said how much it cost to create Zing, but UK corpo-
rate records show the bank plowed almost $74 mil-
lion into MP Payments Group Ltd., the subsidiary it
set up to develop the service. Some managers have
referred to the project as the “Wise killer,” accord-
Edited by
Laura Bliss and
ing to one person familiar with the initiative who
David Rocks asked not to be named.
Eastern markets, also in the works. The Zing web-
site makes a virtue of its big bank origins, stating,
“Get the flexibility of a fintech that’s part of the
HSBC Group.” But with fees broadly comparable
to its rivals, which generally charge less than 1%,
the question is whether HSBC’s offering is distinc-
tive enough to lure customers away.
Kunal Jhanji, leader on payments and fintechs
at Boston Consulting Group (BCG) in the UK,
says that big banks wanting to take on fintechs
will need to rely on more than just their name.
Typical pain points for bank customers, Jhanji
says, include a lack of transparency on payment
◼ FINANCE Bloomberg Businessweek February 12, 2024

▼ 2022 global cross-

border payments
revenues
◼ Transaction fees
◼ Foreign exchange
fees

to anywhere

everywhere
Business to
Consumer

$39b
$28b
$78b

$20b
19

status, unpredictable transaction speeds and high
fees. “The new players will need to ensure that the
improvements in value propositions for customers
deliver true differentiation,” he says.
Wise itself shows how big a challenge even
the largest banks face in trying to take on a well-
funded, successful fintech. The company has spent
13 years honing its product and employs 800 engi-
neers who push out more than 5,000 incremental
improvements to its app every month, says Harsh
Sinha, chief technology officer at Wise.
Revolut Ltd., another fintech offering transfers,
has also come a long way since its 2015 founding.
Today it employs about 8,000 people to cater to
its 40 million customers, and its services, which
include cryptocurrency and share trading services,
stretch well beyond the low exchange fees that
made its name.
London-listed shares of Wise PLC dropped 7.5%
on Jan. 2 as investors reacted to HSBC’s announce-
ment. But now Wise is striking back. In full-page “This is a bit of
ads in British newspapers, it offered a tongue- a shot across
in-cheek welcome to its new competitor. “Your the bows of the
app is a great step forward to make international competitor
transfers and currency conversion more trans- banks”
parent,” the ad stated. “So thanks, HSBC, for
launching Zing. For telling us ours is a mission
you believe in too.”
BCG says global cross- border payments
reached $180 trillion worldwide in 2022, with rev-
enues of $165 billion expected to grow from 6%
to 7% annually over the next five years. Wise,
 ◼ FINANCE
in its marketing, has accused banks of fleecing
customers with high and hidden fees, issuing a
recent report singling out HSBC as one of the worst
offenders. A spokeswoman for HSBC said Wise’s
research excluded the bank’s Global Money ser-
vice, which lets customers send foreign currencies
at a lower cost compared with standard accounts.
She added that HSBC fees include FX risk man-
aged by the bank.
Meaghan Johnson, a fintech consultant, says
Zing would have to get better quickly if HSBC wants
to catch up. “The track record isn’t great for incum-
bent banks launching standalone international pay-
ment platforms,” she warns, pointing to PagoFX,
Santander Bank’s answer to Wise, which was shut-
tered just 15 months after its 2020 launch. US bank-
ing giant JPMorgan Chase & Co. made its own, more
successful foray into fintech when it introduced
Chase UK three years ago. Like Zing, Chase UK has
a foreign exchange offer priced at the same level
as the fintechs, but as an all-around digital bank, it
offers checking and savings services as well.
Nizam Uddin, chief strategy officer at fintech
Algbra, which focuses on serving socially excluded
banking customers, believes HSBC still has time to
20 tweak features to make it competitive.
Tim Levene, founder of Augmentum Fintech
PLC, a UK-based specialist fintech investor, says
HSBC’s move is likely to raise questions on the
boards of other major financial institutions about
whether they need to be more innovative. “This is
a bit of a shot across the bows of the competitor
banks,” he says. ——Harry Wilson and Aisha S. Gani
THE BOTTOM LINE HSBC’s new foreign exchange app aims to
claw back customers from upstart Wise. But the bank may face
an uphill battle.
Shorting the Debt
Maturity Wall
● One financier is betting his own money on a
wave of defaults as ultracheap bonds expire
Hedge fund manager Adam Schwartz got rich
in 2020 predicting the corporate bond market’s
boom and bust. Now he’s staking most of his fund—
and his own cash—on another bet that companies
coming up against record debt maturities will spark
a wave of defaults.
Bloomberg Businessweek February 12, 2024
That wager is at the heart of the $40 million
Black Bear Value Partners fund that Schwartz, a
former director at Fir Tree, runs from Boca Raton,
Florida. The bulk of his portfolio is given over to
a handful of companies bucking the overall trend
and holding very little—or no—debt. The rest is in
short positions against parts of credit markets that
Schwartz thinks are due for a correction.
The notion that defaults will rise as ultracheap
bonds issued in the Covid-19 era expire is nothing
new. But Schwartz says yields aren’t pricing in the
potential for a bigger-than-expected jump in bank-
ruptcies. Things look especially bad, he says, when
you consider that much of the debt was borrowed
on terms that minimize the amount that investors
are able to recover if companies default.
“You have this environment where nobody
defaulted forever,” Schwartz says, referring to the
past 15 years of historically low interest rates. “It’s
like a doctor’s waiting room. A lot of companies
were able to leave and buy themselves some time,
but at the end of the day they’re going to need to
refinance at higher rates.”
The impact of a pandemic-era borrowing spree is
PHOTOGRAPH BY SAUL MARTINEZ FOR BLOOMBERG BUSINESSWEEK. DATA: BLOOMBERG. INCLUDES INVESTMENT-GRADE AND HIGH-YIELD BONDS ISSUED IN THE US AND EUROPE
set to hit companies hard this year, and many hedge
funds are betting it will spur a culling of indebted
companies. By some counts, the debt maturity wall
has never been bigger: In the next three years, US
and European companies face maturities of some
$3 trillion in debt, about 26% of the global total, data
compiled by Bloomberg show. Just under a third of
that total was issued in 2020-21.
Yet markets are trading as if none of this mat-
ters. US companies with investment-grade ratings
sold $189 billion in debt in January, a record for the
month. Average spreads for their bonds stand at
around 95 basis points over Treasuries, approach-
ing the lowest level since the Federal Reserve started
hiking rates. Most investors are betting that Fed rate
cuts this year will create a window of opportunity
for refinancing, and part of the January surge was
due to companies doing just that as a sudden wave
of optimism pushed down borrowing costs. “Everyone
thinks that just
But Schwartz and other bears say that rates
may not come down as quickly or as far as mar- because the
kets expect, because of either lingering inflation last couple
or an economic downturn. This argument got years have
some vindication on Feb. 1 when Fed Chair Jerome gone smoothly,
Powell dashed hopes that rate cuts would begin as the next five
early as March, sending bonds tumbling. years will go
The bull case doesn’t take into account that a lot smoothly”
of today’s outstanding debt was issued at such his-
torically low rates that any refinancing will cost far
more, even if the Fed cuts this year. More than 40%
of the junk-rated bonds due between 2024 and 2026
◼ FINANCE
were taken out during the pandemic, when the Fed
made credit cheap and easy for vulnerable compa-
nies, even pledging to buy certain types of high-yield
debt. With inflation raising costs for most busi-
nesses, the environment is ripe for defaults.
Schwartz isn’t alone in seeking to short the
looming maturity wall. Hedge funds such as Hamza
Lemssouguer’s Arini profited last year with bets
that borrowers who raised money during the easy-
money era would struggle to refinance their debt.
Some signs hint that the bears could be right.
Over 200 large US companies went bust in 2023, the
worst year since the global financial crisis, not includ-
ing the first 12 months of the pandemic. Speculative-
grade companies are defaulting at the fastest rate
since May 2021, and there’s been a surge in payment-
in-kind arrangements by companies that lack the
cash to cover their debts.
Schwartz sees big opportunities for those willing
to play the long game. He declines to name stocks
he’s shorting, but there’s a mix of private equity
firms that have loaded up on over-leveraged com-
panies and online retailers with scant cash flow.
That was fine when low rates meant low costs, “but
you can’t grow like that if what you’re offering is
a partly subsidized product dependent on low
rates.” He’s also reinstated a short on exchange-
traded funds that track major investment-grade
and emerging-market credit indexes, which paid
out handsomely when corporate bonds slumped
at the start of the pandemic, helping his fund grow
almost fourfold.
Bloomberg Businessweek February 12, 2024
Overall, though, Schwartz’s shorts have
not generated much profit for his fund,
which returned 18% last year, versus 24% for
the S&P 500 Index. Bets last year against Silicon
Valley Bank and First Republic paid off when
the lenders collapsed after an exodus by depos-
itors. But investors have to pay interest on short
positions, so they can be costly to hold over an
extended period. The hope is that when they
do pay out, the profit will cover those costs, but
there’s no guarantee.
Schwartz offsets the cost of the short positions
with a handful of holdings in companies with lit-
tle debt, in some cases because they’ve undergone
◀ Schwartz
21
▼ Corporate bond
maturities
$300b
200
100
recent restructurings, in others because they
operate in sectors that lenders eschew because of 0
poor environmental credentials. He’s invested 87% Q2 ’24 Q4 ’26
of his portfolio in just seven companies, including
a coal producer, a building materials supplier and
an owner of auto dealerships. He says that as higher
interest rates and inflation hammer weak balance
sheets, companies with good management and low
debt will benefit.
“Everyone thinks that just because the last cou-
ple years have gone smoothly, the next five years
will go smoothly,” Schwartz says. “It’s a lot better to
be skeptical and cautious, given the sheer amount
of debt that’s out in the system.” �Natasha Doff
and Cecile Gutscher
THE BOTTOM LINE Schwartz and other bearish investors see
opportunity in expiring bonds issued in the heyday of ultralow
interest rates. But the short position comes with risk.
 Bloomberg Businessweek February 12, 2024

E
C
O China Limps Into
N The Year
O Of the Dragon
22
M
I
C
S Beijing hasn’t hit on the right mix of policies
to reawaken the animal spirits

Edited by
Cristina Lindblad
 ◼ ECONOMICS
As China heads into the lunar Year of the Dragon,
traditionally seen as one of the most auspicious crea-
tures on the zodiac, the country’s leaders are strug-
gling to restore confidence at home and abroad.
The economy is besieged by deflation, a per-
sistent housing market slump and a stock selloff.
And Beijing’s piecemeal stimulus policies—such as
lowering bank reserve requirements to encourage
more lending and issuing more government bonds
to fund construction projects—don’t seem to be
improving sentiment.
A key issue is the government’s focus on pro-
moting what President Xi Jinping calls “high-quality
development,” an umbrella term for a variety of
policy goals, from boosting China’s high-tech
capabilities to combating social inequality. That’s
a more complex ambition than officials’ earlier
single-minded fixation on achieving high levels
of economic expansion. “The biggest challenge is
PHOTO ILLUSTRATION BY 731; PHOTOS: GETTY IMAGES (2). *EXCLUDES OFF-BALANCE-SHEET SPENDING. DATA: NATIONAL BUREAU OF STATISTICS COMPILED BY BLOOMBERG AND BLOOMBERG CALCULATIONS;
Beijing’s inattention to deteriorating growth, which
exacerbates all the structural and secular problems
China faces,” says Houze Song, an economist at the
Paulson Institute, a think tank focused on US-China
relations. “And the solution is to assign a bigger
weight to growth in government policy.”
Here are five charts that zero in on China’s pain
points in 2024.
① DEFLATION NOW TOPS LIST OF WORRIES
The term “deflation” describes a situation in which
CITIGROUP DATA COMPILED BY BLOOMBERG; PEOPLE’S BANK OF CHINA AND CHINESE MINISTRY OF FINANCE FIGURES COMPILED BY BLOOMBERG
prices for goods and services fall across a large swath
of the economy. (Not to be confused with disinfla-
tion, which signifies prices are still rising, though
more slowly. That’s what’s happening in the US.)
Adjusted for inflation, China’s gross domestic
product expanded 5.2% in 2023. But in nominal
terms the world’s No. 2 economy grew 4.6%, the
slowest pace in almost four decades, not counting
the years when pandemic restrictions were in place.
① China GDP deflator, year-over-year change ② Citi Economic Surprise Index
US
9%
6 90
3 0
0 -90
-3
Q1 ’98 Q2 ’09 Q4 ’23 2/2/23
Bloomberg Businessweek February 12, 2024
The GDP deflator, the widest measure of prices
in the economy, has fallen for the last three quar-
ters, the longest streak since 1999. Manufacturing
is leading the price drops—a side effect of Beijing’s
approach to economic stimulus. Officials are chan-
neling credit to manufacturers to boost output. But
with growth in consumer spending on goods weak
at home and demand for Chinese exports also flag-
ging overseas, businesses are left with little choice
but to mark down their products.
“The biggest
② WHILE OLD PROBLEMS PERSIST challenge
China’s economy grew faster than the US’s last year, is Beijing’s
but relative to expectations at the start of 2023, the inattention to
former underperformed, while the latter consis- deteriorating
tently beat estimates. growth”
Blame it on China’s property market crisis. It’s an
old story by now—the slump began in 2021—but it’s
making headlines again thanks to a Hong Kong judge’s
ruling ordering the liquidation of China Evergrande
Group, one of the many distressed developers.
Despite Beijing’s efforts to deter real estate spec-
ulation, construction still represents a huge chunk
of the economy, driving demand for goods and
services worth around 20% of GDP, according to
Bloomberg Economics. Related sectors such as 23
household furnishings and cement are also being
dragged down. And there’s a spillover effect to
other areas, as falling home prices make many
households reluctant to spend on everything from
electronics to luxury goods.
After a few mistaken calls of a turn in the prop-
erty market, Wall Street analysts have arrived at the
consensus that conditions won’t stabilize until 2025.
③ NEED MORE, BETTER STIMULUS
Chinese government advisers’ calls for more
stimulus reached a fever pitch last summer, and
Beijing responded with an unusual midyear dose
③ China’s monetary and fiscal stimulus
as a share of GDP
China
◼ Central bank balance-sheet increase
◼ Government deficit*
180 9%
6
3
0
-180 -3
7/17/23 2/2/24 2014 2020 2023
 ◼ ECONOMICS
of deficit spending. While the timing signaled a
welcome flexibility, the scale of the effort, at 1 tril-
lion yuan ($13.9 billion), paled compared with
past interventions. Government officials chan-
neled funds into construction, a tried-but-less-true
method of spurring the economy, ignoring recom-
mendations that directing assistance to households
might yield better results.
The Communist Party’s Politburo unveiled two
slogans in December that hinted at more support
for the housing market and a greater focus on eco-
nomic growth. But neither should be interpreted
as a return to the past.
Perhaps it’s time investors take Beijing at its word
when it says it will never again unleash “floodlike”
stimulus (a reference to the government’s response
during the global financial crisis) or massively
increase demand for housing (as it did after a down-
turn in 2015). Policymakers will instead prioritize
industries such as high-tech manufacturing that are
central to Xi’s revamp of China’s economic model.
④ FEELING LOW
Stubbornly low confidence among households and
businesses is blunting the impact of stimulus. That
24 may be a hangover from the past few years, which
along with the housing slump have been marked
by unpredictable pandemic restrictions, sudden
crackdowns on sectors including education and
tech, and rising US-China tensions.
One sign Chinese families are feeling less secure:
Rather than investing in housing or stocks, they’re
socking money away in savings accounts at banks.
Companies are being showered with credit, but out-
side of growth sectors such as electric vehicles and
cleantech, business owners appear to be reluctant to
expand amid weak demand and falling prices.
The optimistic view is that confidence will recover
as recent traumas recede further into the past and
China’s relations with the US and other key markets
improve. The pessimists see the property slump
continuing to drag on confidence. The prospect of
a Donald Trump reelection won’t ease nerves either.
⑤ FINDING THE FLOOR
Worries about China’s future are reflected in prices
of stocks traded at exchanges on the mainland and
in Hong Kong. A yearlong rout has wiped away about
$6 trillion in market value, from a peak in 2021.
Although the stock market isn’t a reliable
tracker of China’s economy over the long term, in
the medium term it’s sensitive to trends in nomi-
nal growth because they affect profits. So Beijing’s
efforts to boost valuations by tweaking market rules,
such as restricting short selling, and possibly using
Bloomberg Businessweek February 12, 2024
④ China consumer confidence index ⑤ Change in benchmark stock index
since Dec. 30, 2022
Government eases China (CSI 300)
Covid restrictions
India (S&P BSE Sensex)
US (S&P 500)
120 30%
110 15
100 0
90 -15
80 -30
12/2017 12/2023 12/30/22 2/2/24
DATA: NATIONAL BUREAU OF STATISTICS DATA COMPILED BY BLOOMBERG, BLOOMBERG
government funds to buy stocks at scale—an idea
that was floated last month—are unlikely to produce
a lasting upswing. “Without a growth rebound, I
see little chance policy can sustainably boost the
stock market,” says Song of the Paulson Institute.
�Tom Hancock
THE BOTTOM LINE China’s economy is battling an assortment of
ills, some chronic and others new. Sporadic doses of government
stimulus have proved an ineffective treatment so far.
Politics and the Fed
● Powell hopes to stay out of the crosshairs of the US
presidential election. It won’t be possible
Federal Reserve Chair Jerome Powell would no
doubt prefer that the central bank not be dragged
into the middle of what’s likely to be a highly con-
tentious presidential election campaign. But he’s
finding that may be near impossible.
In a rare interview, on CBS’s 60 Minutes, which
aired on Feb. 4, Powell insisted the Fed wouldn’t
take politics into account in deciding when to
reduce interest rates as inflation ebbs. “It just
doesn’t come up in our thinking,” he said.
But such assertions didn’t stop former President
Donald Trump from accusing him of doing just that.
“I think he’s political,” the likely Republican presi-
dential nominee said in an interview that aired on
Fox Business’ Sunday Morning Futures, also on Feb. 4.
“I think he’s going to do something to probably help
the Democrats, I think, if he lowers interest rates.”
 ◼ ECONOMICS
What’s more, even as Powell emphasized the
Fed’s nonpartisan bona fides, he ended up com-
menting in the 60 Minutes interview on issues that
will be hotly debated in the campaign—such as
immigration—though he stopped well short of offer-
ing specific policy prescriptions. “It underscores
just how treacherous the road is in an election year
for the Fed,” says Diane Swonk, chief economist at
KPMG LLP. “It’s hard for them not to accidentally
stumble on political land mines even as they’re try-
ing to do the best economic policy.”
Trump elevated Powell to Fed chair in
February 2018, then spent much of that year and
the next castigating him for keeping interest rates
at levels he considered too high. “The only problem
we have is Jay Powell and the Fed,” Trump groused
in an August 2019 post on Twitter (now X). “He’s
like a golfer who can’t putt, has no touch. Big U.S.
growth if he does the right thing, BIG CUT - but
don’t count on him!”
At one point, Trump even explored the possibil-
ity of firing the Fed chair. He told Fox Business on
Feb. 4 that he wouldn’t reappoint Powell if elected
in November.
President Joe Biden, who backed Powell for a
second four-year term in 2022, has refrained from
giving the Fed public policy advice, though some
of his Democratic colleagues haven’t been so shy.
Several prominent lawmakers, including Senate
Banking Committee Chairman Sherrod Brown and
Massachusetts Senator and former presidential can-
didate Elizabeth Warren, wrote separately to Powell
last month urging him to lower interest rates.
In his 60 Minutes appearance, Powell pushed
back on pressure for a quick turn to easier credit,
even though inflation is cooling quickly. The “dan-
ger of moving too soon is that the job’s not quite
done and that the really good readings we’ve had
for the last six months somehow turn out not to be a
true indicator of where inflation’s heading,” he said.
That didn’t come as a surprise to Fed watchers.
After all, Powell had said as much at his Jan. 31 press
conference after policymakers held rates steady for
the fourth straight meeting. What did take some
analysts aback was his willingness to comment on
some potentially highly charged political issues not
directly tied to monetary policy.
The Fed chair extolled the advantages of
America supporting global democracy and the
economic and security framework behind it.
SAMUEL CORUM/BLOOMBERG
He called the federal government’s debt unsus-
tainable in the long run and urged lawmakers to
tackle the issue. And while he said immigration
policy isn’t the Fed’s job, Powell did argue that
immigrants have benefited the US economy over
Bloomberg Businessweek February 12, 2024
time. Although he stuck to broad principles and ▲ Powell
eschewed specific policy recommendations, sea-
soned Fed observers took note. “I don’t think I’ve
ever seen Powell so forcibly insist the Fed stays in
its lane and then make strong pronouncements” 25
like those, Sarah Binder, a senior fellow at the
Brookings Institution, posted on X. “It’s hard for
The Fed is no stranger to feeling the political them not to
heat in an election year. In 2016, then-presidential accidentally
candidate Trump repeatedly accused former Fed stumble on
Chair Janet Yellen of keeping interest rates low to political land
help Hillary Clinton win the White House. mines even as
But several things set the coming campaign they’re trying
apart. The post-pandemic surge in inflation—along to do the best
with the Fed’s big rate increases to contain it—has economic
made voters more aware of Powell and the central policy”
bank. And they don’t like what they see. Just 43% of
Americans in a Gallup Poll in December gave him
a favorable job rating, down from 53% in 2021, the
last time the company asked that question.
The election is also coming at a particularly deli-
cate time for the economy and the Fed. Powell told
reporters on Jan. 31 that the central bank is trying
to navigate two competing risks. If it cuts rates too
soon, it runs the danger of allowing inflation to settle
at levels well above its 2% goal. If it delays reducing
rates too long, it could end up driving the US into a
recession. “Powell was trying to get ahead of a pres-
idential campaign in which he and the Fed will be
in the crosshairs,” says Mark Spindel, chief invest-
ment officer at Potomac River Capital. �Rich Miller
THE BOTTOM LINE Federal Reserve policymakers like to stay
above the fray when it comes to politics, but that will be difficult as
the presidential election nears.
 Bloomberg Businessweek February 12, 2024

26
Bloomberg Businessweek February 12, 2024

few years ago, during one of California’s steadily

worsening wildfire seasons, Nat Friedman’s fam-
ily home burned down. A few months after that,
Friedman was in Covid-19 lockdown in the Bay
Area, both freaked out and bored. Like many a
middle-aged dad, he turned for healing and
guidance to ancient Rome. While some of us
were watching Tiger King and playing with our
kids’ Legos, he read books about the empire and helped his daughter
make paper models of Roman villas. Instead of sourdough, he learned
to bake panis quadratus, a Roman loaf pictured in some of the frescoes
found in Pompeii. During sleepless pandemic nights, he spent hours
trawling the internet for more Rome stuff. That’s how he arrived at the
Herculaneum papyri, a fork in the road that led him toward further
obsession. He recalls exclaiming: “How the hell has no one ever told me
about this?”
The Herculaneum papyri are a collection of scrolls whose status among
A piece of a Herculaneum papyrus

classicists approaches the mythical. The scrolls were buried inside an

Italian countryside villa by the same volcanic eruption in 79 A.D. that
froze Pompeii in time. To date, only about 800 have been recovered from
the small portion of the villa that’s been excavated. But it’s thought that
the villa, which historians believe belonged to Julius Caesar’s prosperous
father-in-law, had a huge library that could contain thousands or even tens
of thousands more. Such a haul would represent the largest collection
of ancient texts ever discovered, and the conventional wisdom among
scholars is that it would multiply our supply of ancient Greek and Roman 27
poetry, plays and philosophy by manyfold. High on their wish lists are
works by the likes of Aeschylus, Sappho and Sophocles, but some say it’s
easy to imagine fresh revelations about the earliest years of Christianity.
“Some of these texts could completely rewrite the history of key peri-
ods of the ancient world,” says Robert Fowler, a classicist and the chair
of the Herculaneum Society, a charity that tries to raise awareness of
the scrolls and the villa site. “This is the society from which the mod-
ern Western world is descended.”
The reason we don’t know exactly what’s in the Herculaneum papyri
is, y’know, volcano. The scrolls were preserved by the voluminous
amount of superhot mud and debris that surrounded them, but the
knock-on effects of Mount Vesuvius charred them beyond recognition.
The ones that have been excavated look like leftover logs in a doused
campfire. People have spent hundreds of years trying to unroll them—
sometimes carefully, sometimes not. And the scrolls are brittle. Even
the most meticulous attempts at unrolling have tended to end badly,
with them crumbling into ashy pieces.
In recent years, efforts have been made to create high-resolution, 3D
scans of the scrolls’ interiors, the idea being to unspool them virtually.
This work, though, has often been more tantalizing than revelatory.
Scholars have been able to glimpse only snippets of the scrolls’ innards
and hints of ink on the papyrus. Some experts have sworn they could
see letters in the scans, but consensus proved elusive, and scanning the
COURTESY VESUVIUS CHALLENGE

entire cache is logistically difficult and prohibitively expensive for all

but the deepest-pocketed patrons. Anything on the order of words or
paragraphs has long remained a mystery.
But Friedman wasn’t your average Rome-loving dad. He was the chief
executive officer of GitHub Inc., the massive software development plat-
form that Microsoft Corp. acquired in 2018. Within GitHub, Friedman
 Bloomberg Businessweek February 12, 2024

had been developing one of the first coding assistants
powered by artificial intelligence; he’d seen the rising power
of AI firsthand. He had a hunch that AI algorithms could find
patterns in the scroll images that humans had missed.
After studying the problem for some time and ingratiat-
ing himself with the classics community, Friedman, who’s left
GitHub to become an AI-focused investor, decided to start a
contest. Last year he launched the Vesuvius Challenge, offer-
ing $1 million in prizes to people who could develop AI soft-
ware capable of reading four passages from a single scroll.
“Maybe there was obvious stuff no one had tried,” he recalls
thinking. “My life has validated this notion again and again.”
As the months ticked by, it became clear that Friedman’s
hunch was a good one. Contestants from around the world,
many of them twentysomethings with computer science back-
grounds, developed techniques for taking the 3D scans and
flattening them into more readable sheets. Some appeared to
find letters, then words. They swapped messages about their
work and progress on a Discord chat, as the often much older
classicists sometimes looked on in hopeful awe and some-
times slagged off the amateur historians.
On Feb. 5, Friedman and his academic partner Brent
Seales, a computer science professor and scroll expert,
revealed that a group of contestants had delivered transcrip-
tions of many more than four passages from one of the scrolls.
28 While it’s early to draw any sweeping conclusions from this
bit of work, Friedman says he’s confident that the same tech-
niques will deliver far more of the scrolls’ contents. “My goal,”
he says, “is to unlock all of them.”
Terrible things happened to the scrolls in the many
decades that followed. The scientif-ish attempts to loosen
the pages included pouring mercury on them (don’t do that)
and wafting a combination of gases over them (ditto). Some
of the scrolls have been sliced in half, scooped out and gener-
ally abused in ways that still make historians weep. The per-
son who came the closest in this period was Antonio Piaggio,
a priest. In the late 1700s he built a wooden rack that pulled
silken threads attached to the edge of the scrolls and could
be adjusted with a simple mechanism to unfurl the document
ever so gently, at a rate of 1 inch per day. Improbably, it sort
of worked; the contraption opened some scrolls, though it
tended to damage them or outright tear them into pieces. In
later centuries, teams organized by other European powers,
including one assembled by Napoleon, pieced together torn
bits of mostly illegible text here and there.
Today the villa remains mostly buried, unexcavated and
off-limits even to the experts. Most of what’s been found there
and proven legible has been attributed to Philodemus, an
Epicurean philosopher and poet, leading historians to hope
there’s a much bigger main library buried elsewhere on-site.
A wealthy, educated man like Piso would have had the clas-
sics of the day along with more modern works of history,
law and philosophy, the thinking goes. “I do believe there’s
a much bigger library there,” says Richard Janko, a University
of Michigan classical studies professor who’s spent painstak-
ing hours assembling scroll fragments by hand, like a jigsaw
puzzle. “I see no reason to think it should not still be there
and preserved in the same way.” Even an ordinary citizen

efore Mount Vesuvius erupted, the town of

Herculaneum sat at the edge of the Gulf of
Naples, the sort of getaway wealthy Romans
used to relax and think. Unlike Pompeii, which
took a direct hit from the Vesuvian lava flow,
Herculaneum was buried gradually by waves of
ash, pumice and gases. Although the process
was anything but gentle, most inhabitants had
time to escape, and much of the town was left intact under the
Seales and Friedman

hardening igneous rock. Farmers first rediscovered the town

in the 18th century, when some well diggers found marble stat-
ues in the ground. In 1750 one of them collided with the mar-
ble floor of the villa thought to belong to Senator Lucius
Calpurnius Piso Caesoninus, Caesar’s father-in-law who’s
known to historians today as Piso.
During this time, the first excavators who dug tunnels into
the villa to map it were mostly after more obviously valuable
artifacts, like the statues, paintings and recognizable house-
hold objects. Initially, people who ran across the scrolls,
some of which were scattered across the colorful floor mosa-
ics, thought they were just logs and threw them on a fire.
Eventually, though, somebody noticed the logs were often
found in what appeared to be libraries or reading rooms and
realized they were burnt papyrus. Anyone who tried to open
one, however, found it crumbling in their hands.
 Bloomberg Businessweek
from that time could have collections of tens of thousands
of scrolls, Janko says. Piso is known to have corresponded
often with the Roman statesman Cicero, and the apostle Paul
had passed through the region a couple of decades before
Vesuvius erupted. There could be writings tied to his visit
that comment on Jesus and Christianity. “We have about 800
scrolls from the villa today,” Janko says. “There could be thou-
sands or tens of thousands more.”
In the modern era, the great pioneer of the scrolls is Brent
Seales, a computer science professor at the University of
Kentucky. For the past 20 years he’s used advanced medical
imaging technology designed for CT scans and ultrasounds
to analyze unreadable old texts. For most of that time he’s
made the Herculaneum papyri his primary quest. “I had to,”
he says. “No one else was working on it, and no one really
thought it was even possible.”
Progress was slow. Seales built software that could
theoretically take the scans of a coiled scroll and unroll it
virtually, but it couldn’t handle a real Herculaneum scroll
when he put it to the test in 2009. “The complexity of what
we saw broke all of my software,” he says. “The layers inside
the scroll were not uniform. They were all tangled and mashed
together, and my software could not follow them reliably.”
By 2016 he and his students had managed to read the
Ein Gedi scroll, a charred ancient Hebrew text, by program-
ming their specialized software to detect changes in density
between the burnt manuscript and the burnt ink layered onto
it. The software made the letters light up against a darker back-
ground. Seales’ team had high hopes to apply this technique
to the Herculaneum papyri, but those were written with a dif-
ferent, carbon-based ink that their imaging gear couldn’t illu-
minate in the same way.
Over the past few years, Seales has begun experiment-
ing with AI. He and his team have scanned the scrolls with
more powerful imaging machines, examined portions of the
papyrus where ink was visible and trained algorithms on
what those patterns looked like. The hope was that the AI
would start picking up on details that the human eye missed
and could apply what it learned to more obfuscated scroll
chunks. This approach proved fruitful, though it remained
PHOTOGRAPH BY HELYNN OSPINA FOR BLOOMBERG BUSINESSWEEK
a battle of inches. The technology uncovered pieces of the
scrolls, but they were mostly unreadable. He needed another
breakthrough.
riedman set up Google alerts for Seales and the
papyri in 2020, while still early in his Rome
obsession. After a year passed with no news, he
started watching YouTube videos of Seales dis-
cussing the underlying challenges. Among other
things, Seales needed money. By 2022, Friedman
was convinced he could help. He invited Seales
to California for an event where Silicon Valley
February 12, 2024
types get together and share big ideas. Seales gave a short
presentation on the scrolls to the group, but no one bit. “I
felt very, very guilty about this and embarrassed, because
he’d come out to California, and California had failed him,”
Friedman says.
On a whim, Friedman proposed the idea of a contest to
Seales. He said he’d put up some of his own money to fund
it, and his investing partner Daniel Gross offered to match it.
Seales says he was mindful of the trade-offs. The
Herculaneum papyri had turned into his life’s work, and he
wanted to be the one to decode them. More than a few of his
students had also poured time and energy into the project
and planned to publish papers about their efforts. Now, sud-
denly, a couple of rich guys from Silicon Valley were barg-
ing into their territory and suggesting that internet randos
could deliver the breakthroughs that had eluded the experts.
More than glory, though, Seales really just hoped the
scrolls would be read, and he agreed to hear Friedman
out and help design the AI contest. They kicked off the
Vesuvius Challenge last year on the Ides of March. Friedman
announced the contest on the platform we fondly remem-
ber as Twitter, and many of his tech friends agreed to
pledge money toward the effort while a cohort of budding 29
papyrologists began to dig into the task at hand. After a cou-
ple of days, Friedman had amassed enough money to offer
$1 million in prizes, along with some extra money to throw
at some of the more time-intensive basics.
Friedman hired people online to gather the existing scroll
imagery, catalog it and create software tools that made it easier
to chop the scrolls into segments and to flatten the images out
into something that was readable on a computer screen. After
finding a handful of people who were particularly good at this,
he made them full members of his scroll contest team, pay-
ing them $40 an hour. His hobby was turning into a lifestyle.
The initial splash of attention helped open new doors.
Seales had lobbied Italian and British collectors for years to
allow him to do his first scans on their scrolls. Suddenly the
Italians were offering up two new scrolls for scanning to pro-
vide more AI training data. With Friedman’s backing, a team
set to work building precision-fitting, 3D-printed cases to pro-
tect the new scrolls on their private jet flight from Italy to a
particle accelerator in England. There they were scanned for
three days straight at a cost of about $70,000.
Seeing the imaging process in action drives home both the
magic and difficulty inherent in this quest. One of the scroll
remnants placed in the scanner, for example, wasn’t much big-
ger than a fat finger. It was peppered by high-energy X-rays,
much like a human going through a CT scan, except the result-
ing images were delivered in extremely high resolution (for the
real nerds: about 8 micrometers). These images were virtually
carved into a mass of tiny slices too numerous for a person to
count. Along each slice, the scanner picked up infinitesimal
 Bloomberg Businessweek
changes in density and thickness. Software was then used
to unroll and flatten out the slices, and the resulting images
looked recognizably like sheets of papyrus, the writing on
them hidden.
The files generated by this process are so large and difficult
to deal with on a regular computer that Friedman couldn’t
throw a whole scroll at most would-be contest winners. To be
eligible for the $700,000 grand prize, contestants would have
until the end of 2023 to read just four passages of at least 140
characters of contiguous text. Along the way, smaller prizes
ranging from $1,000 to $100,000 would be awarded for vari-
ous milestones, such as the first to read letters in a scroll or to
build software tools capable of smoothing the image process-
ing. With a nod to his open-source roots, Friedman insisted
these prizes could be won only if the contestants agreed to
show the world how they did it.
30 uke Farritor was hooked from the start.
Farritor—a bouncy 22-year-old Nebraskan who
often exclaims, “Oh, my goodness!”—heard
Friedman describe the contest on a podcast in
March. “I think there’s a 50% chance that some-
one will encounter this opportunity, get the
data, and get nerd-sniped by it, and we’ll solve
it this year,” Friedman said on the show.
Farritor, a computer science undergrad at the University of
Nebraska-Lincoln, thought, “That could be me.”
The early months were a slog of splotchy images. Then
Casey Handmer, an Australian mathematician, physicist and
polymath, scored a point for humankind by beating the com-
puters to the first major breakthrough. Handmer took a few
stabs at writing scroll-reading code, but he soon con-
cluded he might have better luck if he just stared at
the images for a really long time. Eventually he began
to notice what he and the other contestants have come
A cross-section of the scroll
to call “crackle,” a faint pattern of cracks and lines
analyzed by Farritor
on the page that resembles what you might see in the
mud of a dried-out lakebed. To Handmer’s eyes, the
crackle seemed to have the shape of Greek letters and
the blobs and strokes that accompany handwritten
ink. He says he believes it to be dried-out ink that’s
lifted up from the surface of the page.
The crackle discovery led Handmer to try
identifying clips of letters in one scroll image. In the
spirit of the contest, he posted his findings to the
Vesuvius Challenge’s Discord channel in June. At
the time, Farritor was a summer intern at SpaceX in
February 12, 2024
California. He was in the break room sipping a Diet Coke
when he saw the post, and his initial disbelief didn’t last long.
Over the next month he began hunting for crackle in other
image files: one letter here, another couple there. Most of
the letters were invisible to the human eye, but 1% or 2% had
the crackle. Armed with those few letters, he trained a model
to recognize hidden ink, revealing a few more letters. Then
Farritor added those letters to the model’s training data and
ran it again and again and again. The model starts with some-
thing only a human can see—the crackle pattern—then learns
to see ink we can’t.
Unlike today’s large-language AI models, which gobble up
data, Farritor’s model was able to get by with crumbs. For
each 64-pixel-by-64-pixel square of the image, it was merely
asking, is there ink here or not? And it helped that the out-
put was known: Greek letters, squared along the right angles
of the cross-hatched papyrus fibers.
In early August, Farritor received an opportunity to put
his software to the test. He’d returned to Lincoln to finish
out the summer and found himself at a house party with
friends when a new, crackle-rich image popped up in the con-
test’s Discord channel. As the people around him danced and
drank, Farritor hopped on his phone, connected remotely
to his dorm computer, threw the image into his machine-
learning system, then put his phone away. “An hour later, I
drive all my drunk friends home, and then I’m walking out
of the parking garage, and I take my phone out not expect-
ing to see anything,” he says. “But when I open it up, there’s
three Greek letters on the screen.”
Around 2 a.m., Farritor texted his mom and then
Friedman and the other contestants about what he’d found,
 Bloomberg Businessweek
fighting back tears of joy. “That was the moment where I was
like, ‘Oh, my goodness, this is actually going to work. We’re
going to read the scrolls.’”
Soon enough, Farritor found 10 letters and won $40,000
for one of the contest’s progress prizes. The classicists
reviewed his work and said he’d found the Greek word for
“purple.”
Farritor continued to train his machine-learning model
on crackle data and to post his progress on Discord and
Twitter. The discoveries he and Handmer made also set
off a new wave of enthusiasm among contestants, and
some began to employ similar techniques. In the latter
part of 2023, Farritor formed an
alliance with two other contes-
tants, Youssef Nader and Julian
Schilliger, in which they agreed
to combine their technology and
share any prize money.
In the end, the Vesuvius
Challenge received 18 entries for
its grand prize. Some submis-
sions were ho-hum, but a handful
showed that Friedman’s gamble
had paid off. The scroll images that
CLOCKWISE FROM TOP: COURTESY VESUVIUS CHALLENGE. PHOTOGRAPHS BY SHAWN BRACKBILL FOR BLOOMBERG BUSINESSWEEK (2)
were once ambiguous blobs now
had entire paragraphs of letters
lighting up across them. The AI sys-
tems had brought the past to life.
“It’s a situation that you practically
never encounter as a classicist,”
says Tobias Reinhardt, a professor
of ancient philosophy and Latin lit-
erature at the University of Oxford.
“You mostly look at texts that have been looked at by some-
one before. The idea that you are reading a text that was last
unrolled on someone’s desk 1,900 years ago is unbelievable.”
A group of classicists reviewed all the entries and did,
in fact, deem Farritor’s team the winners. They were able
to stitch together more than a dozen columns of text with
entire paragraphs all over their entry. Still translating, the
scholars believe the text to be another work by Philodemus,
one centered on the pleasures of music and food and their
effects on the senses. “Peering at and beginning to tran-
scribe the first reasonably legible scans of this brand-new
ancient book was an extraordinarily emotional experience,”
says Janko, one of the reviewers. While these passages aren’t
particularly revelatory about ancient Rome, most classics
February 12, 2024
produced by Farritor,
Nader and Schilliger
Image of Greek text
scholars have their hopes for what might be next.
There’s a chance that the villa is tapped out—that there are
no more libraries of thousands of scrolls waiting to be dis-
covered—or that the rest have nothing mind-blowing to offer.
Then again, there’s the chance they contain valuable lessons
for the modern world.
That world, of course, includes Ercolano, the modern town
of about 50,000 built on top of ancient Herculaneum. More
than a few residents own property and buildings atop the villa
site. “They would have to kick people out of Ercolano and
destroy everything to uncover the ancient city,” says Federica
Nicolardi, a papyrologist at the University of Naples Federico II.
Farritor at home in Lincoln with a papyrus scan
31
Barring a mass relocation, Friedman is working to refine
what he’s got. There’s plenty left to do; the first contest
yielded about 5% of one scroll. A new set of contestants, he
says, might be able to reach 85%. He also wants to fund the
creation of more automated systems that can speed the pro-
cesses of scanning and digital smoothing. He’s now one of the
few living souls who’s roamed the villa tunnels, and he says
he’s also contemplating buying scanners that can be placed
right at the villa and used in parallel to scan tons of scrolls per
day. “Even if there’s just one dialogue of Aristotle or a beau-
tiful lost Homeric poem or a dispatch from a Roman general
about this Jesus Christ guy who’s roaming around,” he says,
“all you need is one of those for the whole thing to be more
than worth it.” <BW>
 TARRED
Bloomberg Businessweek

An excerpt from Battle for the

Bird shows how Jack Dorsey
tried to hand Twitter off to Elon Musk
and everything went south

32

AND
By Kurt Wagner
Illustrations by Alex Kiesling

FEATHERED
February 12, 2024
 Bloomberg Businessweek
lon Musk was growing irritable
E
on Friday evening, Nov. 4, 2022.
It had been just over a week since
he’d closed his $44 billion deal
for Twitter, and advertisers were
bailing on the company in droves. Many
brand-conscious marketers were wor-
ried that Twitter’s historical reputa-
tion for nastiness would return as a
result of Musk’s pledge to defeat the
“woke mind virus,” his derisive
term for the censorious atti-
tude he felt had sucked
the joy out of his favor-
ite social network.
34
Musk said the way to save Twitter
was to restore what he saw as freedom
of speech. He hadn’t actually changed
any of Twitter’s speech policies by that
Friday, but the list of advertisers who
had paused their Twitter ads already
included United Airlines, REI and
Volkswagen and was steadily growing.
This was a major concern, considering
Twitter made roughly 90% of its reve-
nue from advertising.
Musk told his staff he couldn’t under-
stand why things had already gone side-
ways. He’d spent his first full week as
Twitter’s “Chief Twit” kowtowing to its
most important advertising partners.
He’d flown his Gulfstream to New York
for a slate of meetings that included
advertising industry heavy hitters like
WPP’s Mark Read and Horizon Media’s
Bill Koenigsberg. NFL Commissioner
Roger Goodell had visited Twitter’s
office in Chelsea, where Musk prom-
ised him in person that Twitter would
still be a safe place for the league’s valu-
able highlight videos.
Now Musk was demanding answers.
He called Robin Wheeler, his top sales
executive, and asked
how bad the business
was. Wheeler had to be delicate. In a
meeting a few days earlier, her pre-
decessor had pushed back on Musk’s
decision to tweet a joke about Donald
Trump, and had been escorted out of
the building by security just 24 hours
later. It was clear Musk still didn’t appre-
ciate just how anxious advertisers were
about the new direction he was taking
Twitter. He also seemed oblivious to
how his own behavior was contribut-
ing to this feeling. One of the things that
made Musk such a popular Twitter user
was his lack of filter, but that was prov-
ing to be a liability now that he was the
face of the operation.
Wheeler tried to explain this to her
new boss by bringing up a tweet he’d
posted just a few hours earlier in which
he’d threatened to go “thermonuclear”
on advertisers who stopped spend-
ing money on Twitter ads. “You don’t
want to go to war with advertisers,”
she warned.
“Oh, I will go to war,” he replied.
“And I win wars.”
February 12, 2024
Wheeler also told Musk
some Twitter users had
begun harassing advertisers
who were still running ads
on the service in an
attempt to get them
to stop. Musk was
incensed. Soon
after his call with
Wheeler ended,
he sent her a text
and included Yoel
Roth, Twitter’s
head of Trust and
Safety, who man-
aged the teams in
charge of enforcing
Twitter ’s rulebook .
“Yoel, please suspend all
Twitter accounts that are
engaged in harassment of our
advertisers to get them to stop
advertising on Twitter,” he wrote.
“That is not OK.”
Pressuring an advertiser to stop
spending money was certainly not
against Twitter’s rules—it wasn’t even
unusual. Suspending Twitter users for
doing so would be impossible to justify
under the company’s rules, and it cer-
tainly didn’t align with Musk’s stated
pledge to uphold free speech. But Musk
made clear that if the company didn’t
have the rules he needed to exert his
will, he’d create them. He then called
Roth shortly after sending the text and
spent the brief conversation rant-
ing that trolling Twitter’s advertis-
ers was akin to blackmailing the
company. “Blackmail is against
our rules now,” he declared.
Roth hung up and contem-
plated quitting right then and there.
Instead, he called Wheeler and asked
her to talk Musk off the ledge. Wheeler
succeeded, and Musk quickly moved on
PHOTOS: BLOOMBERG (4), ALAMY (2), GETTY IMAGES (1)
to other problems. But the strains that
have defined Musk’s tenure ever since
were already emerging in those first few
weeks on the job, according to several
people familiar with Musk’s interactions
and decisions at the time, who spoke
on the condition of anonymity to avoid
retaliation. Within that first week, he
was learning how his stated principles
Bloomberg Businessweek February 12, 2024

of absolute free speech didn’t mix well
with an advertising business. And the
people trying to help him implement
his vision were learning how quickly the
new boss would abandon those princi-
ples once they didn’t
entity behind it, it will be attacked.”
Dorsey’s own tenure at Twitter
hadn’t always gone smoothly, and
he believed that if anyone could fix
Twitter’s problems, it was Musk. But
if Dorsey’s analysis of Twitter’s flawed
about Twitter on Bluesky, a competing
social network he’d helped envi-
sion long before Musk ever entered
the picture. Jason Goldman, an early
Twitter board member, asked Dorsey
a simple but loaded question: “Do you

“You work in his favor.

Nobody under-
business model was spot on, his solu-
tion has missed the mark. Musk
think Elon has proven to be the best
possible steward” for Twitter?

don’t want engulfed Twitter in chaos even before

he took over. After agreeing to buy the
company in April 2022, Musk had a
Dorsey, as he tends to do, answered
earnestly. “No,” he wrote back. “Nor do
I think he acted right after realizing his

to go to war
stood the tension
inherent in run-
ning Twitter
change of heart
and tried to tor-
timing was bad. Nor do I think the board
should have forced the sale.
“It all went south.”
with advertisers.”
better than Jack

Dorsey, who’d
helped start the company, served two
stints as chief executive officer and
played a role in orchestrating Musk’s
acquisition. As the deal with Musk
came together, Dorsey, who still sat on
Twitter’s board, texted and spoke with
pedo his own deal. He spent much of
the year fighting with Twitter in court.
When he abandoned his legal fight and
reluctantly closed the deal that October,
he immediately fired half the employ-
ees, including most of the executive
T
here was already plenty of
upheaval at Twitter by the
time Musk showed up with
$44 billion in early 2022. In
the two years leading up
to the acquisition, activ-
ist investors tried to push Dorsey out;

“Oh, I will go
him regularly, team Dorsey Twitter permanently banned a sitting
according to pri- had hired and US president; the company set a series
vate messages worked with of lofty financial goals it never came

to litigation over to war.

included in court documents related for years. close to hitting; and Dorsey mentally
checked out before resigning as CEO in
35

the acquisition.
Dorsey shared his And I win wars”
concerns about Twitter’s reliance on This bumpy start was a taste of
advertising revenue and told Musk the things to come. About 16 months into
company would be better served if it the Musk era, the company’s revenue is
was no longer publicly traded. “It can’t now just a fraction of what it was before
have an advertising model,” Dorsey tex- he arrived. Musk’s plan to restore free
ted in March 2022, weeks before Musk speech to the service—which he pre-
first made his offer. “Otherwise you sented as a straightforward hands-off
have a surface area policy—has come with all kinds of aster-
that governments isks and stumbles.
and advertisers will Dorsey has acknowledged that his
try to influence attempt to hand off the company has
and control. If it been bungled. In April 2023, he spent
has a centralized some time responding to questions
November 2021. The conditions were
ideal for someone like Musk to swoop
in and take advantage.
Dorsey was eager to woo Musk, a
business leader he greatly admired—
and someone he often referred to as
his favorite tweeter. Dorsey had tried
unsuccessfully to get Musk to give a
companywide pep talk in 2018, and
then succeeded in getting him to do so
in 2020. In 2021 Dorsey visited Musk
at his Texas rocket launch facility,
Starbase, and brought along his friend,
the music producer Rick Rubin.
Dorsey and Musk kept an open

WHO’S HELD THE TOP SEAT AT TWITTER

Jack Dorsey Ev Williams Dick Costolo Jack Dorsey Parag Agrawal Elon Musk Linda Yaccarino
2007-2008 2008-2010 2010-2015 2015-2021 2021-2022 2022-2023 2023-present
 Bloomberg Businessweek
dialogue as the
acquisition was
coming together,
and Dorsey ulti-
mately retained
his nearly $1 billion
stake in Twitter when Musk took it pri-
vate. When the terms of the deal were
finalized, Dorsey cheered publicly, and
congratulated Musk privately. “I basi-
cally followed your advice!” Musk tex-
“Products that
ted Dorsey just minutes after the deal
was announced in April 2022. “I know,”
Dorsey replied, “and I
appreciate you.”
The day after, Dorsey
facilitate human
sent Musk a private mes-
sage in hopes of setting
connection and
up a call with Parag Agrawal,
whom Dorsey had hand-picked
as his own replacement as CEO
communication
require a
a few months earlier. “I want to make
sure Parag is doing everything possi-
different type of
ble to build towards your goals until
close,” Dorsey wrote to Musk. “He is
36 really great at getting things done when
tasked with specific direction.”
Dorsey drew up an agenda that social-emotional
included problems Twitter was working
on, short-term action items and long-
term priorities. He sent it to Musk for
intelligence”
review, along with a Google Meet link.
“Getting this nailed will increase veloc-
ity,” Dorsey wrote. He was clearly hop-
ing his new pick for owner would like
his old pick for CEO.
This was probably wishful think-
ing. Musk was already peeved
with Agrawal, with whom he’d
had a terse text exchange
weeks earlier after Agrawal
chastised Musk for some
of his tweets. Musk had
also unsuccessfully
petitioned Agrawal
to remove a Twitter
account that was
tracking his private
plane; the bil-
lionaire started
buying Twitter
shares shortly after
Agrawal denied
his request.
So it was no surprise
that the call Dorsey arranged
was a disaster. Agrawal’s vision for
Twitter fell flat with his soon-to-be boss.
There was a particularly uncomfortable
moment that centered on Vijaya Gadde,
Twitter’s top lawyer and pol-
icy exec, who had been deeply
involved in decisions to ban
Trump and block a news story about
Joe Biden and his son Hunter in the
final days of the 2020 presidential elec-
tion. Musk saw Gadde as representing
everything he disliked about Twitter’s
speech policies, and he demanded
that Agrawal fire her. Agrawal refused.
It wasn’t clear if such an action would
be appropriate, given that Musk didn’t
own the company yet and wasn’t sup-
posed to be making demands.
Dorsey didn’t jump in to defend
Gadde, with whom he’d worked for
the better part of a decade, nor did
he advocate for his colleagues after-
ward. “You and I are in complete agree-
ment,” Musk wrote to Dorsey after the
call ended. “Parag is just moving far
too slowly and trying to please people
who will not be happy no matter what
he does.”
“At least it became clear that you
can’t work together,” Dorsey replied.
“That was clarifying.”
February 12, 2024
The phone call telegraphed Musk’s
willingness to clean house. Once he for-
mally took over, he fired people on a
whim, bad-mouthed Twitter’s business
and publicly attacked those employees
who disagreed with him. Musk elimi-
nated the Covid-era policy of granting
mental health days and required every-
one to be back in the office full time.
He also abandoned the system
Twitter used to verify prom-
inent users and eliminated
many of the company’s fact-
checking operations. Twitter had
leaned hard into fact-checking and
other content moderation policies
in 2020 as the rise of Covid-19 and
the contentious US presidential elec-
tion led to widespread mis-
information on the service;
Musk quickly reversed that
approach, offering users more freedom
to say whatever they wanted but dam-
aging Twitter’s rep-
utation as the go-to
place for breaking
news in the process.
For all his flaws as a businessman,
Dorsey had made working at Twitter
feel special, preaching to employees
the power of the service and its place
in the world. Many Twitter employees
accepted less money than they could
have made at other major tech com-
panies such as Meta Platforms Inc. or
Alphabet Inc.’s Google because Dorsey
helped instill the sense that Twitter
was more than another company sell-
ing targeted ads. Dorsey routinely
told Twitter employees that he loved
them, and for many years those feel-
ings were reciprocated.
That connection was essentially sev-
ered as Dorsey held firm in his support
for Musk while the new owner disman-
tled the company. While Dorsey didn’t
COURTESY SIMON & SCHUSTER
directly object to Musk’s approach, he
acknowledged its impact. Shortly after
Musk fired half of Twitter’s employees
just one week after taking over, Dorsey
sent a melancholy tweet of apology. “I
Bloomberg Businessweek
am grateful for, and love, everyone who
has ever worked on Twitter,” he added.
“I don’t expect that to be mutual in this
moment … or ever … and I understand.”
lot has happened since
A
Musk first walked into
Twitter’s San Francisco
headquarters carrying
a porcelain sink and a
plan to turn the company
inside out. Working with the skeleton
crew that remains after laying off or
running off most of the nearly 8,000
employees, he’s aiming to transform
Twitter into an “everything app” where
people can shop, tweet, find dates and
manage their money.
Musk changed Twitter’s official name
to X in July 2023. “The Twitter name
made sense when it was just 140 charac-
ter messages going back and forth—like
birds tweeting,” he wrote that month.
As an everything app, X will be some-
thing different entirely, Musk has said,
and “so we must bid adieu to the bird.”
In the meantime, X’s advertising
business continues to suffer from his
commitment to tweeting whatever he
wants whenever he wants. In April,
Musk changed his Twitter username
to “Harry Bolz.” In July he called Meta
CEO Mark Zuckerberg a “cuck” and
then challenged him to a “literal dick
measuring contest.”
In November he posted support for
an antisemitic tweet, which was the
final straw for some major advertisers
including Apple Inc. and Walt Disney
Co. Musk offered an apology from the
conference stage at DealBook a few
days later, but didn’t put much effort
into coming off as particularly apolo-
getic. “Go f--- yourself,” he announced
to boycotting advertisers just minutes
later from that same stage.
Musk’s approach seems self-
defeating, given that advertising
still makes up roughly 75% of his
company’s revenue. Unlike Meta
and Google, which have enormous
direct-response advertising businesses
whose clients are often small busi-
nesses, Twitter is mostly dependent
on brand advertising—the type of ads
February 12, 2024
that stalwarts such as Coca-Cola, Apple facilitate human connection and
and Disney use to shape their public communication require a different type
image without necessarily expecting of social-emotional intelligence.”
immediate sales.
Before the antisemitic tweet and orsey rarely t weets
D
the DealBook conference, X’s target anymore, and when he
for advertising revenue in 2023 was does, it’s often related
about $2.5 billion, or just over half to his personal interests,
what the company made in the last which include Bitcoin,
full year before Musk bought it, accord- music and supporting the
ing to people familiar with X’s busi- presidential campaign of Robert F.
ness, who didn’t want to be named as Kennedy Jr. It’s easy to see, though,
they weren’t authorized to speak pub- that he hasn’t gotten what he envi-
licly for the company. At the DealBook sioned when he encouraged Musk to
conference, he buy his company.
blamed advertis- Dorsey made a lot of the idea that
ers who were reluc- one of Twitter’s flaws was it had too
tant to spend on X for much power and control over global
the company’s finan- speech, and that the world would run
cial issues. “What this better if such power was distributed.
advertising boycott is When it comes to what is said on
gonna do is it’s gonna kill X, there’s still a company holding
the company,” Musk said. the power, but that company is
“And the whole world will controlled by the richest man
know that those advertisers killed in the world with no board of
the company.” directors, no public share- 37
Of course, it won’t be Disney’s fault holders and seemingly no
if X fails. That will fall on Musk’s shoul- concerns about creating
ders, because of his unwillingness to globally significant speech
adjust to the realities of running an policies on a whim.
advertising business. X operates dif- In an interview with
ferently from companies such as Tesla the online political show
Inc. and SpaceX, where he’s had such Breaking Points in June,
success. A global speech platform can’t Dorsey admitted that the
be fixed or perfected simply by writ- Musk era had gone wrong
ing better code, improving manufac- even before it officially started, when
turing processes or pushing employees Musk accused the company of lying
to work longer hours. about how many users it had and Twitter
“I learned a ton from responded by suing him.
watching Elon up close—the “I think it set up a dynamic
good, the bad and the ugly,” where he had to be very
tweeted Esther Crawford, a hasty, he had to be impatient,
product executive who sur- he had to move as quickly as
vived a few months under possible with features even
Musk before she was laid off if they weren’t fully thought
in a round of cost cuts last out,” Dorsey said. “It all
February. “His boldness, looked fairly reckless.”
passion and storytelling is Still, Dorsey maintained
inspiring, but his lack of pro- something that many of his
Adapted from Battle for
cess and empathy is painful. the Bird: Jack Dorsey,
former colleagues have long
“Elon has an excep- Elon Musk, and the since abandoned: hope. “I do
$44 Billion Fight for
tional talent for tack- Twitter’s Soul, published
have confidence that he’ll fig-
ling hard physics-based by Atria Books, an imprint ure it out,” he continued. “I
of Simon & Schuster
problems,” she contin- LLC. Copyright © by
own 3% of this new company,
ued, “but products that J. Kurt Wagner so I’m supportive.” <BW>
 HOW TO BUILD A

38

Ballmer tours
the Intuit
Dome, which
will open for
the 2024-25
NBA season
$2 BILLION
THE FUTURE
HOME OF THE
LA CLIPPERS
WILL BE STEVE
BALLMER’S ODE
TO BASKETBALL.
IT WILL ALSO
HAVE MORE
THAN 1,000
TOILETS

BY IRA
BOUDWAY

PHOTOGRAPHS
BY PHILIP
CHEUNG

NBA PALACE
39
 Bloomberg Businessweek
STEVE
Ballmer’s suite at Crypto.com Arena in Los Angeles is a bunker
beneath the stands, across the hall from the locker room for
the Clippers, the NBA team he bought for $2 billion in 2014.
It’s a low-lit room with a high-top table, a row of dark couches
and three TVs along the far wall. There’s no view of the court,
which is fine with Ballmer. During games he rarely strays from
his first-row seat along the baseline. On a Tuesday night in
December, two hours before tipoff against the Sacramento
Kings, Ballmer is sitting at the table explaining how happy he
is to be leaving this place next season.
“We can’t establish a sense of identity around here,” he
says of the arena, which the Clippers share with the NBA’s
Lakers, the NHL’s Kings and the WNBA’s Sparks, as well as
about 50 concerts per year. On game nights the Clippers hang
portraits of their current players over the Lakers’ champion-
ship banners. (There’s a lot to cover: The Lakers have won
17 NBA titles, tied for the most with the Boston Celtics. The
Clippers have won zero.) “I think most people would say we’re
in the Lakers’ building,” Ballmer says.
40 Many might also say they’re in the Lakers’ city. For three
decades after former owner Donald Sterling moved the Clippers
from San Diego to LA in 1984—a span in which the Lakers won
eight championships with Hall of Famers including Magic
Johnson, Shaquille O’Neal and Kobe Bryant—the team was a
punchline, with just five winning seasons and mostly anon-
ymous players. The franchise had begun to improve by the
time Ballmer took over, with the “Lob City” era of Blake Griffin
and Chris Paul underway. But in the popular imagination, the
Clippers remain LA’s “other” team.
Since moving into Crypto.com, then known as the Staples
Center, in downtown LA in 1999, the Clippers have also been
the third tenant in the building, often left to make do with
weekend matinees and other suboptimal slots in the sched-
ule after the Kings and Lakers have taken dibs. That’s set
to end next season, when the Clippers move into the Intuit
Dome, a 17,500-seat arena under construction about 10 miles
southwest, in Inglewood.
For the past nine years, since he began scouring LA for
a plot of land, Ballmer has poured thousands of hours into
building a home for the Clippers. He’s finessed state and local
politicians, paid hundreds of millions of dollars to brush aside
a legal challenge from a rival NBA owner and labored over
every detail, from legroom and acoustics to locker rooms
and toilets. The result is a venue, set to open in August, that
Ballmer calls an “homage to basketball.”
Everything about the Intuit Dome—its dramatic exo-
skeleton, designed to evoke a basketball net as a ball swishes
through it; the 1,160 toilets and urinals; the 199 countdown
clocks throughout the concourses; the 44,000-square-foot,
February 12, 2024
halo-shaped LED board; a floor-to-ceiling bank of 4,500 seats
on one baseline known as the Wall—is intended to create an
environment where fans pay rapt attention to the game and
lend frenzied support to the home team.
The most expensive basketball arena ever built, the dome
is both an embodiment of Ballmer’s lifelong passion for the
sport and a large-scale experiment in behavioral psychology.
“There are stadiums that are built more as places for casual
conversation,” he says, “but I’m saying, ‘Hey, this is where
you go if you’re about the game.’ ”
As anyone who’s attended a game or concert in the past
15 years can attest, the smartphone has had a profound effect
on how people interact—or don’t—at live events. The show on
the floor struggles to compete with screens in hands. Over that
same span, sports teams have ramped up efforts to entice big
spenders with lavish dining options and private spaces. The
result, between the fans buried in their phones and those
ensconced in clubs, is often a lifeless space. The Intuit Dome
is Ballmer’s attempt to make arenas rock again.
“It’s a stark departure from what has become the status
quo,” says Ryan Sickman, global leader for the sports practice
at architecture firm Gensler, which wasn’t part of the project.
“It could almost bring a hearkening back to the yesteryear of
fandom in a modern building.”
Since voters in California have repeatedly proved unwill-
ing to fund arena and stadium projects with taxpayer money,
Ballmer is shouldering the cost of his basketball Xanadu him-
self. “I’ll just say it’s well north of $2 billion,” he says when
a Bloomberg Businessweek reporter asks about the cost so far.
“And that’s primarily your money?”
“No, no, it’s not,” he deadpans.
“It’s all my money.”
At 67 years old, almost a decade
into his tenure as Clippers owner,
Ballmer hasn’t changed much
from the big, boisterous, bald-on-
top software executive who spent
34 years at Microsoft Corp., the last
14 as chief executive officer, helping
to build the company into a tech
colossus and amassing a personal
fortune now worth about $140 bil-
lion. He bought the team as a (very
expensive) retirement hobby a few
months after stepping down from
Microsoft. While he leaves most
of the day-to-day decisions to the
Clippers’ front office, he’s devoted
himself to the arena project in all
of its minutiae. “I had a real view of
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what I wanted it to be,” he says, “as
clear a view as anything I worked
on at Microsoft.”
At the groundbreaking in 2021,
in a variation on his infamous
 Bloomberg Businessweek February 12, 2024

“Developers! Developers! Developers!” chant from the stage He’s only slightly more subdued in his suite at Crypto.com
at a 2006 Microsoft conference, Ballmer waxed lyrical about as he describes the project. Dressed in a gray, microchecked
the Intuit Dome’s copious plumbing. “I’ve become a real business-casual shirt that wouldn’t be out of place at a Microsoft
obsessive about toilets,” he told the assembled grandees. product launch, he punctuates his sentences with staccato
“Toilets, toilets, toilets.” bursts of volume, arm waves, hand claps and table pounds:
“We got to have a
point of view,” he
says. “What do we
stand for? What are
we about [pound]?
We’re about bas-
ketball [pound].
Hardcore [pound].
We’re [pound] about
basketball [pound].”

THE INTUIT DOME

sign—big, blue, sans-
serif letters hung on
the exterior of the
arena—went up in
early December, a
few days before this
reporter donned a
safety vest, boots
and a helmet for 41
a tour. (The finan-
cial software com-
pany spent more
than $500 million in
2021 for the build-
The exterior of the Intuit
Dome (above) is designed ing’s naming rights
to evoke a basketball net
as a ball swishes through
for 23 years.) About
it; the Clippers’ center eight months from
court logo (left)
opening day, the
site is a cacophony
of hammer blows, forklift beeps and metal siz-
zling under welding torches. Although it isn’t
finished, with no court, seats or toilets in sight,
it’s far enough along to imagine what it will be.
The NBA has already decided to bring its All-Star
Game to the arena in 2026, the first time the
event has been awarded to an unopened venue,
and organizers of the 2028 Summer Olympics
plan to use it for basketball.
With the court level set below ground, the
dome’s roof strikes a low profile beneath the
swirling basketball-net membrane. Out front,
still mostly a dirt lot, will be the plaza, with
a full-size outdoor basketball court, a 75-foot
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video screen beneath a band shell, a team store

and an amphitheater-style staircase for selfies.
From the plaza fans will split, with those who
have seats in the lower bowl entering from
street level and those in the upper bowl
 Bloomberg Businessweek
taking a long escalator that overlooks the Clippers’ on-site
practice facility to the terrace level.
Intuit is designed so fans in every section walk down to their
seats, rather than making those in the nosebleeds turn away
from the court to go up, a concept the Clippers borrowed from
European soccer stadiums. “Even if you’re sitting in the very
last row, you’re walking toward what you are here for,” explains
the day’s tour guide, Gillian Zucker, the Clippers’ president of
business operations, as she navigates the construction debris
and takes a spot in what will be one of the back rows.
Zucker, a 54-year-old New Jersey native, came to the
Clippers in 2014, shortly after Ballmer took over. She’d spent
most of her career in auto racing, including nine years run-
ning the Auto Club Speedway east of LA. During one of her
job interviews with Ballmer, he told her the Clippers weren’t
the place to come if she was looking for infrastructure proj-
ects. “If you think we’re building an arena, and that is why
you want this, forget it,” she
Ballmer and Zucker recalls him saying.
42
February 12, 2024
Ballmer’s purchase of the team had come together
suddenly. In spring 2014, gossip site TMZ published an audio
recording of then-owner Sterling making racist comments to a
mistress. Within days, NBA Commissioner Adam Silver issued
a lifetime ban and urged the league’s other owners to force a
sale of the team. Ballmer, recently retired from Microsoft, pre-
sented Sterling’s wife, Shelly, with a $2 billion bid—almost four
times the previous record for an NBA team—and she accepted.
By August, after her husband’s attempt to block the sale had
failed, the Clippers belonged to Ballmer.
A lifelong basketball fan who coached one of his sons’
third-grade youth teams and played in pickup games at
Microsoft, Ballmer had pursued previous attempts to buy
into the NBA—in Seattle, Sacramento and Milwaukee—all of
which hinged upon building or renovating an arena. When
the Clippers became available, he was excited to nab a team
without such complications. “The Sterling stuff happens,”
he says, “and I said, ‘Hey! I get to go where I don’t have to
worry about arenas.’ ”
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 Bloomberg Businessweek
But after a few months of sharing the Staples
Center, he told Zucker it was time for the Clippers “ANYTIME HE
to find a place of their own. By summer 2015 they
were hunting for property. Zucker began travel- STARTS A SENTENCE
ing the world, visiting almost a hundred sports
and music venues—from college field houses WITH ‘WOULDN’T
to NFL stadiums to Australian rules football
pitches—to bring back the best ideas. IT BE COOL,’ YOU
THE INTUIT DOME SITS ON A 22-ACRE KNOW THAT YOU’RE
plot about 2 miles east of Los Angeles
International Airport, in south Inglewood. The IN FOR SOMETHING
city bought a piece of the land decades ago, with
the help of grant money from the Federal Aviation
Administration, and demolished the houses there
AMAZING”
as part of a program to move people away from
noise pollution. When Ballmer and the Clippers
came across it, the city was leasing some of the lot
to the Madison Square Garden Co. to use as over-
flow parking for the Forum, its
newly renovated concert venue a mile north.
“I said to myself, ‘This is going to be
good,’ ” Inglewood Mayor James Butts Jr.
remembers thinking when the Clippers
called. Since taking office in 2011, Butts has
made sports the centerpiece of Inglewood’s
redevelopment. The Forum, home to the
Lakers and Kings from its opening in 1967
until their move downtown 32 years later,
was dormant and in disrepair. MSG bought
it in 2012 for $23.5 million and spent two
years and $100 million renovating it. Shortly
thereafter, Stan Kroenke, owner of the NFL’s
recently relocated LA Rams, broke ground on
SoFi Stadium, a more than $5 billion venue
just to the south that would become home to
both the Rams and Chargers.
When the Clippers inquired about build-
ing an arena on the south side of SoFi, Butts
saw a chance to further Inglewood’s renais-
sance as the “City of Champions.” MSG,
with New York Knicks owner James Dolan
as chairman, was less thrilled about the
idea of another venue going up a few blocks
away from the Forum. Since Ballmer and the
Clippers planned to book concerts on nights
when the team was away, MSG saw it as an
invasion of its turf.
After the Clippers and Inglewood for-
mally announced their plan in 2017, MSG
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unleashed a barrage of lawsuits seeking to
block it. In one the company accused Butts
of tricking it into giving up its lease by saying
he wanted the land for a technology park—
an allegation he denied. Butts’ successful
February 12, 2024
reelection bid in 2018 became a proxy war in the arena fight,
with Ballmer and his development company, Murphy’s Bowl,
donating more than $440,000 to his campaign and to a polit-
ical action committee supporting him, while MSG backed his
challenger with more than $700,000.
MSG also sued California Governor Gavin Newsom and 43
the state’s budget committee over a bill that fast-tracked the
environmental review process for the Clippers’ arena and
backed a pair of lawsuits brought by a renters’ rights group.
Whatever the merits of those challenges, MSG appeared to
be trying to run out the clock on the Clippers, whose lease
with Crypto.com Arena owner AEG expires later this year.
(MSG declined to comment.)
Instead of waiting for the legal process to play out, Ballmer
made MSG an offer it couldn’t refuse. In May 2020, a moment
when its parking lot was being used as a Covid-19 testing site,
he paid $400 million to buy the Forum. As part of the deal,
MSG withdrew its legal challenges to his arena plans. “It was
a part of making sure we could be in [the new arena] in 2024,”
Ballmer says of buying the almost 60-year-old venue for more
than 15 times what MSG had paid.
Still, he says, the deal wasn’t purely a matter of remov-
ing roadblocks to a new home for the Clippers. The Forum—
which became the Kia Forum in 2022 after a naming rights
deal with the Korean automaker—gives Ballmer the ability to
book concerts on nights when the Clippers are in town. “It’s
a good enough profit stream that it might have made sense,”
he says, “even despite the high price.”
As the wealthiest owner in US sports, and currently the
sixth-richest person on the planet according to the Bloomberg
Billionaires Index, Ballmer can afford to overpay for what he
wants. Plenty of pundits suggested he’d done as much when
he bought the Clippers for $2 billion. The then-record sum
has been eclipsed four times in the decade since, however, by
buyers of the Houston Rockets ($2.2 billion), Brooklyn Nets
 Bloomberg Businessweek February 12, 2024

($3.3 billion), Phoenix Suns ($4 billion) and Dallas Mavericks of a college field house, it leaves less room for corporate
($3.5 billion). The Clippers are now worth almost $4.6 billion, suites. Intuit has only 46 of them around its bowl, compared
per the latest NBA franchise valuations from news site Sportico. with 178 at Crypto.com. And even these premium spaces are
Does Ballmer feel vindicated? “Yes,” he says with a shrug, engineered for maximum intensity, with the top row of seat-
taking out his phone (an iPhone, for the record) and open- ing for each suite set near the ceiling, so fans won’t have a
ing the calculator app to explain how he evaluates his view of the court from the dining areas. They’ll have to go
investment. A typical index fund, he estimates, would have back out to their seats.
returned about 8% annually over the last 10 years—he plugs Underneath the stands on the baseline opposite the Wall
in “1.08^¹0,” taps the equal sign and gets 2.15—meaning a dol- are four subterranean luxury boxes, cabanas, as the Clippers
lar invested then would be $2.15 today. At a $4.6 billion val- call them, where fans can nosh a few steps from their third-
uation, the Clippers have only slightly outperformed the row seats—not unlike Ballmer’s bunker arrangement at
market. “Microsoft stock sure would have done better,” Crypto.com. Fans in some sideline sections of the lower bowl
Ballmer says, erupting in laughter. “I’m not saying I did badly. will likewise be able to retreat down to private, floor-level
I clearly didn’t overpay. But you can’t look at it as the steal dining spaces called bungalows. The suites, cabanas and bun-
of the century.” galows will all be outfitted with countdown clocks to show
With the Intuit Dome, Ballmer is once again spending what- fans when a timeout or other break in the action is set to end,
ever it takes. In addition to the $400 million for the Forum, so they can hustle back to their seats. Clocks will also be put
he’s committed $100 million to a community benefit plan for up throughout the concourses. “Always clock, clock, clock,
Inglewood to fund affordable housing, youth programs and clock everywhere,” Ballmer says.
other civic needs. Throughout the arena’s design and construc- His fixation on toilets? Also about keeping fans in their
tion, he’s spent extra to fulfill his vision of a hoops cathedral. seats, rather than standing in line, during the game. Intuit
After seeing a full-size basketball court in the lobby of the
Gainbridge Fieldhouse in Indianapolis, where the NBA’s Pacers
and WNBA’s Fever play, Ballmer decided that his arena needed
one, too, and that it should have wooden bleachers. “Turns
44 out they don’t make wooden bleachers anymore,” Zucker says,
pointing out the space where Intuit’s indoor fan court, with
custom-built wooden bleachers, will go. “You could have a
prom or graduation or unveil a new product in here, or play
your Tuesday night pickup game.”
The line between thoughtful detail and extravagance
is always thin. At times the Intuit Dome seems to cross it.
“Anytime he starts a sentence with ‘Wouldn’t it be cool,’ ”
Zucker says of Ballmer, “you know that you’re in for some-
thing amazing.” But the arena is more than an exercise in
wish fulfillment for a basketball-obsessed billionaire; it’s a bet
that the Clippers can find about 17,500 more Angelenos like
Ballmer—and teach them the Tao of Steve—to create a com-
petitive advantage.
Take, for instance, the Wall, an uninterrupted bank of
4,500 seats in 51 rows from floor to ceiling behind one of the
baskets. “It’s built for people to channel their inner Steve
Ballmer,” says Zucker. To fill the section with those who
share in Ballmer’s mania, the Clippers plan to restrict access
through a loyalty program. Fans will be required to complete
a handful of actions, such as sharing photos of themselves in
Clippers gear on social media or answering trivia questions,
to earn a “Chuckmark”—named for the team’s mascot, Chuck
the Condor—before they can buy tickets for seats in the Wall.
“It’s about bringing fans closer,” Ballmer says, “but it’s also
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to say, ‘Hey … you got a purpose here. Your job is not just to
enjoy [clap, clap]. You’re here to contribute. You gotta [clap,
clap] help our team out.”
While the Wall, modeled after the stands at San Diego State
University’s Viejas Arena, may help re-create the atmosphere
 Bloomberg Businessweek
will have roughly one toilet for every 15 seats, more than
double the typical ratio at an NBA arena.
Intuit’s concessions have also been designed for maxi-
mum throughput. The menu will be small and identical at
every stand, so fans don’t waste time wandering in search of
their favorite items. And the Clippers are planning a checkout
RENDERING: COURTESY LA CLIPPERS
A rendering
of the new
arena (left);
the interior
under
construction
(below)
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February 12, 2024
system in which customers simply take what they want and
get charged automatically as they walk out, without so much
as a tap or swipe.
Even the halo board, ostensibly a huge overhead distrac-
tion, is intended to help keep people locked in with carefully
programmed stats and analysis. “We put up that big score-
board,” Ballmer says. “Why? We can teach [clap] you more
of the game. We can tell [clap] you more about the game, the
game [clap], the game.”
Ballmer knows his gonzo style isn’t for everybody. Some
people want to eat, drink, lounge and, especially in LA, be
part of a scene. But there’s already an NBA team in town
for those people: the “Showtime” Lakers. The Clippers, as
Ballmer sees it, need to cultivate an alternative identity—
in the model of their owner—as the team for hoops purists.
At the team’s offices a few blocks from Crypto
.com Arena in downtown LA, the Clippers
have dedicated a floor to a model of the Intuit
Dome, along with full-size replicas of the suites,
cabanas and bungalows, where salespeople
bring season ticket holders to entice them
to follow the team to Inglewood. “Not every-
body’s gonna move over with us,” Ballmer
says. “If you live up in Pasadena or Burbank,
that’s a big move.” The Clippers are also rais-
ing ticket prices, which is a sticking point for 45
some. But Ballmer is confident the team will
pick up at least as many fans as it loses. “LA is
a huge place,” he says. “We can fill the build-
ing with our point of view, as long as we have
a good team.”
With the success of the building tied to the
team’s fortunes on the court, the Clippers have
gone all in on a win-now approach and assem-
bled a roster of veteran stars led by 32-year-old
forward Kawhi Leonard. So far this season, it’s
paid off. As of Feb. 7 the Clippers had compiled
a 34-15 record, good enough for first place in
the Western Conference, eight spots ahead of
the Lakers, and—more important—a berth in the
playoffs, where oddsmakers give them a strong
chance to win it all.
At the Kings game in December, Ballmer
takes his customary seat on the baseline at
Crypto.com—with Walt Disney Co. CEO Bob Iger
as his guest—to watch his Clippers cruise to a
20-point victory, part of a nine-game winning
streak that month. He chats with Iger during
lulls, but his attention never wavers from the
floor. When the Clippers’ 7-foot center, Ivica
Zubac, dunks one-handed over a Kings defender
in the third quarter, Ballmer pumps his fists and
throws himself into the back of his seat in a full-
body spasm of excitement—the happiest fan in
a building he can’t wait to leave. <BW>
 Your Flight Has
Bloomberg Businessweek Month 00, 2023

46

AeroVanti promised clients private jets

on demand. It didn’t deliver
Been Canceled
Bloomberg Businessweek February 12, 2023
Month 00, 2024

47

By Brent Crane Illustration By Stephen Bliss

 Bloomberg Businessweek
B y the time he came to work for AeroVanti, a private
jet startup in Sarasota, Florida, Daniel Marchick had
worked in aviation for 20 years. In the US Air Force,
he flew AC-130 gunships and UH-1N Hueys, then moved to
a desk job, helping to coordinate plane takeoffs and land-
ings. Aviation enterprises require a complex symphony of
skilled actors—not just pilots but mechanics, fuel suppli-
ers, air traffic controllers, schedulers. If one node fails, the
whole system can implode. There’s little room for inno-
cent error, even less for outright deception.
Marchick was hired to run AeroVanti’s scheduling for
$100,000 a year. It was his first job in the civilian sector. He
was excited. AeroVanti looked like an all-American disrup-
tor, out to shake up the staid, cloistered world of private fly-
ing. “Private aviation does not have to be this expensive,”
founder Patrick Britton-Harr told an interviewer soon after
launching the business in 2021. “The way that we set up our
model is to have power in numbers. The more members we
have under our program, the more cost-efficient it will be.”
Members had to pay only $1,000 per month plus
$1,500 per flight-hour, a steal compared with the indus-
try average of nearly $7,000 per hour for comparable twin-
engine turboprops. Britton-Harr framed this pay-as-you-go
approach as “management light.” Flights on his five leased-
48 to-buy, twin-engine Piaggio P.180 Avantis would come with
catering and Wi-Fi and allow for pets. There would be 24/7
customer service. After signing up 300 members, he said,
the company would acquire more planes. From then on,
new members would need referrals.
Private aviation was booming. In 2021, Wheels Up, a
company backed by Delta Air Lines that runs on a similar
membership model, had raised more than $650 million in
the private aviation industry’s first-ever initial public offer-
ing. Britton-Harr, a self-described serial entrepreneur, said
a revolution was coming and he wanted to be a part of it.
Britton-Harr founded AeroVanti in his late 30s. Wide-
shouldered and big-jawed with short-cropped hair and a
beaming smile, he communicated with the quick, confident
◼ A photo of an AeroVanti aircraft that the company released in 2022,
saying it was “in the midst of redefining the entire charter aviation industry”
February 12, 2024
diction of a QVC host. Fluent in boardroom jargon, he could
sound like an artificial intelligence program trained on
corporate PowerPoints. He preferred fist-bumps to hand-
shakes. Most often he came to work wearing shorts, flip-
flops, a visor, dark aviators and a Rolex.
AeroVanti divided its operations between Sarasota and
Annapolis, Maryland. Britton-Harr, a licensed pilot, had
grown up in Florida and Maryland with four brothers.
The company’s accounting division was in Annapolis.
Flight operations were handled at Sarasota Bradenton
International Airport, in a rented office building on the
tarmac. There, a propeller-shaped clock hung on the wall
alongside photos of soaring Avantis, the plush, speedy
Italian aircraft that gave AeroVanti its name. A custom draw-
ing hung on the wall of Britton-Harr and Chief Operating
Officer Robert De Pol, a former Navy pilot, clutching beers
beside Britton-Harr’s two chocolate labs.
In marketing the company, Britton-Harr often invoked
his family. One reason he decided to use Piaggio planes,
he told a reporter, was that his wife liked them. (Like many
private jets, they fly at 41,000 feet, comfortably above
weather systems.) His mother enjoyed the fully enclosed
rear lavatory. His father, Steve Harr, was on board as chief
pilot. While Britton-Harr was growing up, the family had
moved around a lot to follow Steve’s job. He flew for the
US Navy before going to work for American Airlines. Now,
he’d be flying the family business.
At first, Marchick was impressed. The administrators
and mechanics in Sarasota were competent and gung-ho.
Steve Harr had decades of flight experience. AeroVanti had
announced investments totaling about $110 million. And
the business was growing rapidly. In its first year, it signed
up more than 300 members and recorded $20 million in
revenue, according to Britton-Harr. Twenty members had
paid a lump sum of $150,000 for a special “Top Gun” tier,
entitling them to priority booking and other perks.
The cracks, however, soon began to show. Customers
started experiencing frequent last-minute cancellations,
which the company often blamed on vague mechani-
cal issues or “supply chain” problems. Several custom-
ers found themselves stranded in far-flung destinations,
forced to make abrupt arrangements to get home. Others
missed weddings and graduations. “This is not what I had
in mind when I signed up for this,” one client wrote on an
PLANE: BUSINESS WIRE. BRITTON-HARR: MARK WEMPLE
email chain of about 100 people who’d experienced simi-
lar treatment. “Constant scramble versus relaxed luxury.”
“Bernie Madoff could learn a few things from these
clowns,” wrote another.
“Imagine the worst person you can have to be in charge
of anybody’s lives or money and not having anybody to
stand in their way,” Marchick says. “That’s what happened.”
AeroVanti has since gone into a tailspin. The com-
pany faces multiple lawsuits from members and aircraft
Bloomberg Businessweek
◼ Britton-Harr photographed with his
leasers. In interviews with Bloomberg wife, Tracy Deckman, for Business
Businessweek, a dozen employees and Observer’s 40 Under 40 Issue in 2022
more than two dozen people associ-
ated with the company describe a litany
of abusive behavior and malfeasance.
(Most of the employees spoke on condi-
tion of anonymity because they signed
nondisclosure agreements and are afraid
of retaliation.) The Federal Aviation
Administration is actively investigating
the company, and the US Department of
Justice is targeting some of its assets in a
complaint related to Britton-Harr’s pre-
vious business. Opposing counsel have
alleged in court filings that he absconded
with $40 million of members’ money.
AeroVanti hasn’t responded to the
lawsuits against it. Neither Britton-Harr
nor his relatives responded to inquiries
for this story.
Compared with the highly regulated
realm of commercial airlines, private avi-
ation has long been a kind of Wild West.
On paper, operators must follow stringent regulations. But
in practice, there is scant oversight. “This industry attracts
some scummy people,” says Craig Picken, a veteran avia-
tion recruiter. “Ninety-nine percent of operators are really
good, but there’s always that 1 or 2% who screw it up for
everybody.” There have been cases of fraud and gross mis-
management before, especially during the pandemic boom,
when new customers overwhelmed the industry. But to
insiders, the AeroVanti fiasco has been on another level.
“The brazenness of it to me is just unbelievable,” says
David Guzman, who owns a Piaggio charter company in
Tulsa that leased planes to AeroVanti. (He isn’t involved
in the lawsuits.) “Patrick’s an intelligent guy. It’s not will-
ful ignorance. I believe it’s purposeful. I believe they knew
what they were doing.”
E ver since the Wright Brothers soared over Kitty Hawk,
the American aviation community has longed to put
an airplane in every garage. In the interwar period,
the US Department of Commerce launched a campaign to
encourage the design of a $700 “airplane for everyman.”
The automobile, once technically infeasible or prohibitively
expensive, had become ubiquitous. Why not flying, too?
Of course, airplanes are more complicated than cars.
And the world owes mass air travel not to private flyers but
large commercial airliners. Yet the dream of solo flight, of
Americans taking off at a moment’s notice into the skies
with their loved ones and nobody else, persisted. The
invention of the jet engine in the ’50s enabled small air-
craft to travel much farther without refueling, and truly
February 12, 2024
fast small jets began to appear in
the ’60s. There was the eight-seater
Learjet 23 produced in 1963, which
could reach 500 mph. Then the
big-cabined Gulfstream II, released
in 1966, brought high comfort to
the skies. In 1980, Paris-Le Bourget
Airport became the first-ever facil-
ity dedicated solely to private jets.
Hundreds more followed.
Early on, most private aviation
operations were charter-based.
Customers paid for flights à la carte.
In the late ’80s, NetJets Inc. started
a “fractional ownership program,”
wherein customers purchased shares
of a plane in the same way one would
buy shares in a company. Each part-
owner was allotted a certain number
of flight-hours per year. Today, the
$25 billion industry remains divided
largely among three models: frac-
tional jet ownership, private jet own-
ership and membership clubs.
AeroVanti billed itself in the latter category. It operated 49
under Part 91F, a federal regulation that allows cost-sharing.
It built its image around luxury and promised in its mem-
ber agreement that customers could also expect to forge
“business development relationships” with their elite peers.
Business development was Britton-Harr’s forte. Before
AeroVanti, he’d founded several ventures in health care,
despite having no formal training: a mobile dentistry com-
pany called ProHealth Dental Inc. and several medical
testing lab companies that catered to retirement homes.
To a person, everyone who spoke with Businessweek
praised his uncanny mastery of the art of the sale.
“He’s very personable, very enthusiastic, passionate,”
says Guzman, the Tulsa charter lessor. “To the layperson,
he could come up with just enough subject matter knowl-
edge to appear as an expert.”
“He could sell ice to Eskimos,” says John Galdieri, an avi-
ation consultant who gave advice to Britton-Harr early on.
And at first, some members were happy with the ser-
vice. “The plane was fantastic,” recalls Mark Israel, a Top
Gun member who signed up after seeing that AeroVanti
was an official sponsor of the Tampa Bay Buccaneers.
“It was big and comfortable.”
But it soon became clear there weren’t enough planes
to go around. Although Britton-Harr and his sales team
assured members they had a dozen in operation, in reality
only two or three were airworthy at any one time, accord-
ing to one of the lawsuits, and AeroVanti started routinely
canceling reservations. Employees and members say it
 Bloomberg Businessweek
assured disgruntled customers it would reimburse them
for market-rate rebookings through another charter com-
pany, which could cost tens of thousands of dollars per leg.
Often, though, it didn’t.
Employees say Britton-Harr’s sales pitches, which
often included free test flights, were part of the prob-
lem. “Patrick would add flights in and destroy the sched-
ule,” Marchick says. “If employees pushed back, he would
be like, ‘I’m the CEO. This is my company. This can be
done. There are no real rules.’ ” Despite the overload,
AeroVanti’s sales team was ordered to add $5 million in
revenue every two weeks.
Under these conditions, safety sometimes took a back
seat. Someone had written “Minimum ten hours of rest”
on an office whiteboard, in reference to federal guidelines
that dictate how long pilots can fly per day. Marchick says
that one day, Britton-Harr pointed at the board. “Erase
that number,” he said. “That doesn’t exist.”
He insisted that his two dozen pilots fly more frequently
to accommodate the surprise extra flights he added to the
schedule. When employees balked, he’d say, “This is an
at-will state!”—implying that anyone who complained
could be easily fired, according to Marchick. At one point,
Britton-Harr fired his father, who had protested his man-
50 agement style. “NO ONE IS TO CONTACT Steve Harr any-
more for any reason,” pilots were warned in a company
email last May. De Pol, whom many employees regarded
as the company’s one responsible executive, also left with-
out warning. (De Pol declined to comment beyond say-
ing he wants to distance himself from AeroVanti.) Now
Britton-Harr had total control of the company, according
to Marchick and other employees. He began flying by heli-
copter to the Sarasota office from his home on Tampa’s
glitzy Davis Islands.
During this time, Britton-Harr continued to court new
sources of cash for AeroVanti, and the planes were a useful
prop, Marchick says. Prospective investors often received
free flights, even at the expense of paying members. He
and other employees say many of these flights were kept
off official logs, a violation of FAA regulations. Britton-Harr
referred to these free flyers with the abbreviation “D.N.S.,”
meaning “do not screw.” “He had his pecking order of peo-
ple,” Marchick says.
One regular D.N.S. was businessman Alexander
Nistratov, who fled Russia some years ago after being
indicted for real estate fraud while working for that gov-
ernment’s property management agency. Businessweek
viewed a screenshot of his page in AeroVanti’s schedul-
ing system that notes, “Per PBH, flights for Mr. Nistratov
are gratis.” Nistratov declined to comment on AeroVanti
beyond confirming that he had chartered flights.
Britton-Harr was a big spender known to throw lavish,
boozy parties. Some took place in AeroVanti’s Sarasota
February 12, 2024
hangar. At a member recruiting event on a yacht in Fort
Lauderdale, he provided $50,000 worth of caviar, accord-
ing to Scott Hopes, who briefly succeeded him as CEO.
But AeroVanti had no company credit card or shared
account; Britton-Harr controlled all of its finances.
Assuming they’d be compensated, employees often
paid for company expenses using personal funds. Even
Philip Welborn, the senior finance manager for Air Club,
AeroVanti’s membership program, griped to co-workers
that he spent $58,000 of his own money and wasn’t reim-
bursed. Welborn didn’t respond to requests for comment.
At one point, Britton-Harr stopped paying AeroVanti’s
bills. The office became inundated with calls from fuel
companies, mechanics, parts suppliers and the people
whose planes they’d leased. One of these callers was a
Florida entrepreneur named Scott Levine, who’d leased
AeroVanti his LearJet in 2021. The three-year contract was
supposed to net him $1 million in profit, plus four free
years of AeroVanti membership, but after two payments,
AeroVanti defaulted.
Britton-Harr didn’t respond to requests for an expla-
nation, Levine says, so he started texting other employ-
ees whose numbers he had, asking for help. The next day,
AeroVanti canceled his membership and said it wouldn’t
make any more payments because his plane was “not air-
worthy,” which Levine said wasn’t true. When he went to
repossess it, there was a mechanic’s lien on the plane cit-
ing unpaid bills, and Levine had to sue to get it back. When
he eventually did, four months after first leasing it, several
parts were missing: tires, a landing beacon, a hose under
a wing cover. Fellow lessors told him they’d been installed
on other AeroVanti planes.
After Levine unloaded on AeroVanti and its CEO in a
LinkedIn post, Britton-Harr’s attorney threatened to sue
him for libel. Instead, Levine sued Britton-Harr for unpaid
bills. He received a default judgment of $2 million, though
Britton-Harr never responded. Levine says that hubris
tracks. “When you’re pretending to have all that money
but you’re spending other people’s money, it just kind of
inflates you,” he says. Several other owners have repos-
sessed planes from AeroVanti.
B ut all of that was still behind the scenes. Outwardly,
at least, AeroVanti’s second year looked like a story
of expansion. In July 2021 it announced it had raised
about $10 million in venture capital from Network 1 Financial
Securities. (US Securities and Exchange Commission filings
indicate that Network 1, which didn’t respond to requests
for comment, paid only about one-third of it.) Originally,
DAVID JENSEN/GETTY IMAGES
Britton-Harr’s business model for AeroVanti relied on out-
sourcing some flights and services to other operators. Now
he was focused on what he called “vertical integration,”
doing everything in-house, from flying to maintenance.
Bloomberg Businessweek
In March 2022, AeroVanti purchased a small Arizona
aviation company called Marjet. It said in a press release
that it did so to acquire Marjet’s FAA Part 135 certifica-
tion, something Guzman and other aviation experts say
AeroVanti should have had all along. (Part 135, earned
through rigorous inspections of a company’s safety prac-
tices, is required for an airline to perform charter flights
on demand.) AeroVanti said the deal upgraded its oper-
ations and would allow the company “to rapidly scale.”
Around this time, its fleet grew to include an Embraer
Phenom 100, at least nine Piaggios, three Learjet 31As,
a Gulfstream GIII and a helicopter. The company hired
in-house mechanics. After De Pol resigned, Britton-Harr
brought in former Piaggio America CEO Paolo Ferreri as
interim COO. It was a time of “incredible momentum and
record growth of more than 400% year-over-year,” the
company said in a press release. AeroVanti’s client list
soon included athletic departments at the University of
Maryland and the University of Central Florida.
Meanwhile, Britton-Harr was spending jet-loads on mar-
keting. He signed multimillion-dollar sponsorship deals
with the Chicago Cubs, USA Sailing, the Florida Panthers
and the Tampa Bay Buccaneers. (The “AeroVanti Lounge”
at Raymond James Stadium in Tampa promised “luxury at
every step.”) For the Coca-Cola 600, the company spon-
sored a Nascar driver named Corey LaJoie. For the 2023
Preakness Stakes, it sponsored 10 suites. It co-hosted
events with the Blue Angels Foundation, raising money
for veterans. One Christmas, it flew a low-income Navy
family from Florida to Maryland to see relatives and posted
a video of the reunion to YouTube.
The company even started an offshoot yacht club that
required a $100,000 deposit. The AeroVanti Yacht Club was
run by Britton-Harr’s younger half-brother, Liam Harr, a
College of Charleston sailing ace with elite connections.
(He’d once raced to Bermuda on a sailboat financed by
◼ AeroVanti’s car at the Coca-Cola 600 in North Carolina last May
February 12, 2024
Amway Corp. scion Doug DeVos.) Its website notes that one
of its vessels, the 108-foot Casino Royale, had been used in
the James Bond film “as the floating lair of the villain.”
At the same time, AeroVanti struggled to pay employ-
ees. In late 2022, every employee interviewed for this
story says, paychecks started appearing late, then not at
all. One day, office workers heard they’d be paid by wire
transfer instead of their usual payroll vendor, ADP. There
had been “issues” with ADP, they were told. In fact, the
vendor had dropped AeroVanti because of unpaid bills,
according to a former members services staffer. ADP
declined to comment beyond confirming that AeroVanti
is no longer a client.
Pilots were getting skimped, too. They were upset with
a sudden switch from an hourly rate to a flat salary of
$12,000 a month. Then the payments started arriving late.
One pilot says they were more than a month behind at one
point. On a single day in June, four pilots quit, and a dozen
or so more left soon after, leaving AeroVanti with maybe
six. “They could see the writing on the wall,” says the pilot,
who stayed through that period. “They said, ‘We’re done.’ ”
Then a pilot who was ferrying New Orleans Saints
kicker Wil Lutz accidentally drove a plane off a runway in
Destin, Florida. Other pilots had warned Britton-Harr that
this pilot wasn’t qualified to operate a Piaggio’s notoriously 51
finicky controls. But with so many pilots gone, and desper-
ate to please a VIP like Lutz, Britton-Harr had pressured
the pilot to fly. “It could have been much worse,” says an
AeroVanti flight scheduler. “They pleaded with Patrick not
to let this guy fly, and Patrick didn’t care.”
In an interview with Businessweek, the pilot who
crashed blamed mechanical issues, though he acknowl-
edged that AeroVanti didn’t find evidence of any. He says
Britton-Harr pushed him to keep flying Piaggios after the
accident but he refused, worried they were unsafe.
In June 2023, Joey Giordano, the vice president for
operations, emailed employees to say that compensation
was stopping completely. AeroVanti was not closing but
merely “awaiting some capital in order to get back on track
and continue on a path of success,” he wrote. “There are
no hard feelings if you decide that AeroVanti isn’t the right
path for you. For those that stay, there could be very green
valley’s [sic] ahead to enjoy!” Giordano didn’t respond to
requests for comment.
Beyond being ticked off and anxious about paying their
own bills, employees were confused. How could a com-
pany with such a massive marketing budget fail to make
payroll? It wasn’t as if AeroVanti had been crying poverty
all along. It had been less than a year since the company
announced raising a fresh $100 million in capital led by
Lafayette Aircraft Leasing LLC.
The announcement turned out to be hot air. Lafayette
says it never raised any money for AeroVanti. It had only
 Bloomberg Businessweek
leased AeroVanti a Phenom 100 jet, which it repossessed
soon after because AeroVanti didn’t pay its bills.
“I was unaware h
L ate last spring, like a bout of bad turbulence, the
lawsuits arrived. The first two each consisted of
20 members who paid $150,000 apiece for Top Gun
memberships. In the Top Gun arrangement, the money
invested was supposed to go into an escrow account to
purchase a jet in the fractional ownership vein. The suits
claim this money never went into escrow and the planes
were repossessed.
“It was a mess,” says Kristin Vogel, a Top Gun member
who’s not involved in the litigation. “We’d get confirmations
all week, then wake up that morning and get a cancella-
tion.” On her third canceled flight, Vogel called Britton-Harr
directly. She told him she felt she was being scammed. “He
screamed at me, ‘If you say the word scam one more time,
I’m going to remove you as a member!’ ” she recalls. The
outburst freaked her out. She says she thought, “If this com-
pany is not doing well and they’re cutting corners and we’re
getting on a plane that they own—it just didn’t feel safe.”
Shortly after the Top Gun lawsuits were filed, Britton-
Harr issued a public statement decrying the plaintiffs as
opportunists. “They believe in cancel culture,” he said. “We
52 have a tremendous amount of support. We are continuing
to move forward and will not be blindsided by a few toxic
individuals.” At least 10 cases have now been filed against
Britton-Harr, some of them arguing that the real cancel cul-
ture was his scheduling shell game.
In June, as the suits began to pile up, AeroVanti
announced that Britton-Harr was stepping down as CEO,
though he would remain chairman. Replacing him was
Hopes, an entrepreneur, certified pilot and former Manatee
County, Florida, administrator with a controversial past.
As the outside world encroached upon AeroVanti, the
company had already begun to crumble from within.
Former employees say they could be fired if they told
angry members the truth about their cancellations. But
by this time, FAA investigators had spent close to a year
interviewing AeroVanti associates. After landing at air-
ports, pilots found themselves subjected to frequent
“ramp checks”—stops for inspection—even as far afield as
the Bahamas. Ramp checks are a sign, according to pilots,
that authorities have received complaints about a com-
pany. The FAA declined to comment.
All of this pressure further inflamed Britton-Harr’s para-
noia. One day last spring, he demanded that employees
stop using Slack to communicate. He was concerned that
“the feds” might be trying to infiltrate the messaging plat-
form, Marchick recalls. The feds were, in fact, interested
in Britton-Harr. In July the Justice Department filed a com-
plaint against him for his conduct at a previous lab testing
venture. The DOJ alleged that he’d defrauded Medicare out
February 12, 2024
affect oth
of $7 million by submitting false claims for pandemic-era
tests that never occurred. Some of these were billed to
Medicare for diseases that are only found in animals. At
least two AeroVanti airplanes and a sailboat had been
purchased with these ill-gotten funds, the DOJ claimed.
A default judgment later found Britton-Harr liable for
$30 million in damages.
For many members and employees, news of the federal
complaint made them wonder what else might be lurk-
ing in Britton-Harr’s past. Online searches revealed a long
history of negligence. In a 2006 drunk driving accident in
Maryland, he’d killed his passenger, a 20-year-old Naval
Academy midshipman; weeks before the tragedy, he was
ticketed for driving 120 mph on the Baltimore Beltway in his
BMW. “I was unaware how my actions affect other people,”
he told a judge. He was sentenced to five years in prison
for vehicular manslaughter but had all but nine months
suspended in favor of probation and community service.
After the DOJ complaint, Britton-Harr stopped appear-
ing at the AeroVanti office. Employees learned he’d been
evicted from two Sarasota luxury properties for unpaid
rent. His brother Troy Britton-Harr, who often handled mis-
cellaneous tasks for him, had collected Patrick’s belongings.
The founder appeared to have flown the coop.
I n October, neither Britton-Harr nor his four brothers
were responding to inquiries, but Hopes was keen to
talk. The new CEO envisioned a tremendous resuscita-
tion. That month, he’d brought in Piaggio mechanics from
Italy to get four planes airworthy, he says. Most of his time,
though, was spent dealing with lawsuits and other problems
that had piled up during “the Patrick era.”
Hopes, a retired doctor, wore a striped collared shirt
with a Presidents Cup logo on the chest. Tiny palms lined
his shorts. Bespectacled, with salt-and-pepper hair and
a smartwatch, he exuded the easy, well-practiced charm
SARASOTA BRADENTON INTERNATIONAL AIRPORT
of a Southern man of means. In the ’90s he’d run a med-
ical firm, HMD Healthcare—this was why he’d acquired a
pilot’s license, he says, to fly between various business
matters in Florida.
Hopes first met Britton-Harr in late 2022, he says,
at an event hosted by the Sarasota newspaper Business
Observer. Britton-Harr had made the paper’s annual
40 Under 40 list (the Observer: “Who would play you in
 Bloomberg Businessweek
how my actions
er people”
the movie of your life?” Britton-Harr: “Ryan Gosling”) and
it threw a gala with the recipients. Hopes, then the county
administrator, had come to the event with another hon-
oree, Courtney De Pol, his deputy. She had recently relo-
cated to Sarasota for her husband Robert’s new job as
COO of AeroVanti. She’d listed Hopes as a mentor, he said.
When Hopes took over, many AeroVanti members and
employees harbored misgivings. For starters, they won-
dered why he would have agreed to run such a troubled
company. And there was his resignation from his govern-
ment job, where he’d been accused by the Florida Center
for Government Accountability of violating public records
laws and the county sheriff’s office recommended crimi-
nal charges. (In his defense, Hopes notes that no charges
were ever filed.) Some wondered if he and Britton-Harr
were in cahoots. Was their plan to plunder the dying com-
pany, declare bankruptcy and split the remaining assets?
Three months after putting Hopes in charge,
Britton-Harr fired him and replaced him with his older
brother, Todd Britton-Harr. Hopes said he believes he was
forced out of AeroVanti because Britton-Harr wanted per-
sonal access to new investment capital AeroVanti seemed
about to receive. He laughed at the suggestion that he was
in on any of it. “Had I known more about Patrick,” he said,
“I probably would not have taken this up.”
Todd had his own problems. In 2013 he’d been con-
victed of smuggling over a thousand pounds of marijuana
from Mexico into Texas. In court he claimed he’d been
a confidential informant for the US Drug Enforcement
Administration, which the agency denied. Around the
◼ The terminal at Sarasota Bradenton International Airport
February 12, 2024
same time, Todd had been convicted of real estate fraud in
Florida. He served several years in prison. Now he was run-
ning a construction business in Tampa called Britton-Harr
Contracting. “I believe these people are just creating cash
flow to support their lifestyles,” Hopes said at a cafe beside
Sarasota International. “What they’re doing has nothing
to do with building a successful company.”
Where did all that cash go? Some may have gone
toward property for Britton-Harr, who maintains at least
six bank accounts and a dizzying array of holding com-
panies, according to the DOJ complaint. In September 2021
he purchased a $554,000 home in Annapolis. A year
later, he bought two vacant lots in Myrtle Beach, South
Carolina, for $60,000 each. Contractor Andy Amrhein of
Thomasville Restoration recently sued Britton-Harr for
unpaid work on his Annapolis house. Britton-Harr hasn’t
responded. Reached for comment, Amrhein asked, “Do
you know where I can find him?”
Much of the money likely went into AeroVanti, employ-
ees say. A single bill for airplane maintenance can run to
hundreds of thousands of dollars. Leasing them isn’t cheap,
either. Neither is fuel. Or payroll. Or athletic sponsorships.
Of course, Britton-Harr was stiffing people on many of these
bills. “He paid the bare minimum to keep things moving,”
Marchick says. But the ones he was paying still added up. 53
Believe it or not, Britton-Harr is back. Three days into
the Todd era, the older brother stepped down after learn-
ing of a $750,000 default judgment against AeroVanti
in one of the lawsuits, he told the Observer. There was
also a $25 million infusion from a Las Vegas investor that
had been rescinded at the last minute. So Britton-Harr
returned to the corporate cockpit.
This Halloween, the prodigal CEO emailed flabbergasted
members about AeroVanti’s “revitalization.” Given the cir-
cumstances, his tone was remarkably business-as-usual.
Monthly dues had increased to $2,500, he wrote. But Air
Club members now had access to two yachts (the Casino
Royale and the En Garde, for daily rates of $4,995 and
$3,995, respectively), a fishing boat (the Permit, $2,995
a day) and a 50-foot sailboat (Sweet Caroline, $6,995). A
mobile app was in the works, he wrote, and the club was
already “back up and flying.” He cited a single airplane, a
Learjet 31A, which Hopes says Britton-Harr doesn’t own
and Marchick calls a “freaking mess.”
Those hoping for a reckoning with AeroVanti’s turmoil
were left wanting. In his email, Britton-Harr acknowl-
edged only that the company’s “massive support and
growth” had “outpaced the operational capacities
and overall needs of our members.” It was one of just
three statements that gestured ever so vaguely toward
the past. The rest was focused on AeroVanti’s “reset,” its
“renewed shot at success” and the smooth, glorious take-
off that was surely on its way. <BW>
 Orvis tries to win back lapsed anglers by improving
on its legendary Helios 3 rod. By Kyle Stock
P
U
R
FI S
GHTING U
TH I
E T
CU S 55

RR
ENT 58
The best boots for
slushy season

60
Florida’s golf gold rush

62
Who’s driving the fine
fragrance sales boom?
Anita Colton fishes
for trout on the Upper 63
Delaware with the Piaget returns to prep
newest Helios

February 12, 2024

Edited by
Chris Rovzar

Businessweek.com
 FISHING Bloomberg Pursuits
ly anglers like to test themselves by attempting
F
to hook a glorious ocean fish, like a 100-pound
tarpon. But if you want to put a rod to a real
test, it’s best to try it in a situation that’s more
fussy and technical: casting tiny, buggy flies
at tiny, cagey brook trout. The surrounding
branches and bushes leave little margin for error, as do the
shoe-size pockets of water where you must land the fly. The
trout themselves are easily spooked—they’re as skittish as
mice, and usually not much larger.
That’s why I found myself along a trickle of a creek in
Manchester, Vermont, with two of the high priests of fly-
fishing: Shawn Combs and Tom Rosenbauer. Combs is head
of fishing research and development at Orvis Co., which
started making fly rods in 1856 and has since expanded into
a retail giant selling outdoor apparel and ephemera such as
dog beds and flasks. He’s been locked in his lab for almost
seven years trying to come up with a rod to improve upon the
Helios 3—regarded by many as the finest fly rod ever made.
Rosenbauer, meanwhile, is the guy who helps sell Combs’
creations through the homespun media empire he’s cobbled
together in 48 years at Orvis, which includes a hit podcast
and a stream of how-to videos and books. Combs hands me
a wisp of a fly rod—the future of the 168-year-old enterprise—
with the restrained giddiness of an engineer about to pitch
56 a killer app. “Go ahead, give it a try,” he says.
Much has happened in the fly-fishing world since the
summer of 2017, when Orvis rolled out the third iteration
of its celebrated Helios line of rods—the H3 for short. The
product was hailed as a breakthrough (in these pages no
less) for its uncanny combination of power and
accuracy. By manipulating graphite sheets and
a proprietary resin, Combs created a rod that
was both strong and calm. Small vibrations at
the tip, which can send a cast off course with
other rods, all but disappeared. Eventually its
remarkable accuracy became a cheat code for
anglers of all abilities.
A couple of years later, Orvis found itself
on the receiving end of a Covid-sparked ava-
lanche of interest, alongside Netflix, Zoom
and Amazon. Suddenly the world had ample
free time and money, and a fancy fishing rod
became an $850 ticket to social distancing.
Orvis’ Helios went from esoteric invention to
mass-market blockbuster. In 2020 some 7.8 mil-
lion Americans whipped a fly rod around,
1 in 5 of them for the first time, according to a
report from the Outdoor Foundation and the
Recreational Boating & Fishing Foundation.
Scores of independent fly shops ordered
Orvis rods for the first time,
The new Helios specifically the H3. While it
rod is the fourth
in Orvis’ most was among the finest and most
popular line expensive available, its greatest
February 12, 2024
strength may have been that
it bent the learning curve for
thousands of rookie fly anglers.
The company’s share of
the premium fly-rod market
surged from an estimated 15%
before the H3 to almost dou-
ble that at the height of the
pandemic. And for the first
time in decades, fly-fishing
accounted for roughly 30%
of Orvis’ business, according
to President Simon Perkins,
a share on par with men’s
apparel. For Combs, the suc-
cess of the H3 was both val-
idating and nerve-wracking.
Every order prompted an
internal question: Could he
do it again?
By the time Combs was
nearing completion of the
new Helios—the fourth itera-
tion—there was a Covid hang-
over. From 2020 to 2021, the
number of people fly-fishing
fell 4% in the US, the first dip
in almost a decade. Scores of
pandemic anglers had stored
their gear for good, and those
who stuck with it were no lon-
ger so flush with either money
or time. “Honestly, it’s a really
leaky bucket,” Rosenbauer says
of all the anglers who got away.
Combs’ latest creation
would have to be not only bet-
ter than his last—it would have
to be significantly so to per-
suade customers to upgrade.
I probably can’t cast nearly
as well as Perkins, but I’ve been chasing trout (and other
fish) for 35 years, and my garage holds more rods than I’d
like to admit. I’m about to the level of hobbyist Combs is
trying to win over.
PREVIOUS PAGE AND THIS SPREAD: COURTESY ORVIS CO.
The first impression the fourth generation of the Helios
makes is with its weight, or rather the lack thereof. Scurrying
down to the creek, I whack the tip into one tree after another,
in part because it doesn’t feel like I’m carrying much of any-
thing. On the water, in a tunnel of foliage, a quick flick of the
wrist sends a small, fuzzy fly 35 feet, dropping gently into a
still pool of water.
With fly-fishing, as with food, there’s been a recent cultural
shift toward the traditional, the organic. For decades the indus-
try cranked out stiff—so-called fast—graphite rods that could
FISHING Bloomberg Pursuits
catapult a line 100 feet or more. Lately, though, many fly fishers
are more pragmatic: They realize they seldom need to cast that
far. They want a tool that’s more sensitive, less turbo.
Bendier—or slower—rods have made a comeback. There’s
even been a renaissance in fiberglass, for example, a heavier,
whippier material that was ubiquitous in the 1960s and ’70s
before Orvis and its rivals discovered graphite.
The magic in Combs’ creation is that it’s softer and slower
than its predecessor but no less powerful and accurate. It’s a
bit of a paradox—a 200 mph supercar with 1960s steering, a
robot with emotions. It does all the things the H3 manages,
with more finesse, “more feel,” as Combs puts it. It seems
perfectly weighted to where fly-fishing culture is right now.
Orvis is still a private company and, as such, fairly
February 12, 2024
57
The author fly-fishing in Vermont
tight-lipped. We may never know how the H4 performs
financially. Perkins, the top executive, does share one estimate:
The new rod, which goes on sale this month for $1,098 to
$1,198, is four times better in quality than its predecessor.
After plucking a few fish out of remote eddies of the
stream, I hand the rod to Rosenbauer. For months he’s been
casting it at striped bass and other megafauna, but he’s yet
to give it the tiny-water test. He quickly works out some line,
the rod bending deeply—down almost to his hand—before
it slings straight and tucks the fly under a log. The bug dis-
appears in a splash.
Rosenbauer isn’t an effusive guy and doesn’t consider
himself a great caster. Nevertheless, he cackles gleefully.
“Shawn!” he gushes. “I love it.” <BW>
 STYLE Bloomberg Pursuits February 12, 2024

After more than 700 days without significant snowfall, New

Only Fools York City was blanketed in white in January, just as the 2024 Old
Farmer’s Almanac predicted. It was a welcome development for
footwear makers: Sales of cold- and all-weather boots in 2023

Slush In were down 18% from 2022, according to Beth Goldstein of con-
sumer research company Circana. Nora Kleinewillinghoefer, a
partner in the consumer practice of consulting firm Kearney,
says milder falls and winters are reshaping the snow boot
industry, “steering the market toward lighter, versatile styles.”
A stylish class of boot rises to handle Phyllis Leibowitz, a personal stylist who’s dressed the
wet winters and muddy springs likes of Marisa Tomei and Lou Reed, says most people want
By Matthew Kronsberg water-resistant options that are light enough to leap over an
icy puddle but grippy enough to stick the landing. We call
Photographs by Audrey Melton them slush boots; here are seven that stand out.

58

DANNER CLOUD CAP

Stylist Leibowitz is drawn to this roasted pecan and
apricot color, a design she likens to “a ’70s parka.”
The ankle-high women’s boots come with a specially
formulated sole and split heel for superior traction. It’s
available in two other color combos and in black. $210

SNOW PEAK TDS NIOBIUM CONCEPT 3 AURÉLIEN SNOW BOOT

This collaboration between Japanese outdoor outfitters Snow Peak and dad-chic
sneaker brand New Balance brings together two distinct currents of cool. A
removable PrimaLoft-lined inner boot, with a design “inspired by the winter sky,”
sits inside Vibram soles working in tandem with a breathable waterproof shell to
keep feet warm and dry. $300
There’s a hint of office-friendly formality in these men’s
slush boots. Made of a waterproof technical fabric that’s
also available in brown, they have a Velcro band rather
than laces, and a knit cuff sits at the ankle, above chunky
white lug soles. €495 ($534)
STYLE Bloomberg Pursuits February 12, 2024

CAMPER PIX
Frigid climes were probably not the first thing on
Lorenzo Fluxa’s mind when he created Camper shoes
on the island of Mallorca in 1975. Since then the label
has built a reputation for bold designs suited to all
sorts of wintry conditions, such as these red and brown
leather Chelsea boots, which sport daring colors (and
textures) on a wraparound EVA outsole that gives 59
premium puddle protection. $225

ADIDAS ASMC X TERREX HIKING BOOT

For getting off the sidewalk and onto the trail in style, Stella McCartney
collaborated with Adidas on a slush boot featuring the shoemaker’s custom
insulation that uses a minimum of 50% natural and renewable materials. Vivid
color options include solar lime (above). $250

DIEMME BALBI
Made in a village
within sight of the
Dolomite Mountains
in northeastern
Italy, these turn the
mere functionality
of the duck boot
into a high-fashion
statement. The
sturdy rubber sole
is offset by a white
CANADA GOOSE CYPRESS PUFFER BOOT
nappa leather
Best known for keeping torsos toasty, Canada Goose
brings the power of the puffer down to ground level. A upper, which
gusseted front zipper makes these women’s boots easy Leibowitz calls “a
to slip into and out of, while the grooved outsole has superfun cross
more texture on the heel and toe to make them extra between Gene Kelly
grippy in slippery conditions. $525 and L.L.Bean.” €339
 GOLF Bloomberg Pursuits February 12, 2024

soil, which is easier to manipulate into interesting shapes. It

Golf’s Next also helps create firmer conditions so the ball rolls farther.
To transform their sites, these developers have hired some
of the world’s best golf course architects to work their magic.

Paradise Is Over the next three years, an Avengers-like constellation of the

biggest names in golf design will create a total of eight private,
upscale courses at five properties, bringing 144 new holes to

In a Swamp a 10-mile stretch about 35 minutes from West Palm Beach.

Developers have anointed a sleepy
Florida county as the next big thing
By Michael Croley
Florida is often considered an underwhelming place to play
golf. Sure, it’s fun to wear shorts in February, but good golf
terrain has movement, and bland, flat marsh doesn’t have the
same cachet as wind-swept cliffs overlooking the Pacific. The
Sunshine State stereotype is a course surrounded by retire-
ment homes that looks as if it just rolled off the production
line. The state has more than 1,200 courses, the most in the
US, but just three on Golf Digest’s 100 Greatest Golf Courses list.
That’s a lot of mediocre links—and yet it isn’t enough. More
60 courses opened in the US last year than any time in over
a decade, according to the National Golf Foundation, and
almost a third of them were in Florida. Membership queues
at Emerald Dunes Club in West Palm Beach and the Bear’s
Club in nearby Jupiter are estimated to be as long as seven
years, despite fees of $500,000 or more. A little farther north,
the Medalist and Floridian clubs have upped their initiation
fees and expanded their member ranks to 300, but they still
have as many as 50 people on standby.
These wealthy waitlists have cropped up since the state
became the biggest beneficiary of the finance industry’s exo-
dus from New York. To capitalize on the influx, real estate
developers have set their sights inland, in Martin County,
north of West Palm
Beach, even though ter-
rain around Interstate 95
is flat and mostly
wetlands. “Honestly, the
land is probably some
of the least desirable
to build a golf course
on,” says Gary Pohrer,
a Douglas Elliman bro-
ker in the area. “They’re
going to have to move a
lot of dirt.”
The area does con-
Bill Coore and Ben Crenshaw, whose credits include the
world-famous Sand Valley in Nebraska and Bandon Trails in
Oregon, took on the challenge of adding a course at McArthur
Golf Club, where 275 members already pack a highly regarded
Tom Fazio-designed course. But the available land lacked the
drama the duo usually starts out with. “We kid the owners
that it was just a horrible site,” Coore says with a laugh. “It’s
just flat sand, a couple of feet above the water table, and a
lot of isolated wetlands.” They focused on the greens, engi-
neering contours and variety to eliminate the “18 parking
lots” Coore says they were left with after clearing the land.
In December, Gil Hanse, who oversaw the creation of Rio
de Janeiro’s Olympic Golf Course for the 2016 games, fin-
ished the first of three proposed courses at Apogee Club.
It’s the $400 million brainchild of Miami Dolphins owner
Stephen Ross and Michael Pascucci, who developed the
Sebonack Golf Club in Southampton, New York. In some
ways, the lack of inspiring terrain has allowed Hanse to let
his imagination go wild with intimidating bunkers and fast,
firm greens on tricky angles.
Tom Doak, whose résumé includes Pacific Dunes on
the Oregon coast and Tara Iti in New Zealand, is taking
on the course at Sandglass. It’s being developed by Chris
Shumway, who runs an eponymous investment firm in
Stamford, Connecticut. Sandglass will be a links-inspired
course; Shumway says its terrain is “high, dry and sandy,”
a rarity in Florida.
A little to the east, yet another development comes
from Ken Bakst, owner of Friar’s Head on New York’s Long
Island. The nearly 4,000-acre site, called the Ranch, will
have two courses built
The Back Yard at by the design team of
McArthur Golf Club
Whitman, Axland &
Cutten, who were long-
time associates of Coore
and Crenshaw.
All the competition in
the area doesn’t seem to
concern Bakst. Each of
the new clubs, he notes,
offers something differ-
ent for its members.
“Those courses don’t
hurt one another,” he
LARRY LAMBRECHT

tain one component says. “They feed off each

critical to building a golf other. None of us think
course, however: sandy this is a zero-sum game.”
GOLF
If You Drain It,
They Will Come
Five properties aiming to add
world-class golf to the already
saturated Sunshine State
Apogee Club
This 1,220-acre property, which has set the
initiation fee at $500,000, plans to have
1,000 members, according to Pascucci. It’s
a “pure golf” club, meaning there are no
homes to build a course around.
Bona fides: The West course, the
property’s first, is by Gil Hanse and Jim
Wagner; Tom Fazio II and Mike Davis
(formerly of the United States Golf
Association) are designing the second,
and Kyle Phillips, who did Kingsbarn in
St. Andrews, Scotland, will build the third.
Amenities of note: There will be two Hart
Howerton-designed clubhouses, as well
as a 360-degree 50-acre practice range,
with another eight acres dedicated to the
short game and 10 air-conditioned hitting
bays. The club will also have padel and
pickleball and a 160-acre lake stocked
with fish.
Completion date: The West course
opened in December; the second is due
in December 2025; and the third and final
course is estimated for December 2026.
The Ranch
Bakst was skeptical about a site in
Florida until he visited. With coaxing
from his wife, Suzanne, he’s embarked on
building the Ranch, which will have two
courses and 175 homes located discreetly
away from the links. They’re clustered
on 250 acres of the roughly 6.1-square-
mile property.
Bona fides: Bakst made his name with
Friar’s Head, a fixture on Golf Digest’s list
of the 100 best US courses since it opened
in 2002. The Ranch’s two courses will be
built by Whitman, Axland & Cutten.
Amenities of note: Practice facilities will
sit on 175 acres between the two courses
and will include a 12-hole par-3 course and
a full-length 10-hole practice course.
Completion date: The first course is
scheduled to open in fall 2025; the second
course, in fall 2026.
Atlantic Fields
On 1,500 acres next door to the Hobe
Sound Polo Club and Michael Jordan’s
Grove XXIII course, Discovery Land Co. is
Bloomberg Pursuits February 12, 2024
building more than 300 homes
on the site of a former tree
farm. The developer, which
was behind Baker’s Bay in the
Bahamas and a new $1 billion
Port St. Lucie
Fla.
private community in Dubai,
intends to reconstruct a
nearby marsh and preserve
much of the original wetlands
and farm.
Bona fides: An 18-hole course
will be designed by Tom McArthur
Fazio II, who builds all of DLC’s
courses, including the one The Ranch
at Gozzer Ranch in Coeur
d’Alene, Idaho. Also Fazio’s: the Apogee Club
Atlantic Fields
course at nearby PGA National
Resort in Palm Beach Gardens Sandglass
(approximate)
and the Tranquilo at the Four
Seasons in Orlando.
Amenities of note: Atlantic
Fields will include an
equestrian center with
a stable, riding rings, a Bears Club Seminole
lounge and viewing area; Golf Club
an organic farm; and a
clubhouse whose full health
center includes hot tubs, cold
plunge pools, a sauna and 61
steam rooms.
Completion date: A short
course opened in December,
with an 18-hole course Emerald Dunes
estimated to be ready this fall.
Sandglass Golf Club Palm Beach International Airport
Shumway says he’s “chosen
the simplest lane” by
whittling his club down to the
essentials. His goal is to have
150 members: “We want a links-style play.
world-class golf course, with no housing, Completion date: Opens in December.
that’s pure golf.” That said, there may be
McArthur Golf Club
some on-site cottages for lodging.
Bona fides: Like his mentor, the late Unlike most brand-new developments in
Martin County, McArthur is a relative senior
billionaire developer Julian Robertson
Jr., Shumway has hired Doak to build his citizen at 22 years old. General manager
Kevin Murphy says there are no plans
course. Sandglass will require moving a
lot of dirt, a rarity for the designer and to expand its membership, despite the
increased demand for golf in the area.
his team, who prefer to use naturally
occurring hills to create the undulations Bona fides: The club already has had a
Tom Fazio-designed course that architect Bill
you see in his work at Colorado’s Ballyneal
and Ireland’s St. Patrick’s. Coore says is “just impeccably maintained.
It’s very beautiful.” The club’s new course,
Amenity of note: The club will shut
down in the summer, allowing the turf the Back Yard, by Coore & Crenshaw, is
unlike many of the architect duo’s more
to repair for three months instead of
being punished by foot traffic in the heat. famous courses, which sit in stunning natural
Doak says if a club isn’t closed for an settings. But the challenges intrigued them,
extended period each year, there’s no way and the result is a course that weaves
to make major repairs to the turf. “After through the wetlands and uses the existing
three years the ball doesn’t bounce and trees and water features to frame the holes.
roll at all anymore,” which is essential to Completion date: Opened in November.
 CRITIC Bloomberg Pursuits February 12, 2024

Gen Z Wants to Smell Rich

Fine fragrance makes a comeback among young people seeking a mood lift
By Aja Mangum
Buffeted by bad news on all appeal to others,” Madar says.
sides, teenagers and young Robin Mason, president of
adults are finding comfort in fine fragrance North America
cologne. Sales of fine fragrance for DSM-Firmenich AG, says
at Givaudan, which makes pop- the pandemic spurred the
ular scents for brands such as change in perspective. “Before
Dior, Diptyque and Tom Ford, Covid, Gen Z was disengaged
were up 14% in 2023 from the from fine fragrance,” she says.
year before. In its first quarter Now they’re buying in bulk.
in fiscal 2024, Coty saw its pres- “We’re noticing that collecting
tige fragrance revenue grow fragrances has been popular
25%. That’s as luxury across on social media like TikTok,”
the board has softened globally. says Autumne West, national
Circana’s 2023 Fragrance beauty director at Nordstrom.
Consumer Report found youngsters age 13-26 had fueled an Today, #perfumetok has 2.3 billion views. “There is a reinvig-
increase across all of fragrance and beauty in 2023. “Mental orated curiosity surrounding scent with a newer generation.”
health is so important to this generation,” says Jean Madar, Smaller companies are reaping the benefits, too. Nyakio
62 chairman and CEO of InterParfums Inc. “Fragrances that create Grieco, co-founder of beauty retailer Thirteen Lune and
mood-boosting, positive emotions are a big purchase driver.” founder of skin-care brand Relevant: Your Skin Seen, noticed
InterParfums’ sales across its portfolio—which includes an uptick in fragrance sales on her site and at her flagship store
scents from Ferragamo, Oscar de la Renta and Van Cleef & in Los Angeles. The brand’s 13 Stems has been a top seller since
Arpels—rose 21% year over year, to $1.318 billion in 2023. “Gen Z its introduction last year, and the Golf le Fleur line Grieco car-
considers fragrance to be part of their core identity, worn for ries from musician Tyler, the Creator is also extremely popular.
their personal enjoyment and self-expression rather than to Here are 10 premium indulgences to add to your collection.

Creed Queen of Silk
This floral, amber, fruity creation from the
House of Creed has a timeless elegance—and
the bottle doubles as a vanity showpiece.
$445 for 75ml
Ourside Dusk
In a space that lacks diversity, Ourside, a
series of unisex scents, is the brainchild
of Bronx-based Harvard Business School
grad Keta Burke-Williams. Dusk leads
with succulent berries, fig, bergamot and
grapefruit before drying to a warm cloak of
amber, vetiver, patchouli and frankincense.
$196 for 50ml
Boadicea the Victorious 1907
This British house teamed up with Neiman
Memo Paris Cappadocia
Inspired by the ancient region in Turkey,
Cappadocia offers an intoxicating olfactory
experience. The spice and warmth of
saffron and sandalwood oil complement
the sweetness of vanilla, white jasmine and
Turkish rose. $310 for 75ml
Glasshouse Fragrances Sunsets in Capri
The bright combination of mandarin, white
peach, jasmine and marine accord is simple
and straightforward, but it’s also playful
and pretty. As the name suggests, it smells
just like a beach vacation. $140 for 3.4 fl oz
Parfums de Marly Althaïr
A refined take on the gourmand trend:
Inside the handsome bottle is a sweet
food) to amp up frankincense and amber in
this full-bodied, unisex scent. $330 for 4.25 oz
Arquiste L’Or de Louis
An initial spray explodes with orange blossom
and melts with honey and musk accords
before settling into a smoky base. It’s heady
and complex—worthy of the 24-karat gold
flakes floating inside. $245 for 100ml
Mizensir For Your Love
The latest from master perfumer Alberto
Morillas—the nose behind Acqua di Giò,
Gucci Bloom and Marc Jacobs Daisy—is a
cozy, powdery scent. The patchouli heart
and benzoin essence base grounds the
sweetness from the raspberry top note.
$235 for 100ml
ILLUSTRATION BY ANA MIMINOSHVILI

Marcus to create a timeless aroma that will
appeal to women and men. The red bottle and
gold shield have a regal quality, but the scent
is lighthearted: Its cheery blend of lemon
zest, pink pepper and black currant top notes
strikes a delightful balance with the tobacco,
cedarwood and amber base. $695 for 3.3 oz
blend of cinnamon, bergamot and bourbon
vanilla with a base of praline and musk.
$365 for 125ml
Christian Dior New Look
Dior Parfums Creative Director Francis
Kurkdjian used aldehydes, compounds that
add zing to a fragrance (akin to seasoning
H24 Herbes Vives
Herbaceous, without morphing into a
generic “manly” cologne, this fragrance
uses sorrel, hemp, parsley and pear granita
to deliver a sophisticated outdoorsy
scent—even for a man who enjoys more
indoor comforts. $155 for 100ml
THE ONE Bloomberg Pursuits February 12, 2024

Golden Hour
Piaget rereleases a classic watch that
defined the decadence of the 1980s
By Chris Rovzar Photograph by Rene Cervantes

Dress watches from the 1960s and ’70s have

been the rage for a couple of years now—
whether it’s a vintage ’60s Omega Genève
with a linen-textured gold dial or a new
release such as the Heritage Chronometer
Celebration line from Carl F. Bucherer, which
indulges in the metal mesh bracelets of the THE CASE
era. So what’s next in the retro rotation? The The original Polo came out in 1979 in
bold, bright chic of the 1980s, of course. response to customers who were used
Back then, Piaget’s Polo watches were worn to Piaget dress watches but wanted
alongside G.H. Bass Weejuns penny loafers something more sporty—you know,
and colorful polos from Ralph Lauren; they for riding horses and going out to
were all proud hallmarks of New England nightclubs such as Studio 54. The
country club elitism and laid-back California case and the bracelet are joined
cool. This month, the brand is rereleasing its together in a series of alternating
most recognizable watch of the period as the brushed-gold blocks and polished 63
Polo79, with a banded construction that looks gadroon links, allowing the heavy
like it was carved from one contiguous hunk watch to snugly hug the wrist. Like
of 18-karat yellow gold. many timepieces of the ’80s, most
versions of the Polo were battery-
powered. Now, in honor of the brand’s
THE COMPETITION 150th anniversary, Piaget has slipped
• A few weeks before Piaget announced the one of its ultrathin movements—the
Polo79, Bulgari reintroduced an ’80s watch 1200P1 in-house self-winding caliber—
of its own, the simple yellow-gold Bulgari into the new, 38mm version. A sapphire
Bulgari worn by George Michael in the Faith caseback is a fresh addition, allowing the
years, for $13,200. mechanics to be easily admired. But then
• The word “Rolex” is mentioned 26 times in again, you’re not wearing a fat gold watch
Bret Easton Ellis’ American Psycho; it was because of the mechanics, are you?
the brand of choice for his decade-defining $73,000; piaget.com
psychopath, Patrick Bateman. The current
GMT-Master II doesn’t come in Bateman’s
preferred color, bone, but the $38,900 gold
version does scream “Eighties!”
• For a discount slice of the decade, go for
the $395 Bulova Computron—a gleaming,
gilt box that shows the time on an old-
school, red seven-segment display.
 ◼ LAST THING

m a i l i n g o f f i c e s . E x e c u t i v e , E d i t o r i a l , C i r c u l a t i o n , a n d A d v e r t i s i n g O f f i c e s : B l o o m b e r g B u s i n e s s w e e k , 7 3 1 L e x i n g t o n A v e n u e , N e w Yo r k , N Y 1 0 0 2 2 . P O S T M A S T E R : S e n d a d d r e s s c h a n g e s t o B l o o m b e r g
B u s i n e s s w e e k , P.O. B ox 3 7 5 2 8 , B o o n e , I A 5 0 0 3 7- 0 5 2 8 . C a n a d a P o s t P u b l i c a t i o n M a i l A g r e e m e n t N u m b e r 41 9 8 9 0 2 0 . R e t u r n u n d e l i v e r a b l e C a n a d i a n a d d r e s s e s t o D H L G l o b a l M a i l , 3 5 5 A d m i r a l B l v d . , U n i t 4 ,
B l o o m b e r g B u s i n e s s w e e k ( U S P S 0 8 0 9 0 0 ) Fe b r u a r y 1 2 , 2 0 2 4 ( I S S N 0 0 0 7- 7 1 3 5 ) H I s s u e n o . 4 8 1 2 P u b l i s h e d b i - w e e k l y b y B l o o m b e r g L . P. P e r i o d i c a l s p o s t a g e p a i d a t N e w Yo r k , N .Y. , a n d a t a d d i t i o n a l

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● YOUNG PEOPLE TRUST SOCIAL MEDIA ALMOST AS MUCH AS

The New News TRADITIONAL NEWS

Share of US adults
In democracies, big election years such as this provide who say they have 100%
convenient moments to assess the health of the fourth estate. some or a lot of trust
in the information
News flash: Much of the industry is in upheaval. As public trust from each, 2016-22
in and consumption of mainstream outlets decline, Instagram, Local news
TikTok and YouTube have become the new juggernauts. organizations
50
These platforms draw right- and left-leaning news consumers National news
organizations
far more evenly than any national media outlet, yet hyper-
Social media
personalized feeds can create fragmented views of the world.
Young people in particular are tuning in to influencers and 0
peers for current affairs. Meanwhile, social media companies
18-29 30-49 50-64 65 and
have slashed fact-checking and moderation, and media layoffs older
keep piling up. �Laura Bliss and Minh-Anh Nguyen

● PERSONALITIES ARE EDGING OUT PUBLISHERS ● PARTISANSHIP ON

THE PLATFORMS
Where global news consumers on each platform generally pay attention to get information
US adults by
◼ Overall Age: Under 35 35 and older
political leaning

Facebook YouTube Instagram TikTok X/Twitter ◼ Left

◼ Center
① Mainstream news Mainstream news Mainstream news Ordinary people Mainstream news
◼ Right
43% 42 42 44 55
Share getting news from
each platform in the
② Ordinary people Independent news Celebrities Influencers Politicians past week

Facebook
64
③ Independent news Influencers Influencers Celebrities Independent news 31%
YouTube
28

④ Celebrities Ordinary people Ordinary people Mainstream news Ordinary people Instagram
16

TikTok

⑤ 8
Politicians Celebrities Independent news Independent news Influencers
X/Twitter

20
⑥ Influencers Politicians Politicians Politicians Celebrities
Share getting news from
CONDUCTED IN JANUARY AND FEBRUARY 2023; CHALLENGER, GRAY & CHRISTMAS; TIKTOK; FREE PRESS

these news outlets in

the past week
PAGE: GETTY IMAGES. DATA: PEW RESEARCH CENTER; REUTERS INSTITUTE AND YOUGOV SURVEY

Local TV
● NEWS CONSUMPTION IS RISING ON YOUTUBE, INSTAGRAM AND TIKTOK
Share of any social media users in the US getting news from each platform, 2020-23 37%
Fox News
Facebook YouTube Instagram TikTok X/Twitter
30% 52
CNN
20 38

NBC/MSNBC
10 37

0 CBS
28

ABC
● MEDIA LAYOFFS ● NEXT-GEN NEWS ● TECH ROLLS BACK MODERATION 27
Some 528 journalists were laid off ANCHORS From Nov. 1, 2022, to Nov. 1, 2023, Meta,
in January after the loss in 2023 of Creators Dylan Page, aka X/Twitter and YouTube eliminated
Local radio
News Daddy, and V Spehar, of

3,087
print, digital and broadcast jobs,
the most annually since 2020.
UnderTheDeskNews, draw
10.4 million and 3 million
followers on TikTok, respectively.
17
policies aimed at reducing hate speech,
25
New York Times
33
The New York Times: 595,600. ▲ Page misinformation and harassment.
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