2020-05-01 Fortune

M A Y 2 0 2 0

■ F O R T U N E . C OM

The Coronavirus EconomyHOW THE PANDEMIC IS RESHAPING EVERY ASPECT OF BUSINESS.

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METHOD

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F O R T U N E M A Y 2 0 2 0 3

38Strategies for Survival From restaurants

to retail, airlines

to energy, how

hard-hit industries

are adapting in a

time of crisis.

56Will Medicine Makers Come to the Rescue?The pandemic may

finally do for the phar-

maceutical industry

what relentless TV ads

cannot: show off its

power to innovate.

BY SY MUKHERJEE

60Seattle Under SiegeWhen the city became

the first epicenter

of the coronavirus

outbreak in the

U.S., the companies

headquartered there

found themselves in

the fight of their lives.

BY ERIKA FRY

70How Zoom ZoomedA quiet hit among

business users when

the pandemic struck,

a young company

struggles to serve

consumers.

BY MICHAL LEV-RAM

74The Grocery Robots on the Pandemic Front LinesOcado built a buzzy

business helping super-

markets survive online.

The COVID-19 crisis has

become its trial by fire.

BY JEREMY KAHN

82W O R L D ’ S G R E A T E S T L E A D E R S

Heroes of the PandemicFortune’s seventh

annual list honors

those who have

rallied the world

behind them in this

decisive moment.

C O N T E N T S

COVER ILLUSTRATION BY MANSHEN LO

VOLUME 181 • NUMBER 5

SPECIAL

REPORT

THE

CORONAVIRUS

ECONOMY

Features May 2020

ILL

US

TR

AT

ION

BY

SH

AW

NA

X

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T H E A N D R O M E D A C H A I NSubscribe to Fortune’s first pop-up newslet-ter, Outbreak,

tracking the COVID-19 pan-demic. fortune

.com/newsletters

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S A L O N D E S A C C E P T É SLook out for Fortune Connect, our forthcoming membership community for rising business stars.

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The Conversation

86 LI SA S U

An annotated discussion with the CEO of chipmaker AMD. I N T E RV I E W BY A A R O N P R E S S M A N

Fortune (ISSN 0015-8259) is published monthly with two double issues (June and December), for a total of 14 issues, by Fortune Media (USA) Corporation, Principal Office: 40 Fulton Street, New York, NY 10038. Periodicals postage paid at New York, NY, and additional mailing offices. Postmaster: Send all UAA to CFS. (See DMM 507.1.5.2). Non-Postal and Military Facilities: Send address corrections to Fortune Magazine, P.O. Box 37508, Boone, IA 50037-0508. Canada Post Publications Mail Agreement #40069223. BN# 888381621RT0001. © 2020 Fortune Media IP Limited. Printed in the U.S.A. Customer Service and Subscriptions: For 24/7 service, please use our website: www.fortune.com/myaccount. You can also call 1-800-621-8000 or write to Fortune Magazine, P.O. Box 37508, Boone, IA 50037-0508. Reproduction in whole or in part without written permission is strictly prohibited. Your bank may provide updates to the card information we have on file. You may opt out of this service at any time.

4 F O R T U N E M A Y 2 0 2 0

Departments

WHAT OUR

EDITORS

ARE UP TO

THIS MONTH

THE BIG IDEA

BY M I C HAE L T. O STE RH O LM

& MARK O L S HAKE R

To Battle a Pan demic, Think Like the MilitaryPAGE 34

Foreword

7 What We Know About COVID-19BY C L I F T O N L E A F

The Brief

11 Has the Coronavirus Crisis Changed Business? You Bet It Has.BY G E O F F C O LV I N

18 Privacy in a Pandemic: Less Might Be Best for Public Health BY DAV I D M E Y E R

21 China’s Apps for Tracking the Outbreak Are Efficient— and Worrying

BY N AO M I X U E L E G A N T &

C L AY C H A N D L E R

22 Ford Shifts Gears: The Automaker and Its Competitors Pivot to Produce Medical Supplies BY M A R I A A S PA N

28 Can Thermal-Imaging Tech Help Stem Viral Spread? BY A A R O N P R E S S M A N

31 What’s the Smart Money Doing? Five Market Veterans Weigh In

BY A N N E S R A D E R S &

J E N W I E C Z N E R

Passions

90 Buying Time: Watch Lovers Sell the Most Analog of Collectibles Online BY DA N I E L B E N T L E Y

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96 Mapping the Dramatic Drop in Market Indexes Worldwide BY B R I A N O ’ K E E F E &

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F O R T U N E M A Y 2 0 2 0 7

What We Know About COVID-19

As we enter the fifth month of this

worldwide crisis—a viral pandemic

that has grown feverishly to nearly

2 million confirmed cases in 185

countries or regions, and more

than 125,000 deaths, according

to researchers at Johns Hopkins

University—there are still plenty of

mysteries to solve. How many people

are unknowingly infected with (and

possibly spreading) the virus? How

long will the pandemic last? When is

it safe to go back to work? Well, no

one quite knows.

As to the question of how the

coronavirus will reshape the global

economy—How much damage will it

do? Which industries will suffer the

most, bounce back, be reinvented?—

we have devoted this entire issue and

most of our daily online coverage to

investigating. Virtually our entire

EPIDEMIOLOGY is a science of “seems to be” steps. Researchers plot data points on a

map and speculate connections between them, conjuring up likely nodes of infection and possible vectors of transmission. Such guessing, if you will, forms the basis for hypotheses, and then the truly hard work begins: Scientists gather evidence—systematically, painstakingly—until they can prove or disprove those theories.

That’s what John Snow, history’s

most famous epidemiologist, did in

1854, when he plotted deadly cases of

cholera on a map of London, eventu-

ally tracing the outbreak to a single

contaminated well and water pump.

And that’s what’s happening now,

with the novel coronavirus and respi-

ratory disease it causes, COVID-19.

0

50

100

150

200

250

300 MILLION POPULATION

MAR. 19 20 21 22 23 24 25 26 27 28 29 30 31 2 3 4 5 6APR. 1

STATEWIDE STAY-AT-HOME ORDERS,

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

CA

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SOURCES: KAISER FAMILY FOUNDATION; CENSUS BUREAU

PANDEMIC POTLUCK STATES HAVE LARGELY

PUT IN PLACE THEIR OWN

COVID-19 MITIGATION

STRATEGIES. (THE VIRUS

MAY NOT HAVE NOTICED.)

F O R E W O R D

FWD.W.05.20.XMIT.indd 7 4/14/2020 9:54:58 PMFINAL

8 F O R T U N E M A Y 2 0 2 0

editorial team has spent the past

few months plotting data points

on unfinished maps and doing our

best to draw meaningful patterns

among them. It’s guesswork, to be

sure—though you might think of it

as financial epidemiology as well.

But in the sea of seems-to-bes,

maybes, and outright unknowns,

there are also things that we do

know—and cataloging those lessons

will perhaps keep us from repeating

our mistakes again.

“Let’s start with the premise that

we’ve been complacent about our

preparation for such a pandemic,”

says Steven Corwin, who is both a

physician and the president and CEO

of New York–Presbyterian hospi-

tal. “And I don’t think there’s any

question—whether it’s an individual

hospital, whether it’s as a country,

we’ve been able to skate by.” For

all the would-be plagues that have

threatened American shores in the

past couple of decades—SARS,

MERS-CoV, H1N1 influenza, even

Ebola—none delivered the knock-

out blow to the U.S. that COVID-19

has, even if a few were devastating

elsewhere. Our false sense of security

has led us to put off tackling impor-

tant questions, Corwin says: “What

do you need in the Strategic National

Stockpile? How fragile is the supply

chain? How much are we dependent

upon just-in-time delivery—which,

though it makes us more efficient in

terms of health care, doesn’t neces-

sarily provide resiliency?”

As it happens, the pandemic

answered those questions for us.

“We’re now at the peak of this in

New York,” says Corwin, in early

April. “We’re using 700,000 masks

a week, and we’re 20% of the New

York system—which works out to

3.5 million masks this week for the

downstate New York area. At that

rate, the Strategic National Stockpile

doesn’t go a long way.” Health and

Human Services Secretary Alex Azar

told a Senate committee in February

that the Strategic National Stockpile

had a mere 30 million surgical masks

and 12 million respirators (the N95

masks that filter out most smaller

viral particles) in reserve, plus a few

million more that were likely past

their expiration date.

We know that our medical and

pharmaceutical supply chains are

vulnerable. It’s not only masks and

other personal protective equipment

(PPE) that largely come from China.

That nation, for example, is also the

world’s largest producer and exporter

of active pharmaceutical ingredients,

the chemical feedstock of modern

medicine. China also produces many

of the chemical reagents that are

used in disease diagnostics, such as

polymerase chain reaction (or PCR)

tests that identify viral strains. So, if

in the midst of a pandemic, the sup-

ply starts there, the chain may break

before it gets here.

On that front, we know that, when

Bruce Gellin, president of global immunization at the Sabin Vaccine Institute, at

home with his pandemic preparedness plans.

SH

AR

ON

GE

LL

IN


CLIF TON LE AF

Editor-in-Chief, Fortune

@CliftonLeaf

it comes to a potentially pandemic

strain—a virus that is both virulent

and easily transmissible from human

to human—any lag in diagnostic

testing can be catastrophic. That has

been the case with the novel corona-

virus, for which widespread testing

was badly delayed due to the develop-

ment of a flawed diagnostic test at the

CDC. But the bigger problem wasn’t

the glitch in the government’s assay;

rather, it was the policy of centralizing

testing at one federal lab. Centralizing,

in short, just meant bottlenecking.

“Even if everything went perfectly,

even if the CDC tests had rolled out

perfectly, there was no way that the

screening capacity in the U.S. was go-

ing to be robust enough to deal with

a pandemic strain here in the U.S.,”

says Scott Gottlieb, a physician and

former commissioner of the FDA,

which regulates such diagnostics.

“You always had to get the academic

labs [at universities] and the clini-

cal labs in the game. And that takes

time. So you needed to be working

with them in January to get them

ready for February and March.

“If we had the capacity in place

in mid-February to test 100,000

samples a week,” says Gottlieb, “it

could have made a very big dif-

ference.” Corwin agrees: “All the

scenario planning around this type of

virus was predicated on early testing

and diagnosis.”

Which brings up something else we

know: A plan is not a process. When

I reach Bruce Gellin, the president

of global immunization at the Sabin

Vaccine Institute, he—like most

everyone else in America—is under

home quarantine, which has afforded

him time to clean out his garage.

There, under piles of Beanie Babies

and other 1990s detritus, Gellin has

found volumes of several of the fed-

eral government’s plans to fight a viral

scourge. “We had a plandemic,” quips

Gellin, a former deputy assistant sec-

retary for Health and leader of HHS’s

National Vaccine Program Office. In

2005, under the Bush administration,

he led the creation of America’s first

pandemic influenza preparedness and

response plan.

This was the “bird flu” era, and

federal policy makers were imagin-

ing the economic and social costs

of quarantining huge swaths of the

population, if it came to that. “One

of the principles was outlining the

backstops that needed to be in place

to allow people to stay in place,”

Gellin recalls. “How would a nurse

be able to work if her school-age kids

were home, for example? How would

someone living hand-to-mouth not

get kicked out of her house if she

can’t work—or a homeowner not de-

fault on a mortgage? There is a huge

cascade of stuff that has to happen if

you’re going to force people to stay at

home.” Such “community mitigation,”

as they called it, was just part of the

planning within the plan. In the era

of COVID-19, we are all learning how

essential such questions are.

Finally, the most powerful lesson

of all may come from witnessing

government inaction in the face of a

once-in-a-generation challenge—and

knowing the cost of that paralysis.

After President George W. Bush

tapped Michael Leavitt to succeed

former Wisconsin Gov. Tommy

Thompson as secretary of Health and

Human Services in December 2004,

Leavitt asked all of the agency’s

operating and staff division heads

to come over and brief him on their

respective portfolios.

“He was trying to decide who to

keep, maybe, and who not to keep,”

says Stewart Simonson, then a former

assistant secretary for Public Health

Emergency Preparedness and now as-

sistant director-general for the World

Health Organization’s office at the

United Nations. “And so I went over

to brief on the preparedness and re-

sponse portfolio, and then at the end

of the meeting, I gave him two books:

The Great Influenza—John Barry’s

book on the 1918 flu epidemic—and

the 9/11 Commission Report.“And what I said is—something

to the effect of that we know we will

have another 1918. It’s inevitable.

It’s just a matter of time. And if it

happens while you’re secretary, and

you’re not aware of the threat, this

other book’s next volume will be

about you.”

“If we had the capacity in place in mid-February to test 100,000 samples a week, it could have made a very big difference.”

F O R E WO R D


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F O R T U N E M A Y 2 0 2 0 1 1

T H E B R I E FB U S I N E S S . D I S T I L L E D .

EC ONOMIC S

Has the Coronavirus Crisis Changed Business? You Bet It Has.

America’s consumer-driven economy has been dealt a powerful setback. Here’s how we can recover—and what the long-term effects of the pandemic will be.

BY GEOFF COLVIN

Mainstream

economists

forecast that

U.S. GDP will

shrink 30%

to 50% in

the second

quarter.

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1 2 F O R T U N E M A Y 2 0 2 0

To those on the front lines of the coronavirus crisis, it’s ultimately about fear. “People are terrified,” says

Kathryn Lott, executive director of Houston’s Southern Smoke Foundation, a crisis relief organization for people in the food and beverage industry. “All are afraid they will lose their homes, and the terror in their voices is something I have never experienced. I have done casework for years, during natural disasters, people who have been gunned down, new mothers on the streets with infants during winter. I have never heard this.”

No one has ever heard this, the

pleas for help from so many Ameri-

cans rendered jobless with stunning

suddenness—more than 16 million

and counting as of early April. For

them, the COVID-19 pandemic

has triggered intertwined crises

of personal health and personal

finance, threatening disaster for them

individually and, in the aggregate,

for the country. The great challenge

facing each person—and the nation

overall—is overcoming the two crises

together. In the modern economy

there is no playbook for how to do it.

More than in any past economic

collapse, U.S. consumers are at the

heart of this one. Not only do they face

the threat of getting sick, but they’re

also getting fired or furloughed by the

millions because their workplaces are

being shut down to prevent others

from being infected. As a result, they

can’t spend, forcing more businesses

to close, and so on—“an aggregate

demand doom loop” says Glenn Hub-

bard, chairman of the White House

Council of Economic Advisers from

2001 to 2003. “The problem is radiat-

ing from consumption demand by

households,” says Matthew Slaughter,

a CEA member from 2005 to 2007.

“It’s unprecedented—an involuntary

shock to consumption demand. The

magnitude of it is huge.”

For consumers, the cosmic injustice

of it all is head-spinning. The U.S.

economy has long been consumer-

driven, and over the past five years

consumers have powered

economic growth even

more than usual, expand-

ing America’s economy

faster than those of most

other big, developed

economies. Consumers’

share of GDP reached a

towering 68% in last year’s

fourth quarter, higher than

it got even in the 2006 to

2008 shopping festival

that preceded the financial

crisis and recession. Yet

unlike then, consumers in

recent years have increased

their buying responsibly,

saving a prudent 8% of

their disposable personal

income on average vs. near

0% back then. Household

debt reached 99% of GDP

in the last boom; at the end

of 2019, it was just 76%.

And now, having kept the

economy cruising along,

consumers are suddenly

under intense financial

pressure. Of those who still

have jobs, millions cannot

work from home and must

choose between risking

their health (and potentially

their lives) by working in

grocery stores, warehouses,

post offices, hospitals, and

other high-contact settings,

or not working.

On top of it all is a

crowning irony: Because

the U.S. is still fundamen-

tally a consumer-driven

economy—and can’t trans-

form overnight—consum-

ers as a group will have

to get themselves and the

whole economy out of this.

No one knows how deep

a hole they’ll have to climb

out of; everything is hap-

pening too fast for official

statistics to keep up. But

we know this is the steepest

economic plunge in mod-

ern history. More people

lost their jobs in two weeks

in March than in the entire

2008–2009 recession.

In the Great Depression,

real GDP declined for 43

months, eventually shrink-

ing by 30%. This time,

Morgan Stanley forecasts a

30% decline in the second

quarter; Goldman Sachs

says 34%; and St. Louis

Fed president James Bul-

lard says 50%. For now, the

most important indicators

to watch aren’t economic

ones. They’re the weekly

trends in new COVID-19

cases, number of deaths,

and governors making

isolation orders more strin-

gent or lenient.

BREAKING THE

“DOOM LOOP”

Consumers can’t bring

back the economy without

help. Reviving consump-

tion is a major goal of the

Coronavirus Aid, Relief,

and Economic Security

(CARES) Act and the many

other actions by federal

agencies, states, and the

Fed to put more cash in

consumers’ hands. But dol-

ing out money isn’t enough.

“There’s the immediate loss

of the job, but the bigger


issue is uncertainty,” says

Hubbard, who advised

Senate Republicans on

the CARES Act. Getting a

$1,200 check, augmented

unemployment benefits,

and tax relief may offer

some respite, but consum-

ers won’t spend much and

employers won’t hire if

they’re braced for still worse

to come.

That’s why the Paycheck

Protection Program, an

innovative element of the

CARES Act that got off to

a rocky start, is especially

worth watching. It offers

small businesses (up to 500

employees) Small Busi-

ness Administration loans

equaling about 20 weeks

of major expenses, includ-

ing payroll, mortgage, and

rent. If a business gets

the loan by June 30 and

restores staffing and pay

to pre-Feb. 15 levels, while

also meeting other tests, the

loan can be forgiven. The

effect could be significant:

Firms with 500 or fewer

workers account for over

half of U.S. employment.

In theory it’s a sensible

policy response, helping

to break the doom loop

by giving businesses and

workers certainty. Employ-

ers will know they can keep

paying employees, even

if there’s no work to do,

confident that it won’t cost

them a thing; employees

will know their employer

has a strong incentive to

keep paying them, so they’ll

be more inclined to spend.

At least it’s a certainty until

June 30, by which time,

the policymakers hope,

the pandemic will be in

decline, and the economy

will have turned up.

ESTIMATED CORONAVIRUS EFFECT ON U.S. REAL GDP

0 0–12–14% –10 –8 –6 –4 –2 2 4%

DECLINE IN SERVICES CONSUMPTION

DECLINE IN MANUFACTURING

DECLINE IN CONSTRUCTION

SECOND-ROUND INCOME EFFECTS

POSITIVE EFFECT

FROM FISCAL

RESPONSENEGATIVE EFFECT FROM DECLINE IN SPENDING

SOURCE: GOLDMAN SACHS

FEB.

2020

DEC.

2021

JAN.

2021

JUNE

JUNE

We know this: The coronavirus will result in a hit to the U.S. economy unlike any ever seen. All we’re left to argue over is how long, and how bad. Everyone who has ventured a prediction on GDP is starting from the same Econ 101 equa-tion: GDP = C + I + G + (X – M).

The most important part of that equation is “C”: Consump-tion accounts for

HOW FAR WILL GDP FALL?IT’S THE TRILLION-DOLLAR QUESTION

AS ECONOMISTS CALCULATE THE

FALLOUT FROM THE GREAT CESSATION.

BY BERNHARD WARNER

68% of U.S. GDP. Drilling down, “services” makes up 69% of C, and the figures are dire: Goldman Sachs calculates a 90% decline in April sports and entertain-ment spending and 75% falls in spending on public transpor-tation and food services, plus a 65% drop in hotel bookings.

About the only sector of consumption that could rise

is health care spending, which may climb 1.6%.

“I,” or busi-ness investment, meanwhile, accounts for about 17% of GDP. Goldman forecasts a 35% decline in overall manufacturing activity—with the biggest hits to automobiles and parts suppliers.

Which brings us to one area of the equation set to grow: “G,” for government spending. But that’s tricky. You’d think a $2.2 tril-lion stimulus bill would lift GDP. But technically, most of that is defined as trans-fer payments, which, as a rule,

don’t pad G. The $16 billion to purchase vital medical gear in the CARES Act, for example, does count—though it’s a sum that’s unlikely to make much of a differ-ence.

Finally the net exports (“X”–”M”) tally will actually worsen in 2020, Goldman says. With consensus expectations for second-quarter GDP expected to be down more than 30%, we could be looking at Depression-era jobless numbers. Meaning the his-tory majors may have as much in-sight as the econ majors about what’s ahead.

H O W T H E C O R O N A V I R U S I S R E S H A P I N G B U S I N E S S — E C O N O M I C S


1 4 F O R T U N E M A Y 2 0 2 0

products will play a huge

role” in how retailers adjust

through the pandemic.

In the longer term,

the pandemic experience

will change consumers

for decades. “We will be

different,” says economist

Ulrike Malmendier of the

University of California

at Berkeley. “We’ll make

different product choices,

consumption choices, hu-

man capital choices.” This

is beyond economics; it’s

neuroscience. A crisis expe-

rience is deeply emotional,

and “stronger emotions get

anchored more strongly in

our memories,” she says.

“Our hard wiring changes.”

We will buy differently.

“Macroeconomic crises

appear to leave long-term

‘scars’ on consumer behav-

ior,” write Malmendier and

coauthor Leslie Sheng Shen

in a pioneering 2018 study.

They found, for example,

that regardless of income,

households that experi-

ence high unemployment

personally or in the mac-

roeconomy consume less,

including less food, than

other households. They use

significantly more coupons

when they shop and buy

more sale items and prod-

ucts of lower quality, again

regardless of their income.

Such households also save

more. Those effects fade

over time but are still mea-

surable years later.

It’s a similar story with

But at least initially the

program has spawned

massive uncertainty among

prospective borrowers and

the banks through which

loans are being made. The

hastily written law only

outlined the program, leav-

ing the Treasury to write,

at warp speed, 31 pages of

regulations. The SBA was

entirely unprepared to lend

10 times as much money in

a few weeks as it normally

lends in a year, and the

amount appropriated for

lending, $299.4 billion,

was clearly far too little.

A larger risk: Maybe the

pandemic won’t be under

control by June 30; either

the economy will sink back

into the depths when the

program ends, or Congress

will extend it at a cost of still

more hundreds of billions.

LONG-TERM “SCARS”

FOR CONSUMERS

For the moment that’s

unknowable. But we can

say with some confidence

how this already traumatic

experience will change the

behavior of shaken consum-

ers. In the near term, those

who have income will save

more of it if they possibly

can. The dominant feeling

of consumers in an eco-

nomic meltdown is loss of

control, and having money

put away, even just a little,

gives them a feeling of more

control. Of the money they

spend, they’ll spend more

of it on necessities, again be-

cause they feel more control

when their necessities are

on hand. The NPD Group, a

retail research firm, has ob-

served this shift already and

says that “wrestling with

necessities vs. discretionary

investing. In a separate

study, Malmendier and

coauthor Stefan Nagel

found that households’

financial risk-taking is

strongly related to how well

or poorly markets have per-

formed during their lives,

and again, the effects are

long-lasting. “Even returns

experienced decades earlier

still have some impact,”

they report.

One more key finding: In

addition to recent experi-

ences being most influen-

tial among all age groups,

they are most powerful by

far among the young, who

increase consumption more

during booms and cut back

more during busts. They

may be living on way, way

less for some time.

For two groups of young

people—those graduating

from high school or college

this spring—that’s just the

beginning of the dispirit-

ing news. College students

who graduate into the labor

force during a recession

suffer reduced earnings for

10 years on average, and

for those with the lowest

predicted earnings (based

on college and major), the

earnings penalty may last

much longer. It gets worse.

Some research finds that in

midlife, recession graduates

on average work more and

earn less, are less likely to

be married and more likely

to be childless, and suffer

higher death rates. One

researcher on this topic,

Northwestern University’s

Hannes Schwandt, sums up

the findings thus: “The bad

luck of leaving school dur-

ing hard times can lead to

higher rates of early death

and permanent differences

in life circumstances.”

If past trends from seri-

ous recessions hold true, the

pandemic might alter the

economy’s structure, dimin-

ishing the earning power of

the labor force—potentially

for years. Lack of funds will

force some prospective col-

lege students to postpone or

abandon their plans. If the

recession is long, many of

the newly unemployed may

remain jobless for many

months or even years, dur-

ing which their skills might

deteriorate and become

outdated, as happened in

the last recession. Even if

they get jobs eventually,

they may well be less valu-

able workers.

Apart from its effects

on workers’ earnings, the

pandemic may do other

lasting damage to the labor

force as well. If the unlikely

worst-case scenarios play

out and COVID-19 kills

over 100,000 Americans

plus millions more world-

wide, the simple shrinkage

of the labor force would

reduce output for years.

Even without that extreme

circumstance, the same

factors that have caused

schools to close will signifi-

We will be different. We’ll make different product choices … Our hard wiring changes.ULRIKE MALMENDIER, UNIVERSITY OF CALIFORNIA AT BERKELEY ECONOMIST

ON HOW THE CRISIS WILL AFFECT CONSUMERS


cantly curtail early child-

hood education, a proven

factor in better educational

achievement later in life.

Researchers have also

uncovered an unexpected

effect of the 1918 flu pan-

demic that could potentially

recur: It reduced educa-

tional attainment by people

who hadn’t been born yet.

Americans who were born

in the months after the

pandemic, and thus were

in utero during it, were less

likely to graduate from high

school than the cohorts im-

mediately before and after

them. In any long-term eco-

nomic recovery plan Con-

gress and the White House

hammer out, policymakers

would be wise to invest in

incentives that help young

people finish school.

PLANNING FOR THE

NEXT CATASTROPHE

As businesses respond to

this grand-scale reorder-

ing of their world, some

implications are already

clear. Remote work will be-

come mainstream, if only

because so many people

will have an online meet-

ing app and know how

to use it. Companies are

slashing capital spending

as they scramble for cash,

weakening the foundation

of future economic growth

while also fueling a B2B

doom loop in the present.

They’ll diversify supply

chains beyond China when

demand returns, further

slowing that country’s

decelerating economy.

As in all recessions, com-

panies will learn to do more

with fewer people, so the

already spiking unemploy-

ment rate may well con-

3 KEYS TO LEADING IN A CRISISThis crucible experience will be career-defining for many leaders. In any crisis— especially a historic global catastrophe in which the main factor is uncertainty—people want leaders to give them information, reassurance, and a plan. Yet this is exactly when all of those are maddeningly difficult to deliver. History says leaders will benefit by following a few principles:

DEFINE REALITY AND GIVE HOPE .

People hunger for the unvarnished truth about their organization and its pros-pects, and they can sense evasion a mile away. The news in a crisis is rarely good. The leader’s art is outlining reality unflinchingly and framing it as a challenge that can be met, not as a disaster that must be endured. Effective leaders never make a promise that can’t be kept with 110% certainty; they do offer realistic reasons for hope.

Even these principles will be of limited value to any leader who hasn’t built trust and credibility. You can’t change the past, but a crisis is an excellent time to start changing the future.

BE DECISIVE .

In a crisis, even people who would normally be at one another’s throats accept that major decisions must be made quickly. These decisions will be debated—but after they’re made, not before. That’s a valuable opportunity for leaders. The difficulty is that just when decisions are most easily accepted, they’re hardest to make. Every leadership decision is made with incomplete information; in a crisis the problem is worse and the stakes are higher. Don’t let that fact stop you from making firm decisions.

REMEMBER THAT PEOPLE WANT TO BE LED.

We understand in our bones the simple efficiency of it, that no group accom-plishes much if no one is in charge. In a life-threatening historic crisis, we want di-rection more than ever. We also need a leader to be, in effect, a repository for our fears, someone who has the power to do what we cannot. The leader assumes part of our burden and helps us sleep at night. If you’re in charge—be in charge.

3

2

1

tinue to rise at least briefly

after this recession ends.

It’s a safe bet that many

companies will compile

pandemic plans for the

future—surely a wise move,

but if that’s all they do,

they’ll be missing a crucial

lesson of this experience.

A global pandemic is the

most predicted disaster

since Hurricane Katrina,

yet, now as then, businesses

and governments were

caught flat-footed. When

the urgency of this calam-

ity abates, it will be time to

start thinking through other

plausible catastrophes—a

major earthquake strikes

California; some group or

nation detonates a nuclear

bomb; a large electrical

grid gets hacked and shut

down. You’ll never foresee

exactly what happens, but

the exercise of working out

the second- and third-order

effects will put you miles

ahead of competitors if one

of these events occurs. It’s a

lot of work. But remember

the conclusion of Mohamed

El-Erian, CEO of bond trad-

ing firm Pimco during the

financial crisis: “It’s better to

be prepared for events that

don’t happen than unpre-

pared for events that do.”

As we look ahead to days

that will probably remain

challenging, what can be

offered to the supremely

important, terrified con-

sumer, the hero and victim

of this saga? Only hope—

based on history. Forecasts

of multiplying deaths and

unprecedented eco-

nomic collapse come with

percentages and decimal

points. Yet human ingenu-

ity, passion, and energy are

beyond any economist’s

ability to predict, and those

are what get us through

times of trial. It’s unsatis-

fying to say that a better

future awaits us because of

forces and factors that we

can’t exactly describe. But

we mustn’t forget that it’s

true.

H O W T H E C O R O N A V I R U S I S R E S H A P I N G B U S I N E S S — E C O N O M I C S


Content by the Buzz Business

THE CHANGING

FLAVORS

OF ARABIA

While fl atbreads, dates, yogurt drinks, and

classic Bedouin dishes such as kabsa—chicken,

basmati rice, and sp ices—remain the much-

loved st aples of the Saudi diet, a new breed of

rest aurateur is now emerging, fusing age-old

traditions with modernity and giving contemporary

twist s to local favorites like margoog (lamb

st ew) and mugalgal (a celebratory meat dish

usually cooked for the fest ival of Eid).

Meanwhile, the busy malls of Riyadh and Jeddah

are packed with offi ce workers discovering

new fl avors from far afi eld. As the Kingdom

opens up to outside invest ment and infl uence,

entrepreneurs in the hosp itality indust ry are seizing

the opportunity to provide Saudis with exotic

culinary experiences from around the world.

In a refl ect ion of just how fast life is changing

for women in the country, many of this new

generation of rest aurant owners are young female

entrepreneurs who are relishing the chance

Past ry chef and rest aurateur

Mayada Badr is one of

the brightest st ars of Saudi

Arabia’s new culinary scene.

Leaving behind a career

in advertising to st udy at

culinary school in Paris and

st art her own past ry business

in Jeddah, Mayada’s st ory

is an insp iration for other

chefs and entrepreneurs

across the Kingdom.

CHANGE AGENTS

I HAVE ALWAYS LOVED FOOD AND

COOKING FOR OTHERS. IT IS ONE OF

THE SIMPLEST AND OLDEST

EXPRESSIONS OF LOVE—MAYADA BADR

No country in recent years has undergone such

a rapid food transformation as the Kingdom

of Saudi Arabia.


https://avxlive.icu/

to transform their passion for

cuisine into successful businesses.

“Women in Saudi Arabia are more

experimental and more willing to

take risks than men, who tend to

pursue more traditional careers,”

says Mayada Badr, the owner of

Pink Camel, Saudi Arabia’s most

celebrated high-end past ry boutique.

Aft er st udying at the Cordon Bleu

culinary school in Paris and gaining

experience at a Michelin-st arred

rest aurant near Cannes, in 2012 Mayada

opened the groundbreaking Pink Camel

in the city of Jeddah, on the Red Sea.

The past ry shop’s handcraft ed

macarons and cakes have made the

Pink Camel name synonymous with

culinary creativity across Saudi Arabia,

and Mayada has become an insp iration

for entrepreneurs both male and female.

Making good use of her st rong

presence on social media, Mayada

and her partners recently opened a

rest aurant, Black Cardamom, that

brings seasonal local produce from

Saudi farmers st raight to the plates

of diners in Jeddah, replacing imports

with food grown on nearby farms.

open rest aurants and discover all the

ins and outs of the culinary world.

The react ion from the men in my family

was interest ing at that time. Men

believe they need to be st able, secure,

and dependable. My brother told me

he was envious of the fact that I could

pursue my dream and do what I love,

whereas he could not take that risk

because of the pressure to provide.

Since culinary school, I have met a lot

of men who are doct ors, lawyers, and

dentist s who look at my career path

with admiration and take insp iration.

How easy is it to be a female

entrepreneur in Saudi Arabia?

It was an advantage for me to be a

female entrepreneur as everyone wanted

to help us succeed. We are experiencing

an amazing transition. It is a cultural

revolution. Men and women are st arting

to work together and share open sp aces.

When my daughter was born, I thought

she would never drive. Now I am driving

and she will never even remember that

I was not allowed to drive. Women are

becoming much more independent.

I can go to a soccer match in the

st adium and take my daughter with me.

Seeing the change here and feeling the

hope and the potential is insp iring.

How is the culinary sect or

changing in Saudi Arabia?

The government is supporting chefs

and is sharing our food culture

internationally. Saudi rest aurants

are sourcing more locally and more

sust ainably. Young chefs are using

homegrown food from Saudi farmers. A

new Saudi-fusion sect or is developing

and is beginning to att ract international

att ention. For people looking for

more authentic food experiences,

Saudi Arabia is the place to come.

Mayada’s passion for authentic cuisine

is insp iring other young Saudis to follow

their dreams of opening a rest aurant.

“Now that Saudi Arabia is changing so

fast , I want to help a new generation

of Saudi men and women learn

culinary skills and grow their own

rest aurant businesses,” she says.

Q&A with Mayada Badr

When did you decide to pursue your

dream and become a past ry chef?

I have always loved to eat. When I

discovered salted caramel macarons

in France, I decided to bring them to

Saudi Arabia. I st arted cooking them at

home, packaging them, and sending

them to friends. Soon I was gett ing calls

from people who wanted to become

cust omers. That is when I left my job in

advertising and went to Paris to st udy

at Le Cordon Bleu Culinary Academy.

How did your family react

to your decision?

At the time, chefs were not the rock

st ars they are today. My parents did

not look upon my choice favourably

initially as they were keen for me to

st udy for a mast er’s degree. But it

was what I wanted to do—I wanted to

All of Pink Camel’s macarons are made fresh

daily, completely by hand

Content by the Buzz Business

Q & A


DATA RIGH TS

Privacy in a PandemicHow the global spread of the coronavirus is upending Western notions about how our digital footprint is protected. BY DAVID MEYER

IT WAS MERE MONTHS AGO that

data privacy was one of those

wonky policy topics that gradually

was becoming more clearly defined

in corridors of power from Brussels

to Washington to Sacramento. In

Europe, tough new rules were setting

the pace for the rest of the world.

In the United States, Congress was

slowly coalescing around national

guidelines, encouraged by

big tech companies seeking

clarity (and a say in the

legislative process).

Now, as the novel

coronavirus crisis grips the

globe, that consensus is

being replaced with a new

reality: Less data privacy,

not more, may be what’s

best for public health.

Successful efforts in

several Asian countries

already have shown that

absent a vaccine or effec-

tive treatment, the best

way to fight COVID-19 is

to aggressively “track and

trace” infected individuals.

Using tools from location

tracking to smartphone

apps, governments have

been able to monitor shift-

ing patterns of movement

to indicate how best to

impose or lift restrictions.

They’ve also been able to

alert individuals whose

infection might need to be

communicated to those

who have recently crossed

their path.

Such surveillance tech-

niques would have been

anathema to privacy advo-

cates before the crisis. Now

the question isn’t if govern-

ments and their corporate

partners should be able

to monitor the health of

individuals, but rather how

much, in what manner,

and under what regulatory

restrictions. Even digital

rights advocates who railed

against snooping tricks by

the likes of Facebook and

their clients reckon such

data collection is neces-

sary. “We need a massive

surveillance program,”

PHOTO ILLUSTRATION BY S E L M A N D E S I G N

PRI.W.0520.XMIT.indd 18 4/14/2020 4:38:52 PMFINAL

F O R T U N E M A Y 2 0 2 0 1 9

screamed the headline

of a late-March essay by

the prominent Silicon

Valley privacy evangelist

Maciej Cegłowski. “I am

a privacy activist, typing

this through gritted teeth,

but I am also a human

being like you, watching

global calamity unfold

around us.”

Some of the best hopes

for pandemic fighting

come from the same

smartphone-enabled

applications used by tech

behemoths to sell online

from the European Union’s

General Data Protection

Regulation (GDPR), which

gives consumers the right

to block the collection and

sharing of their personal

data. A New York State

law called the Stop Hacks

and Improve Electronic

Data Security (SHIELD)

Act began imposing new

responsibilities on compa-

nies in March.

The tech industry, hop-

ing to avoid a potentially

misaligned patchwork of

state data-protection laws,

Battle lines already are

being redrawn in Wash-

ington, with industry

sensing opportunity and

some privacy advocates

worrying about overreach.

“The lack of a national

consumer privacy frame-

work and fragmented

state rules may create

uncertainty for developing

data-driven tools to help

health officials respond to

the ongoing public health

crisis,” complains Keir

Lamont, policy counsel for

the Computer & Com-

munications Industry As-

sociation, whose members

to hang on to personal

information, and whether

people will still be able

to demand the erasure of

their data after the crisis

ends.

In China, privacy has a

whole different meaning.

The country began devel-

oping a legal framework

for data protection about a

decade ago, but it was fo-

cused more on companies

than individuals. As data-

privacy lawyer Emmanuel

Pernot-Leplay concluded

in a recent article, there is

a striking “difference be-

tween the strengthening of

Less data privacy, not more, may be what’s best for public health.

advertising. In April,

Apple and Google an-

nounced a joint effort that

will enable the Bluetooth

chips in their respec-

tive smartphones to be

used for contact tracing

in a similar way to how

retailers can already track

a user’s location within a

store. It follows the lead of

Singapore, where a state-

sanctioned app called

TraceTogether uses Blue-

tooth signals to establish

past proximity between

COVID-19 sufferers and

those around them. Only

this time it’s baked into

the operating system.

Before the crisis, regula-

tors were increasingly

clamping down on the

ad-tech industry’s ability

to closely track users. In

the U.S., a legislative effort

was beginning to pick up

speed. The California Con-

sumer Privacy Act (CCPA)

took effect in January.

The law borrows liberally

has in recent years joined

privacy advocates in push-

ing for the development of

a federal law. Both sides in

the Senate had bills under

consideration before the

pandemic struck. Between

a presidential election and

the focus on disaster relief,

it’s unlikely legislators will

return to the topic this year.

“It’s unfortunate,” says

Cameron Kerry, formerly

general counsel of the U.S.

Commerce Department

and now a scholar of pri-

vacy and information tech-

nology with the Brookings

Institution and MIT Media

Lab. “Before things shut

down, it looked like there

could be some room in the

legislative calendar this

summer to reach agree-

ment on the content of the

bill. Now I think it is quite

likely at this point that

we’re looking at something

for next year.”

include Facebook, Google,

and Amazon. Jeff Chester,

executive director of the

privacy-focused Center for

Digital Democracy, coun-

ters that “the digital mar-

keting industry wants to

claim its failure to protect

privacy is now a benefit for

the public health.” He calls

for “guardrail policies” to

limit how these companies

can use the information

they collect as part of any

crisis response.

Once again, Europe is

leading the way. European

Union privacy regulators

maintain it is possible

to use privacy-invasive

tracking methods in the

pandemic, while still

respecting the rights set

out in the GDPR. In early

April, they began working

on guidance for how to

achieve this. Key ques-

tions include how long the

authorities will be able

protection against private

entities and the parallel

increase of government’s

access to personal data, as

there is still no significant

privacy protection against

government intrusion.”

The COVID-19 out-

break has seen a massive

increase in state surveil-

lance in China, in partner-

ship with the private sector

(for more, see “When Red

Is Unlucky” in this issue).

Few expect Beijing to roll

back such programs when

the crisis passes. On the

contrary, the success of its

public health measures

may be seen as a power-

ful validation of Beijing’s

approach.

It’s safe to say more

surveillance, not less, will

be the new normal in a

forever changed world.

Additional reporting by Clay Chandler

PRI.W.0520.XMIT.indd 19 4/14/2020 4:38:52 PMFINAL

F O R T U N E M A Y 2 0 2 0 2 1

ASIA

When Red Is Unlucky China’s apps for tracking the outbreak are both efficient, and worrying. BY NAOMI XU ELEGANT & CLAY CHANDLER

THE PHYSICAL BARRIERS of the

largest lockdown in human his-

tory started coming down in Wuhan,

China, on April 8. By the time shops

opened, and some of the city’s 11 mil-

lion residents ventured out, authori-

ties had introduced a more modern

method for isolating those at risk of

infection. At checkpoints throughout

the city, police and security guards

demanded residents present a QR

code on their mobile phones that

rates the user’s coronavirus risk level.

Green codes granted unrestricted

movement. A yellow code required

seven days of quarantine. Red meant

14 days of quarantine.

Local governments created the

algorithms behind the ratings at the

behest of China’s State Council and

rolled them out in Wuhan and hun-

dreds of other cities on apps hosted

by China’s largest tech companies,

Alibaba, Tencent, and

Baidu. To receive a rating,

users download an app

embedded in one of the

three ubiquitous mobile

payment platforms and

register with basic infor-

mation—name, national

identity card number,

phone number, address.

Subsequent questions are

more invasive, quizzing us-

ers on health status, travel

history, and asking them to

identify any close contacts

diagnosed with the virus.

Technology’s deep

foothold in Chinese society

fast-tracked the rollout.

More than 60% of China’s

population, or 850 million

people, own smartphones

and depend on them for a

wide range of daily activi-

ties. Local governments all

but mandated app usage

by making it a prerequi-

site for moving about. By

mid-April, Alibaba was

hosting apps for more than

200 cities and Tencent had

over 300. Baidu didn’t say

how many local apps it is

hosting.

Another reason the apps

garnered wide adoption

is that they seem to work.

But that efficiency comes

with tradeoffs. The apps’

opaque algorithms run on

sensitive information, and

users’ freedom of move-

ment is dictated by its

pocket-size traffic light.

Even as Chinese cities

reopen, residents unable

to show a green badge are

denied entry to businesses,

public areas, and transit

systems. The apps concern

human rights advocates,

who fear they’ll transform

smartphones into an ever

more powerful tool for

China’s authoritarian gov-

ernment to spy on its own

citizens.

“Technology can play

a role in containing the

pandemic,” says Doriane

Lau, a China researcher

at Amnesty International,

but “an increase in state

digital surveillance pow-

ers can threaten people’s

privacy and freedom of

expression, especially in

places where these rights

and freedoms are not well-

protected by law.”

In China, the apps’ color

codes have become a way

of life, one that—at the

very least—has given users

a ticket out of lockdown.

Cathy Fu, a tech worker

in Beijing, got stuck in Wu-

han’s Hubei province for

two months. She received

her first green QR code on

March 10. “I was so happy,”

Fu said. She gladly flashed

it weeks later as she finally

boarded a train back to her

home in Beijing.

T H E B R I E F

A traveler

displays his

QR code at

Wenzhou

railway station

in Zhejiang.

NO

EL

CE

LIS

—A

FP

/G

ET

TY

IM

AG

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FOR MARCY FISHER, one of the

global pandemic’s biggest and

most urgent recent headaches in-

volved a small piece of elastic.

On March 20, Fisher, a Ford Mo-

tor lifer who normally oversees the

automaker’s global body exterior and

interior engineering, became one of

about 200 Ford executives and em-

ployees facing an urgent new man-

date: How could the country’s largest

automakers, their massive production

lines idled by the threat of spreading

infections, pivot into producing des-

perately needed medical supplies?

Crosstown rival General Motors

had already jumped into action,

hammering out a partnership with

ventilator specialist Ventec Life

Systems. Ford CEO Jim Hackett and

his deputies consulted with experts at

the Mayo Clinic, a medical supplier,

and the White House, which was

patients’ infected coughs

and other airborne health

hazards. Within a day she

had a viable design and

was talking to suppliers

about getting the material

to make hundreds of thou-

sands more. The plastic

part was simple enough.

But when it came to the

elastic band that secures

the shield onto someone’s

head, Ford “ran into a big

industry shortage,” Fisher

recalls.

The solution, when it

came, was gloriously banal.

At 4 a.m. on March 26, one

of Ford’s suppliers opened

up its plant and started

extruding a version of the

flexible rubber tubing, or

weather strips, that you’ll

more normally find sealing

car doors and windows.

“By 8 a.m. we had a proto-

type,” Fisher says. Within

hours, her team was drop-

ping off samples at local

hospitals for ER doctors to

vet. Within days, Ford had

manufactured 100,000

of the final products; by

mid-April, it was making

1 million per week. And

AU TOMOT I V E

Ford Shifts GearsThe automaker and its competitors are pivoting to produce medical supplies. A look at what it takes to go from V-8s to ventilators. BY MARIA ASPAN

It’s completely innovative,

high-speed efforts to

turn itself into a medical

manufacturer—includ-

ing a promise to produce

50,000 ventilators by

July 4—will be even more

complicated and subject to

much greater scrutiny.

Ford’s “Project Apollo,”

named for the scrappy

rescue of the Apollo 13

astronauts, involves cross-

industry partnerships

with GE, 3M, and many

smaller suppliers, as well

as the willing participation

of more than 750 United

Auto Workers members

who will operate Ford’s

retooled factories. Besides

face shields and ventila-

ERIN BRENNAN, A DETROIT EMERGENCY PHYSICIAN, OF FORD’S IMPROVISED FACE SHIELD

and it totally works.

agitating—loudly—for the automak-

ers to get involved. Soon they were

strategizing with their counterparts at

General Electric and 3M.

While those more complicated

devices would take weeks or months

to produce, Fisher’s team started with

one of the most basic of supplies: the

plastic face shields that medical work-

ers use to protect themselves from

the elastic substitute? “It’s

completely innovative, and

it totally works,” says Erin

Brennan, an emergency

physician at a Detroit hos-

pital, who tested the face

shields. “This team has

been awesome.”

But that was the easy

part. The rest of Ford’s

A worker at a Ford subsidiary plant in Plymouth, Mich., assembles a face shield.

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tors, it will yield medical

supplies including masks,

gowns, and respirators.

Few of these devices are

simple to design, source

components for, or manu-

facture—especially under

the pandemic’s life-and-

death deadlines.

“Lives are at stake,” says

Jim Baumbick, the Ford

vice president of enterprise

product line manage-

ment, who’s overseeing

the automaker’s efforts to

make medical supplies for

COVID-19. “A lot of these

machines are incred-

ibly complex, and adding

capacity takes time. And

time is the enemy.”

That’s especially true for

the sophisticated and ur-

gently needed ventilators

that help critically ill pa-

tients breathe. Tradition-

ally made by a handful of

medical-device specialists,

ventilators require many

more components and are

much more regulated than

face shields.

In an attempt to stream-

line the process, Ford and

GE decided to focus on an

FDA-approved, relatively

simple version produced

by a small Florida com-

pany, Airon. “The key

factor is speed and getting

as many ventilators as pos-

sible to clinicians treating

COVID-19 patients,” Tom

Westrick, GE Healthcare’s

chief quality officer, says in

an emailed statement.

Even these ventilators

require about a month

of sourcing, design, and

regulatory conversations

before Ford’s factory work-

ers at the Rawsonville plant

in Ypsilanti, Mich., can

start producing them. Each

Airon machine has up to

350 parts, which Adrian

Price’s manufacturing team

spent a weekend taking

apart and 3D-scanning,

before starting to look for

ways to replicate them on

a massive scale. (One sub-

stitution: adapting a timer

valve usually used in Ford

vehicles’ powertrains.)

“When we build a car

or truck, the first thing

for us as a manufacturing

team is to figure out how

to build one, and then how

to build a few, and then

how to build them at rate,”

says Price, Ford’s director

of global manufacturing

core engineering and the

executive in charge of its

new ventilators, in early

April. “And that’s really the

process that we’ll be go-

ing through over the next

couple of weeks.”

Ford expects its internal

ventilator production to

start the week of April 20,

with a goal of making

1,500 ventilators by the

end of April; 12,000

by the end of May; and

50,000 within 100 days.

(GM will supply 6,000

by the end of May and

30,000 by the end of Au-

gust.) Still, the effort may

not be enough, as experts

are predicting the country

will need another 14,000

ventilators by mid-April.

“We’re too late to the

party,” says Marcus Scha-

backer, a physician and the

head of ECRI, a nonprofit

focused on medical devices

and patient safety. No mat-

ter how many ventilators

are actually produced in

the next few months, there

GOING TO

WAR WITH

THE VIRUS

In the 1940s, Ford

and General Motors

switched their facto-

ries over to manu-

facture tanks and

airplanes for World

War II. Now both are

invoking that compari-

son to make supplies

to fight COVID-19,

as are some of their

fellow automakers

and leaders of many

other industries. What

they’re making:

FORD is already pro-ducing 1 million plastic face shields a week and has promised 50,000 Airon ventila-tors by July. It’s also making a version of 3M’s respirators and is helping 3M and GE ramp up their own pro-duction of respirators and ventilators.

GENERAL MOTORS has promised the federal government 30,000 ventilators by the end of August, in partnership with med-ical-device specialist Ventec Life Systems. GM is also working on surgical masks and says it could eventually make 50,000 a day.

XEROX is partnering with Vortran Medical Technology to make up to 200,000 dispos-able, non-ICU ventila-tors a month by June.

DYSON has promised the U.K. government 10,000 of a newly designed ventilator, and founder James Dyson has said he will donate another 5,000 internationally.

T H E B R I E F


2 4 F O R T U N E M A Y 2 0 2 0

are other hurdles that no

manufacturer can solve, he

says—including an equally

dire shortage of trained

health care personnel that

can use them.

“It’s very good and

very positive that these

companies are stepping

forward,” adds Julie Let-

wat, a health care attorney

with McGuireWoods in

Chicago. “But the devil’s in

the details. Will they have

enough workers? Who’s

paying for these? How will

they be distributed?”

The UAW workers who

have volunteered to risk

the virus and manufac-

ture the ventilators will be

working at social-distance

levels, and Ford says it is

considering new, as-yet-

unspecified technology to

protect them. But that’s not

a guarantee, of course—

and the last two questions

are even trickier. Baumbick

says, “We haven’t spent

any time talking about

cost,” and adds that Ford

is working with a coalition

of hospitals and govern-

ment agencies and officials,

including FEMA, the CDC,

and the White House, to

decide where its medical

supplies will go.

The federal govern-

ment is also getting more

actively involved. On

April 8, the U.S. Depart-

ment of Health and Hu-

man Services announced

that it had given GM a

$489 million contract to

deliver 30,000 ventilators

by the end of August. By

then, Ford may be supply-

ing a vast array of medi-

cal supplies and personal

protective equipment. On

April 13 the company an-

nounced that it has started

making masks, and is turn-

ing airbag material into

reusable gowns.

Now that the face

shields are flying out of its

factories, Fisher has turned

her focus to a much more

complex device: a battery-

powered, air-purifying

respirator. Internally, Ford

calls it a “scrappy” version

of a PAPR, the hood-and-

air-hose devices that doc-

tors sometimes wear with

or in lieu of the N95 masks

that are in such short sup-

ply. “We thought it was go-

ing to be an area of unmet

need,” Fisher says. “And it

looked like something that

not everybody could do, in

an area where we have a lot

of engineering depth.”

The PAPR design, which

Ford has adapted from and

is developing with advice

from 3M, also required

regulatory conversations

and testing before Ford

could start production on

April 14. The company

says that it will assemble

100,000 or more of the

PAPRs at its Vreeland facil-

ity near Flat Rock, Mich.

“Things are very fluid

right now,” Fisher said ear-

lier in the month, echoing a

common refrain during this

coronavirus spring. “It’s just

moving so fast.”

BREAKDOWN OF COVID-19 CONTRIBUTION TOUNEMPLOYMENT, BY SECTOR, IN PERCENTAGE POINTS

SOURCE: GOLDMAN SACHS

We’re living through the larg-est layoff spree in American history.

In a three-week period through early April, 16.8 million Americans filed for unemploy-ment benefits, likely pushing the real unemploy-ment rate to near 15%, the highest level since 1940.

And it’s not just small- and midsize employ-ers. Fortune 500 firms are trying to limit the impact

OUT OF WORKAS THE PANDEMIC INFECTS CORPO-RATE BOTTOM LINES, COMPANIES ARE SCALING BACK THEIR WORKFORCES—RAPIDLY. BY LANCE LAMBERT

of the coronavi-rus slowdown on their finances by axing thousands of jobs. Some of the biggest companies to announce sizable job cuts include hospitality com-panies Marriott and MGM, as well as retailers Under Armour and Sephora. Other corporate titans—compa-nies such as GE Aviation, Disney, and Macy’s—are turning to fur-loughs, with the

hope of rehiring talent eventu-ally. “We’ve never been through anything that compares to this,” said Mark Zandi, chief econo-mist at Moody’s Analytics.

A few com-panies such as Instacart, Ama-zon, and Walmart have announced big hiring pushes. But they are the outliers, as the vast majority of industries are contracting. In the graphic at right, Goldman Sachs projects how many points each of these sectors will add to the growing unemployment rate in the U.S.

T H E B R I E F — A U T O M O T I V E


So Progressive offers commercial auto and business

insurance that makes protecting yours no big deal.

Local Agent | ProgressiveCommercial.com

Small business is no small task.

NOW MORE THAN EVER, THE WORLD IS WAKINGup to the importance of telemedicine. In the past decade, the use of telemedicine has exploded, with nearly 76% of U.S. hospitals using a computerized telehealth system, compared with just 35% in 2010, according to the American Hospital Association. As consumer access to technology grows, and as in-person medical resources become exhausted because of COVID-19, telemedicine is poised to become even more mainstream.

“With the spread of COVID-19, the weaknesses within our health system are now front and center,” says Jody Tropeano, content director of HLTH, the noted conference for health innovation. “One bright spot has been the increased adoption of telemedicine.”

EFFECTIVE REACHThe benefi ts of telemedicine are vast, says Tropeano. In rural communities, for example, patients who need to drive long distances to visit a doctor can rely on video or digital messaging services for routine or preventive care, reducing transportation costs and freeing up medical resources for other patients.

“If patients can utilize telemedicine to handle more mild symptom checking and other routine medical visits during this crucial time, it’s going to ease the burden to the health systems and allow clinicians to focus on higher-risk COVID-19 patients and other emergencies,” Tropeano says. Telehealth services also improve access by drastically lowering the cost of doctor visits: An in-person, non-emergency appointment averages around $176, while the same non-emergency telehealth appointment is only $40 to $50 on average.

TANGIBLE BENEFITSTelemedicine isn’t merely cheaper and more accessible. Receiving medical services quickly, easily, and inexpensively helps doctors treat mild ailments before they turn into bigger ones. Research from the California Telehealth Resource Center shows that patients in intensive care who have telehealth support experience reduced complications, spend less time in the hospital, and have a lower mortality rate than patients who don’t.

Nevertheless, only 2% to 3% of employers include telemedicine in their benefi ts packages, according to the Society for Human Resource Management. But that might be changing. One pilot study estimated that for every dollar spent by employees on health care, their employers saved six. Another study found that most employees’ health concerns were satisfi ed in just one offi ce visit—which diverted patients from more expensive health care settings, saving money for the company in the long term.

“Employers, and employees with telehealth as a current benefi t, might have been shy to adopt virtual care until this point. However, I think people will start to feel more confi dent in the benefi ts of telemedicine and utilize it more routinely going forward,” Tropeano

says. “COVID-19 has been the biggest test to the telemedicine industry so far, but I

think virtual care will emerge from this crisis as the new digital front

door to health.” ■

How telemedicine and virtual apps are lowering costs for companies while improving outcomes for employees.

VIRTUAL CARE, REAL-WORLD RESULTS

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2 8 F O R T U N E M A Y 2 0 2 0

T ECH

Focusing on FeversThermal-imaging cameras are increasingly being used to fight pandemics. But are they the right tool for the job? BY AARON PRESSMAN

Resorts, Brazilian miner

Vale, and airports in New

York, Los Angeles, and

San Francisco are just a

few of the customers that

have recently started us-

ing the equipment.

“The silver lining of

this outbreak is that in

the future, more advanced

infectious screening will

be done at all mass gath-

erings,” says Matt Fried-

man, CrowdRx’s medical

director and associate

medical director at Mai-

monides Medical Center

in Brooklyn.

Demand for thermal-

imaging equipment from

FLIR Systems, a leading

manufacturer, has grown

exponentially during the

coronavirus epidemic, says

Jim Cannon, the com-

pany’s CEO. The privately

owned firm, based in

Oregon, charges $5,000

to $7,000 for entry-level

cameras that are suitable

for medical screening.

FLIR’s thermal cameras

aren’t just for medical

uses. Energy companies

install them to spot leaky

pipelines; factories use

them to detect worn

parts in machinery; and

the military uses them

to spot enemy fighters in

the dark, including from

a drone that weighs just

30 grams.

Still, Cannon is careful

when discussing what his

gear can do in terms of

the COVID-19 pandemic.

The cameras detect “el-

when anyone had an

above-average tempera-

ture, a potential symptom

of a COVID-19 infection,

so the person could be

pulled aside for additional

screening.

The company that

supplied the technology,

CrowdRx, declined to say

whether it had identified

anyone at the event with a

possible fever. But what’s

clear is that the corona-

virus epidemic has put

a spotlight on thermal-

imaging technology as a

potentially important tool

in combating pandemics

and protecting the global

economy.

Long a fixture in

airports and rail stations

in Asia, a result of the

previous SARS and H1N1

epidemics there, thermal

imaging is increasingly

being installed world-

wide. Casino giant Wynn

SAMSUNG TOOK an unusual

precaution when it held a

splashy event in San Francisco dur-

ing the early days of the coronavirus

outbreak, before the city issued a

“shelter in place” order. The tech

giant hired a startup to install a

sci-fi-inspired system to scan con-

ference attendees for fevers.

Hundreds of people going to

the event had to walk past a high-

resolution thermal camera that

is supposed to detect body tem-

peratures with an accuracy of within

one-half a degree Fahrenheit. A

laptop running software interpreted

the data and alerted a technician

Thermal-imaging cameras identify people who have unusually high temperatures, a possible sign of infection. C

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evated body temperature,”

not necessarily fevers or

infection. “They can’t

diagnose anything,” he

explains.

And that’s a growing

concern for medical profes-

sionals tasked with slowing

the spread of COVID-19.

Even if a thermal camera

accurately determines a

person’s temperature, that

doesn’t mean it can ac-

curately detect whether he

or she is carrying the virus.

Some people have naturally

higher body temperatures,

or they may have raised

their temperature through

physical exertion. More-

over, wearing glasses can

interfere with the technolo-

gy taking accurate readings

because it needs a clear

view of a subject’s eyes.

And, far worse for the

virus fighters, a person

infected with COVID-19

can be contagious to oth-

ers for several days before

showing any symptoms.

Other infected people may

be using medication to

lower their temperature,

allowing them to slip past

thermal cameras without

being flagged.

A recent study by the

European Centre for

Disease Prevention and

Control concluded that

thermal scans of travel-

ers from China, followed

by additional screening

including questions about

symptoms like coughing

and difficulty breathing,

failed to identify three-

quarters of those infected

with the coronavirus.

Even more damning, in

March, the influential U.S.

nonprofit medical research

group ECRI published an

analysis of previous stud-

ies on the effectiveness of

using thermal screening

to fight outbreaks includ-

ing COVID-19. It found

that the technology, used

alone or in conjunction

with questionnaires, is

“ineffective for detecting

infected persons” and that

it “could provide a false

sense of safety.”

The review came

after a large U.S. health

care system asked ECRI

whether it should install

thermal cameras to screen

people entering hospitals,

explains Andrew Furman,

ECRI’s executive director.

“Even under a best-case

scenario, you’re going to

miss more than half of the

infected population,” Fur-

man says. “The evidence

is telling us that this is not

going to help.”

CrowdRx’s Friedman,

who has also served as

the lead in-house physi-

cian for Yankee Stadium,

Madison Square Garden,

and the U.S. Open tennis

tournament, agrees that

the thermal-imaging tech

is imperfect. But he cites

some other studies that

found the technology

successfully identified

fevers more than 90% of

the time. And people with

fevers are more conta-

gious than asymptomatic

carriers, he says.

“By no means does its

sensitivity approach 100%

at capturing all infected

persons,” Friedman says.

But still, he adds, when

it comes to large gather-

ings, either at workplaces

or major events, using the

technology “should be the

minimum bar.”

PANDEMIC-FIGHTING TOOLS

OF THE FUTUREA NUMBER OF FAR-OUT IDEAS ARE BEING DEVELOPED TO COMBAT THE NEXT EPIDEMIC.

GERM-RESISTANT CLOTHING

An Israeli company is infusing fabric with copper to trap germs and bacteria so that it can be used in protective gear. Meanwhile, researchers in the U.K. have developed face masks manufactured with a protein coating on the fabric that they say protects against 96% of airborne virus cells.

MAPPING MAMMALS

Researchers mapped all 55 of the viruses found in a particular species of bat as a “proof of concept” for a multibillion-dollar initiative to identify and analyze all viruses in mammals. During the project’s first 10 years, orga-nizers say they could map an estimated 320,000 viruses, which may give health officials a head start in combating future pandemics caused by viruses jumping from animals to humans.

VIRUS-KILLING ROBOTS

Chinese and Danish companies have developed robots that can disinfect hos-pitals and offices by emitting concen-trated ultraviolet light as they maneuver around. Some countries have also tried using drones to spray disinfectant on potentially infected areas.

MEET-UPS IN VIRTUAL REALIT Y

As seen all too often, people like to congregate even when they’ve been or-dered not to. Better virtual reality tech-nology that provides more realistic and immersive experiences could provide a safer way to socialize in the future.

A CACOPHONY OF COUGHING

The sound of people coughing and sneezing may one day provide an early warning about impending pandemics. University of Massachusetts research-ers have created a device hooked up to microphones that monitors waiting rooms in doctors’ offices and hospitals. If software detects a rise in throat clearing and wheezing, it can, in theory, raise a red flag. In a trial in one clinic last year, the device predicted illness rates that matched the results from lab tests on patients.

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The Tesla bull is loading up on “names that have been crushed.”

F O R T U N E M A Y 2 0 2 0 3 1

IN V EST

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

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

No one can accuse Catherine Wood

of being a by-the-numbers inves-

tor. Wood, whose tech-focused firm

has more than $10 billion under

management, is famous for being

the biggest Tesla bull on the Street.

Now she’s taking her focus on

“disruptive innovation,” applying a

long-term view to the coronavirus-

ravaged stock market, and betting

on some beaten-down shares.

Wood notes that high-fliers like

Netflix, a high-conviction hold-

ing for ARK, have held up well in

the market plunge. But they don’t

offer the kinds of returns she’s see-

ing from “names that have been

crushed.” That’s why

Wood is selling some

Netflix and moving

into companies that

are going to “gain

more traction because

[they’re] solving a

lot of problems” illuminated by the

coronavirus. One stock Wood picked

up on sale is 2U, an online educa-

tion technology company catering to

homebound students. Another is on-

line real estate marketplace Zillow,

which she believes will benefit from

“an acceleration toward online real

estate shopping.” —Anne Sraders

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Liz Ann Sonders C H I E F I N V E S T M E N T S T R AT E G I S T, C H A R L E S S C H WA B

“The hit to the economy … is still ahead of us.”

Mohamed El-ErianC H I E F E C O N O M I C A D V I S E R , A L L I A N Z

Investors need to answer “yes” to three questions before the all-clear.

Allianz’s chief economic adviser Mohamed

El-Erian gets asked lots of questions these

days: Where will the market bottom? When

should investors put their money to work? But

as investors keep searching for that bottom—

and signs that the coronavirus crisis may be

abating— El-Erian suggests, instead, they ask

themselves three questions:

“One: Do you as an individual feel that if

you catch the virus, you will be treated well

[and with enough equipment] in a hospital

or not? Two: Can you identify with some

confidence who has the disease and who

doesn’t, and what is the risk of that disease

spreading? Third: How comfortable are you

about your immunity?”

Until investors can answer those questions,

El-Erian tells Fortune, “we’re not going to be

able to really have certainty that we’ve turned

the corner”—and investors won’t be able to be

optimistic in a decisive way about their

portfolios. —A.S.

as well as temporary

staffing and electricity

output (tracked by the

New York Fed’s newly

launched Weekly

Economic Index)—

“stuff that really

picks up the weak-

ness we’re seeing and

we’ll continue to see.”

Among stocks, she’s

avoiding small-cap

companies (with their

shaky balance sheets)

in favor of large-cap

stalwarts. She also

favors the health care

sector—and while that

call predates the pan-

demic, it’s “reinforced

to some degree by the

virus.” —Jen Wieczner

The stock market

isn’t always the best

bellwether of what’s to

come in the economy.

Though stocks rallied

powerfully in early

April, Schwab’s Liz

Ann Sonders isn’t

bullish yet. “I think

we’ve just scratched

the surface in terms

of the hit to the labor

market,” she says. “I’m

very confident that the

hit to the economy,

at its maximum, is

still ahead of us, not

behind us.”

That’s why Sonders

is watching unemploy-

ment data, both initial

and continuing claims,

3 2 F O R T U N E M A Y 2 0 2 0

Sonders is avoiding small-cap stocks and focusing on stalwarts.

El-Erian says we don’t yet have enough information to know if we’ve turned the corner.

SO

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TO

PH

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GO

OD

NE

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GE

TT

Y I

MA

GE

S;

EL-

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: S

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Teresa BargerC E O A N D C O F O U N D E R , CART ICA

Asian markets are “definitely past the worst.”

As the manager of a $1.2 billion hedge fund

investing exclusively in small- and medium-size

companies in emerging markets, Teresa Barger

views the coronavirus from a specific point

of view. She has divided her investing world

into three “waves”—where the coronavirus was

(Asia), where it is (Europe), and where it has

yet to really spread (Africa and Latin America).

Accordingly, she’s taking a wait-and-see ap-

proach to the Southern Hemisphere where

“there’s not enough data.”

For now, Barger is “really focused on north

Asia, where we know what their capacity is to

deal with it if there is another outbreak,” she

says, noting the region’s relatively ample medical

supplies and strong public-health infrastructure.

“I think they’re definitely past the worst.” That

includes Korea and Taiwan, where she’s fond of

tech companies whose businesses track semicon-

ductor demand—and which she prefers over Chi-

nese companies, whose stock prices have already

bounced back significantly. —J.W.

Lori Keith P O R T F O L I O M A N A G E R , PARNASSUS

Find companies poised to win in the “back half of this recovery.”

investors should really

be thinking as you

look out on the back

half of this recovery.”

One name that

checks her boxes?

Clorox. Keith believes

the disinfectant-wipe

maker will prosper as

people stay focused

on sanitation and

infection control.

Another is Digital

Realty, a real estate

investment trust

specializing in data

centers. Keith sees it

benefiting as more

people work from

home and companies

shift systems to the

cloud. —A.S.

When the market is

in free fall, visualizing

long-term gains

can be difficult. But

Lori Keith, who

manages Parnassus’s

$4.7 billion Mid Cap

Fund, is applying a

disciplined approach

even as stocks

swing wildly. She’s

“looking for those

companies that are

going to be winners of

tomorrow”—with wide

competitive moats and

strong balance sheets

that are poised to gain

significant share from

all the dislocation

that’s occurring right

now. “That’s where

T H E B R I E F — I N V E S T

Keith is looking for companies with wide competitive moats.

Hedge fund manager Barger is taking a wait-and-see approach to stocks in South America.

KE

ITH

: R

EE

D Y

OU

NG

; B

AR

GE

R:

CO

UR

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OF

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MA

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ME

NT


I

3 4 F O R T U N E M A Y 2 0 2 0

IMAGINE THAT the United States en-

tered into a major land and sea war,

and that only then, after the conflict

began, did the government begin

commissioning contracts to design

and build the aircraft carriers, fighter

jets, and other weapons systems we

would need for the fight. Well, the

imagination needn’t run too far,

because in essence, that is what has

happened as we were sucked into our

war against the coronavirus. While

there is much that can be faulted in

our flat-footed response to this pan-

demic, especially at the federal level,

one clear-cut failure should be even

more obvious to anyone who has ever

run a business: We had glaring gaps

in our supply chain and no immedi-

ate plan to fill them.

Start with the basics: We did not

have anywhere near the necessary

number of N95 respirator masks,

gowns, and other equipment to

protect our frontline troops—the

medical first-responders and hospital

staff. Nor did we have enough ven-

tilators to support our most severely

stricken living casualties. Witness the

scramble of state governors outbid-

ding one another and the federal

government to procure ventilators

and personal protective equipment

(PPE). While the U.S. does have a

Strategic National Stockpile (SNS),

an emergency repository of antibiot-

To Battle a Pandemic, Think Like the Military

BY MICHAEL T. OSTERHOLM AND MARK OLSHAKER

ILLUSTRATION BY N I C O L A S O R T E G A

BIG.W.0520.XMIT.indd 34 4/10/2020 8:03:23 PMFINAL

ics, vaccines, chemical antidotes, and

other critical medical supplies, it has

never been sufficiently maintained.

Indeed, no administration, including

the present one, has supported fund-

ing an SNS robust enough to meet

even the first few months’ worth of

need during a severe pandemic.

So why do we have stockpile upon

stockpile of arms and matériel for

combat against human foes, but only

a paltry supply of weapons against

pathogenic enemies that could poten-

tially claim millions more casualties?

It comes down to this: We have failed

to prepare for a war against microbes

with the same urgency and resolve

as we do a conventional war. And

the difference shows in the business

models we bring to each fight.

Even in non-pandemic times,

more than 85% of the critical acute

drugs needed each day to keep

people alive are produced offshore.

Nearly all are generic, with produc-

tion concentrated in China and

India. Sedatives critical to intubate

for ventilation, such as ketamine,

propofol, and pancuronium, are

already in short supply. Despite their

vital importance to our national

health, these fragile, just-in-time

supply chains show how reliance on

foreign on-demand manufacturing

leaves our country highly vulner-

able. During a pandemic such as

COVID-19, this vulnerability can

translate into tens or perhaps hun-

dreds of thousands of lost lives.

The only route to effective pre-

paredness is to institute a military

procurement and planning model

similar to what we do for conventional

warfare. This isn’t the first serious

pandemic to hit American shores, and

it won’t be the last. We need to plan

and budget long-term for what we

know we’ll need and steadily procure

the right armaments. This model pre-

supposes a certain amount of waste

and spending on weapons that may

never be used. But that is a price we

have long been willing to pay on the

military defense side. The infectious

disease side should be no different.

Those who believe that the free

market alone can serve our needs are

likely failing to factor in the biologi-

cal complexity of the challenge we

face. For example, we desperately

need new antimicrobial drugs to

which the many disease-causing

bacteria, viruses, and parasites have

not yet developed resistance. But it’s

nonsensical to ask a pharmaceutical

company to spend billions of dollars

developing a powerful antibiotic—

then ask that it not be used or sold

except in the most extreme cases, so

the microbes won’t become resistant.

Similarly, the Pentagon doesn’t tell

companies to develop and manufac-

ture a new fighter plane and then

only later decide if it wants to buy it.

We need the same strategic capacity

for PPE and ventilators as we do for

rifles and tanks. The Defense Produc-

tion Act is a critical tool in wartime.

But it cannot magically make General

Motors or Ford able to produce ven-

tilators with more than 1,500 parts

sourced from scores of countries in

response to a fast-moving crisis.

The government needs to be a

partner in developing microbial

weapons and the muscle to quickly

produce and distribute them. How

might things be different if we had

taken SARS more seriously in 2002,

or MERS in 2012, and developed a

coronavirus vaccine platform, even

with little commercial market? We

may not have had a vaccine targeted

at COVID-19, but we would have been

many months further along. And

since it is beyond dispute that another

flu pandemic like the one in 1918–20

is a matter of when, not if, an urgent

large-scale enterprise to develop a

universal influenza vaccine could be a

tremendous gift to mankind.

Pandemics have become a threat

on the scale of thermonuclear war.

We must start treating them that way,

making the investment and ensuring

a stable supply chain for the tools and

weapons we’ll need. We can see the

consequences of past inattention right

now. We must not again allow the un-

thinkable to become the inevitable.

This won’t be the last serious pandemic to hit American shores. We need to plan ahead to acquire the weapons we’ll need.

A B O U T T H E W R I T E R S

Michael T. Osterholm is Regents Professor and director of the Center for Infectious Disease Research and Policy at the University of Minnesota. Mark Olshaker is a writer and documentary film-maker. They are the authors of Deadliest Enemy: Our War Against Killer Germs.

T H E B I G I D E A

BIG.W.0520.XMIT.indd 35 4/10/2020 8:03:23 PMFINAL

ANY GOLFER WORTH HIS OR HER SALT

will tell you that impact is what truly counts.

It doesn’t matter whether your swing is Adam

Scott fl awless or Jim Furyk funky—the moment

when club meets ball is where the rubber meets

the road. Impact is also an essential component

of the PGA TOUR. While the fans’ focus centers

on the competition, one of the TOUR’s main

intents is community outreach —in other words,

its impact on its host communities worldwide.

The scale of the TOUR’s charitable eff orts since

1938? Three billion dollars and counting.

Consider the coronavirus pandemic, which

has upended every aspect of life. In mid-March,

the PGA TOUR was in the midst of its fl agship

championship, THE PLAYERS, held annually at

its TPC Sawgrass headquarters in Ponte Vedra

Beach, Fla., when public health safety neces-

sitated calling off the tournament after Thurs-

day’s fi rst round. (The TOUR soon announced the

cancellation of events through late May.) Fans’

disappointment was understandable, but perhaps

the more signifi cant potential knock-on eff ect

centered on THE PLAYERS’ charitable support.

Would that likewise be canceled?

PGA TOUR commissioner Jay Monahan made

clear that same Friday that it would not.

“Hold us accountable,” Monahan said.

DECISIVE ACTION

The next day, Monahan led the charge to back

up his words. He and more than 30 volunteers,

including PGA TOUR and THE PLAYERS staff , TPC

Sawgrass chefs, former volunteer chairmen, and

friends and family, went to the Sulzbacher Center

for the homeless and at-risk in neighboring

downtown Jacksonville to serve lunch,

donated by TPC Sawgrass and THE

PLAYERS’ two caterers, to some 250

people in need. Another week’s worth of

lunches went into the facility’s freezers

and walk-in refrigerator. It was, in golf

terms, an inspired piece of scrambling, as

food that would have been consumed by

fans at THE PLAYERS went to good use.

And it wasn’t just PGA TOUR manage-

ment lending a hand, as the organiza-

tion’s community-minded ethos extends

to the players too. Five-time TOUR winner

and area resident Billy Horschel, along

with his wife and daughters, helped

workers load food onto a semitrailer to

be shared with the Feeding Northeast

Florida community food bank. Horschel

also donated $20,000 of the $52,500 he

earned from the canceled championship to the

food bank, distributing the rest among other

charitable causes.

Volunteers play a critical role as well. Without

the dedication of more than 2,000 volunteers

annually at THE PLAYERS, for example, the event

couldn’t possibly have produced the record $9.25

million it generated for local nonprofi t charities in

2019, nor the more than $100 million it has pro-

duced since the tournament’s 1974 launch.

By the time the 2020 PLAYERS would have ended,

22 tons of food, worth $700,000, had gone to

Feeding Northeast Florida and its network of

agency partners, like the Sulzbacher Center, with

less fanfare than a tournament-winning putt but

far more import.

“Our players play a big role in driving our

charitable mission and helping to positively

impact diverse audiences,” says Anne Davis,

director, PGA TOUR Tournament Business Aff airs,

Community Impact, “and our more than 100,000

volunteers are vital to our ability to improve lives,

enrich communities, and honor the game of golf

and its values.”

IMPACT OF ALL KINDS

The game of golf requires a variety of shots

to achieve mastery, each demanding a diff er-

ent type of impact. The same can be said of

the TOUR’s community outreach, which seeks a

footprint both deep and wide. This holds true for

every tournament, each of which aids an array of

local endeavors.

“The PGA TOUR supports a broad range of

causes and organizations in every tournament

community—from small grassroots nonprofi ts to

C O N T E N T F R O M P G A T O U R

MAJORIMPACTFor the PGA TOUR, community outreachis at the heart of the game.

Our players

play a big role

in driving our

charitable

mission and

helping to

positively

impact diverse

audiences.Ó ANNE DAVIS

DIRECTOR, PGA TOUR

TOURNAMENT BUSINESS

AFFAIRS, COMMUNITY

IMPACT


local chapters of major national charities, primary

charitable host organizations, and fundraising

organizations,” Davis notes. “Every tournament is

diff erent, and every tournament community has

diff erent needs.”

THE PLAYERS can tell that story too. Beyond

food security eff orts, the tournament’s charitable

investments have benefi ted nonprofi t organiza-

tions that promote youth education, character

development, health and wellness, and military

support. And the breadth of support is impres-

sive: Dreams Come True, which fulfi lls the dreams

of children battling life-threatening illnesses. The

MaliVai Washington Youth Foundation, started

by and named after the former tennis pro, which

received a $500,000 donation last year toward

completing a $5 million capital campaign, in

part for a new teen center. Junior Achievement,

a fi nancial literacy, workforce preparation, and

youth-entrepreneurship program. Boys and Girls

Club of St. Augustine. Two charter schools, KIPP

and Tiger Academy, in underserved areas.

On the health care front, THE PLAYERS re-

cently gave $1 million to Flagler Health+

Foundation to help create a mental health pro-

gram in St. Johns County schools that addresses

the growing suicide rate among teens. Nemours,

a nonprofi t pediatric health system, received

a $500,000 donation to support the renova-

tion of the clinic lobby that welcomes children

from around the world impacted by hearing loss,

cancer, and blood disorders. And the Northeast

Florida Healthy Start Coalition received $100,000

to help lower infant mortality rates.

Professional golf certainly isn’t a matter of

life and death, but thanks to the PGA TOUR’s

charitable eff orts, it makes a positive impact, like

a 300-yard drive straight down the fairway. ■

1. BILLY HORSCHEL AND

HIS DAUGHTERS LOAD

A FEEDING NORTHEAST

FLORIDA TRUCK. 2. PHIL

MICKELSON VISITS WITH A

YOUNG CANCER SURVIVOR AT

THE PLAYERS. 3. YOUTH AT

THE PLAYERS CHAMPIONSHIP

BOYS & GIRLS CLUB OF ST.

AUGUSTINE. 4. PGA TOUR

COMMISSIONER JAY

MONAHAN SERVES MEALS

AT A CENTER FOR THE

HOMELESS AND AT-RISK.

5. THE PLAYERS AWARDED

A $500,000 GRANT TO THE

MALIVAI WASHINGTON YOUTH

FOUNDATION TO SUPPORT

THE FOUNDATION’S NEW

TEEN CENTER. 6. “DREAMER”

DYLAN BROWNING POSES

WITH RICKIE FOWLER DURING

HIS DREAMS COME TRUE

VIP EXPERIENCE AT THE

PLAYERS.

1 2

3

56

4


3 8 F O R T U N E M A Y 2 0 2 0

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

HOW A MERIC A WI L L RECOVER

T H E C O R O N A V I R U S E C O N O M Y

A IR LINE S PLO T A NE W T R A JEC T ORYB Y V I V I E N N E W A L T

48A ‘GR EEN’ SILV ER LINING T O A N OIL-PAT C H C LOUDB Y J E F F R E Y B A L L

40A M A R K E T SELLOFF, SEC T OR BY SEC T OR B Y B R I A N O ’ K E E F E &

N I C O L A S R A P P

468 6 T HE R E S TAUR A N T INDU S T RY? B Y E M M A H I N C H L I F F E

44INSIDE

INT.W.05.20.XMIT.indd 38 4/14/2020 9:17:05 PMFINAL

ILLUSTRATION BY N I C O L A S O R T E G A

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B A NKS W ER E R E A DY

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C OME T O T HE R E S C UE ?

B Y S Y M U K H E R J E E

54 56

INT.W.05.20.XMIT.indd 39 4/14/2020 9:17:06 PMFINAL

4 0 F O R T U N E M A Y 2 0 2 0

IN MARCH, FRENCH PRESIDENT Emmanuel Macron went on national television from the Élysée Palace and told his coun-trymen that in the fight against the coronavirus, “We are at war.” Three days later, Patrick Pouyanné, chief executive of French oil giant Total, delivered to his roughly 100,000 employees a video message about the energy rout that was no less blunt. The price of oil had collapsed, “halving our share price,” noted the visibly pale CEO, speaking from the Total Tower in Paris into a microphone he was clutching in his right hand, in the style of a talk-show life coach. To stanch the bleeding, Total for 2020 would slash its capital spending more than 20%, nearly triple its planned cuts in operating expenses, and suspend share buybacks.

But one thing Total would not do, Pouyanné told his workers, was cut spending on its “new energies” division, a unit that includes investments in solar, wind, and bat-teries. That unit, Pouyanné declared, “will be safeguarded, as we must prepare for the future.” The upshot: This year, the approximately $2 billion Total will spend on its renewable-energy and energy-storage forays will account for about 13% of the company’s capital spending—a share

that once would have been all but in-conceivable for a fossil-fuel producer.

Long before this spring’s epic oil-price crash, the energy sector was struggling with a longer-term existential threat. Gone were the good old days, when oil consumption grew inexorably and the nations and corpo-rations that controlled the most juice minted the juiciest profits. A scary new world had arrived, one in which oil demand was projected to peak in the next couple of decades even as ex-ternal pressure surged—not just from environmental activists and regula-tors, but also from central banks and hedge funds—for Big Oil to diversify into lower-carbon energy sources.

That pressure already had begun to reshape the industry’s business strategy. Today’s energy-market car-nage shows every sign of intensifying that low-carbon shift.

The plummeting oil price has changed the return-on-investment calculus for both oil executives and mainstream investors. It has slashed the profit margins of many petroleum projects to the lower levels long typical of renewable-energy projects. But the greener projects, because they typically sell their energy under much longer-term contracts than are com-

STANDING TALL A wind farm near Palm Springs. The ripple effects of the coronavirus crisis have raised the profile of renewable-energy projects, both in local power supplies and in oil giants’ investment plans.

ENERGY

Plummeting prices and consumer demand are squeezing Big Oil like never before. But those forces are also making renewable energy a more attractive investment for the industry’s biggest players.

BY JEFFREY BALL

A ‘GREEN’ SILVER LINING

TO AN OIL-PATCH CLOUD

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mon in the oil industry, remain lower-risk. And the oil majors’ long-term clean-energy activities are relatively unaffected by the companies’ short-term spending cuts, because those cuts aim to minimize the amount of petroleum the firms bring to market at today’s suddenly depressed prices.

Right now, the oil industry is reel-ing from a one-two punch: a supply surge sparked by brinkmanship between Saudi Arabia and Russia, and demand destruction amid a likely recession set off by the coronavirus. The price of Brent crude, the interna-tional benchmark oil, cratered 52% between March 3 and April 1, and prices per barrel were languishing around $30s in mid-April. Global oil consumption, whose growth has been slowing for several years, actually will fall in 2020, the first full-year drop since the global financial crisis, the

International Energy Agency projects. Major oil companies have scurried to retrench as their stock prices tanked; Exxon Mobil announced in April some of the deepest cuts, pledging to ax 2020 capital spending 30%, to $23 billion. Some smaller firms have begun filing for bankruptcy, among them Whiting Petroleum, a once-high-flying producer in the North Dakota–focused Bakken shale play.

As has happened so often before in the oil patch, boom has turned to bust. The industry was hoping that a mid-April agreement to curb produc-tion, particularly by Saudi Arabia, would buoy prices. But the industry’s underlying challenges remain: plenti-ful supply and slowing growth in de-mand. Particularly hard hit will be the Permian Basin, a storied and prolific oil zone spanning western Texas and eastern New Mexico. Retrenchments

by major Permian producers Exxon Mobil, Chevron, and Occidental Petroleum foreshadow spending cuts in the basin this year totaling many billions of dollars.

Ken Winkles feels the coming crunch from his office in Pecos, Texas, in the Permian’s heart. Until recently in Pecos, throngs of oilfield workers had the bunkhouses known as “man camps” bursting, the burger joints breaking records, and the traffic snarled. All that is now dissipating. In March, in an ominous early indicator, the num-ber of drilling-rig permits granted in the county was down 38% from February 2020 and 59% from March 2019. Winkles, executive director of the Pecos Economic Development Corp., considers himself an optimist. But he’s also a realist. “We’re just in the begin-ning of the slowdown, crash, whatever you want to call it,” he tells me.



4 2 F O R T U N E M A Y 2 0 2 0

The bust came fast. When Chevron held its annual investors’ meeting in New York on March 3, amid mount-ing concern about the coronavirus, it forsook handshakes, prompting executives and analysts to greet each other with elbow bumps. Still, the bumpers were bullish. Executives whipped through slides outlining investment plans that assumed Brent would remain at $60 a barrel.

Three days later, the Saudi-Russia fight sent oil prices through the floor. On March 24, Chevron, scrambling to regain its bearings, announced it would cut its 2020 capital-spending budget 20%, to $16 billion. The cuts will focus on short-term production—nearly half will come by curbing pro-duction in the Permian Basin. They’ll also include layoffs. This downturn is

“the most difficult one the industry has faced,” Pierre Breber, Chevron’s chief financial officer, tells me. “Assuming that oil stays at $30 for two years is certainly a stress case that we need to have our arms around.”

But Breber says Chevron’s long-term plan to cut its carbon intensity is “largely intact.” Those plans include retrofitting oil-drilling operations to make them more energy-efficient. Chevron is also ramping up, notably at a massive natural-gas field off the coast of Australia, a technology called

“carbon capture and sequestration,” which grabs carbon-dioxide emissions and shoots them underground—an approach many scientists see as es-sential to curbing climate change.

T

H E V I RUS - D R I V E N economic slowdown, too, is highlighting the competitiveness of renewable energy—

particularly in electricity markets, where oil companies increasingly are deciding they must play. In many parts of the world, power demand has fallen. Those declines have had the effect of increasing the percent-age of power in those markets that’s supplied by solar and wind, both because their fuel is free and because of production subsidies they get. The global crash has “fast-forwarded some power systems 10 years into the future,” Fatih Birol, the IEA’s executive director, wrote in a March analysis, “suddenly giving them levels of wind and solar power that they wouldn’t have had otherwise without another decade of investment.”

A case in point is California, long a green-energy leader. As of mid-April, with the state’s population under shelter-in-place orders, weekday electricity demand was down 5% to 8% below normal levels, according to the state’s power-grid manager, the California Independent System Operator. Renewable-energy genera-tors typically sell their power to the grid at lower prices than fossil-fuel generators do, because their energy, unlike fossil fuel, is lost if they don’t use it. So “it’s a reasonable conclu-sion that renewables are serving a higher percentage of the load than they would otherwise,” Steve Berb-

erich, chief executive of the opera-tor, tells me. That has amplified the problem that, at times of particularly strong sunshine or wind, renewable-energy sources generate more power than California can use. And that highlights the rising importance of improving the nimbleness of power grids—with technologies such as energy storage—to accommodate greater supplies from renewables.

Renewable-energy projects aren’t immune to the global eco-nomic shock. Overall growth in solar-panel and wind-turbine sales is slowing from its recently torrid levels, as factories, shipping, and electricity demand take a pause. At France’s Total, executives say that construction delays are likely for some solar and wind farms because coronavirus-related restrictions are waylaying workers. In a sense, though, that’s a sign of the prog-ress that clean-energy technologies have made: Once a rounding error, they’re now significant enough as industries that they’re as exposed to macroeconomic forces as are the fossil-fuel behemoths.

The headwinds for clean energy, moreover, are relative. As oil heads for its worst year in recent memory, solar and wind installations remain strong, according to Wood Macken-zie. Global solar projects will dip a bit in 2020 before resuming quick growth next year, the research firm projects, and wind installations will post a new yearly record.


$447,612,200,000DECLINE IN MARKET VALUE OF THE STOCKS IN THE S&P 500 ENERGY SECTOR, MARCH 2 TO MARCH 18, 2020

SOURCE: BLOOMBERG


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THIS IS WHAT HIGH BLOOD PRESSURE LOOKS LIKE.

4 4 F O R T U N E M A Y 2 0 2 0

THE CORONAVIRUS RECESSION has left no industry untouched, but the restaurant business is arguably the hardest hit so far. The food and beverage sector accounted for 60% of the jobs lost in March, the first wave of the tsunami that has since prompted 16.8 million Americans to apply for unemployment. The impact on those workers foreshadows a su-persize blow to the economy at large. The restaurant industry—which in-cludes five chains large enough to ap-pear in the Fortune 500— contributes an estimated 4% of the U.S. GDP, or roughly $1 trillion.

To get a sense of the ways in which the industry has been impacted—and how it might ultimately pick up the pieces, Fortune spoke to three restaurateurs, each leading a very different type of establishment.

B R I A N N I C C O L Chairman and CEO, CHIPOTLENATIONAL CHAIN — 2,600 LOCATIONS

$5.6 BILLION IN ANNUAL REVENUE — 85,000 EMPLOYEES

THE IMPACT OF THE VIRUS ON CHIPOTLE and its employees “breaks my heart,” says Brian Niccol. The crisis comes at a particu-

larly frustrating time for the new CEO, who was guiding the chain past its earlier food safety issues by redesigning restaurants and rolling out new menu items like carne asada—changes that helped provide a 15% bump in revenue last year.

“We’ve kind of hit the pause button on those things,” he says. In-stead, Chipotle, like its chain-restaurant peers, is focused on adapt-ing to the new reality: plunging consumer demand and a workforce increasingly concerned about its health and safety—not to men-tion longer-term job security. The brand has reduced hours at 10% of its stores and closed 3% of locations—mostly those in shuttered malls or shopping centers—furloughing those employees. The rest of the hourly workforce, still coming in, received a 10% pay bump through mid-May; Chipotle employees typically get three days of sick leave, and now those working during the crisis are eligible for up to two weeks of sick pay, depending on their work schedules.

Some long-term changes to the company may be positive, Niccol says. More diners are now turning to the chain, traditionally a lunch staple, for dinner, he notes. Digital orders—already up 90% last year to 18% of total sales—will, he expects, become a permanent consumer habit (although that revenue stream largely depends

RESTAURANTS

The virus has done something no other attack or downturn could: all but shutter the food-service sector. How can a business dedicated to bringing people together survive a disease that keeps us apart?

BY EMMA HINCHLIFFE

86 THE RESTAUR ANTINDUSTRY?

Estimated cash flow required for independent U.S. restaurants to pay all current expenses

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on the continued success of partners like Uber Eats). Niccol also predicts that restaurant industry employees, burned by rapid layoffs at other companies, may start paying closer attention to the financial health of their employers (Chipotle has prioritized a healthy balance sheet as it has recovered from its 2015 E. coli outbreak):

“Employees are going to have a closer eye on, ‘What is the health of my company? How good of a cash position are they in in the event of a crisis?’ ”

T O M C O L I C C H I O

Owner, CRAFTED HOSPITALITYMIDSIZE RESTAURANT GROUP —

5 CRAFTED HOSPITALITY LOCATIONS

4 ’WICHCRAFT LOCATIONS — 475 EMPLOYEES

TOM COLICCHIO has high standards—for his staff, for Top Chef contestants, and for the nation’s lawmakers. As one of the founders of the newly created Independent Restaurant Coalition (IRC), the Crafted Hos-pitality and ’Wichcraft owner has become a spokesman for the sector’s 11 million or so servers, chefs, kitchen staff, and hosts, and is calling for government support. “Without help, the restaurant industry is going to be decimated,” he says. Colicchio is lobbying for changes to Congress’s CARES Act that account for the particulari-ties of running a restaurant. For instance, the legislation forgives loans for compa-nies that keep employees on the payroll for at least eight weeks after disbursement; many restaurants need the money now but suspect that it will take far longer to return to business as usual. Colicchio opted to close the doors of his establishments on March 15, sending his nearly 500 employ-ees to file for unemployment rather than try to transfer to a takeout model as some of his fine-dining peers have done. The risk outweighed the pros of staying open, he says: “I couldn’t live with myself if, for a couple thousand dollars a night, someone may end up on a respirator.”

The IRC is pushing for new tax rebates and other longer-term support, but for Colicchio, the immediate priority is keeping the industry—and its role as a community touchstone—alive. “Our neighborhoods without restaurants aren’t neighborhoods,” he says. “Our buildings with ground floors empty—that just feels like the city is dead.”

M O O N LY N N T S A I , Co-owner, KOPITIAM INDEPENDENT RESTAURANT — 1 LOCATION — 28 EMPLOYEES

IT WAS ONLY JANUARY when Manhattan’s Chinatown, home to Moonlynn Tsai’s Malaysian coffeehouse and restaurant, first felt the sting of the coronavirus. Diners, concerned about the new disease in China, began avoiding the area—despite an utter lack of evidence that the virus was present in the neighborhood.

Three months later, Kopitiam—named for the Hokkien word for coffeehouse— remains open, but it’s making less than 5% of its usual sales. The beloved eatery, first opened in 2015, is deeply entrenched in the community. Its staffers are a mix of local high-schoolers and elderly residents, and Tsai and her business partner, chef Kyo Pang, are trying their hardest to continue serving their neighbors. The pair furloughed their staff on March 17, days after New York City ordered restaurants to close, but paid all employees through April 1. They’ve tried to keep some revenue coming in with takeout orders, as well as gift cards and special offers like an at-home kit to build the restaurant’s famous kaya jam toast. But the challenges continue. Tsai said suppliers have gone from delivery every day to three times a week. In just a month, Kopitiam burned through all its savings from the past two years.

Looking ahead, Tsai fears for her fellow Chinatown establish-ments. If her restaurant—fawned over by food critics and with a savvy digital presence—can’t weather the storm, what will happen to others?

As for Kopitiam, she’s not ready to think beyond the next days. “I’ve learned to numb myself. If I start sitting still, all the emotions are going to come,” Tsai says. “We were hoping by now we could expand, but everything we had for that has been wiped out. If this happens again—how do we make sure we’ll be okay?”


NEIGHBORHOOD FIXTURE: Kopitiam’s Moonlynn Tsai in New York City’s Chinatown.

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RES.W.05.20.XMIT.indd 45 4/13/2020 8:24:30 PMFINAL

P/E RATIO LEVELS

COMMUNICATION

INDEXES

CONSUMER

DISCRETIONARY

CONSUMER

STAPLES

INDUSTRIALS

I.T.

FINANCIALS

HEALTH CARE

SECTOR PERFORMANCE

DURING RECENT

BEAR MARKETS

DOW JONES INDUSTRIAL AVERAGE

RUSSELL 2000

S&P 500

GLOBAL EQUITY (MSCI WORLD)

MEDIA & ENTERTAINMENT

TELECOMMUNICATION SERVICES

AUTOMOBILES & COMPONENTS

CONSUMER DURABLES & APPAREL

CONSUMER SERVICES

RETAILING

FOOD & STAPLES RETAILING

FOOD, BEVERAGE & TOBACCO

HOUSEHOLD & PERS. PRODUCTS

ENERGY

BANKS

DIVERSIFIED FINANCIALS

INSURANCE

HEALTH CARE EQUIPMENT & SERV.

PHARM BIOTECH & LIFE SCIENCES

CAPITAL GOODS

COMMERCIAL PROFESSIONAL SERV.

TRANSPORTATION

SEMICONDUCTORS

SOFTWARE & SERVICES

TECHNOLOGY HARDWARE

MATERIALS

REAL ESTATE

UTILITIES

GOLD

OIL

BONDS

LOWEST RECORDED IN PREVIOUS TWO BEAR MARKETS* 2020 RANGE

APR. 9, 2020

0 10 20 30 40 50x

0 10 20 30 40 50x

* 2000 AND 2007 BEAR MARKETS. LOWEST P/E LEVELSIN THE PERIOD 2000–04 AND 2007–11

CHART: NICOLAS RAPP WITH SCOTT DECARLOSOURCES: BLOOMBERG; YARDENI RESEARCH

MARKETS

4 6 F O R T U N E M A Y 2 0 2 0

THE DIVE INTO THE RED was sudden and across-the-board. As the coro-navirus crisis escalated, U.S. stocks plunged from an all-time high on Feb. 19 into a bear market. To put the historic rever-sal in perspective, we crunched the numbers for all 24 of the S&P 500 industry categories com-pared with the past two market collapses.

A SELLOFF,

SECTOR

BY SECTOR

S

O FA R, this year has already featured the worst month

for stocks (March) since October 2008 and the best week (early April) since 1974. But as chaotic and painful as the market swoon has been, it hasn’t yet surpassed the last major meltdown. Only one industry has plunged further from its high than it did during the Great Recession of 2007 to 2009—energy, thanks to an oil price war this spring between Russia and Saudi Arabia. Stock valuations, as measured by price/earnings ratios, have stayed relatively buoyant too. Of course, it could be early days. The bear market that began in 2007 lasted 517 days. And it took 929 days to start a new bull market after the dotcom bubble burst. The good news: In both cases, stocks eventually soared again. —Brian O’Keefe

BUG.W.05.20.XMIT.indd 46 4/14/20 8:50 PMFINAL

CHANGE IN PRICES: DEPARTURE FROM MARKET TOP

BEAR MARKETLENGTH (DAYS)

(LOWEST LEVEL)

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

2000

DOTCOM

BUBBLE

BURST**

2007-

2009

FINANCIAL

CRISIS***

LOWESTDURING ...

20

00

DO

TCO

M B

UB

BL

E B

UR

ST

20

07–

09

GLO

BA

L F

INA

NC

IAL

CR

ISIS

20

20

CO

VID

–1

9 P

AN

DE

MIC

0

200

400

600

800

1,000

BOTTOMSDURING RECENTBEAR MARKETS

–60%

–50

–40

–30

–20

–10

0 20

00

DO

TCO

M B

UB

BL

E B

UR

ST

20

07–

09

GLO

BA

L F

INA

NC

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20

20

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–1

9 P

AN

DE

MIC

–19.2%

–26.3%

–17.6%

–19.0%

–19.5%

–11.8%

–31.7%

–25.6%

–28.9%

–13.2%

–5.5%

–11.8%

–9.2%

–37.0%

–30.0%

–19.3%

–24.3%

–13.6%

–4.3%

–25.2%

–22.2%

–23.5%

–18.5%

–16.0%

–17.2%

–14.9%

–13.8%

–12.9%

8.0%

–57.3%

2.0%

–34.4%

–43.1%

–49.1%

–51.4%

–63.8%

–75.0%

–56.6%

–14.7%

–23.2%

–31.0%

–22.6%

–2.2%

–3.1%

–21.7%

–12.1%

–39.8%

–19.6%

–6.2%

–26.4%

–43.9%

–16.7%

–10.9%

–84.0%

–73.0%

–85.5%

–24.8%

–25.8%

–47.7%

–10.5%

–37.7%

–1.3%

–53.8%

–59.4%

–56.8%

–59.0%

–62.8%

–50.7%

–84.6%

–64.4%

–43.7%

–56.5%

–26.1%

–31.0%

–37.3%

–47.8%

–86.9%

–83.0%

–81.2%

–48.1%

–36.2%

–68.6%

–56.8%

–51.1%

–60.4%

–50.5%

–53.3%

–59.7%

–75.5%

–45.9%

–4.4%

–57.8%

–0.1%

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

–36.7%

–41.4%

–33.9%

–33.8%

–30.4%

–23.0%

–50.9%

–46.0%

–47.6%

–27.5%

–15.5%

–30.7%

–21.9%

–56.3%

–47.4%

–38.5%

–43.1%

–35.2%

–21.8%

–43.8%

–37.0%

–37.3%

–35.1%

–31.2%

–31.0%

–36.4%

–38.0%

–35.9%

–8.1%

–62.3%

–2.6%

0 –10 –20 –30+10% –40 –50 –60 –70%

*** LOWEST LEVEL FROM 10/9/07TO 12/30/11 FOR EACH SECTOR

** LOWEST LEVEL FROM 3/24/00TO 12/31/03 FOR EACH SECTOR

**** AS OF 4/12/2020. 53 IS THE NUMBER OF DAYS ELAPSED SINCE THE PREVIOUS TOP AS IT IS TOO EARLY TO SAY WHETHERTHE S&P 500 HAS LEFT BEAR TERRITORY AND IS NOW IN A BULL PHASE. COUNT INCLUDES WEEKENDS AND HOLIDAYS.

–3

3.9

%5

3*

**

*

BUG.W.05.20.XMIT.indd 47 4/14/20 8:50 PMFINAL

4 8 F O R T U N E M A Y 2 0 2 0

H I S PAST JA N UA RY, as word of a deadly new virus began filtering out of China, the business lounge at Hamad International Airport in Doha, Qatar, was teeming with people, coming and going from almost every point on the planet. Facing a long layover on a reporting trip, I poured some tea and sank into an armchair. Nothing, it seemed, could disturb such serenity. Ten days later, our family took a weekend trip

from Paris to Kraków, Poland. Why not? The taxi to the airport cost more than the tickets on low-cost airline Easy-Jet—the ninth carrier I had flown in 12 months.

Today that seems like a lost world—and it will not be simple to find a way back to it. The ambient-lit Doha busi-ness lounge, with its hot showers and solicitous concierges, is a lot quieter these days, like the rest of the world’s travel hubs. Now the question is, What kind of airline industry will emerge once the pandemic and the lockdowns have finally passed?

As the outlines of the answer begin to come into focus, it looks like a screeching halt to the past decade’s travel boom. Last year, passenger trips on U.S. carriers hit an all-time peak of 925 million, with occupancy also at a record high

T

AIRLINES

Signs point to a long, slow recovery and a shrinking of the industry globally—with fewer airlines and routes for travelers to choose from.

BY VIVIENNE WALT

CARRIERS

PLOT A NEW

TRAJECTORY

POST-

PANDEMIC

ILLUSTRATION BY J O S U E E V I L L A

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AIR.W.05.20.XMIT.indd 48 4/14/20 7:25 PMFINAL

of 84.6%. Those figures are long gone. “You will see airlines as smaller versions of themselves, with fewer airplanes operating fewer routes,” says Henry Harteveldt, president of the Atmosphere Research Group in San Francisco. “Perhaps where there were 10 flights a day, now there will be six to eight flights a day,” he says.

Meanwhile, there is a growing debate, especially in the U.S., about why taxpayers should be on the hook to bail out major carriers. According to the calculations of Washington Post columnist Allan Sloan, the four major U.S. airlines spent about 90% of their profits during the roaring 2010s on stock buybacks, even while earning billions on fees for soggy sandwiches, seat assignments, and checked luggage. “They have done almost everything possible to tell the public, ‘We don’t give a damn about you,’ ” Harteveldt says. Fewer than half of

consumers surveyed by Fortune in March said airlines deserved a bailout. Yet the $2.2 trillion U.S. coronavirus relief fund includes $61 billion for the shell-shocked aviation industry. And a host of U.S. airlines, includ-ing American, Delta, Southwest, and United, have applied for help.

B

Y A P R I L , the airlines had already drastically cut their fleets, in moves that will likely far outlive COVID-19.

American is opting to retire more than 100 of its 900 planes, and Delta says it is considering early retirement of older aircraft. Manufacturers are also bracing for tough times. GE Aviation cut 10% of its staff in March and furloughed half the others until May. In April, Boeing offered all employees voluntary buyouts.

That is just the start. Leaner and poorer, airlines will tread with ex-treme caution in putting planes back in service, unless they are sure passen-gers will fill them. In interviews, most analysts believe the industry’s recovery could take at least until 2022. Mean-while, travelers will feel the difference, as routes and flights shrink. “There have been too many airlines in the world,” says John Grant, vice president of aviation analytics company OAG in Luton, England. “The industry would broadly agree with that.”

The overcapacity is especially acute in Europe, where about 120 compa-nies compete for business, compared with the U.S., which has just four ma-jor airlines and a handful of smaller regional carriers. European govern-ments have rushed to rescue flagship airlines, with Germany offering loans to Lufthansa, and Italy’s government taking control of Alitalia. Even the most glittering heavy hitters will not escape pain. “We will be permanently affected, with questions about chang-es in travelers’ behavior,” Air France CEO Anne Rigail said on April 7.

Indeed, the airlines’ losses are epic. Brian Pearce, chief economist of the

industry group IATA, estimates the carriers will lose about $252 billion in revenues this year and that without government help, several “might not be able to last” until next year.

In fact, dozens of airlines—espe-cially low-cost tourist carriers—face shaky prospects for survival. Some, like EasyJet, have enjoyed years of profitability. But Britain’s budget regional airline FlyBe collapsed in March as passengers vanished. And others could find it difficult convinc-ing governments that their survival is essential. “Is it essential to have 9 pound ($11) flights to Majorca, or nine flights a day to Lisbon?” says Daniel Röska, senior airlines analyst at Bernstein Research in London.

The problem airlines face is that their ability to recover will most likely rest on two factors, both of which are completely out of their control: how long it might take before people feel comfortable boarding planes and how much corporations will cut their travel budgets.

Start with the first challenge. Being sealed in an aircraft with dozens of

925NUMBER OF PASSENGER TRIPS

FLOWN ON U.S. CARRIERS IN 2019,

AN ALL-TIME HIGH, WITH A RECORD

84.6% OCCUPANCY RATE

MILLION



FINTECH

HOMEBOUND CONSUMERS ARE RELYING ON FINANCIAL UPSTARTS LIKE NEVER BEFORE—EVEN TO GET STIMULUS MONEY. IT’S A CHANCE FOR FINTECH TO PERMANENTLY ENTRENCH ITSELF IN THE MAINSTREAM. BY JEN WIECZNER

FINTECH’S

BIGGEST TEST

5 0 F O R T U N E M A Y 2 0 2 0

strangers, whose health status is un-known, may still feel like a high-risk act even months after the pandemic wanes. “There are very few economic activities where people experience such crowding as air travel,” says Joseph Schwieterman, a transporta-tion expert and professor at DePaul University in Chicago. People will want to travel again, he says. But true ease, where people again fly carefree, will likely require much more solid assurance. “It will take medical break-throughs,” he says.

That will take time. And until vaccines and drug treatments are developed, the second factor— corporate travel—could determine when airlines might recover. The two are closely linked: So long as there is some risk to travelers, companies might hesitate to dispatch their em-ployees, especially while trying to cut costs in a recession.

The 2008 financial crisis and Europe’s debt crisis of the 2010s bear that out. Companies cut travel spend-ing—at first temporarily, and then more permanently. “That never really came back,” Röska says. “Companies adapted to a different spending policy, with 20% less travel a year.” The tour-ism surge cushioned the blow.

A decade on, the impact could be even deeper, for one reason: better technology. Since whole countries began locking down in March, count-less corporate meetings, and even the leaders of the G7 nations and OPEC, have convened online. Such meetings are not quite as vibrant as the real-life ones, but neither have they been too disappointing. “Everyone is becoming virtual, Zooming,” says Mark Man-duca, managing director covering airlines at Citi in London. “This has to be a long-term effect.”

No matter how good your Wi-Fi may be, spending hours on Zoom Video doesn’t quite measure up to the easy days before COVID-19—just a few months ago—when business lounges were packed and low-cost weekend getaways seemed knitted into our lives. But for the airline industry, the return route will be especially long and challenging.

I

N T H E WA K E of the Great Recession, as lawmakers passed the Dodd-Frank legislation to rein in an ignomini-ous financial industry,

one paragraph of the law also validated a rebel contingent of reform-minded entrepreneurs. The passage mandated that banks must make consumers’ data available to them “in an electronic form.” And so was born the fintech industry.

Now, as the novel coronavirus presents the world with its biggest economic challenge in more than a decade, fintech is having a moment of truth. Companies like SoFi, Robinhood, Chime, and others were built on prom-ises of providing consumers and busi-nesses with easier access to money in all its forms—investments, credit, person-to-person payments—via the Internet, and often without dealing with a brick-and-mortar bank. With the global economy largely on pause, millions of people abruptly out of work, and thousands of bank branches shut-tered, the time for fintech to deliver on those promises has arrived. As the U.S. government passed a $2 trillion stimulus package in March, including forgivable small-business loans and $1,200 checks for Americans, Treasury Secretary Steven Mnuchin stipulated that “any fintech lender will be autho-rized to make these loans”—a historic first. In April, these platforms earned further validation when the Internal Revenue Service allowed eligible recipients to elect to receive stimulus payments electronically—through Square’s Cash App, for instance, or Venmo—rather than by paper check.

PayPal, Square, and other fintech players are heeding the call to help. In between calls with the Treasury De-partment, Dan Schulman, PayPal’s CEO,

has been holding daily videoconfer-ences with employees from his home office in California. “One of the things I’m telling them is, this is our time,” he tells Fortune via Skype. (For more from the interview, visit Fortune .com.) Even before the IRS began disbursing stimulus money, Chime, the largest so-called challenger bank in the U.S., went out on a $20 million limb—giving more than 100,000 customers immediate access to as much as $1,200 through an interest-free payday advance. “We felt that this could create some sort of industry movement,” says Chris Britt, Chime’s CEO.

Indeed, consumers holed up at home are relying on financial apps in record numbers. New sign-ups at PayPal, along with its peer-to-peer pay-ment app Venmo, have been double the pre-pandemic norm on recent days. They’re also using the apps in ways they weren’t designed for, such as to donate money to struggling individuals or to fund needed equip-ment for health care workers—totaling tens of millions of dollars. When Taylor Swift, the pop star, recently sent a surprise $3,000 “gift” to dozens of her fans who’d lost jobs or income as a result of the coronavirus, she did it via PayPal. It’s no coincidence that Venmo payments using the medical-mask emoji surged 375% in March, accord-ing to the company.

The crisis has become a proof-of-concept for fintech, one likely to change the way people bank and move their money even after they can visit a teller in person again. Says Zach Perret, CEO of Plaid, a startup whose software powers virtually all the major U.S. fintech apps (and which was recently acquired by Visa): “This shutdown time, I’ll suspect we’ll look back and say this was one in which digitalization really accelerated.”


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

Without more donors, patients will not have the type A, B, O or AB blood they need.

You can help fi ll the #MissingTypes this summer. Make a blood donation appointment today.

RedCrossBlood.org/MissingTypes

Without A, B and O, we can’t save anybody.

5 2 F O R T U N E M A Y 2 0 2 0

U.S. BANK

NATIONAL

ASSOCIATION

TRUIST

BANK

CITIBANK

CAPITAL ONE

STEARNS

WEX

FIRST CITIZENS

BANCORPSOUTH

BMO HARRIS

$8.8

$6.7$3.9

$8.1

$1.4

$1.3

$8.1

EVERY CIRCLE

REPRESENTS

A BANK

$17.7$13.4

SMALL-BUSINESS LOAN EXPOSURE FOR U.S. BANKS

SMALL-BUSINESS LENDING BY BANK

SM

AL

L-B

US

INE

SS

LO

AN

S A

S A

% O

F A

LL

LO

AN

S

TOTAL AMOUNT OF SMALL-BUSINESS LOANS OUTSTANDING

O R T H E PAST D ECA D E , the big U.S. banks have endured arduous annual Federal Reserve

“stress tests” gauging their strength to weather another Great Recession–like crisis. Critics groused that forcing financial titans to build gigantic war chests—modeled to withstand a replay of double-digit joblessness and an eight-point drop in GDP—was unneces-sarily cautious. But, lo and behold, banks

are suddenly confronted with a scenario even worse than the regulators’ worst case. “The banks were kicking and screaming while the government made them build capital and liquidity,” says Mike Mayo, an analyst with Wells Fargo.

“But that’s why they’re in such good shape today.”Indeed, the stress-test policy appears absolutely crucial

now, given the damage that the coronavirus pandemic is unleashing on Wall Street. From the start of 2020 through early April, the KBW banking index dropped 33.6%—20 points more than the S&P 500. JPMorgan Chase CEO Jamie Dimon warned in his annual letter that the bank’s earnings would “be down meaningfully” this year, con-ceivably endangering its dividend. And both boutique firm Wolfe Research and investment bank KBW forecast that profits for the Big Four banks—JPMorgan, Bank of America, Citigroup, and Wells Fargo—could crater more than 60% if a recession extends into 2021.

The crisis has pushed the major commercial and invest-ment banks into a new cycle of much lower earnings. But in a reversal from 2008, their profits should remain posi-tive even in the direst scenario. Plus, they’re entering a sharp downturn flush with capital and liquidity. Whereas Wall Street was the problem in the Great Recession, today the lenders and underwriters have the resiliency to be part of the solution—as conduits for channeling as much as $4 trillion in emergency funding to businesses large and small, and continuing to extend credit to their regular customers, from automakers to hairdressing salons.

The banks built up their finances in what has been a

F

GRAPHIC BY N I C O L A S R A P P

WALL STREE T

Thanks to a decade of scrutiny on top of a golden era of growth, the industry’s Big Four are well positioned to withstand a severe downturn—and capitalize on Washington’s stimulus plan.

BY SHAWN TULLY

THIS TIME,THE BANKSWERE READY FOR A CRISIS


WAL.W.05.20.XMIT.indd 52 4/13/2020 7:12:07 PMFINAL

near-golden period for the industry over the past 10 years. They ben-efited from a combination of a strong economy and conservative manage-ment—partly dictated by the Fed, and partly imposed by such leaders as Dimon and BofA CEO Brian Moyni-han. Banks diversified into areas that generated steady earnings, notably by building and buying wealth manage-ment franchises. Most of all, pushed by the stress tests, the banks shored up their capital. From late 2008 to 2019, equity capital as a share of the balance sheet rose 51% at JPMorgan, more than doubled at BofA and Wells, and tripled at Citi. Entering 2020, the big banks boasted their strongest capital levels since 1940.

That staying power is crucial to seeding a recovery. The major banks are a giant source of funding to small- and medium-size businesses, or SMEs—typically enterprises that employ up to 10,000 and issue paychecks for over 70% of U.S. work-ers. At year-end 2019, the Big Four held $836 billion in “commercial and industrial” or C&I loans to SMEs. That was 45% of the total for all U.S. banks. The Big Four also provide the likes of hotel owners and develop-ers $422 billion in financing, equal to 28% of all commercial real estate lending provided by America’s banks.

The economy’s shutdown is starv-ing SMEs for cash. The stimulus plan marshals the banks to originate and service government-guaranteed loans to as many as 17 million of these enterprises. The aid designed to flow through the lenders comes

via two main vehicles. The first is the $349 billion Paycheck Protection Program (PPP). It makes loans of up to $10 million mostly to compa-nies with 500 or fewer employees. And if a company’s payroll stays the same for eight weeks after it gets a loan, the debt is forgiven. The PPP is a good thing for America’s banks, including the Big Four. The lenders take no credit risk, and, according to interviews with bankers, the fees paid to originate the loans make them profitable, especially for amounts up to $2 million.

Since most of the loans are likely to become grants, the PPP will help bridge their clients through to the recovery without adding to their debt load. Plus, fragile businesses can use the new loans, charging 1% interest, to pay the interest on existing, at-risk borrowings at, say, 4% or 5%—lift-

ing their cash flow. Put simply, the PPP lowers the banks’ credit risk by providing either grants or cheaper, guaranteed financing to small busi-nesses, and lowering the number of bad loans going forward.

T

H E S EC O N D P RO G R A M is less of a slam dunk for banks. The Main Street Lending Program will extend loans to

medium-size businesses employing up to 10,000 people. For the Big Four, that category is several times the size of their small-business books. The Fed is providing the cash and the Treasury is guaranteeing 95% of the financings; the banks will keep just 5% on their books. Under the Fed’s plan, up to $600 billion in Main Street loans will be offered. But these loans are a different species from the relief offered by the PPP. The borrowers have to repay the government. If they default, the U.S. can protect taxpayers by seizing assets or forcing them into bankruptcy.

For the banks, the Main Street program could pay off by support-ing their clients through a few more difficult months. But if a recession stretches into late this year or beyond, many struggling, overleveraged com-panies might need to seek additional emergency funding. That would cre-ate a quandary for the banks, who will certainly face intense pressure from regulators to make the loans. In that scenario, the banks will need to draw on every bit of the financial strength they built up over the past decade.

BANK OF AMERICAWELLS FARGOJPMORGAN CHASE

AMERICAN EXPRESS

SOURCE: WOLFE RESEARCH

$38.9$34.5$29.4

$28.6

SMALL-BUSINESS LENDING BY BANK

PARTLY DICTATED BY THE FED, THE BIG BANKS ENTERED 2020 BOASTING THEIR STRONGEST

CAPITAL LEVELS

SINCE 1940.

WAL.W.05.20.XMIT.indd 53 4/13/2020 7:12:08 PMFINAL

5 4 F O R T U N E M A Y 2 0 2 0

IT MAY BE A MISNOMER to call anyone in retail a “winner” right now, when stay-at-home and social-distancing measures have shut down hundreds of thousands of U.S. stores and threatened consumers’ spending for the foresee-able future. But look at the few chains that have managed relatively well in this chaotic time, and you’ll gather clues about what it will take to come out ahead in the industry, both now and long after the virus has been contained.

Walmart’s U.S. sales reportedly jumped 20% in March as people stocked up on essentials—further boosted by a 190% increase in monthly downloads of its online grocery app, according to data tracker App Annie. Nike kept its China business from stalling, thanks to a fitness app that helped homebound consumers do quarantine workouts. And Lululemon Athletica has even reopened a few North American stores, not to serve walk-in customers, but to use inventory to fill online orders more quickly.

What these cases make clear is how central the full inte-gration of stores and shopping technology has become to big retailers’ health. “The retailers that were already doing

it successfully are the ones that are going to recover much more quickly,” says Kimberly Becker, senior research director with Gartner. And in a future when shoppers are likely to be skittish about staying long in any store—if they visit at all—only the tech-savvy chains will survive.

The big-box retailers proved their mettle during the rush on stores in March, as Americans stripped shelves of essentials like toilet paper and baker’s yeast. While lengthy waits for delivery were thwarting many e-commerce shoppers, Target and Walmart succeeded by offering drive-up retrieval for online orders through their apps. (This will become increas-ingly important now that both chains are limiting the number of shoppers allowed in stores at any one time.) And the fact that the chains now hold much more of their e-commerce inventory in stores than they once did helped them avoid shortages.

“Because we’re using stores as local fulfillment hubs, we’ve been able to handle sustained, holiday-like online volumes,” Target chief operating of-ficer John Mulligan tells Fortune.

Crisis-related changes in shop-ping habits have also accelerated a less-is-more approach to product

RETAIL

Even after the coronavirus crisis ends, shoppers may be reluctant to spend time in physical stores. The retailers who are smartest about technology will get the most out of their bricks and mortar.

BY PHIL WAHBA

NEXT-GEN APPS

TO EASE NEW ANXIETIES

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selection. To keep shelves well-stocked, retailers have worked closely with suppliers to limit the variety of sizes, colors, and flavors of all sorts of goods, focusing only on those most consistently in demand. Unilever, for example, said last month it would concentrate mostly on large sizes of its products, like 30-ounce jars of its Hellmann’s mayonnaise, to speed up production and distribution.

Retailers like Walmart and super-market giant Kroger have long been shifting in this direction, opting to devote more shelf space to bestsell-ers rather than stocking 50 varieties of the same detergent. “There’s been a slow bleed of taking out the stuff that’s just another color or another flavor and isn’t pulling its weight,” says Laura Kennedy, lead consumer and retail analyst at CB Insights. Increasingly, if you crave a company’s seventh-bestselling sandwich cookie, you’ll have to find it on the Internet.

Technology is helping retailers wring more revenue out of their inventory. Lululemon has invested heavily in RFID (radio-frequency identification) tech, enabling it to

know in real time where every hoodie or sports bra is, whether at a distribu-tion facility or in a store. That’s mak-ing it much more efficient in filling online orders from physical stores, at a time when e-commerce is its only source of income. “The race is, How much cash can you get out of inven-tory that’s stuck in stores today?” says Nikki Baird, vice president of innova-tion at retail tech firm Aptos.

Stores that can precisely track in-ventory are also helping their custom-ers: The best apps can tell shoppers which items are in stock in what store and where in that store, an appealing idea for customers who don’t want to linger. (Walmart and Target have made big strides in this arena too.)

R

ETAILERS’ tech successes aren’t focused solely on logistics and efficiency: They can also keep cus-tomers interested in a

brand. After most of its 7,000 retail locations in China were closed, Nike made the premium version of its workout-on-demand Nike Training Club app—which is seamlessly inte-grated with Nike’s e-commerce—available for free there. As use of its apps surged, Nike’s digital sales rose 30% in China during the country’s six-week lockdown, and business in stores bounced back quickly once they reopened. Nike is using the same playbook in North America now. “We know that consumers need to main-tain their mental and physical health,” says Heidi O’Neill, Nike’s president of consumer and marketplace.

Still, even after the crisis has passed, no one expects shoppers to quickly return to their old com-fort levels in physical stores. Some upgrades Nike has implemented, like self-checkout and contactless payment systems, seemed like nice-to-haves before the coronavirus; after stores reopen, they’ll be must-haves.

“The investments you made are going to be ever more meaningful when customers come back,” says O’Neill.


61%SHARE OF U.S. RETAIL LOCATIONS—

258,366 STORES AS OF MID-APRIL—THAT HAVE CLOSED BECAUSE OF COVID-19 PRECAUTIONS

SOURCE: GLOBALDATA RETAIL

RET.W.05.20.XMIT.indd 55 4/14/20 10:10 PMFINAL

5 6 F O R T U N E M A Y 2 0 2 0

N AUGUST 2019, barely half a year before the world changed, the pharmaceutical industry was the most disliked business sector in America: 58% of those polled by Gallup had a negative perception of the industry, more than twice the share who viewed it favorably—giving drugmakers a net positive score of minus 31, the worst by far of any business sector in the country. For comparison, airlines and the legal profession had net positive scores of plus 19 and plus 5, respectively. Even the federal government (minus 27) had better ratings overall.

Enter the coronavirus. As much as the pandemic has devastated many industries, it has offered Big

Pharma a chance to shine as never before, winning back the trust of a public infuriated with years of soaring drug prices. Will they seize the moment? The answer depends in large part on how fast drug and device makers make progress in three areas essential to beating back COVID-19. The first is in the realm of diagnostic tests that can identify not only who has the disease but also who’s no longer infectious and therefore safe to return to work. Second are therapies to shorten the disease course and lessen its severity—which will be important for reducing the burden on hospital ICUs and exhausted critical care teams. And third are vaccines: Without a safe and widely disseminated vaccine to confer immunity on a huge swath of the population, it’s hard to imagine life returning to something resembling “normal.”

Success in these three areas won’t put the pricing controversies to bed. As they strive for novel therapies and medical tools, pharma com-panies will have to balance the need to fund innovative projects and still satisfy a public (and perhaps regulators) demanding low- or no-cost drugs and devices to combat this plague. Still to be determined is what role health insurers and governments may play in all of this.

Gilead Sciences, which likely has the most advanced anti-COVID-19 drug of the bunch, has consistently stated it doesn’t expect to make much money off of its antiviral product, remdesivir. SVB Leerink’s lead

pharma analyst Geoff Porges tells Fortune the company will be under tremendous pressure to put a reason-able price tag on the drug. Indeed, the blanket uncertainty across the industry—on everything from pric-ing to the resiliency of supply chains to the difficulty of conducting clinical trials in an era of social distancing and overwhelmed hospitals—has prompted several firms, including Pfizer and AstraZeneca, to issue statements saying they can no longer offer financial guidance for the year.

Throw in the already fragmented nature of U.S. health care, a desper-ate public, a fast-changing timeline of government priorities, and anx-ious shareholders, and the result is something akin to an Olympic sprint in which dozens of runners are each competing on their own tracks. Predicting who’s got the lead in such a race isn’t easy. But Fortune reached out to dozens of companies, analysts, public health organizations, academ-ics, and other experts to assess the state of progress.

One bit of good news: So far, even longtime cynics are giving the indus-try a qualified thumbs-up. Whether that’s enough to grant drugmakers a better grade than lawyers is another question.

I

The pandemic may finally do for the pharmaceutical industry what relentless TV advertising cannot: show off its power to innovate.

BY SY MUKHERJEE

WILL MEDICINE MAKERS

COME TO THE RESCUE?

DRUG INDUSTRY

PHA.W.05.20.XMIT.indd 56 4/14/2020 8:14:04 PMFINAL

DIAGNOSTICS

FUNDAMENTAL to controlling the spread of COVID-19 are tests that can identify those who have been exposed to the coro-navirus, which is easily transmitted by infected individuals—even, the evidence suggests, when they have no symptoms of illness. The standard test requires a quick swab of the throat or nose (or both), which grabs a tiny sample of mucus and analyzes it through a process called polymerase chain reaction. PCR amplifies the genetic material of the virus, if any is present, making it easier to identify.

PCR tests can quickly reveal who is currently infected with the virus, even if they’re asymptomatic. But they don’t show who may have previously been infected, silently or otherwise, and no longer carries the virus—thanks to the response of their body’s own immune system. In such cases, those formerly infected will have telltale antibodies in their blood. The antibod-ies circulate in the blood for a long while, keeping a careful vigil out for the virus should it reappear and standing ready to mount a counterattack if it does. That, in short, is an immune response.

Having an immune response (that is to say, antibodies) to a virus doesn’t neces-sarily mean a person has full immunity to it on subsequent exposure. But when it comes to returning people to work, it’s important to know who’s got at least some immunity and who doesn’t. Serology tests, which look for specific antibodies in a small sample of blood, can reveal that.

In recent weeks—and notably, after the Centers for Disease Control and Preven-tion botched its initial PCR test—a spate of private and public health labs have rushed into the breach, creating a range of diag-

nostics for COVID-19. As of April 10, there were 33 FDA-authorized coronavirus tests—though the question of which ones work best may not be known for months, when there’s enough data out there to compare them, says virologist Pedro Piedra of Houston’s Baylor College of Medicine.

Swiss drug giant Roche developed the first commercial coronavirus diagnostic to receive emergency authorization on March 12—with Thermo Fisher Scientific, LabCorp, Quest Diagnostics, Abbott, Cepheid, Cellex, Becton Dickinson (BD), Henry Schein, and others—following quickly on its heels.

One standout is Abbott’s latest PCR test, ID NOW, which can deliver positive or negative results within minutes rather than hours or days, which had been the standard turnaround time. That’s because it can be conducted on far more portable machinery and uses something called “iso-thermal” technology, explains John Frels, VP of R&D at Abbott. Typically, molecular virus tests need to cycle through multiple temperatures in order to amplify a virus’s genetic sequence in patient samples; the Abbott test can do that amplification process at a more consistent temperature, speeding up the process. The test is slated to be used in drive-thru testing facilities set up by CVS Health in several states, which may place it in front-runner status.

On the serology front, both medical distributor Henry Schein and Cellex, a smaller biotech firm, have received authorization for blood tests that screen for antibodies to the novel coronavirus. While U.S. regulators have said there are scores of companies that have signed up to create antibody tests, one major prob-lem is the spectre of profiteers hawking fake tests, something FDA Commissioner Stephen Hahn has said the agency will crack down on.

TREATMENTS

AT PRESS TIME, more than 75 coronavi-rus drugs are currently in development, according to research from Agency IQ. An additional 40 medicines, already approved for other indications, are now being tested as well against COVID-19.

“I think the best bet is still Gilead’s remdesivir,” says Porges, the SVB Leerink analyst, who is eagerly awaiting data from clinical trials that began in late February in China and which are expected to be published soon. Multiple other public health experts agreed.

Remdesivir, an investigational antiviral


70NUMBER OF CORONAVIRUS

VACCINES NOW IN DEVELOPMENT,

ACCORDING TO THE WORLD

HEALTH ORGANIZATION

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

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treatment, has been in development for years to treat various infectious diseases, including SARS and MERS-CoV, two ill-nesses caused by strains of coronavirus related to the COVID-19 pathogen. In a study of 53 seriously ill COVID-19 patients treated with the experimental drug through a “compassionate use” program, its results published in the New England Journal of Medicine in April, 38 patients (68%) showed measurable improvement. (In 15% of cases, the patients’ illnesses progressed.) Though the study, experts caution, was neither randomized nor controlled, two standard practices that help ensure results aren’t inadvertently skewed, the initial findings were promis-ing—with response rates significantly higher, and mortality lower, than would be expected based on current data from hospitals today.

Antiviral medicines, which typically interfere with a virus’s ability to replicate, are rarely cures in the way that antibiotics (which kill bacteria) often are. But having a drug that can help patients breathe well enough to stay off a ventilator could be of enormous value in this pandemic. A single day on a hospital ventilator can cost $25,000, says Porges.

Gilead CEO Daniel O’Day released an open letter saying it would expand the number of available doses to 1.5 million, enough for 140,000 courses of treatment. A possible timeline could include emer-gency authorization within a few months.

Multiple other companies—including Takeda, Regeneron, and scores of other firms—are working on treatments. Those encompass antivirals, antibodies, or therapies derived from the blood plasma of patients who have recovered from

COVID-19. “There’s an incredible sense of urgency,”

says George Scangos, CEO of Vir Bio-technology, a company working on both COVID-19 treatments and vaccines, in-cluding through a major collaboration with British drug giant GlaxoSmithKline. “The number of companies that want to con-tribute regardless of whether you make a lot of money is incredible.” Hal Barron, the R&D chief at GSK, concurs. “I meet weekly with most of the Big Pharma company heads,” he tells Fortune. “I’ve never seen a magnitude of urgency like this.”

VACCINES

TESTING AND TREATMENTS can only get you so far. With a virus as transmissible as the novel coronavirus, a vaccine is critical to establishing long-term public health safety. Making sure they work—and are safe—can take years, says Peter Hotez, dean for the National School of Tropical Medicine at Baylor College of Medicine. That said, time does seem to be speed-ing up. By mid-April, there were no fewer than 70 coronavirus vaccines in develop-ment, according to the World Health Organization; with those from China’s CanSino Biologics, Inovio, and Moderna already in human trials.

Moderna’s candidate tweaks the virus’s messenger RNA to elicit an immune response in humans. In earlier clinical stages, GlaxoSmithKline has partnered with multiple firms, including Vir and French drug giant Sanofi, that want to le-verage its “adjuvant” technology—which can make it easier to produce more doses of a vaccine on a wide scale. Then there’s Pfizer’s collaboration with BioNTech in China; a partnership between Heat Biologics and the University of Miami; the Baylor School of Medicine with its investigational SARS vaccine; Novavax; and Johnson & Johnson.

But Johnson & Johnson seems to have produced the most buzz. In late March, J&J said its experimental vaccine might be in clinical trials by the fall of 2020 and on the market by early 2021. “Based upon our early data, we feel confident that we have got a very good candidate,” J&J CEO Alex Gorsky tells Fortune, adding this was a result of an investment in vaccine devel-opment technology made a decade ago, which “turned out to have much broader application than we anticipated.”

“This is a complicated virus that seems pretty good at avoiding the immune system,” says Vir chief Scangos. “It could be possible that COVID-19 vaccines are modeled after flu vaccines, which are somewhat effective, but would require wide-scale annual production” as new strains of the coronavirus emerge. “If we’re realistic, there’s risk.”


“THIS IS A COMPLICATED VIRUS THAT

SEEMS PRETTY GOOD AT

AVOIDING THE IMMUNE SYSTEM.”GEORGE SCANGOS, CEO OF VIR BIOTECHNOLOGY, A COMPANY

THAT IS WORKING ON COVID-19 TREATMENTS AND VACCINES

RACE FOR THE CURE Gilead’s antiviral remdesivir, which had previously been used for SARS and MERS-CoV patients, is seen as a promising treatment for COVID-19.

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Social distancing is the most effective tool we have for

slowing the spread of the coronavirus. And that means

staying home, if you can.

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

If you must go out, keep your social distance—six feet,

or two arm-lengths apart. Young. Elderly. In between.

It’s going to take every one of us. If home really is where

the heart is, listen to yours and do the life-saving thing.

Visit coronavirus.gov for the latest tips and information from the CDC.

#AloneTogether

T O G E T H E R , W E C A N H E L P S L O W T H E S P R E A D .

6 0 F O R T U N E M A Y 2 0 2 0

SILENT STREETS Influential

scientists spread the word early

here about the virus.

WHEN THE CITY BECAME THE FIRST EPICENTER OF THE

CORONAVIRUS OUTBREAK IN THE U.S., THE COMPANIES

HEADQUARTERED THERE—AMAZON, MICROSOFT,

STARBUCKS, NORDSTROM, COSTCO, AND OTHERS—

FOUND THEMSELVES FIGHTING ON THE FRONT LINES.

SEATTLEUNDER SIEGET H E C O R O N A V I R U S E C O N O M Y : S E A T T L E

BY ERIKA FRY

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T

O M LY N C H hadn’t expected the world to change—or at least his perception of it—at his Tuesday morning leadership meeting. He had expected to talk about

the fiscal year 2021 budget and maybe to get to know his team a little better. It was Feb. 25, and Lynch was just four weeks into the job as director of the Fred Hutchinson Cancer Research Center, so new that as he walked the halls of the Hutch that morning he struggled to find the right conference room.

Lynch had also made time on the meeting’s agenda for Trevor Bedford, an epidemiologist at the prestigious Seattle-based research in-stitute who had been tracking the novel coro-navirus known as SARS-CoV-2 since early January. Lynch describes Bedford as “very humble” and “understated,” but that morn-ing, as the quiet computational biologist laid out his grim projections for the virus’s impact on Seattle, he held the room. People became incredibly quiet and just listened,” says Lynch. “Everyone in the room at the same time got that what he was talking about was something that was going to really change our lives.” Lynch vividly recalls that day. “You remember where you were when you realized what this was.”

What this was was still a completely unfathomable proposition for most in the global metropolis of 3.5 million. “Social distancing” had not yet entered the lexicon. At the time, Seattleites were still making ar-rangements for March tech conferences and spring fund raising galas; people were look-ing ahead to attending Seattle Storm games and Patti Smith concerts and the Emerald City Comic Con, a beloved annual gathering of 100,000 superfans slated for mid-March.

If people knew it at all, COVID-19 was a threat that seemed at least an ocean away. The State of Washington had reported just one known case, that of a 35-year-old man from Snohomish County outside Seattle, who had traveled to Wuhan and gotten sick upon his return in mid-January. He’d been treated and recovered. For those keeping score, it was Washington–1, coronavirus–0. But on that morning in late February, Bed-ford framed the situation quite differently; the virus was an urgent if not yet visible ex-istential threat. Lynch got the message, and the next morning, in a breakfast meeting with Fred Hutch’s board leadership it was

Lynch who upended the agenda.“I think we should spend this entire conversation talk-

ing about COVID-19, and what’s very likely to be coming down the pike here in Seattle,” Lynch said to his chair Matt McIlwain, a managing director at Madrona Venture Group, the Seattle-based venture capital firm. McIlwain left and immediately called his VC colleagues: “We need to think through what our strategy is,” he said.

Another person looking at Bedford’s data was Christine “Chris” Gregoire, a former Washington state governor—she served from 2005 to 2013—former Fred Hutch chair, and now head of an organization called Challenge Seattle, which engages 19 of the city’s largest businesses and institutions. Those include a striking number of name-brand Fortune 500 companies and organizations, including Amazon, Microsoft, Starbucks, Costco, Boeing, Nordstrom, Alaska Air, and the Bill & Melinda Gates Foundation, among others. The group

CITY OF INDUSTRY

THE SEATTLE AREA is home to an outsize number of Fortune 500 companies, tech firms, and medical organizations. Seattle is west of Lake Washington, while suburbs such as Bellevue and Kirkland are across the lake on the “Eastside.”

PROVIDENCE HEALTH

EVERETT

SEATTLE

AMAZON

STARBUCKS

NORDSTROM

UNIVERSITY OF

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KAISER PERMANENTE

GATES

FOUNDATION

EXPEDITORS

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was founded to solve some of the region’s more intractable problems surrounding education, affordable housing, and transportation. As it happened, Challenge Seattle had one of its meetings on the night of Feb. 25.

Challenge Seattle chair Susan Mullaney, the president of Kaiser Permanente Washington—which has dozens of health facilities, a leading research center, and more than 700,000 members across the state—had been follow-ing, with increasing alarm, her own group’s COVID-19 modeling efforts. She asked Gregoire for some time on the agenda that night; this was something she thought the business community needed to prepare for.

Many attendees now remember the event as their psychological turning point. Earlier in the evening, they’d casually discussed the virus over wine; at dinner, they’d sat—as one did, pre-pandemic—tightly bunched around tables. Though a few were already bumping elbows, many shook hands.

“I gave a brief update on how bad we thought it would be,” says Mullaney. Gregoire went over Bedford’s projections. As the group, which included Weyerhaeuser’s Devin Stockfish, Zillow’s Rich Barton, and REI’s Eric Artz, talked through comparisons to the 1918 flu pandemic, it was lost on no one that the most concerned among the group were its subject-matter experts—Mullaney and Steve Davis, the recently retired CEO of PATH, the global health organization. Some were struck by the assessment that the CDC was six to eight weeks behind on the issue. “The severity of it was sinking into all of us during that dinner,” says Michelle Seitz, CEO of Russell Investments, the Seattle-based global asset manager.

Margaret Meister, head of Symetra Financial, an insur-ance giant based in Bellevue, the Seattle suburb, had been so startled she texted her leadership team that night. “We need to up our game. This is a crisis. This is not some small thing,” she told them.

“Quite candidly, there was absolute shock around the table,” says Gregoire. “That was the day that everybody saw how dire this could be if we didn’t get to work.”

What nobody imagined was how quickly things would turn. Just three days later, public health authorities an-nounced the state’s second confirmed case of COVID-19. It was a stunning one: The infected individual was a local teenager, a high school student also from Snohomish Coun-ty but who hadn’t traveled anywhere. (His case had been detected only because the Seattle Flu Study, an influenza surveillance effort funded by Seattle-based Gates Ventures and staffed by University of Washington, Seattle Children’s Hospital, and Hutch scientists—Bedford among them—ig-nored state and federal guidelines and tested samples.)

And then the following night, a Friday, Gregoire got a call. The state had its first COVID-19 death, and there was an outbreak at a local nursing home. The virus was in the community, and it was spreading. The threat they’d all been worrying about had already arrived.

But something else had been spreading too. The net-works that knit Seattle together—running from its research hospitals and global businesses to world-eminent institu-tions, community organizations, and government—were thrumming with the exchange of information and inten-

tions. Gregoire immediately called Mullaney and asked her to prepare another briefing.

T

H E R E A R E M A N Y WAYS to tell the story of America’s first COVID-19 outbreak—an epidemic that, in the Greater Seattle area, has to date

tragically killed 385 and infected 7,324 (in King County, home to Seattle proper, the numbers are 294 deaths and 4,428 infec-tions). The virus has stolen the livelihoods of hundreds of thousands more. But the story of how Seattle came together can be a model for any city and organization.

In some ways, it’s hard to dream up a city better equipped to manage an outbreak of a new and deadly pathogen. Seattle has few worthy rivals when it comes to public health. In the University of Washington, the city has one of the nation’s leading virology labs and one of its largest infectious disease departments. It’s a town full of influential epidemiologists and disease modelers, many of whom have had their efforts blessed with Gates dollars, from the Hutch’s Bedford—with 200,000 Twitter followers—to the University of Washington’s Chris Murray, whose models are cited by the White House. It’s no accident that Seattle has the world’s first operational trial site for a COVID-19 vaccine candidate, or that it’s the first city in the country doing CO-VID-19 surveillance with at-home testing kits.

“We have an infrastructure that is 40 years in the making,” says Larry Corey, the man who started UW’s virology program in 1978 (and

SEATTLE FREEZE Locals adopted social

distancing guidelines seriously—and early on.

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to fight for market share, they were on the same side for once, trying to save their city.

B

R A D S M I T H H A D N’T E X P ECT E D to come home to find an outbreak in his backyard. As Microsoft’s president, he’d been thinking about the virus, certainly—he’d been at a security conference in Munich mid-February,

where he’d met a team from the White House who had peppered him with questions: What had the company seen in China? What would be the ripple effect of China’s economic downturn? Smith had then gone to Rome for an event at the Vatican; as the outbreak worsened in northern Italy, the virus was top of mind. He had left Italy the night of Friday, Feb. 28.

On Feb. 29, local public health authorities announced its first COVID death, an outbreak at the Life Care Cen-ter in Kirkland—a short drive from Microsoft’s campus. Adding to the urgency, Hutch epidemiologist Trevor Bed-ford shared an analysis, based on genomic-sequencing data of the virus, that suggested SARS-CoV-2 had been stealthily circulating in the community for weeks, likely infecting hundreds. Smith, a history buff, did two things: He ordered the best-regarded book on the 1918 flu pan-demic, John Barry’s The Great Influenza, and he phoned his friend Gregoire, who had called for an emergency meeting of Challenge Seattle members the following day. They discussed the need to gather leaders from both the private and public sectors—and particularly public health experts.

The next day Gregoire held the emergency meeting, becoming the first in what is a now an ongoing series of daily COVID-19 crisis calls, open to the entire business community, sometimes with as many as 200 participants. At the beginning though, it was a much smaller group of leaders and King County officials trying to establish the facts and coordinate a response in an effort to “build public confidence,” says Gregoire.

They decided, when possible, organizations—even fierce competitors, like Amazon and Microsoft—should respond in the same way, whether it be on work-from-

has since been instrumental in developing AIDS drugs, helmed the Hutch, and led the global HIV Vaccine Trials Network). “We’ve been able to permeate our community…we’re able to influence and be a factor.”

Seattle is also a city of staggering wealth, home to a burgeoning tech community as well as the world’s most valuable multina-tional companies and the world’s two richest men, one of whom, Bill Gates, just so hap-pens to be the planet’s most prominent advo-cate and funder of pandemic preparedness. Beyond those deep pockets, these enterprises are well connected to expertise—logistical, technical, biomedical—that spans the globe.

It all adds up to a highly educated popula-tion—with 62.6% of its residents holding four-year degrees, it was dubbed “America’s most-educated big city” in 2019—with a bias toward data and science. (Some also credit locals’ Scandinavian reserve—which mani-fests as the “Seattle freeze”—for their success at social distancing.)

Two Twitter hashtags epitomize the city’s collective response. #AllInSeattle—a fundraising banner under which dozens of the city’s millionaires donated $27 million to various nonprofits in four days—and #We-GotThisSeattle, a hashtag that trended on Twitter and was stitched on a flag that now crowns the city’s iconic Space Needle.

That’s not to say the city is out of the woods—Washington State Gov. Jay Inslee has stressed this point repeatedly—but in recent weeks as COVID-19 has continued its devastating spread across the U.S., Seattle has found a bit of a clearing, or in epide-miologist-speak, some “curve bending.” Its hospitals, though constrained by resources, have not been overwhelmed like those in New York and New Orleans. In King County, where Seattle and many of its suburbs lie, COVID-19 cases today are doubling once every 15 days; that compares with every 11.5 days in New York City and every 8.5 days in Chicago. Supplies once destined for Amer-ica’s COVID-19 ground zero are now being rerouted to new, hotter hot zones.

In that way, the city offers a playbook, one that points to the importance of collabora-tion. Seattle is a big global city, but as many Seattleites will tell you—powerful ones, at least—“it feels a lot like a small town.” Infor-mation, and aid, and solutions were being rapidly passed around Seattle’s tight-knit business community and throughout the ranks of government. Suddenly some of the most cutthroat companies on the planet, like Amazon and Microsoft, weren’t trying

“THESE BIG COMPANIES BEGAN

ACTING IN CONCERT. I’VE HAD

A CAREER IN PUBLIC SERVICE

AND I’VE NEVER SEEN

ANYTHING LIKE THIS.”


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APRIL 12

1

10

100

1,000

10,000 CASES

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STATE WEEKLY NEW

UNEMPLOYMENT

CLAIMS

March 76,548

March 1414,154 March 21

128,962

March 28181,975

April 4170,063

SEATTLE COVID-19 DEATHS

(KING COUNTY, CUMULATIVE COUNT)

MARCH 1

FEB. 29, 2020First COVID death announced in Seattle area. Fred Hutch epidemiologist Trevor Bedford posits virus has been spreading stealthily for six weeks, infecting hundreds.

MARCH 1Challenge Seattle begins daily crisis calls.

MARCH 3Amazon and Facebook report confirmed cases on their Seattle campuses.

MARCH 9Seattle Foundation launches COVID-19 Response Fund backed by Amazon, Microsoft, Alaska Air, the Starbucks Foundation, and others; raises $9 million in 3 days.

MARCH 11Gov. Inslee bans gatherings of 250-plus; a day later he closes Seattle area schools.

MARCH 13The Hutch sets up Zoom call between ICU and ER doctors in China and the U.S.

MARCH 16World’s first COVID-19 vaccine trial begins at Kaiser Permanente Washington. Microsoft begins using its cafeteria workers to make meals for students and other community members.

MARCH 19A Seattle-area furniture company, Kaas Tailored, begins producing PPE. Nordstrom and Alaska Air assist in its effort.

WEEK OF MARCH 2T-Mobile expanded its work with Snohomish County’s School2Home program, providing 850 Wi-Fi hotspots to enable remote learning.

APRIL 10Inslee tweets that the state has started to “bend the curve.” He encourages all to continue to stay home. Boeing delivers first shipment of reusable 3D-printed face shields, manufactured at company facilities.

APRIL 12

MARCH 23Inslee issues stay-at-home order. Private citizens launch #AllinSeattle to respond to the crisis and raise $27 million before official launch. City launches Seattle Coronavirus Assessment Network using at-home COVID-19 testing kits, sponsored by Gates Foundation, delivered by Amazon. Boeing announces 14-day shutdown at area facilities.

MARCH 26Seattle Mayor Jenny Durkan raises #WeGotThisSeattle flag atop Space Needle.

MARCH 28Steve Ballmer gives $10 million to UW to ramp up coronavirus testing; Jeff Bezos and others follow.

APRIL 5Inslee gives 400 ventilators to N.Y. State.

AS COVID-19 SPREADS IN SEATTLE, CORPORATIONS JOINED THE FIGHT TO FLATTEN THE CURVE

1,166

489

117

235

22

11

4

2,079

3,169

4,119

1,166

489

693693

117

235

329329

22

11

1515

4

2,079

1,5791,579

3,169

4,119

4,428 CASES IN KING COUNTY

FEB. 28

SOURCES: WASHINGTON STATE EMPLOYMENT SECURITY DEPARTMENT; CASE AND DEATH DATA FROM THE NEW YORK TIMES, BASED ON WASHINGTON’S KING COUNTY

MARCH 7 MARCH 22MARCH 15 APRIL 1

home policies or protocols around essential employees. Those companies also got a heads-up whenever local or state officials were planning to announce outbreak-related policies. “So these big companies began acting in concert,” says Gregoire. “I’ve had a career in public service, and I’ve never seen anything like this.”

Within days of the group’s first call, many of the city’s largest employers had asked all but their essential workers to stay home. Microsoft went on to announce it would continue to pay its hourly workers—janitors, cafeteria staff—while the campus was closed. Others, like Amazon and Expedia, followed suit.

But the virus didn’t wait for the business community to get its bearings. It had already crossed into Seattle’s corporate sector.


L

I K E M A N Y of Seattle’s tech leaders, François Locoh-Donou, CEO of $2 billion F5 Networks, was planning for business as usual as February drew to a

close. There was an investor and analyst event in New York, then the company’s annual customer meeting in Orlando mid-March.

But late on Friday, Feb. 28, his HR chief had taken him aside. There had been just three confirmed COVID cases in the whole


6 6 F O R T U N E M A Y 2 0 2 0

state of Washington then, but one of them had been in close contact with an F5 em-ployee. That employee—whose own COVID test results wouldn’t be available for a few days—had been coming to work, riding the elevator, and occupying space in the com-pany’s new, 48-floor office tower.

That raised all sorts of questions—familiar now, but quite novel then. Should they close the office tower? Should they forgo their events? Had they themselves been exposed? Working out of a conference room that weekend, F5’s leadership team scrambled to consult experts and formulate a plan. “We had to make decisions really quickly,” says Locoh-Donou. They closed the tower for cleaning, a fact that more or less forced the other decisions: “We couldn’t send 10 execu-tives from F5 Tower to be in a room with investors in New York City,” he says.

The decision hurt nonetheless. The em-ployee tested negative, but the last-minute cancellation of the investor event spooked the market, and F5’s stock price took a beat-ing. For a couple of days, “it looked like a bad decision,” says Locoh-Donou. Of course, he adds, it was the right call.

Within days the city’s other tech com-panies were dealing with similarly urgent decisions. Amazon emailed employees on Tuesday, March 3, about a confirmed case on its Seattle campus; the individual—one of the company’s 50,000-plus based in Se-attle—worked out of the headquarters’ Brazil building and had last been in the office on Feb. 25. The night before falling ill, that employee had eaten dinner at Facebook’s nearby Seattle campus.

Facebook, meanwhile, had its own con-firmed case—a contractor who had last been in the company’s local offices on Feb. 21. Microsoft reported a case on its Redmond campus, peopled by roughly 50,000 employ-ees, on March 5.

“People wanted to know what floor they were on or what room they were in,” says Kathleen Hogan, Microsoft’s chief people of-ficer, who got word of the confirmed case on their campus over text. Microsoft benefited from the expertise of Colleen Daly, the com-pany’s global wellness benefits manager, who holds a Ph.D. in public health. Daly was on daily calls with the CDC and World Health Organization and managed the company’s internal contact tracing efforts.

For the city’s tech companies, many of which are in the business of enabling the bur-geoning work-from-home economy, issuing swift and sweeping guidance for their em-

ployees was relatively straightforward. The calculation was not so simple for some of Seattle’s other large employers.

H

AV I N G C LOS E D D OW N 80% of its stores in China during the outbreak, Starbucks already had experience with COVID-19 when the virus showed up in its hometown. When a staff member in a downtown Seattle store

came down with the disease on March 6, the company sanitized the store and resumed operations a few days later. The company phased in other changes—like offering 14 days of catastrophe pay to COVID-impacted workers and removing seating. But as the outbreak intensified across the U.S., employees like Aniya Johnson of Philadelphia grew frustrated that they were being asked to risk their health to serve coffee. “It’s not an essential service,” Johnson told Fortune in mid-March, days after she had, on a whim, started an online petition calling on Starbucks to close stores during the pandemic. The effort attracted 37,400 signatures from baristas and customers by the time Starbucks announced it was moving primarily to a drive-through model. (Starbucks says its decisions were informed by the China experience and grounded by concern about the well-being of its employees and communities, and its desire to support governments in efforts to mitigate the virus’s spread.) Costco—whose stores were deluged nationwide with shoppers seeking toilet paper and canned goods—asked employees at its headquarters, just east of the city, to report to work. That request was dropped after an employee in the company’s travel department died of COVID-19 and others tested positive in mid-March.

Boeing, which employs roughly 35,000 at its largest factory in Everett, just north of the city, and 70,000 in the Puget Sound region, initially kept its plants run-


250KN U M B E R O F N 9 5 M A S K S P R O C U R E D B Y M I C R O S O F T T O H E L P F I G H T T H E

S E A T T L E - A R E A C O V I D - 1 9 O U T B R E A K


ning. Deemed an essential business, its lines continued to assemble airplanes as COVID-19 cases cropped up in its workforce; it suspended production in the state in late March following the death of a quality inspector named Elton Washington.

While some Seattle employers struggled to strike the right balance, the area’s health care providers were scram-bling to prepare for a surge of patients amid a desperate shortage of tests and other critical supplies. The Providence Regional Medical Center in Everett, which had received the nation’s first COVID-19 case in January, had tried to bulk up on supplies for a potential pandemic that month.

“Even being a couple steps ahead in our planning, it was really a challenge,” says Amy Compton-Phillips, chief clini-cal officer for the system. Starting in January, Providence’s orders from suppliers in China couldn’t be filled because manufacturing lines there were down. Providence staffers were overwhelmed by offers from suppliers they’d never worked with before, and came to understand many of them were profiteers, hawking non-medical-grade goods.

“Things got so bad that we just went out to Joann Fabrics and Home Depot and bought supplies,” adds Compton-Phillips. A local Seattle TV station did a news story, featur-ing footage of Providence’s nurses assembling face shields and surgical masks in a hospital conference room.

Jeff Kaas, CEO of Kaas Tailored, a local company with 200 employees that makes furniture for Nordstrom and airplane parts for Boeing, heard about the spot on March 18 and immediately texted a doctor friend at Provi-dence: “You know I have a factory, right?”

The next morning at 6 a.m., Providence sent a design and supply team to Kaas’s Mukilteo, Wash., factory. They

worked out a surgical mask prototype, and the following day, after some collaboration with a firm in the Netherlands, they were making them. Kaas shared the specs on-line, which are now being used to produce personal protective equipment (PPE) around the world.

His own factory, staffed by employees, vol-unteers, his wife, and all four of his children, has been running 16 hours a day, six days a week since. Nordstrom has lent tailors to the effort and placed one of its managers at Kaas’s factory full-time. Providence’s effort has grown into the “100 Million Mask Chal-lenge,” managed by the American Hospital Association.

Outdoor Research, a Seattle-based outdoor- and military-apparel maker owned by Dan Nord strom—he left his family’s department store business in 2002—has also transitioned his operations to make PPE, an effort that was celebrated by Gov. Inslee as the sort of wartime manufacturing effort that’s needed. Local institutions have also stepped up to fill testing and health care gaps. The University of Washington has quickly ramped up its operations to run 2,000 tests per day. The Gates-backed flu study has pivoted to doing COVID-19 surveillance using at-home swab kits that Amazon delivers.

A Seattle-based financier with connec-tions to China reached out to Madrona’s

ALL IN Workers at Kaas Tailored went from making airplane parts for Boeing to producing personal protective equipment.

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6 8 F O R T U N E M A Y 2 0 2 0

McIlwain in mid-March, offering to set up a video call between ICU and ER doctors in COVID-19-impacted Chinese cities and their counterparts in Seattle. Two days later, with the help of the Hutch, the information-sharing session took place over Zoom at 6:30 a.m. Seattle time, with 300 participants nationwide.

While Challenge Seattle initially focused on synchronizing the ac-tions of the business community, the group’s efforts quickly turned to troubleshooting and supporting the government too.

When Kaiser Permanente’s Mul-laney asked the group in early March,

“Can anybody help get basic supplies?,” Costco CEO Craig Jelinek responded, saying he could source 40,000 N95 masks from China in 24 hours. Alaska Air CEO Brad Tilden made a broad offer to transport supplies. “We’ve got a fleet of airplanes that we’ll put at your disposal,” he told Mullaney.

Later, when a representative from Washington State mentioned on a call that it needed to make an advance payment to secure $10 mil-

turned into quarantine centers, Gregoire says Starbucks came through with furniture. After Mullaney advised that the state needed a single point person to coordinate its hospitals during the outbreak, her team helped Gov. Inslee find and hire—in roughly 72 hours—Vice Admi-ral Raquel Bono, a trauma sur-geon who set up field hospitals in Desert Storm.

By early April, there were very real signs of hope that these types of moves had helped Seattle had escape the worst-case scenarios. Gov. Inslee sent 400 ventilators Seattle no longer needed to the East Coast. Supplies to turn CenturyLink Field, where the Seahawks play, into a temporary hospital were instead directed to other states.

In assessing the catastrophic toll from the spread of this deadly pathogen, in most places COVID-19 seemed to reveal nothing but weakness: weak-ness in infrastructure, weakness in supply chains, weakness in preparedness, divisions between government and business. In Seattle the pandemic seems to have revealed something else entirely: a tensile strength that few knew the city possessed. Says Smith: “If you bring us all together and coordinate the right way, you can do so much more together.”

The city’s dense web of partnerships has proved vital in stemming the initial wave of contagion; it’s unclear if it will be as effective in addressing the collateral damage COVID-19 has wrought—a devastated economy, record-level unem-ployment, and fissures of in-equality the crisis has laid bare.

These are new realities with no easy answers, but Seattle has an advantage when everyone is #AllIn.

lion worth of protective equipment from China, Microsoft that day made available $15 million to the govern-ment to assist.

In another instance, a quarter-million N95 masks Microsoft had managed to procure for the state were stuck at a FedEx import facility in Memphis. Smith got wind of this dilemma at 5 p.m. on a Saturday in late March. He made a call to the White House, a contact on the National Security Council. They were released by the next morning.

“Anything the government has asked of these companies they have stood up and said, ‘We can make that happen,’ ” says Gregoire.

When Challenge Seattle asked for help organizing the state’s medical supply distribution center, they got senior managers from Amazon and Microsoft. When King County need-ed furnishings for motels they had


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M

OST E N T R E P R E N E U RS D R E A M of having an unexpected flood of new users. For Eric Yuan, the 50-year-old founder and CEO of Zoom, adding 90,000 schools—and having to edu-cate them on how to use his product—has

become a bit of a nightmare. “We thought their IT teams could help, but we were wrong,” he says in an early April interview over Zoom. “We are like the IT team for them.”

It’s hard to feel too sorry for him. After all, he is a multibillionaire several times over. He leads one of the few companies whose prospects have soared as a result of the pandemic. Still, Yuan looks drained, his face wan against the backdrop of a glimmering—and fake—image of the Golden Gate Bridge, a standard option in his product’s

“choose virtual background” feature.His frustration is understandable. A month has passed

since Yuan ordered his 2,500-person company to work from home, preced-ing California’s statewide lockdown by 12 days. In the weeks that followed, as the COVID-19 outbreak spread around the world, the San Jose–based company’s popularity took off expo-nentially as well. To “Zoom” quickly became a verb, the new-normal way to convene for everyone from yoga instructors to Fortune 500 executives suddenly forced from their workplac-es. Zoom’s users soared from 10 mil-lion a day in December to 200 million in March. Its stock price is up 80% on the year, giving the company a market

Aparna Bawa

Ryan Azus

Eric S. Yuan

Lynne Oldham

A QUIET HIT AMONG BUSINESS

USERS WHEN THE PANDEMIC

STRUCK, A YOUNG COMPANY

STRUGGLES TO SERVE CONSUMERS.

BY MICHAL LEV-RAM

HOW ZOOMZOOMED

VIDEO STARSMembers of Zoom’s management team, half of whom worked with CEO Eric Yuan at Cisco, which owns the videoconferencing unit Webex, before he started the company. Like so many others, they now fill their days meeting with one another over Zoom.

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value of $35 billion. But the rapid growth has exposed

challenges far greater than the CEO’s crammed calendar. As it turns out, the main reason Zoom was able to zoom past the competition, its ease of use, has proved to be a thorn in its side. Not requiring passwords as a default setting gave rise to yet another new phrase in the pandemic lexicon, Zoombombing, or the intru-sion of uninvited and often offensive guests to private meetings. Zoom also has proved a target for hackers, forc-ing the company to patch software that could have allowed remote users

to control the cameras of unwitting users, among other nefarious tricks.

The explosion of attention caught Zoom off guard. After all, for a decade it had been focusing on business users, not the masses. Yuan has embarked on an apology tour, penning a contrite blog post and granting numerous media interviews.

“I’m ashamed,” he says of the security flubs. “I blame myself.” He’s adding more defensive features, such as mandatory password protection of meetings, while acknowledging that such moves will make Zoom less click-button simple to use. “For sure,

it will have some impact,” says Yuan. “But we have to win back trust.”

Winning trust isn’t Zoom’s only hurdle. Counterintuitively, the surge in usage isn’t necessarily a boon to its business, because so many of its new users aren’t, and may never be, paying customers. That challenge, at least from an investment perspective, may be an even bigger concern than security slipups. “I don’t think it’s sustainable to give your product away for free for too long,” says Alex Zukin, an analyst with RBC Capital Markets.

In other words, Zoom may have become a beloved household name

B U S I N E S S S U R V I V E S A P A N D E M I C : E N E R G Y

Kelly Steckelberg

Janine Pelosi

Harry D. Moseley Oded Gal


7 2 F O R T U N E M A Y 2 0 2 0

cating a phone call. “Eric spent two years building Zoom’s core architecture,” says Santi Subotovsky, a general partner with Emergence Capital, another early investor in Zoom.

“He did the hard work, and he didn’t take any shortcuts.” Yuan’s goal was to make Zoom scalable and reliable.

He also wanted to make it much easier to use than exist-ing video conferencing software, which typically led users through a series of clicks (and downloads) before any video started streaming. Because there were plenty of simple alternatives in the marketplace, from Google’s Hangouts to Microsoft’s Skype to Apple’s FaceTime, Zoom would have to stand out to succeed. “We were in a market full of gorillas,” says Janine Pelosi, Zoom’s chief marketing officer and another former colleague of Yuan’s. (Half of Zoom’s 12- member management team worked with him at Cisco.)

Zoom’s embrace of “freemium” pricing—free to most us-ers, upsells for added features—made the company popular with business users. The free version the world has become familiar with allows calls of up to 40 minutes for as many as 100 people and unlimited one-on-one exchanges. Zoom’s paid accounts start at $15 a month per user, enabling longer-duration calls and various administrative controls.

even as it faces unexpected scrutiny for its less-than-perfect security. But its success when the world returns to normal is any-thing but assured.

Z

O O M F L E W under the radar right through its successful initial public stock offering in April 2019. It raised $357 mil-lion at $36 per share, and the

stock quickly charged over $100, making it a bright spot in Silicon Valley after the disappointing debuts of buzzier startups like Uber and Lyft. Its early users were typically universities and other smaller technology companies. And it wasn’t like videoconferenc-ing was a particularly new idea. “For a long time, everyone thought that it was a crowded market, and that there’s nothing going on there,” says Dan Scheinman, a former head of corporate development at Cisco and Zoom’s first investor.

For Cisco, Zoom is in many ways the one that got away. In 2007 the networking equip-ment giant bought Webex, a business-focused videoconferencing company, where Yuan was the vice president of engineering. He stayed on at Cisco for four years and then left to build his own version of Webex, taking 40 engineers along with him. “To be able to scale video is a hard problem to solve,” says Oded Gal, Zoom’s chief product officer and one of the Webex refugees. “The engineers who fol-lowed Eric had built the best screen-sharing technology out there, and there are not a lot of people who can do that in the world.”

The entrepreneurs didn’t simply try to re-create Webex. Yuan believed a more modern take on the industrial-grade product the Cisco unit offered should be easily acces-sible from phones and laptops while on the go. It also needed to work on spotty Internet connections and cellular networks and to do it better than existing videoconferencing sys-tems, which sucked up huge bandwidth and still didn’t do a particularly good job of repli-

–50

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100

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NASDAQINDEX

ZOOM STOCK PRICE

CISCO

APR. 9

RINGCENTRAL

100.8%

1.9%

SOURCE: S&P GLOBAL

JAN. 1, 2020APR. 18, 2019

N U M B E R O F Z O O M ’ S

D A I LY M E E T I N G

PA R T I C I PA N T S I N

M A R C H . I N D E C E M B E R ,

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C H I N E S E U S E R S

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T H E N U M B E R WA S A

M E R E 1 0 M I L L I O N .200,000,000

ZOOM STOCK PERFORMANCE SINCE IPO


Versions targeting big and small businesses offer even more capacity and additional bells and whistles.

True to its business-focused roots, Zoom already was earning a modest profit by the time it went public. For the year ended Jan. 31, 2019, it made nearly $8 million on sales of $330 million. Sales nearly doubled to $623 million a year later, and profits nearly tripled to $22 million, handily beat-ing Wall Street estimates. “They’ve been executing wonderfully,” says Zukin, the RBC analyst. “Even pre-COVID, the stock had been on a significant tear.”

Indeed, Zoom was producing some of the fastest revenue growth rates in the soft-ware industry well before the effects of the pandemic began to be felt in China, where Zoom had proved popular. The company removed time-limit restrictions for Chinese users as the country began locking down. When workers in the U.S. began to follow suit in March, Zoom transitioned in a span of weeks from Silicon Valley success story to global phenomenon. And that’s when things got out of control.

W

H I L E Y UA N is publicly apologiz-ing and reevaluating Zoom’s features, his larger, deep- pocketed competitors are seizing the moment. Webex, his

former employer, is also seeing huge upticks in usage—more than tripling its volume of average meeting minutes per month in the U.S. in March. And it is actively marketing what it says is an emphasis on privacy and security to customers, both old and new.

“That differentiation helps at this time,” says Sri Srinivasan, head of Cisco’s collaboration unit, which includes Webex. Microsoft Teams, a business-focused product that includes videoconferencing and complements the company’s consumer-oriented Skype service, also has been gaining. Microsoft says 500,000 organizations use Teams, which it bundles with subscriptions to its Office 365 productivity software.

Even smaller players, like Internet tele-phone provider RingCentral, are trying to make their move while Zoom is in the hot seat. In early April, RingCentral announced it was launching its own video product after seven years of relying on Zoom to provide

“white label” videoconferencing tools to its customers. “We get to control our destiny,” says Vlad Shmunis, founder and CEO of RingCentral, referring to ending his com-pany’s reliance on Zoom’s video tool.

That alone might not make a dent in Zoom’s current growth trajectory. The com-pany’s chief financial officer, Kelly Steckel-berg, says that revenue from customers like RingCentral represents less than 10% of Zoom’s overall sales. What’s more, it’s not clear whether the current scrutiny of Zoom’s security issues will end up eating away at its new growth at all. Consumers can be forgiv-ing of security flaws in an overwhelmingly useful product. Just ask Facebook.

But there’s another question looming over Zoom’s newfound role as the public’s favorite videoconferencing tool: Just how many of its new users will become paying users? Unlike Slack, another collaboration-tool software maker, Zoom doesn’t break out the percentage of its account holders who pay. It also doesn’t say how successful it is in converting nonpaying users to pay-ing subscribers. The company warned that usage growth would erode margins, but it hasn’t quantified the risk.

Investors, who have watched Zoom’s market value equal that of auto giant General Motors, are concerned. “We have reservations about Zoom’s long-term ability to monetize,” Morgan Stanley analyst Meta Marshall wrote in a report. Credit Suisse’s Brad Zelnick, who downgraded Zoom’s stock April 6 to “under-perform,” was more direct. “We expect much of the recent surge will prove ephemeral, and/or comes from free users or education, which are difficult to monetize,” he told clients.

As for Zoom’s Yuan, he sounds as though he rues the day his company became a con-sumer hit at all. He’s focused right now on putting customers at ease, not wowing them. Already he has paused the development of all new features—that Snapchat-like makeup filter you’ve been pining for will simply have to wait—opting to devote his team’s time to fixing security loopholes. “We will review everything,” says the CEO. “Anything that might have negative impact to security and privacy, we will turn it off.”

In the process, Yuan needs to make sure he doesn’t turn off users who think his prod-uct has made getting through a global crisis just a little bit easier. After all, like Yuan, most of us plan to someday return to our office. When we do, he needs to make sure we still want to Zoom.

T H E C O R O N A V I R U S E C O N O M Y : Z O O M

NOT QUITE OVERNIGHT

For many, Zoom seems to have appeared out of nowhere. In fact, it was a private startup for eight years as it became popular for its ease of use among busi-ness customers.

2011

Zoom incorporates under the name Saasbee Inc.

2012

Changes name to Zoom Video Communications

2013 First public release of Zoom Meetings, which supported 200 million annual meeting minutes by year-end

2014

Launched Zoom Chat, Zoom Video Webinar, and Zoom Rooms

2015

100th employee hired

2016

Reached 6 billion annual meeting minutes

2017 Launched Zoom’s developer platform and hosted first user conference, Zoomtopia

2018

Announced Zoom Phone and a marketplace for third-party apps

2019 Exceeded 5 billion monthly meeting minutes. Oh yeah, and went public.


7 4 F O R T U N E M A Y 2 0 2 0

O

T H E RO B OTS A R E M E S M E R I Z I N G.

Inside a warehouse in Erith, on

the outskirts of East London,

more than a thousand of them

glide across a vast steel and

aluminum grid. Each is the size and shape of

an office copy machine, topped with stubby

antennae and a shining neon-green LED.

Following individual routes, they whiz off,

accelerating at rates rivaling those of a Ferrari.

OCADO BUILT A BUZZY BUSINESS

AROUND HELPING SUPERMARKETS

SURVIVE ONLINE. THE COVID-19 CRISIS

HAS BECOME ITS TRIAL BY FIRE.

BY JEREMY KAHN

THE GROCERY ROBOTS ON THE

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They stop on a dime, reverse, shoot left or

right, or momentarily pause to allow fellow

robots to pass—a meticulously choreo-

graphed electric ballet.

The robots’ grid is actually the top of a

giant three-dimensional lattice—a modular

cage packed with groceries. Each time a ro-

bot stops, it drops a clawlike attachment into

the bowels of the lattice (“the hive,” as human

workers call it), descending as many as three

stories. The claw grabs the sides of a white

plastic crate containing fruit, vegetables,

cereal—any of 55,000 different items—and

retracts it up into the robot’s belly. The robot

then carries the crate to another grid square

and lowers it into the “pick tunnel,” which

sits beneath the hive on the warehouse’s

ground floor. There, workers pick items out

of the crates to fill customers’ orders, placing

the groceries into red plastic bins, which are

HIVE MIND At Ocado warehouses, thousands of robots roll atop a metal grid known as “the hive,” filling orders with minimal human involvement.

THE PANDEMIC FRONT LINES


7 6 F O R T U N E M A Y 2 0 2 0

stumbled as it races to keep up. To try to slow the over-

whelming order volume, Ocado shut down its mobile app

and implemented a queuing system on its website. But de-

mand was simply too great, and with all its delivery slots

booked for a week out, Ocado was forced to temporarily

shut down its website in mid-March. When it came back

online, almost a week later, the company restricted orders to

existing customers; even so, delivery slots remain difficult to

find. Ocado is now preparing for other worst-case scenarios;

it has held rehearsals for what will happen if its employees

begin to fall ill and entire teams need to self-isolate. (One

possible solution: drafting furloughed workers from other

industries to staff warehouses and drive trucks. The com-

pany has already reached out to recruit idled Uber drivers.)

Even before the coronavirus hit, grocers were under

tremendous pressure, squeezed by rising costs and race-

to-the-bottom price competition. Net profit margins for

U.S. grocery chains, for example, average just 1% to 2%,

according to consulting firm Mercator Advisory Group.

On top of these dismal trends, executives in the sector fear

the twin Death Stars of retail—Amazon and Walmart—

both of which have made clear their intentions to domi-

nate the grocery business. Walmart is already by far the

largest seller of groceries in the U.S., with a 21.3% market

share, according to UBS, more than twice the share of its

nearest competitor, supermarket chain Kroger.

Some industry insiders argue that the only way “legacy”

grocers can compete with the titans is by matching their

state-of-the-art technology and logistics infrastructure.

That automation could also help them trim labor costs: A

recent McKinsey report estimated that by implementing

existing technologies, a grocer could run a store with 55%

to 65% fewer labor-hours.

Ocado’s pitch to grocers stresses those benefits and

adds a compelling twist: Ocado can build the automa-

tion infrastructure for them, sparing them the pains and

costs of developing their own.

For many years, Ocado’s talk of becoming a tech plat-

form seemed to be just that: talk. Equity analysts were

skeptical, and the stock became a perennial favorite among

then loaded onto trucks for delivery.

This warehouse, or customer fulfillment

center (CFC), as logistics pros call it, is one

of the most sophisticated and automated on

the planet, one that can handle many tens

of thousands of orders a week. It belongs to

Ocado, a pioneering British online grocer

that is positioning itself as a white knight for

the beleaguered grocery sector—and possibly

other industries too—offering to help super-

market chains compete in an automated age.

Ocado’s robot-powered warehouses thrum

with activity on ordinary days; since the coro-

navirus crisis erupted, they’ve been in roaring

overdrive. The pandemic has given the com-

pany a chance to prove it can keep an online

grocery business humming, even when its

human workforce faces unprecedented strain.

Yet at the same time, the crisis’s upending

of daily life has threatened to knock Ocado

off its growth trajectory, just when it seemed

tantalizingly close to becoming a global force.

Like most grocers, Ocado has faced sky-

rocketing demand fueled by social distanc-

ing measures and panic buying. Its U.K.

grocery sales in March leaped more than

20% year over year. At one point, visits

to its website were 100 times the nor-

mal rate—a level so high, it triggered the

company’s cybersecurity systems to believe

the website was under attack. “This is the

peakiest peak we’ve ever had in the history

of the business,” says David Shriver, Ocado’s

group director of communications.

Ocado is hardly alone in this. Consultants

McKinsey & Co., in a note to grocery clients

on March 19, reported that online grocers

worldwide were struggling to meet demand

spikes as high as 700%. There’s a good

chance the pandemic will have a lasting im-

pact on consumer behavior, converting many

more customers to online grocery shopping

long after the crisis recedes.

Still, like its peers, Ocado has sometimes

AT ONE POINT, VISITS TO OCADO’S WEBSITE

WERE 100 TIMES THE NORMAL RATE,

TRIGGERING ITS CYBERSECURITY SYSTEMS TO

BELIEVE THE SITE WAS UNDER ATTACK.



short-sellers. But Ocado’s logistics prowess

has gradually won converts. Beginning in

2017, the company announced a series of

licensing deals with grocery chains on four

continents—including a huge partnership

with Kroger. Since then, Ocado’s market

capitalization has quadrupled to north of

$10 billion, while revenue has grown steadily,

to $2.2 billion last year. (See the “Price of

Growth” box in this story.)

Investors seem confident that Ocado can

capitalize on the current moment; its shares

have risen 28% since Feb. 28, even as global

markets plummeted. The future, however,

looks murkier. Ocado’s licensing deals

require it to spend heavily upfront to build

dozens of CFCs. Those obligations have left

some analysts wondering if the company,

which currently carries more than $750 mil-

lion in debt, has taken on too much risk. And,

even once the pandemic passes, an exis-

tential question looms: whether any grocer,

even with Ocado’s robotic helping hand, can

withstand the onslaught of the Everything

Store and the Behemoth of Bentonville.

O

CA D O’S RO OTS stretch back to

the dotcom boom, when three

twentysomething Brits

working as traders at Goldman

Sachs—Tim Steiner, Jonathan

Faiman, and Jason Gissing—got bitten by

the startup bug. The trio founded Ocado in

April 2000. (The name is an invented word,

chosen because it could work across

languages and because the founders liked

how it looked as a logo.) Steiner, Ocado’s

CEO, is the only founder still involved with

the company. Compact and trim, with

close-cropped gray hair and pale blue eyes,

he exudes a pugilistic intensity as he walks

through Ocado’s history at a rapid-fire clip.

When Ocado made its debut, established

British grocery chains such as Tesco, Sains-

bury’s, and Walmart-owned Asda already

had e-commerce operations. Those chains

were using their stores to fulfill online orders,

with store clerks gathering the goods and

loading them onto delivery trucks. This pro-

cess, known as “store pick,” is the way most

retailers have grafted e-commerce onto their

existing operations. Store pick requires little

additional capital or labor investment, but it

has disadvantages. Many stores’ stockrooms

are too cramped to accommodate a sizable

picking operation, which means employ-

ees may have to fill online orders from the

supermarket floor, putting them in competi-

tion with in-store customers. With smaller

inventories, there’s also a greater chance that

items won’t be available—a leading driver of

customer dissatisfaction.

Ocado, which had no stores, took a

different approach. It built an automated

central distribution center in Hatfield, on

London’s northern edge, and delivered all its

orders from there—a strategy that helped it

minimize inventory shortfalls. The business

quickly became popular, consistently top-

ping consumer surveys.

The problem: The technology at Hat-

field left a lot to be desired. The equipment

Ocado was using—giant conveyor belts

and sorting machines—was designed for

the manufacturing sector, where factories

churn out mass volumes of identical items.

It was ill-suited for the grocery business,

where the assortment of items is huge, and

each customer’s order is unique. Constant

spending on improvements, meanwhile, was

eating up cash. “I used to joke about the law

of material-handling equipment, which was,

Five plus five equals seven,” Steiner says.

1800+N U M B E R O F S O F T WA R E E N G I N E E R S E M P L OY E D BY O C A D O

ESSENTIAL

An Ocado driver

delivers groceries

in Ironbridge,

England. Ocado’s

order volume

surged in March as

social distancing

measures took hold.

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7 8 F O R T U N E M A Y 2 0 2 0

Among those who visited Ocado was the U.K. grocer

Morrisons, which had revenues far exceeding Ocado’s

but didn’t have an online offering. The two companies

reached a deal that sold half the capacity of Ocado’s new-

est CFC to Morrisons, with Ocado agreeing to manage the

facility and a delivery fleet on Morrisons’ behalf. When

Morrisons.com launched in January 2014, it was the first

evidence that Ocado could put its platform to work for

other grocers.

Clarke, who by then had been promoted to chief technol-

ogy officer, had an even more ambitious version of that

platform in mind. By mid-2015, Ocado had begun develop-

ing the army of robots that would eventually staff its “hives.”

The robots, designed by Ocado in conjunction with U.K.

robotics company Tharsus, are controlled by an internal

4G network with more base stations packed into less

space than pretty much anywhere else on the planet. The

network enables each robot to communicate with the soft-

ware controlling it 10 times per second. At Erith, the hive

generates four terabytes of data every day, all of which is

fed back into a digital twin to refine the system.

The robots allow Ocado’s newest fulfillment centers to

pick 200 items per hour of labor time—and mean they

can move a typical order from inbound supply truck into

the hive, and then have it picked, packed, and loaded on

a van for delivery in 15 minutes or less. Meanwhile, the

modular design of the hive itself means it can easily be

replicated and sized to fit new locations. Complementing

the hardware is new software—lots of it, from cloud-based

mobile apps to artificial intelligence. This integrated pack-

age, along with the engineering support to maintain and

upgrade it, is what Ocado now offers to the world’s grocers.

Around this time, Paul Clarke, a software

consultant with experience running tech

startups, received a call from an Ocado

recruiter. “I said, ‘Look, I’m really sorry, but

I don’t want to work in retail,’ ” recalls Clarke,

a lanky 60-year-old with the professorial

demeanor of the Oxford physics don he once

considered becoming. But when he toured

Ocado’s warehouse, Clarke was impressed

by its scale and complexity. Hatfield was a

giant automation puzzle—exactly the sort of

engineering problem he enjoyed cracking. “I

fell in love,” he says.

Clarke signed on for a one-year gig, tasked

with improving the system that controlled

the flow of goods along Hatfield’s fast-

moving conveyor belts. Ocado’s operation

was so complex, Clarke says, that the only

way to reengineer it was to build a series of

digital “twins”—in essence, real-time software

simulations of the operation. This allowed

Clarke and his team to experiment with im-

proved configurations before implementing

them in the real warehouse, avoiding costly

trial and error. Before long, Steiner says, the

twins helped wring new efficiencies from

equipment—making five plus five equal 12.

In the summer of 2010, Ocado went public

on the London Stock Exchange, in a list-

ing that valued the company at 937 million

pounds ($1.4 billion at the time). That was

more than many analysts thought the money-

losing grocer was worth, and its shares fell

10% on their first day of trading. That skepti-

cism would continue to haunt Ocado: Over

the next decade, its shares would frequently

have the dubious distinction of the being

among the market’s most shorted.

Over the following year, though, Ocado

eked out its first small operating profit.

Around the same time, grocery consultants,

investment banks, and, eventually, huge

packaged goods companies—Procter &

Gamble, Unilever, Nestlé, and Coca-Cola—

began quietly asking to tour the company’s

fulfillment centers. Steiner’s instinct was to

refuse. “We were quite secretive,” he recalls.

But he soon realized that while other com-

panies might glean a few tips by touring the

CFCs, they couldn’t replicate the integrated

system of software, hardware, warehouse

workers, and delivery drivers Ocado had

built over a decade. In its 2012 annual report,

Ocado for the first time made monetizing its

intellectual property a strategic plank.

THE PRICE OF GROWTH

OCADO’S GROCERY SERVICE has been a hit with British shoppers. Its automated logistics and software business aims to be an equally big hit with supermarket chains—but spending on the tech has hurt Ocado’s bottom line.

0

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–$273 M.–300 million

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FY 2011 FY 20112015 20152019 2019

SOURCE: BLOOMBERG

ANNUAL REVENUES PRETAX INCOME

OCA.W.0520.XMIT.indd 78 4/13/20 8:28 PMFINAL

A

M A ZO N A N D WA L M A RT are no strangers to

robotics. Amazon uses flat, Roomba-like

robots to move stacks of pallets around its

fulfillment centers; last year, it acquired

Canvas, a startup whose computer-vision

systems allow warehouse robots to work in crowded

conditions alongside people. Walmart, meanwhile, has

deployed thousands of robots to track inventory and has

created a fully automated pilot warehouse in New

Hampshire to serve its grocery e-commerce business.

Pure-play supermarkets have been far slower to auto-

mate. But in June 2017, a major move by Amazon gave

Ocado’s modernization sales pitch a Saturn V–size boost.

That was when the Everything Store spent $13.7 billion

to buy upscale grocer Whole Foods, which had 500 stores

worldwide. The deal stoked grocers’ fears that Amazon

would decimate them as it had so many retailers in other

categories—and the trickle of interest in Ocado’s technol-

ogy became a torrent.

In November 2017, Ocado announced a deal with French

retailer Groupe Casino to supply the technology for its

e-commerce in France. Two months later, it partnered

with Sobeys, which operates 1,500 stores under a variety

of brand names across Canada. “It’s the only profitable

e-commerce model at scale that I’ve seen,” Sarah Joyce,

Sobeys senior vice president for e-commerce, says of Ocado.

Several other deals followed, including with ICA, a

Swedish company that operates 1,300 groceries; with Coles,

in Australia; and with Aeon, Asia’s largest supermarket

chain, in Japan. But the biggest of them all was the strategic

partnership Ocado reached in May 2018 with Kroger. The

American giant took a 5% share in Ocado and gained exclu-

sive U.S. rights to its technology; Ocado committed to build-

ing about 20 CFCs for Kroger. The British company’s shares

soared 44% on the day the partnership became public.

Rodney McMullen, Kroger’s CEO, says he had been

watching Ocado for a decade, meeting periodically with

its top executives. Kroger implemented a store pick–based

EVENTUALLY, SAYS OCADO’S

PAUL CLARKE, “THE GOAL

IS TO MOVE TO AN

ENTIRELY DARK FACILITY”—

THAT IS, A FACILITY WITH

ALMOST NO PEOPLE.

e-commerce operation after a 2013 merger,

but McMullen says it became unwieldy as it

grew. The struggle to keep both online and

in-store customers happy was driving Kroger

toward the automation model. “We didn’t see

a path where we could accelerate to where

Ocado is in a year or two,” McMullen says.

It’s a common refrain among Ocado’s cus-

tomers: They lack the resources to replicate

Ocado’s technology. “We are a big company,

but we are not a technology company,” says

Anders Svensson, the CEO of ICA Sweden.

Ocado, in contrast, employs more than

1,800 software engineers and 600 hardware

specialists. That’s far less than Amazon or

Google, but it’s a lot for a grocer.

T

H E S L E W O F L I C E N S I N G D E A LS

pushed many investors to

abandon their skepticism: It’s

been a long time since Ocado

was a heavily shorted stock.

Still, those deals aren’t adding much to the

bottom line—because Ocado receives money

only after the automated CFCs are built.

Ocado currently operates six CFCs to sup-

port its U.K. grocery operation; it aims to run

at least 50 worldwide within the decade. Its

first CFC outside Britain, built for France’s

Groupe Casino, went live on March 26.

Another, for Sobeys, outside Toronto, should

open by June. And its first center for Kroger

is scheduled to come online in Monroe, Ohio,

in the first half of 2021.

Ocado’s partners are responsible for

acquiring land, building external structures,

providing a delivery fleet, and hiring workers.

But Ocado has to build the hives, supply the

robots and software, and provide training and

on-site engineering support. It costs Ocado

$40 million to $45 million in “peak cash

outflow” for each average-size CFC, Steiner

says. Only after construction does Ocado col-

lect a fee based on the warehouses’ available

capacity. In its most recent fiscal year, just 6%

of Ocado’s revenue came from licensing.

Sherri Malek, an equity analyst at RBC

Capital Markets, says Ocado won’t see posi-

tive free cash flow from its licensing until

at least 2022. Meanwhile, Ocado’s heavy

investment has led to ballooning losses—

worsened by a catastrophic fire that gutted

one of its CFCs in early 2019.

One looming question is whether the

coronavirus could thwart Ocado’s expansion.



the U.S. isn’t high enough to support Ocado’s CFC model.

If anything, the pandemic has shown that “store pick” may

be a more resilient business model: Stores can staff up to

fulfill online orders if a crisis prompts a surge in demand,

whereas automated CFCs, designed to operate close to

capacity most of the time, aren’t as flexible.

Such doubts haven’t stopped Ocado from raising capital.

It issued a $187 million share offering in 2018. In February

2019, it sold 50% of its British e-commerce operation to

U.K. retailer Marks & Spencer. The sale simplified Ocado’s

proposition to investors, positioning it as more of a pure-

play tech platform, while raising $982 million. Ocado also

sold $655 million of convertible bonds in December.

The frequency of Ocado’s fundraising has made some

analysts uneasy. But Steiner, the CEO, says the efforts are

a sign of strength, not weakness. “The only reason to do a

capital raise is because you think you are going to do more

[business],” he says. And in February, the world’s most

prominent investor offered an indirect vote of confidence

in Ocado’s strategy: Warren Buffett’s Berkshire Hathaway

disclosed in government filings that it had spent almost

$550 million to buy a 2.3% stake in Kroger.

W

H I L E O CA D O B R E A KS G RO U N D on CFCs

around the world, Clarke, the chief technol-

ogy officer, is peering around the next

technological bend. He has experimented

with new robots, including models with

human-like appendages that enable them to handle

delicate groceries and carry out repairs. Eventually, Clarke

says, “the goal is to move to an entirely dark facility”—that

is, a CFC with almost no people.

Robots aren’t the only topic on Clarke’s mind. Ocado has

made multiple investments in “vertical” farming—indoor

experiments in sustainable agriculture. Another invest-

ment is Karakuri, a British startup creating automated

kitchens that can prepare restaurant-style meals for deliv-

ery. Clarke says Ocado envisions building an “integrated

food machine.” By combining vertical farming, food prep,

and delivery in one facility, he explains, “you might be able

to go from plant to kitchen table in two hours or less.”

Steiner and Clarke have also begun looking beyond food

altogether in search of profitable business lines. Ocado’s

expertise in logistics, A.I., robotics, and simulation could be

deployed to tackle automated parking lots, parcel sorting,

rail freight, container ports, and more. Ocado has already

created simulations of a car-parking system, Clarke says,

and has begun exploring scaled-up versions of its robots for

handling freight far heavier than a crate of bananas.

It all may sound like a stretch for a company whose

core grocery business is still fighting to prove its staying

power. But for those who wonder why Ocado would want

to expand into parking or port operations, Steiner has

a ready answer: What if Amazon had simply stopped

with books?

When the pandemic first struck, Ocado en-

countered trouble obtaining a key part for its

robots, because it was made in Wuhan, China,

the epicenter of the outbreak. (The company

has since found an alternate supplier.) Ocado

mostly hires local engineering teams, so

travel bans have had little impact on its plans.

And grocery and construction workers have

been classified as essential in most places,

enabling work to continue. Still, Duncan

Tatton-Brown, Ocado’s CFO, acknowledged

to reporters in March that if restrictions on

movement stayed in place for many months,

the construction timeline would suffer.

At the same time, Ocado doesn’t expect all

of its pandemic-driven revenue boost to last.

Much of its sales bump came from customers

buying dry goods and other nonperishables;

the company predicts that demand for many

of these items will fall below normal levels

in the second half of the year, as customers

work through their stockpiles.

Even before the coronavirus, some observ-

ers were doubtful that Ocado’s grocer partner-

ships would pay off. Christopher Mandeville,

a food retail and distribution analyst at

research firm Jefferies, has criticized the

Kroger deal in particular. Other than in a few

major cities, he says, population density in

A HUMAN TOUCH

Ocado is experimenting with humanoid robots

that can handle delicate groceries and do repairs.


CO

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T H E C O R O N A V I R U S E C O N O M Y : W O R L D ’ S 2 5 G R E A T E S T L E A D E R S

No disease in living memory has posed as great a threat to global health and livelihoods as the novel coronavirus. But since its earliest days, the battle against SARS-CoV-2 has also spurred countless people to tremendous acts of resourcefulness, courage, and compassion. We’re devoting our seventh annual leaders’ list to those who have rallied the world behind them in this decisive moment, including inspirational figures from the medical community—some of whom led by example even at the cost of their lives.

HEROES

OF THE

PANDEMIC

L I W E N L I A N GOPHTHALMOLOGIST, WUHAN

CENTRAL HOSPITAL, CHINA

WRITERS: MARIA ASPAN, EAMON BARRETT, KRISTEN BELLSTROM, SCOTT DECARLO,

NAOMI XU ELEGANT, ERIKA FRY, MATT HEIMER, RACHEL KING, ELLEN MCGIRT,

GRADY MCGREGOR, DAVID MEYER, JOHN PATRICK PULLEN, CLAIRE ZILLMAN

WORLD’S 25 GREATEST LEADERS

1

WGL.W.0520.XMIT.indd 82 4/14/20 9:24 PMFINAL

2

C H R I S G R E G O I R ECEO

Challenge Seattle

Gregoire, a former Washington governor, brought hard-hit Seattle’s business community together early in the city’s outbreak. She insisted on a science-based response, and the group, which includes some of the world’s most competitive corporate rivals, fol-lowed her lead—act-ing early, aggressively, and in unison—to help slow the virus’s spread. (For more, see

“Seattle Under Siege” in this issue.)

3

J AC K M ACofounder

Alibaba, China

A strong advocate of U.S.-Chinese coopera-tion during his time running Alibaba, Ma cut through geopoliti-cal tensions to donate thousands of testing kits and a million face masks to the CDC, while facilitating the shipment of 1,000 ventilators to New York State. He has also been quick to help other undersup-plied nations, particu-larly in Latin America and Africa. As of mid-April, Ma had do-nated nearly 18 million masks, 3 million test kits, and thousands of ventilators—reaching over 100 countries.

I F T H E PA N D E M I C H AS A FAC E , it’s the mask-clad visage of Dr. Li. After becoming one of the first to sound the alarm about a new virus emerging in his city, Li was detained by local Chinese authorities and forced to recant his warning. Within days of his release, the 34-year-old doctor returned to treating patients, only to become infected by the all-too-real disease, and then, on Feb. 7, to succumb to it. Dr. Li’s bravery—both in the face of the coronavirus and the state— inspired China and ultimately the world. (In April, the Chinese government honored Li as a “martyr.”) Dr. Li’s final post on social media site Weibo has become a living memorial, where users flock to post messages and celebrate his life. This digital Wailing Wall, as some have called it, has more than 850,000 posts and stands in rebuke to anyone who does not believe that the voice of one can be the difference between the life or death of thousands.

4

T H E G OV E R N O R SJay Inslee,

Washington;

Gretchen Whitmer,

Michigan;

Mike DeWine, Ohio

From Washington’s Inslee, who had to invent the playbook for fighting the disease on U.S. soil when his state was the first hit, to Whitmer, who refused to back down when attacked by President Trump over her demand that the federal government step up to help, to DeWine, who has held the line on his stay-at-home order, despite pressure from protesters and his own party, seeing U.S. governors rise to the moment has been a bright light in a bleak time.

5

A N T H O N Y FAU C IDirector, National In-

stitute of Allergy and

Infectious Diseases

In 36 years as director of NIAID, Fauci has guided the U.S. response to outbreaks from AIDS to Zika. After mixed signals and inaction initially handicapped the federal reaction to the coronavirus, Fauci emerged as the administration’s most trusted authority fig-ure. He has assuaged the public by speaking plainly, frequently, and honestly in briefings. And his candor about mistakes—“It’s a fail-ing, let’s admit it,” he told Congress of the government’s testing efforts—has helped prompt the White House to course-correct.

6

R AC H A E L B E DA R DGeriatrician

Rikers Island

Bedard, who cares for the oldest and sickest in New York City’s cor-rectional system, has refused to allow the risk to her incarcer-W

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v

LO R I L I G H T F O OT Mayor of Chicago J E N N Y D U R K A N Mayor of Seattle LO N D O N B R E E D Mayor of San Francisco

AS T H E F E D E R A L G OV E R N M E N T D R AG G E D I TS F E E T, America’s mayors—par-ticularly those leading our biggest and therefore most vulnerable cities—sprang into action to protect their citizens. In Seattle, the earliest U.S. hotspot, Jenny

Durkan established the country’s first drive-up testing site for first responders, created a $5 million grocery voucher program, and shared her city’s hard-won lessons with her fellow mayors. Durkan’s counterparts in the Bay Area—includ-ing San Francisco’s London Breed and Oakland’s Libby Schaaf—seem to have heeded her warnings. The region was the first in the nation to issue shelter-in-place orders, a farsighted step that likely saved thousands of lives. In Chicago, Lori Lightfoot showed that urban leadership extends beyond the West Coast, closing the city’s parks to enforce social distancing—and playing into the loving memes that sprang up depicting her as a stern quarantine enforcer. “Your jump shot is always gonna be weak,” quipped Lightfoot. “Stay out of the parks.”

8 4 F O R T U N E M A Y 2 0 2 0

ated patients to be overlooked. She’s used Twitter to call for a mass release of detainees, reminding anyone who will listen that jail is “a perfect setup” for a deadly outbreak.

7

J O S É A N D R É SFounder, World

Central Kitchen

The chef and restau-rateur has thrown himself into nourishing those affected by the crisis, forklifting food onto quarantined cruise ships and serv-ing nearly 100,000 meals a day to health care workers and others in hotspots—all while providing much-needed jobs for restaurant employees.

Andrés’s latest feat: turning the Washing-ton Nationals’ baseball stadium into a massive community kitchen to serve D.C. residents.

8

G E O R G E YA N C O P O U LO SChief Scientific

Officer, cofounder,

Regeneron

Regeneron and Yan-copoulos are racing to fight COVID-19 on two fronts. The company’s rheumatoid arthritis drug sped into clinical trials in March after evidence emerged from China that it may help the most severely ill patients. Since January, Yancopou-los’s team has also been developing an antibody cocktail—the

same approach that helped Regeneron deliver an Ebola drug last year—to treat the disease and serve as a prophylaxis for medi-cal workers.

9

M A RY B A R R ACEO, General Motors

GM was the first big American automaker to commit its idle assembly lines to the fight against COVID-19. Barra stood fast in the face of criticism from the President and reaped the benefits: On April 8, the U.S. Department of Health and Human Services awarded GM a $489 million contract to deliver 30,000 ventilators by the end of August.

10

B I L L GAT E SCofounder, Bill

& Melinda Gates

Foundation

Five years ago, with spooky precision, Gates warned us we’d be where we are now if we didn’t prepare for a pandemic. (We didn’t prepare.) Luckily, Gates did—putting his money in 2017 behind CEPI, an organization that has already ushered eight COVID-19 vac-cine candidates into development. In Febru-ary, Gates deployed funding to ready critical public health infrastructure in Africa and South Asia for the virus’s onslaught.

12

L E E H S I E N LO O N G & L E O Y E E - S I NPrime Minister,

Singapore & Executive

Director, National

Center for Infectious

Diseases, Singapore

Singapore was one of the first countries out-side China to confirm a coronavirus case; nearly three months on, its COVID-19-related deaths remained in the single digits. Leo’s center developed a test before the city-state confirmed its first case. It now has one of the highest per capita test-ing rates in the world. Swift border controls, methodical contact tracing, and transpar-ent communication with the public also serve as how-tos for other virus hotspots.

13

J A N E M O S B AC H E R M O R R I SFounder and CEO

To the Market

Morris’s organization matches big buyers—like Target and Mas-tercard—with a global network of nontradi-tional manufacturers, mostly women-owned and based in vulnerable communities. In March, dozens of TTM makers retooled their opera-tions to produce masks, gowns, and scrubs. Barely 30 days later, the personal protective equipment (PPE) began rolling in. Morris has orders for over 1.2 mil-lion units in the U.S. and hopes to eventually dis-tribute in Kenya, Ghana, and India too.

14

A M A D O U S A L LDirector, Institut

Pasteur, Senegal

Testing resources for COVID-19 have been particularly scarce in Africa, where a couple of months ago the continent had just two labs—one of which is Sall’s institute—that could do the job. The virologist has been focused on spreading that capacity and creat-ing a more practical way to test. Working with U.K.-based diagnostic company Mologic, Sall’s team is developing a point-of-care device that will offer results in 10 minutes. Tests will cost less than $1 and be manufactured in Senegal.

15

K I O U S K E L LYER Nurse, Mount Sinai

West

One of the countless health care profession-als putting their lives on the line—and too often losing them—Kelly is believed to be the first New York City

T H E C O R O N A V I R U S E C O N O M Y : H E R O E S O F T H E P A N D E M I C

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nurse to have died from the virus. His death spurred colleagues to defy orders and speak out about the danger-ous PPE shortages at city hospitals, motivat-ing policymakers and philanthropists to step up to help.

16

R I H A N N AFounder, Clara Lionel

Foundation/Fenty

Beauty

Rihanna’s nonprofit pledged $5 million to address the needs of families impacted by the pandemic, making her one of the first ce-lebrities to throw their financial weight into the crisis. So far, her commitments include $2 million partnerships with Jay-Z’s Shawn Carter Foundation and Jack Dorsey, and an effort to get tests and supplies to ICUs in Haiti and Malawi.

17

N E I L F E R G U S O NProfessor, Imperial

College London, U.K.

In early March, the U.K. was pursuing a coro-navirus strategy that accepted an almost unchecked infection rate in a bid to create widespread immunity. Modeling provided by epidemiologist Fer-guson and his team helped change the government’s mind. Without a lockdown, the scientists warned, over 500,000 people could die in the U.K. The White House also took note of the model, which predicted a U.S. death toll as high as 2.2 million, and stepped up isolation rules.

18

S H I R I N R O U H A N IPhysician, Shohada

Hospital, Iran

Facing a severe short-age of medical staff, Rouhani continued to treat patients even after she herself was infected by COVID-19. After her death, many

Iranians shared a photo of the doctor hard at work while hooked to an IV drip, praising her persistence and brav-ery in the face of Iran’s massive outbreak.

19

WA N G C H UA N F U Chairman, BYD

Wang was among the first corporate leaders to implement a major pivot to meet virus-driven demand. In late January, when the COVID-19 crisis was accelerating in China, Wang created a task force to design and build new production lines to manufacture face masks and hand sanitizer—goods now in demand worldwide. Today, the Shenzhen-based electric-vehicle maker claims to be the world’s largest manu-facturer of surgical masks, churning out 5 million a day.

20

A N G E L A M E R K E LChancellor, Germany

Hardly a lame duck, Germany’s outgoing chancellor has won global praise for her calm, immediate, and effective response to the pandemic. Merkel, a trained scientist, imposed strict social distancing measures and modeled them herself, self-quaran-tining after her doctor tested positive for COVID-19. Those poli-cies and Germany’s early, widespread testing have helped keep its death toll far lower than that of many of its European neighbors.

21

T H E G R O C E R SWaitrose, U.K.; H-E-B,

U.S.; Sobeys, Canada

Grocers have emerged as vital lifelines for pan-icked populations, even as their staff became “essential” frontline workers at risk of expo-sure. European chains like Waitrose were

D O RS E Y S E I Z E D T H E PA N D E M I C M O M E N T to make his first major foray into philanthropy, announcing that he would devote $1 billion of his equity in pay-ment startup Square—or about 28% of his wealth—to a COVID-19 relief fund. He’s disbursing the money transparently, going so far as to tweet out a public Google spreadsheet tracking the process. About $5.2 million had been doled out as of mid-April; one of the first recipients was the joint $4.2 million grant he and Rihanna (No. 16) set up to benefit victims of domestic violence affected by L.A.’s stay-at-home order. Dorsey is also thinking beyond the epidemic, earmarking any leftover money to support girls’ education and universal basic income, which he calls “the best long-term solutions to the existential problems facing the world.”

J AC K D O R S E Y CEO, TWITTER/SQUARE

pioneers in setting up special shopping hours and delivery for the vulnerable and elderly. In North America, Texas-based H-E-B and Canada’s Sobeys increased workers’ pay and medi-cal leave—acts that helped nudge giants Target and Walmart to follow suit.

22

L E O VA R A D K A RPrime Minister

Ireland

Closing out his term in the midst of the crisis—his party lost in February’s election—Varadkar has tackled

the situation with aplomb, canceling Saint Patrick’s Day festivities and closing schools, pubs, and other establishments without hesitation. But what has really impressed is his will-ingness to put himself on the front lines: A doctor by training, Varadkar is now work-ing half a day per week assessing patients for the virus.

23

C R I ST I A N F R AC A S S I & A L E S S A N D R O R O M A I O L ICEO & Engineer

Isinnova, Italy

As the virus pummeled Italy, Fracassi and Romaioli heard a hospital in Brescia was short on essential valves for its ventilators. The pair visited the hospital and studied the valves, which needed to be replaced after each use. They tinkered with prototypes on Isinnova’s 3D printers until they figured out how to create the parts—and then provided them to the hospital for free. Fracassi told local media: “There were people with their lives in danger, and we acted. Period.”

24

B R E T T C R OZ I E R Former commander

U.S.S. Roosevelt

As the coronavirus spread quickly through his aircraft carrier, Crozier urged his superior to help him evacuate stricken crew—and then wrote a plea to other brass after relief was slow in coming. When the letter was leaked to the press, it prompted Crozier’s removal—but not before drawing the nation’s attention to the threat posed to our troops, a reality driven home on April 13 when a sailor from the ship died from the virus.

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AMD CEO LISA SU, an engineer with a Ph.D. from MIT, has transformed the company by doubling down on cutting-edge technology.

CNV.W.0520.XMIT.indd 86 4/13/2020 2:51:24 PMFINAL

F O R T U N E M A Y 2 0 2 0 8 7

the next big thing.

Now the expectations are high. It’s

interesting, because life, as well as

product road maps, is all about mak-

ing choices. And the choices don’t

actually get easier as you do better.

The choices are exactly the same, if

not harder, frankly.

Your product road map over the

past five years included whole new

designs for CPUs and GPUs. 2 GPUs

used to be just for video gaming,

but now they’re also being used in

data centers to help compute big-

data analysis. What comes next?

We’re making large investments

in graphics and what we’re doing

around optimizing graphics for both

gaming as well as computing. That’s

a new vector where we’re putting a

lot of emphasis.

If you think about what differenti-

ates AMD, it’s the idea that we can

put the best processors together for

each of the workloads. This idea of

bringing CPUs and GPUs together

in different combinations and with

E N G I N E E R I N G A N E W A M D

When you took the reins in October

2014, AMD’s revenue was down

almost 40%; your market share

had been cut in half—your stock

even dropped below $2. But your

strategy for revamping the business

by focusing on higher-performance

chips has been a success. Your

stock is up, 1 and reviewers have

gone crazy over your latest Ryzen

chip lineup; this year 100 new

laptops are coming to market with

AMD chips. You once described the

turnaround process to me as “fight-

ing your set of wars.” How does it

feel to have won some battles?

SU: It’s been very exciting, reward-

ing—all of those things. The past

couple of years have certainly

helped build that confidence that,

hey, when we set out to do some-

thing, we can actually get it done.

And when we began, there was a lot

of convincing to do. But there’s a

lot more to do, and in our world it’s

always about what’s next and what’s

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

“It’s amazing to see a company of more than 10,000 people transition to work from home on a dime.”

THIS EDITED Q&A HAS BEEN CONDENSED FOR SPACE AND CLARITY.

PHOTOGRAPH BY D R E W A N T H O N Y S M I T H


8 8 F O R T U N E M A Y 2 0 2 0

science, or Lawrence Livermore,

which does more of the national

security–type things around simu-

lating our nuclear stockpile, all of

them do better when you can take

larger data sets and do many more

calculations.

That’s what we’re doing in build-

ing these large supercomputers. But

we’re going above what normal scal-

ing would allow you to do by adding

this combination of CPUs and GPUs

and high-performance interconnect.

And that’s kind of fun because you

can see that, yes, it’s the same tech-

nology that goes into game consoles—

albeit much, much, much bigger. But

it’s used in a different way, and it’s

used in really tough applications that

will change the world going forward.

The supercomputers you’re build-

ing will reach exaflop speeds, 5 five

times as fast as the fastest current

supercomputer. How can you make

such a huge leap forward?

It’s not any one thing in particular,

Aaron. I think it’s a combination of

things. But the most important is

the idea that these components are

smarter because they have smart in-

terconnects that allow them to share

data and share operations much

more efficiently than what has been

done in the past.

My new laptop isn’t five times as

fast as my old laptop, not even close.

Do you envision that consumer

devices are going to see huge leaps

like that again?

The technology that we’re putting

into supercomputers today will

absolutely show up in consumer

devices. It might take five more years

for that to be the case, but it’s always

been the case that you use these big

applications to drive the barriers of

innovation.

Let’s solve the big problems, then,

over the next five to 10 years, you

trickle that to consumers once the

cost point gets there and once the

manufacturing technology gets there.

different interconnections really goes

toward where accelerated computing

is going in the future.

It’s kind of funny that the same kinds

of GPU chips that video gamers

needed also turned out to be the

thing that’s running A.I. and machine-

learning apps in cloud data centers at

Google and Amazon. Why are those

kinds of GPU chips, which can run

lots of simple tasks very quickly, so in

demand in data centers?

It’s the idea that computers can get

smarter and smarter. And the way

they get smarter is they get better

at recognizing patterns and match-

ing patterns and then using that

information to become a little bit

smarter in the future. And that’s the

whole concept of machine-learning

and artificial intelligence and high-

performance computing.

This part of computing is actually

moving faster than anything else

because we have this tremendous

amount of data that we’re generating,

which we don’t really know what to

do with. Each of us is generating so

much information. Our companies

are generating a ton of information.

The Internet is generating a ton of

information, and we need to figure

out what to do with it all. 3

How do you bend the performance

curve? In technology, if you plot the

performance gains made by our in-

dustry over a five- or 10-year period,

it often looks like a straight line. You

can draw a straight line through it,

and our goal in life is to change that

line. We want to be above the line,

bending the curve.

A L L A B O U T T H E E X A F L O P

AMD just won two government bids

to build some of the fastest super-

computers ever. 4 How is your tech-

nology being used in that context?

If you think about the problems that

you’re solving in science at the Oak

Ridge National Laboratory, which

does medical science and weather

B E T W E E N

T H E L I N E S

(2) Know your

chips: The CPU, or

central processing

unit, is commonly

used as the main

computing chip in

PCs and servers.

The GPU, or graph-

ics processing unit,

started out helping

speed up video

games but is also

used for A.I. and big-

data apps now too.

(1) AMD STOCK PERFORMANCE

OCT. 8,2014$3.28

APR. 9, 2020$48.38

SOURCE: BLOOMBERG

8% 54%

49

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% OF TOTAL

POPULATION


Your typical word processor prob-

ably doesn’t need a much faster CPU.

But there are some applications that

I do think are going to hit consum-

ers. A lot of this machine-learning

technology, for example, is really use-

ful in things like speech recognition,

right? And if you think about your

speech-to-type conversion right now,

it’s okay, but it’s still not that good.

T H E N E W N O R M A L

The world is now facing a crisis

from the coronavirus pandemic.

On March 5, you told analysts that

the outbreak was having a modest

impact on your financials so far.

But given your global supply chain,

what are your longer-term worries?

The COVID-19 crisis is truly unprec-

edented and touches all of us. Our

priority is protecting the health and

safety of our employees, partners,

and communities. It’s amazing to see

a company of more than 10,000 peo-

ple transition to work from home on

a dime. We’ve also figured out how to

do some things differently, including

some very sophisticated engineer-

ing work remotely. At the same time,

we’re supporting our customers as

their priorities change. We have a

complex supply chain where our

products go through multiple coun-

tries to get manufactured. Although

there were some early disruptions,

we’ve been able to navigate it.

Does that mean having more redun-

dancy geographically?

That’s exactly right. It’s having redun-

dancy in your supply chain. It’s having

redundancy in your engineering

teams. It’s building the notion of, hey,

you have your contingency plans as

things change. And, in some sense, it’s

building a company that can with-

stand lots of different things related

to the environment we’re operating in.

You’re one of just 35 female CEOs

in the Fortune 500 right now.

What do we need to do to have more

women leaders in tech?

One piece is about just the pipeline

and having enough people start

in the field. And then the other

piece is making sure that women

have good opportunities. Give good

people good opportunities—they

will shine.

We are definitely very focused on

ensuring that as we look at leader-

ship, particularly in the technical

ranks. 7 That being said, these roles

are very competitive, and at the end

of the day it’s always about, Let’s get

the best person in the job.

T H E C O N V E R S A T I O N

Part of your strategy for reviving the company was to get into the business of making custom chips for gaming consoles. Now I’m seeing all kinds of cloud gaming services everywhere, no special device needed. Is console gaming still a good business?

Gaming is a great business. I think the last number, there were over 2 billion gamers if you look at from mobile to PC to console to cloud. 6

This is a big year for gaming, with both Microsoft and Sony launching their next-generation consoles. They are some of the most anticipated consumer products of 2020. And again, we like gaming because it uses technology very, very well. And we’re able to reach a lot of households, and it will continue to be an important part of our portfolio. I do think cloud gaming has opportunities, but it’s still many years out.

(4) Super deals:

In March, the DOE’s Lawrence Livermore National Labora-tory picked AMD to supply processors for El Capitan, its $600 million super-computer. In 2019, AMD won a similar deal to supply a new supercomputer called Frontier for the DOE’s Oak Ridge National Laboratory.

(5) Big, big

numbers:

An exaflop requires computing 1 quintil-lion floating point calculations per second—or a 1 followed by 18 zeros. Apple says the A13 processor in the iPhone 11 can reach one teraflop, so it would take 1 million iPhones to equal an exaflop.

(6) Play on,

players:

An estimated 2.5 billion people played video games last year, spend-ing $152 billion, says research firm Newzoo. About 45% of the spending is on mobile games, about one-third on consoles, and the rest on PC gaming.

(7) Still a long

way to go:

Women held 24% of all jobs and 18% of engineering jobs at AMD in 2018, ac-cording to the most recent data avail-able. For context: Women held 26% of computer and math-related jobs nationwide last year.


WATCHES

Buying TimeA new generation of watch lovers are selling the most analog of collectibles online. BY DANIEL BENTLEY

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F O R T U N E M A Y 2 0 2 0 9 1

LAST JULY, Ben

Clymer sold 100

watches for just

shy of $1 million in under

10 minutes. The time

pieces—a version of

Blancpain’s Fifty Fathoms

diver’s watch—were

scooped up by collectors,

and a few speculators, all

fervently refreshing a web

page at 10 a.m. on a

Wednesday to drop

$9,900 on a limited

edition watch. Those in

the know need fast fingers

to score such a rarity from

Clymer’s company,

Hodinkee, and its

collaborations with some

of the world’s top watch

brands, including TAG

Heuer, Vacheron Con

stantin, and Omega,

among others.

But Hodinkee isn’t a

jewelry store, nor is it the

type of watch retailer you’re

used to. It’s the flag bearer

for a revival of interest in

mechanical watches—new

and old—and has spawned

a small but vibrant ecosys

tem of businesses bringing

vintage watches to new

buyers.

master chronograph gifted

to him by his maternal

grandfather. (The name

of his blog—and later,

company—comes from the

Czech word for wrist

watch: hodinky.) The blog

soon caught on and won

over watch enthusiasts in

cluding, notably, musician

John Mayer, who would

go on to write for the site,

become an angel inves

tor, and appear in videos

showing off his collection

of heavyhitter timepieces.

Eleven years later,

Hodinkee is more than

one man’s musings.

It’s the world’s fore

most news source for

all things watches and

watch culture, with 13

editors between its North

American and Japanese

websites publishing

articles, reviews, videos,

and podcasts on all things

horological.

It’s a tastemaker—in

variably increasing the

value of vintage watches

it blesses and creating, or

at least codifying, a new

breed of vintage watch

collector, one who might

rock a 1940s Longines

with a pair of Nikes.

That influence extends to

bringing forgotten brands

back to the fore. “[Ben]

singlehandedly ignited

interest in Universal

Genève watches, effec

tively a defunct brand,”

says Floridabased vintage

watch dealer Eric Wind.

“The strength in prices for

those watches can really

be credited to him.”

Hodinkee is a maga

zine publisher as well: Its

biannual coffeetable tome

is just as likely to feature

Hodinkee is a tastemaker, creating, or at least codifying, a new breed of vintage watch collector; one who might rock a 1940s Longines with a pair of Nikes.

Hodinkeefounder and CEO Benjamin Clymer (opposite page). [1] Omega Speedmaster Hodinkee Limited Edition, inspired by Clymer’s grandfather’s watch, $6,500. [2] Swatch Sistem51 x Hodinkee Generation 1986, $170. [3] Fifty Fathoms Blancpain for Hodinkee diving watch, $9,900. [4] TAG Heuer Carrera Skipper for Hodinkee, $5,900.

The New York City–

based company began life

as a Tumblr blog in 2009

while Clymer was working

as a consultant at UBS.

“It was after the financial

crisis, and I was effec

tively told to look busy in

my cubicle,” says Clymer.

And so he began filling

those idle hours by writing

about watches, starting

with an Omega Speed


9 2 F O R T U N E M A Y 2 0 2 0

a story on vintage Alfa Romeo sports cars as it is one about Patek Philippe perpetual calendars.

But it’s making its big-gest splash as a retailer, selling new and vintage watches, watch straps, accessories, and the various trappings that might appeal to a well-heeled collector, such as Leica cameras and $1,600 cigarette lighters by S.T. Dupont.

That retail operation began with Clymer and early employees packing watch straps in Clymer’s West Village apartment. It is now headed up by chief commercial officer Russell Kelly, whom Clymer lured away from his position as U.S. brand manager of Rolex sister brand Tudor. (“You don’t just leave Ro-lex,” one industry insider tells Fortune, speaking to the significance of that hire.) In 2019, the compa-ny’s revenue increased by 85% to north of $20 mil-lion, and the number of brands it sells has grown from 10 to 18, adding huge names like Omega, Blancpain, Breitling, and soon Apple Watch.

The limited editions, released a handful of times a year, are what really set Hodinkee apart from the average watch retailer. The company’s in-house design team works with the brands to create unique timepieces or reissue be-loved watches from their archives. “We have data on what our readers and cus-tomers have in their col-lections,” says Clymer. “We know the kinds of things

they’re into.” One example: A re-creation of a yacht-ing chronograph from the archives of TAG Heuer, known as the “Skipper,” currently resells for more than double its original retail price of $5,990.

After testing the waters with a number of pop-up shops, the company is set to open its first brick-and-mortar store later this year,

in premises left vacant by the Supreme streetwear brand in New York’s SoHo. Don’t expect the white gloves and starched collars you’ll find in the boutiques of Madison Avenue. The space has been specced with slouchy leather couches, a podcast studio, and a watchmaker’s bench. “We wanted to give it a clubhouse feel,” says Kelly.

One of the more innova-tive businesses to emerge from the wave of atten-tion Hodinkee brought to vintage watches is Manhattan-based Analog/Shift, founded by long-time watch enthusiast James Lamdin in 2012. In contrast to the buyer-beware shopping experi-ence at a pawnshop or diamond district store-

HOW TO BU Y A WATCH ONLINE

BUY THE SELLER It has become commonplace for unscrupulous

dealers to misrepresent the watches they are selling, especially

online. Buy from one who points out a watch’s flaws and will take

the purchase back if you’re not satisfied.

BUY THE BEST QUALITY You’ll pay a premium for the best vintage

watches—but they’ll also hold their value. There’s a false economy

in trying to save a few thousand dollars buying a beat-up version.

BUY SOMETHING YOU LIKE Watch collecting is about having fun

and expressing your own personal taste. Don’t buy something

purely as an investment. Despite record auction prices in recent

years, the watch market can be fickle. It’s better to have something

you’ll enjoy on your wrist when the market takes a dip.

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front, Lamdin’s approach is one of transparency and education. Every nick and scratch, every blemish of its pieces is photographed in high contrast—“often to our detriment,” says Lamdin. And accompa-nying each beautifully shot timepiece is a short story, practically an essay, explaining what the watch is, and why it’s cool. “I

Instagram and Hodinkee, watch collectors on the Internet were nerds on forums. Instagram made it cool for people to share their collections.” Analog/Shift uses Instagram as both a marketing tool and as a way to observe what the larger community of collectors is buying.

Buying watches on the Internet is one part of the equation—but what about selling them? A collector

line marketplace that uses data analysis of the watch market so collectors can buy and sell their watches at a fair price.

Someone looking to sell a neglected watch, or looking to fund their next watch purchase, can go to Crown & Caliber’s website, enter details on the piece and receive an instant of-fer for the watch based on market trends. The seller then sends the watch in a prepaid shipping box to the company’s Atlanta headquarters, where it’s verified by a team of ex-perts, serviced and cleaned if necessary, and offered up for sale with a one-year warranty backed by the company. Retailers like Neiman Marcus, and even watch brand Breitling, use Crown & Caliber to facilitate their trade-in programs.

“Every year $5 bil-lion worth of watches are sold in the U.S., and we estimate $100 billion worth are on people’s wrists or sitting in drawers and closets,” says Powell, “We’ve done more than 70,000 transactions and have been growing 60% every year. We think there’s a huge unaddressed market.”

Technology has always disrupted the way we keep time. Sundials replaced standing stones. The wristwatch replaced the pocket watch. But in an age when few of us need to wear a mechanical watch, it’s the commu-nity of enthusiasts on the Internet that is keeping them alive.

really enjoy storytelling,” says Lamdin. “I want to share our knowledge with our customers and anyone who comes across our site or Instagram.”

Instagram, which launched the year after Hodinkee, has had a mas-sive impact on the world of watch collecting and his business in particu-lar, says Lamdin: “Before

could turn to eBay or a watch forum, but they’re not without risks. And you know you’re probably not going to get the best deal at your local watch dealer or pawnbroker.

Georgia-native Hamil-ton Powell thought there was a better way. Using his experience in private equity, Powell created Crown & Caliber: an on-

Crown & CaliberInside the reseller’s

watch shop, where

employees inspect

and refurbish

preowned

timepieces.

Analog/ Shift A Rolex GMT

Master, circa

1968, from the

company’s

inventory.

P A S S I O N S — W A T C H E S

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MEXICO

–46.5%

BRAZIL

–57.8%

CHILE

–49.1%

SOUTH AFRICA

–46.3%

PANAMA

–8.3%

COLOMBIA

–58.3%

CHANGE IN INDEX VALUE, FROM HIGHEST TO LOWEST IN 2020

CANADA

–42.8%

U.S.

–33.9%

GERMANY

–39.1%

U.K.

–42.3%

ICELAND

–34.3%

TURKEY

–38.4%

NIGERIA

–34.6%

EGYPT

–37.9%

SPAIN

–38.4%

ITALY

–40.3%

GREECE

–49.5%

AUSTRIA

–51.0%

MALAYSIA

–29.8%INDIA

–42.5%

U.A.E.

–36.6%

TANZANIA

–18.9%

SAUDI ARABIA

–29.8%

RUSSIA

–50.8%

JAPAN

–31.4%

SOUTH KOREA

–40.6%

CHINA

–18.4%

HONG KONG

–25.3%

AUSTRALIA

–45.9%

INDONESIA

–48.0%

THAILAND

–40.9%

ARGENTINA

–51.4%

0%–10%–20%–30%–40%–50%–60%

9 6 F O R T U N E M A Y 2 0 2 0

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

T H E C A R T O G R A P H E R

INFOGRAPHIC BY N I C O L A S R A P P WITH S C O T T D E C A R L O SOURCE: BLOOMBERG; JAN. 1 TO APR. 9, 2020. CALCULATED FROM INDEX PRICES IN U.S. DOLLARS

MAP.W.05.20.XMIT.indd 96 4/14/2020 9:00:27 PMFINAL

0221.fortune_fullpage.r4.indd2-5-2020 12:25 PM James Sena / Rusty Sena

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